Canadian Heritage Committee on May 14th, 2019

[Ryan Fitts]

We have a significant anti-fraud team, and we continue to grow.

However, I want to pump the brakes a little on the bots discussion. It's a problem. There should be anti-bots legislation, but on the other hand, I haven't seen any prosecutions brought under the BOTS Act in the U.S. So if it was this rampant, I'm wondering why that hasn't happened.

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

Okay, that's fair.

What is the industry prepared to do before government legislates?

I think your industry lies parallel to the privacy industry. If I am Zuckerberg right now at Facebook, and I'm staring down $2.5 billion to $5 billion in fines because every privacy breach is $40,000 U.S., and here in Canada, we have a privacy framework that fines companies $100,000 or individuals $10,000, something is out of whack.

If we were to look at legislation that would fine individuals who are responsible for running bot companies or for scalping $40,000, or held you responsible for $40,000 per ticket that was sold more than 50% over the list price, I'm pretty sure the industry would move fast.

What is the industry prepared to do to prevent that sort of thing from happening?

[Patti-Anne Tarlton]

You'd be surprised that the Canadian industry has rallied around this already.

There are two different things. I would agree that putting a lid on resale isn't a customer-friendly approach. It won't stop the behaviour. Technology-wise, you can do that, but it's not a great outcome for consumers.

However, from a sporting industry and from a Canadian live music industry perspective—I think the executive director of the Canadian Live Music Association spoke last week in front of the committee—the industry wants the enforcement.

So, they will help. We will help. We are investing already. In large measures, and maybe even different from the United States, the industry is there to help artists and help bands.

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

I have two minutes left so let me pause you there.

Both of your companies take a fee for every transaction, regardless of how much the ticket costs. Is that correct?

[Patti-Anne Tarlton]

Correct.

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

It doesn't really matter whether the ticket is sold at 100% of its original value, or two, four or 500 times, you still get paid. Is that correct?

[Patti-Anne Tarlton]

Correct.

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

Okay.

Should we then be looking at a report and takedown system? That's a possible thing we can do with hate speech. It happens in France, in Germany. When we know there's a hate-based organization, we target them and we take their website down.

Should we be doing that with organizations that are wildly inflating the ticket prices of the artists you want to support?

[Patti-Anne Tarlton]

I couldn't agree with you more, in that historically, we haven't been pointing fingers at others. We just try to be the best that we can be. An enforcement mechanism that can include the industry that's living it and breathing it every day, bringing that forward for enforcement, would be welcomed.

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

I'm putting out some Armageddon-type scenarios here, because this is what's in the arsenal of governments to do. We could literally pass legislation that would heavily fine scalpers or could throw them and their corporate owners in jail. That is a tool that the state could use.

How does the industry move into a space before we're compelled...? Because I can say that people in my riding are irked. That's parliamentary language for hopping mad.

Mr. Fitts.

[Ryan Fitts]

I thinks it's very important that government certainly enforce the laws that are on the books and available to them.

It's difficult for corporations and marketplaces to be responsible for the criminal conduct of third parties. However, we always co-operate with law enforcement when we're contacted, and we certainly have drafted our privacy policy in such a way to make it very clear that we will do so.

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

I guess my message to you, having come from business before politics, is to be part—and you are—of the solution before government is impelled by people to step into this space.

I know you have very smart government relations people with you in the room. I think that a combined solution makes a lot of sense.

Thanks.

[The Chair, Liberal, Julie Dabrusin]

Mr. Blaney, I can give you two minutes, if you wish.

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

Very well.

We're getting to the end of the hour, and first I'd like to thank the witnesses. I found the discussion extremely interesting and very instructive.

I would offer you the opportunity to have some closing remarks, especially in the context of Mr. Boissonnault's questions. As you know, we are the federal government. You've exposed whether sellers are primary or resellers.

What would be your final message to the committee, in regard to how to protect fans, and let the industry still be profitable?

[Ryan Fitts]

First of all, it is important to have a discussion about this. That's why we're here today. We appreciate the opportunity. Thank you very much.

