Canadian Heritage Committee on May 14th, 2019

[Jesse Kumagai]

Yes.

In the music space, I believe a lot should be on the artist. The reality is that in a great many cases they are entirely responsible for dictating the ticket prices. Usually there's a degree of collaboration with those who are promoting the concert and respect for their intelligence with respect to a local market and what they believe appropriate pricing would be, but more often than not it's the artist who's dictating it. The concert producer and promoter go along with that.

I think that's the correct approach. It's the artist's career. It's their creative content. They're the ones who are ultimately maintaining that relationship with their fans. I understand it and appreciate it.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Thanks for that.

I was part of an organization that brought in a premier CHL hockey event. We were disappointed that the promoter actually held tickets back. We told the promoter that they shouldn't hold tickets back and to put them on sale, but they didn't. They held them back and released them later.

Do you see that happening often?

I guess our frustration was that we felt we knew our market and we felt we knew what would be fair. The promoter basically said that if we want to have this event or show in Saint John, New Brunswick, this is what they're going to do. They're going to hold these tickets back. Then at the very last moment—literally a day before the event—all of sudden these hundreds of tickets became available.

How chronic a problem do you think that is?

[Jesse Kumagai]

I would say there are two things to address here.

First is the motivation for holding back those tickets. There are many legitimate reasons why you might not put a ticket up for sale. It might have to do with production requirements of the event. You're not sure if the patron would be able to have a clear view of the stage for example. There are a variety of practical considerations.

There are practices in the industry of holding back tickets to manage the pricing. Fundamentally—

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Let me jump in.

You said there is a bit of a practice of holding back tickets to manage the pricing. Is that manipulation? Are you falsely creating a sellout and then releasing tickets?

[Jesse Kumagai]

Sure.

For starters, let me say that it's a very small percentage of the activity, certainly in the concert world, where that happens. It does happen, but it's almost always at the direction of the artist—as part of your question there. Just about everything we do, especially from a ticketing standpoint and from a marketing standpoint, involves artist approval. We send all of this back to the artist to review and update.

In terms of that practice of holding back tickets with an interest in understanding that what's going on with the marketplace is responding accordingly, it's a very small percentage that do that. Far more often than not it's either artist-directed or coming from somewhere within the artist world.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Ms. Moore, you commented when you presented about how sports and music venues were different.

Can you elaborate on what you meant by that?

[Catherine Moore]

Yes, of course.

I think the difference is that the sports events will go ahead regardless, whereas with a music event, even with a top artist, if tickets don't sell, the show will be cancelled.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Does that happen often, though, where you see venues come in that are cancelled?

[Catherine Moore]

There were examples. I think it was last summer there were a couple of high-profile tours—one was the Jay-Z tour—where ticket prices were very.... The euphemism is soft. Some of those shows were cancelled. It can even be big venue and big artist shows. Promoters are taking a risk. They are assuming their ticket prices are right and their venues are right, but sometimes they get it wrong.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Ms. Moore, if you could wave a magic wand and you were with the federal government, what would you recommend we do? How involved should we get with this problem?

It's obviously a problem across the country at different times. What would you recommend we do?

[Catherine Moore]

To the extent that the federal government can have best practices and consistency in user protection, that is where the federal government has a role. By user, I mean the ticket buyer. It could help to have ways for the industry as a whole to identify legitimate tickets, to consistently keep telling users the price may go up, and technologically personalizing and having a way that users can go to the same vendor consistently.

I think enforcement is very hard when things are offshore. For governments to essentially try to manipulate a market is a slippery slope.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Thank you.

[The Chair, Liberal, Julie Dabrusin]

I now give the floor to Mr. Blaney for seven minutes.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Thank you, Madam Chair.

Welcome, witnesses.

I liked Mr. Kumagai's presentation and what Ms. Moore just said about the need to inform the “user”, the “ticket purchaser”. I think I understand that from the moment when someone goes to a fraudulent site to purchase tickets, it's all over. In other words, the artist will not get paid. The owner of the show venue will not get paid either, and the user will not have a ticket. It seems very difficult for law enforcement to track those fraudsters.

My questions are for Mr. Kumagai or Ms. Moore. If I understood correctly, money is then lost. Does that represent a lot of lost money?

Are a large number of people buying virtual tickets that don't get them anywhere?

[Jesse Kumagai]

I can respond. It's a common problem. We see it all the time.

The jurisdictional piece is a very serious one. In addition to the funds not going to the creator and not going to those who are taking the financial risk, I'll note that when the money does leave the jurisdiction, it also means it's no longer part of our tax base. There are all kinds of considerations that come into play. We lose our ability to provide customer service. If an event is cancelled or postponed for any reason, or we have to provide specific instructions for patrons, we have absolutely no ability to find them and work through that.

The challenges are numerous.

We recognize that the secondary market exists, and in the absence of enforcement, we recognize that it will continue to exist. Our interest is very much in protecting the consumer and ensuring the transaction is a safe one and that the patron will get into the venue.

There are basically three realities out there right now.

There's the reality of purchasing on the secondary market from a reseller that has the ability to authenticate the ticket. For example, Ticketmaster's platform can do that, if they are the original seller of the ticket.

Then you have the platforms that can't guarantee it's a real ticket but that offer you a money-back guarantee. StubHub is a good example of that. They cannot guarantee that you will get into the event, but if you can't, you will get your money back.

Then there's the third, which is represented by the out-of-region resellers or the person on Kijiji who took a print-at-home ticket and photocopied it 50 times to sell it.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

From a heritage perspective, when this money is not going into the system, the artist is the biggest loser.

Madam Moore, in your presentation you gave the example of a Raptors event, where tickets were not available on Ticketmaster but were on StubHub, and we just had Ms. Tarlton, from Ticketmaster, say that was not possible.

Can you explain what happened and how it turned out?

[Catherine Moore]

That's why I took screenshots. They do say that this can't happen, but within a few seconds of each other, I looked for exactly the same game on StubHub and on Ticketmaster. Companies say that this is impossible, but it clearly is possible. Did I go through the system and buy a $6,300 ticket? No, I did not. I was going by what it was showing on the website.

To continue with another part of your question, this right of resale that exists in visual arts ensures that some of the money from the resale goes back to the presenting organization. In that case, the presenting organization is a visual artist. I would recommend the government look at a possible adaptation of that for the live business.

Another thing with the live business is that when there is high demand, it justifies higher face value ticket prices. A lot of artists, for the reason we've talked about, don't want to have those higher ticket prices, but that does perpetuate the situation we're in now.

[The Chair, Liberal, Julie Dabrusin]

Mr. Blaney, you have two minutes left.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Madam Moore just gave the example, but to get back to the example with StubHub, it doesn't work with what we were told, but from what I understand, if they don't get into the sports event, they have a guarantee of being reimbursed. Is that correct?

[Catherine Moore]

Yes, if they showed up at the arena and couldn't get in, they would get reimbursed if they paid that money.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Okay.

[Catherine Moore]

I did not do that purchase, but my understanding is that those tickets were available for that game on StubHub.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Thank you.

How much money is lost by consumers on those kinds of secondary resale fake tickets? Do you have any insights or comment on that?

[Jesse Kumagai]

My understanding is it's in the billions of dollars globally. I don't think we have completed the study to identify a number for Canada, but we'd be happy to research that. It's been researched internationally, so those numbers are available. I just don't have them.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Thank you very much.