New federal government wants to take action against ticket gouging for concert tickets

The newly signed coalition agreement contains a declaration of war on the buccaneers of the event business. The federal government of CDU, CSU, and SPD, which was formally appointed on Tuesday, intends to "protect consumers from excessive prices, lack of transparency, and fraudulent sales practices, and to better enable event organizers to defend themselves against unfair behavior by ticket speculators." This is what it says on page 87 of the document. Barely seven lines for the age-old problem of the "secondary ticket market."

In the past, before the internet age, this scam was still entirely analog. Ticket smugglers would stand in droves near venues and stadiums on the day of an event, holding dozens of tickets for sold-out concerts by Paul McCartney, AC/DC, or Tina Turner like fans, and raking in obscene sums from those who hadn't made it to the ticket shop in time after the presale opened.

Occasionally, this deal worked out well for the buyers. At Bruce Springsteen's second concert in 1992 at the Frankfurt Festhalle, you could get a ticket for ten Deutschmarks (official price: 53 Deutschmarks). The boss had a different band than the E Street Band on his tour bus, and two only passable albums in his luggage. Not as many people wanted to experience that as usual. The bootleggers had miscalculated.

Legally, these people have been difficult to take action against so far; tickets to cultural or sporting events are securities that can essentially be traded like any other security. The event industry tried to ruin the business of commercial resellers.

Remaining ticket contingents were held back and only went on sale shortly before the show. Sales were limited to a few tickets per person. Personalized tickets emerged: the buyer's name is printed on the ticket, and they then require additional identification to enter the venue or the venue. The number of illicit traffickers on site has decreased significantly.

But the dishonest business the government wants to stop continues to flourish, primarily online. The black market traders sell their goods primarily on secondary market platforms. On some of these ticket exchanges, they can set the price themselves. On so-called ticket search portals, customers even pay money for the search for the coveted tickets.

"At some secondary ticket exchanges, you can get tickets for five times the original price, in extreme cases up to ten times," says Johannes Fechner, parliamentary manager and legal advisor of the SPD parliamentary group in the 21st German Bundestag, in an interview with the Redaktionsnetzwerk Deutschland (RND). "Tens of millions of euros in profits are generated annually. We want to put an end to this rip-off."

"We want to enable organizers to set upper limits for resale in their general terms and conditions – for example, that a markup is only possible up to a maximum of 30 percent," the MP explained. This would create legal uncertainty. Customers of a secondary market portal should in future be able to compare the secondary market price with the original price, and transparency should also be ensured.

When purchasing tickets on the secondary ticket market, customers often don't even know that their chosen digital ticket shop is a secondary ticket market portal. They also don't know who sold them the tickets there. This isn't the only thing that's set to change. "We need a so-called 'notice and take down' procedure," says Fechner. "If the ticket retailer receives a notice that the price is being charged too high, they must remove the offer." Violation would result in a contractual penalty.

Is the government cracking down on mafia structures? "I can't prove it," says Fechner, "but there are some indications. There are reports of online retailers commissioning people to create software to buy tons of tickets and then reselling them for many times the price."

In addition to profiteering, the digital secondary ticket market also features fraud. Counterfeit tickets are circulating, which security personnel usually recognize as such upon entry. Buyers are also offered personalized tickets, which also result in them being turned away at the entrance. And there are fake tickets for events that don't even exist. "The legislature doesn't need to tighten anything here. Fraud is a criminal offense," explains Fechner. "The customer only has to report it, because the public prosecutor needs a tip-off to take action."

Wouldn't it be easier to prevent the secondary market altogether? "Absolutely not," says the SPD politician. They also don't want to make it a general criminal offense. Fechner is thinking primarily of private resellers. “You can get sick, an important appointment comes up – there must be an option to resell your ticket.”

If an event is sold out, prospective buyers are generally advised to use official ticketing companies with secondhand portals. The German market leader Eventim, for example, operates the brokerage website fansale.de, where tickets are sold from fan to fan. If the official price is being charged or even lower, the customer will be notified by a blue "Fair Deal" button.

The latest tool used by tour operators to defend themselves against commercial second-hand sellers is “dynamic pricing,” which air travelers have long been familiar with: booking early, low prices, booking late – high prices.

This dynamic price management, primarily intended to increase profits, adjusts ticket prices to current demand. If many people want tickets at the same time, the price increases in real time. From the moment they click on a seat to the digital checkout, it can increase several times over. Customer data is also analyzed: Those who were previously willing to pay a lot for tickets will likely continue to do so. This has been the case in the US for some time.

Expensive pleasure: In 2022, a ticket to a Bruce Springsteen concert was expected to cost a peak of $5,500.

Source: IMAGO/ZUMA Wire

Ticketmaster, which merged with event giant Live Nation in the US in 2010 (the merger is currently the subject of an antitrust lawsuit by the US Department of Justice), caused a media furore in 2022 when tickets for Bruce Springsteen performances, via dynamic pricing, reached a peak price of $5,500. The New York Times quoted a tweet from Bill Werde, editorial director of Billboard magazine from 2008 to 2014: "Hard to believe Bruce Springsteen is the one making music fans miss the bootleggers."

In Germany, Ticketmaster also offers dynamic pricing. However, there have been no excessive ticket prices so far, probably because there is sufficient competition. The system is nevertheless tempting. According to the Institute for Retail Research, tests using a complex pricing algorithm have demonstrated revenue increases of up to 8 percent.

One argument put forward in favor of dynamic pricing was that it would significantly reduce the profitability of the black market. If the system were to become established in Germany, fans who previously enriched secondary retailers would still be exposed to very high prices. Only in this case, they would be excluded from the official ticket sellers. As early as May 2022, Michael Rapino, CEO of Live Nation Entertainment, stated on the business podcast "The Compound and Friends," according to the New York Times, that the prices paid by fans to bootleggers represented the street value of many tickets. Rapino argued: "Why shouldn't the artist capture most of that surplus?"

"A concert ticket must remain affordable for average earners," Eventim CEO Klaus-Peter Schulenberg stated in March in an interview with the online edition of the "Frankfurter Allgemeine Zeitung." His company does not use algorithm-supported dynamic pricing – to date. "Personally, I also have rather traditional views on this topic: Whoever is first in line should get the best seat," the entrepreneur said. But then admitted: "The future probably looks different."

Unless the federal government intervenes here, too. "Dynamic pricing is permissible under current law, a kind of auction," counters legal counsel Fechner. While he sees no chance of legal regulation here, he recommends another solution: "The most effective solution would be to prohibit dynamic pricing in the lease agreements with promoters where concert halls or open-air venues are publicly owned." Many of the large event venues in Germany are in public hands.

Otherwise, Fechner sees things similarly to Schulenberg : "All music fans, all sports fans should be able to see their favorite team and their favorite artists. Culture is for everyone. Sports are for everyone. Therefore, no rip-offs on tickets!"

It was a personal concern of his to include the issue in the coalition agreement – ​​in the last legislative period, the FDP, which held the Justice Ministry, blocked measures. Now the "important partial consumer protection" could come into effect, possibly as early as next year. "From a legal perspective, it's not rocket science."