We think it is important that resale marketplaces offer accountability and choice to consumers. It's important that they offer buyer guarantees. It's important that you are guaranteed that your tickets are going to work when you get to the venue. We look forward to working with governments to ensure things like buyer guarantees and anti-bot legislation.

It's also important to realize that the resale marketplace is valued by consumers because of the flexibility in how you can buy tickets, at a time of your choosing, and in a manner of your choosing. It's a very important tool that should be available for consumers. We're dedicated to working with government to come up with a workable marketplace.

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

Ms. Tarlton.

[Patti-Anne Tarlton]

I thank you, as well.

I would speak on behalf of the Canadian industry, from the entire stakeholder base. Canadian companies are following the rules across the country. They would welcome opportunities to find ways to enforce those rules and enhance other opportunities to have the outcomes of legislation and consumer protection benefit artists and fans.

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

Thank you.

[The Chair, Liberal, Julie Dabrusin]

Thank you very much.

That brings us to the end of this first hour.

We're going to suspend briefly, while we switch panels.

Thank you very much, to all of the witnesses.

[The Chair, Liberal, Julie Dabrusin]

We are continuing our meeting.

Thank you for joining us by video conference. We have Catherine Moore, adjunct professor, music technology and digital media, from the faculty of music at the University of Toronto.

We also have Jesse Kumagai, director of programming at the Corporation of Massey Hall and Roy Thomson Hall.

We will start with Catherine Moore, please.

[Catherine Moore, Adjunct Professor, Music Technology and Digital Media, Faculty of Music, University of Toronto, As an Individual]

Thank you.

I'm going to focus on three areas in my opening comments. The first is about the user considerations, the second about business considerations and the third about how, possibly, to expand the market and access.

First of all, I'll talk about improvements and consistency in the user experience.

User frustration is caused by many things, most of which relate to the speed at which the tickets are sold and the high competition for these tickets, which brings the price, sometimes, very high. This is, of course, for the most popular shows. There will never be enough tickets to meet demand for these shows.

Online ticketing has many aspects, and prices change rapidly, going both up and down. On websites, there is sometimes indication that the price will vary. Sometimes that's in pop-up windows on screen, sometimes it's in the terms and conditions of purchase and sometimes it's in other places, but this is inconsistent. The user experience is not consistent, and having a persistent reminder that this change in pricing is the nature of ticket pricing would help users remember that this is a very competitive market.

Users have some methods to shape their own user experience. For instance, if there were legislation that said there had to be pop-ups, users can choose on their own to block pop-ups.

I have some screenshots if they're useful for the conversation later and for your questions, but you can easily see by looking at these sites that if you'd looked on, for instance, Ticketmaster for the Raptors game seven the other night, you'd have seen there were no tickets available. However, if you'd looked at StubHub for the same game, you'd have seen there were tickets available. Even the StubHub Canada site has prices in U.S. dollars. These are all things that can be addressed to make the user experience more consistent and clearer.

The second area I'd like to look at is the business considerations: operational concerns for live business promoters and for ticketing companies. The term “slow ticketing” has come into use. This term is used to describe a practice where the instant gratification aspect of online shopping is intentionally slowed down so that the event organizers can have some control over which category of ticket buyer can be first to purchase tickets for an event. By using slow ticketing, the event organizers understand that, by slowing down the sales process, they may make less money on the event than if they let sales happen at the fastest rate set by ticket demand.

In order to decide whether to continue using a slow-ticketing strategy, one question I raise is how businesses would measure the slow-ticketing strategy's success. For example, there would probably be fewer sold-out shows, but the total revenue might be higher because the top ticket prices might be higher.

Also, the slow-ticketing strategy may lead to more show cancellations by promoters because of low ticket sales, since buyers may think they should wait, in case prices go down. This type of cancellation might reduce the overall number of ticketed events and might reduce the overall revenue for the industry.

If improved and targeted artificial intelligence increasingly personalizes online ticket selling, what's the most important future benefit for ticket sellers, and where do online ticket sellers see the greatest value in developing new artificial intelligence tools for their industry? This relates to ways in which the government might support advances in AI in this business.

Another thing to look at is what the main behavioural differences are between sports and music ticket buyers. How could or should an online ticket seller tailor the buying experience differently?

Finally, in this section about operational considerations for visual art, in some countries there's a resale right. What this means is that every time a work is resold, the original artist receives payment. Information about this type of resale right is available on the CISAC website. We could think of this right to be eventually applied to the resale of concert tickets.

The third area I'd like to look at in my opening statement is expanding the market, expansion of access. Since there won't be enough seats for everyone who wants to attend a blockbuster event, the live industry could look at ways to expand access, for instance, simultaneous broadcast into theatres where people could gather with friends to enjoy a communal experience with high-quality sound and wide-screen image. Ticket sales for the in-theatre experience would go back to the performers and presenters of the show.

For sports, there already is an infrastructure for this that provides, via TV networks and sports leagues, both in-home and in-group, such as sports bars, those types of locations for people to enjoy the event live. The one thing to think about would be, how could this work for the non-league entertainment industry that is live music?

Thank you.

[The Chair, Liberal, Julie Dabrusin]

Thank you.

Mr. Jesse Kumagai from the Corporation of Massey Hall and Roy Thompson Hall.

[Jesse Kumagai, Director of Programming, Corporation of Massey Hall and Roy Thomson Hall]

Thank you, members of the committee, for the time and opportunity to speak to you today.

As mentioned, my name is Jesse Kumagai. I'm the director of programming for the Corporation of Massey Hall and Roy Thomson Hall. We are a charitable, not-for-profit arts presenter in Toronto. We present concerts in our two iconic concert halls and in other venues throughout the market we serve.

In addition to being a concert promoter, we also invest in the future of our audiences and artists, with significant investments in our education and outreach initiatives as well as in several artist development programs.

In addition to my professional work, I also want to share that I serve in a volunteer capacity for a number of Canadian music organizations, including the Unison Benevolent Fund, which provides emergency relief for members of the music community, especially musicians, experiencing times of crisis. I'm on the board of the Polaris Music Prize which, through a juried process, celebrates and recognizes great Canadian recordings based entirely on artistic merit, with no concern for commercial success. I'm the board chair of the Canadian Live Music Association. You heard from our president and CEO, Erin Benjamin, earlier in these proceedings.

The reason I give you this additional context about me is to hopefully underscore the fact that I'm coming at this from a perspective in which we value the artists and the fans in a very significant way.

In terms of the ticketing world, I believe there are really two issues at the forefront of this discussion. The first is the accessibility of tickets on the primary market. The second is the high occurrence of fraudulent and deceptive activity on the secondary market.

Speaking about the primary market first, we recognize that there is at times an imbalance between the supply and demand sides of the equation. We also recognize that at times there's a gap between the listed ticket price and what the market will actually bear. Both of these issues in many ways can be traced back to what I refer to as the artist's dilemma. A great number of artists who are ultimately very much in control of the initial ticket pricing for their events are interested in ensuring that their fan base—all of their fan base—can have access to fairly priced and accessible tickets. The problem with this is that it creates the pricing gap that fuels the secondary market.

You've likely heard from a lot of people about some of the interventions that can be used to address these issues. I don't want to spend too much time on these, other than to say that in my experience and from what I've seen internationally, the most effective solutions are those that are technological or operational and are developed and implemented by the sector. The least effective—especially internationally, when we take a look at other examples—are the solutions that are legislated, not because the laws are bad, but because they are not enforced. As we all know, unenforced laws are toothless laws.

The more significant issue, as far as I'm concerned, and the one we deal with on a regular basis on the front lines, is the regular occurrence of fraud and deceptive activities on the secondary market. These include such actions as the sale of fake tickets; people paying in foreign currencies without realizing it; being duped into thinking that they're purchasing from a primary official seller when really they're buying from a secondary seller; and hidden charges and fees. The truth is that a great number of these operators exist outside of local jurisdictions, making any sort of recourse or attempted enforcement of law very difficult or impossible under the circumstances.

You've heard this, however, from a number of people. If you'll indulge me, I've brought a few real world examples of some messages we've received from patrons. I'll omit any identifying information but would be happy to validate the authenticity of these with the committee at any time.

I'll start on the subject of supply and demand. Once again, these are the exact words of the patron and not my own, so forgive me. It is emotional.

At the end of June last year, we promoted three concerts with Gordon Lightfoot. They were the final three concerts at Massey Hall before we closed for our two-year renovation. Obviously, those concerts were in very high demand. This is the email:

You pricks. Last time I looked Gordon Lightfoot tickets weren’t on sale yet.

Now he’s sold out. Go fuck yourselves.

I share this not so much for the drama, but just to indicate that it is a very passionate subject for people and they tend to respond in equally passionate ways. This poor patron, of course, was not able to attend those concerts.

Again, in attempting to juxtapose the difference between the disappointment and upset around not being able to access tickets and the actual harm that can come to Canadians through fraudulent activity, I will share another one. This one has a happier ending, but from very different circumstances.

This email says:

Hi,

I wanted to write to say thank-you very much to Massey Hall and its team for helping us out yesterday at the Blue Rodeo concert and making it a great experience.

The show was sold out, so I purchased tickets on Stub Hub. When my wife and I got into the Hall we discovered that the tickets were fakes which was such a disappointment. The staff were sympathetic and the manager (whose name I wish I’d taken to name him personally in this email), busy as he was dealing with the beginning of the show, checked on the tickets for us and gave us a complimentary pair for the show! He really saved the day!

Our inboxes are filled with stories like this. I have another example here of a grandparent of a child performing in our annual Toronto Children's Chorus Christmas concert at Roy Thomson Hall who had promised her grandson that she would attend the concert. She mistakenly ended up on a secondary ticketing site and purchased three tickets. Those tickets, which were still available on our site for $45.50 each, were sold to her in U.S. funds for $146 each, with service fees of $44.53 per ticket and a delivery charge of $7.95. The total was $579.54 for this grandmother to attend her grandson's Christmas concert. Those tickets, had they been purchased through the official box office, would have come in, with fees and everything included, for well under $200.

These examples really demonstrate the harm that does come to Canadians and why we on the front lines are significantly concerned about those shady practices and the deceptive activity and fraud that occurs on the secondary market.

Considering all of this, and recognizing that legislating this subject matter is largely the domain of the provinces and territories, I do have three recommendations to bring forward to this committee for things that the Government of Canada can do to help address some of these issues.

The first is to invest in a national awareness campaign that educates consumers on the tricks employed by the secondary market. This will result in fans being empowered to avoid fraudulent activity, being able to recognize the legitimate sources of tickets and hopefully avoid becoming victims of fraud.

The second is to invest in the technological solutions that will ensure the tickets end up in the hands of the fans for whom they are intended and not the secondary market. This is a global problem. If we can come up with a made-in-Canada solution, we will be leaders in the sector and we will all prosper as a result.

The third recommendation addresses the fact that a lot of our attention is based on the high-demand events where we do have considerable action on the secondary market and a lot of that fraudulent activity. There are so many fantastic opportunities for Canadians to experience music. We believe that the Canadian government can invest more in the live sector to improve that accessibility, to improve the quality and quantity of presentations throughout the country and generally make the opportunity for Canadians to attend live music events easier and safer.

Thank you very much. I would be happy to answer any questions.

[The Chair, Liberal, Julie Dabrusin]

Thank you for that colourful presentation.

We are going to begin with Mr. Long, for seven minutes, please.

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

Thank you, Madam Chair.

Thank you to our witnesses this afternoon. It is very interesting.

Mr. Kumagai, how much responsibility would you place on the actual performers or artists to try to bring control to ticket pricing? We have certainly heard examples. My friend and colleague MP Shields talked about a performer in Calgary who did five shows instead of just one because there was such high demand to flush out secondary sales. We've certainly read and heard about different artists and performers who have stepped in.

Can you give me your thoughts on that? How much onus should be on the actual performers?