Could vouchers become a trap for promoters?
Live music markets in Europe have looked to vouchers as a cure for their coronavirus-inflicted crises. The effect of this type of medicine seems to be based upon a presumption that ticket owners will hold on to their rolled-over tickets, or use vouchers for another show instead, or wait for cash refund until late 2021.
Well, what if they don’t?
Voucher schemes have turned millions of ticketholders into promoters’ creditors. They can be divided into three sub-groups: Those who can afford it; those who can’t really but were not given a choice; and those whose present ambivalence may well turn into anger with passing time.
So far, the economic prognosis is that the effect of the corona crisis has not yet fully revealed itself and it will not be until three to six months from now when it will really hit hard, once various government support and help programmes are over.
Everything points to this crisis being the strongest in decades. The natural reaction is a great deal of uncertainty and, in this situation, the live music industry in countries using voucher schemes has sent a very clear message – if worse comes to worst, it will be the customers who will bear the load.
Ticketholders might be facing situations where they need access to at least some part of the cash spent on tickets to cover their daily needs. As their chance to get an immediate, full refund from promoters is either restricted or made temporarily impossible, then they might be tempted to offload what they have in the only way possible – on the secondary ticketing market.
Voucher schemes have turned millions of ticketholders into promoters’ creditors
Desperate times call for desperate measures and ticketholders might have to give away their tickets as quickly – and therefore cheaply – as possible. If this happens to a significant extent, then it could affect the sales of the postponed events in question, as well as newly announced gigs.
Nowadays, promoters postpone their shows hoping for the best. Now, if it is a sold-out show, then one might worry only about lowering the profit margin, but if there is still some way to go to break even, then the promoter has every reason to worry.
Postponed shows were negotiated at the peak of the conjecture cycle with ticket prices reflecting both the expected buying power projected into selected capacities, as well as accordingly set fees and subsequent other costs.
The upcoming 2021 season will be tough. Experts’ projections quoted in media see a decline in revenue of more than 50% for the leisure sector next year in some markets. Better than the current drop of 80-90%, but hardly a full recovery. By the nature of things, it can be reasonably expected that the lost revenue will be distributed in an uneven manner, show-per-show.
The highest risk lies with events that have not yet reached breakeven and that have found themselves in a 2020 position that they probably aim to roll over to 2021. If an event, traditionally a festival, has tickets scaled from an early-bird rate to an on-the-door price and is now somewhere in the middle, then promoters will probably follow up the sales from the point an price that they stopped on prior to coronavirus, and offer a similar or identical line-up (value) in return.
In cases where the contracts were not renegotiated for a lower guarantee, then promoters will have both prices and costs set on 2020 expectations for the next season, which might deliver lower revenue. Maybe upwards of 50% lower.
It is not lowered income that breaks promoters’ neck, it’s the unpayable bills accumulated from previous commitments that do it
Additionally, we need to account for the risk of cheap tickets on the secondary ticketing market. If tickets are available for less that than the official presale on these sites, either for the very same event, a similar event or event in the same time period, or a better event, then it will likely redirect the cash flow from official presales and further lower the promoter’s future revenue.
If a market revenue goes down by 50 % and the remaining potential half is further affected by cheap resales, how much can reasonably be expected to be left over? If such a scenario becomes reality, then the expectations of future turnover might not (sufficiently) materialise, leaving the promoter with obligations to fulfil with insufficient funds.
Not to mention, that standard competition will continue, and new shows will have the advantage of a wow-effect over postponed and rolled-over events. Also, corporations in some countries are likely to come out of the crisis with loaded cash-flow from temporarily non-refunded tickets for cancelled arena shows with a limited time to reinvest it.
In this light, it might seem that the intention to lower artist guarantees by 20 % in 2021 is merely cosmetics.
If it is the case and all options are still on the table then, in some ways, it is not a bad option to leave in 2020 what belongs in 2020: ask agents to return paid advances, refund ticketholders or press on with substitute events and enter the next year without a ball and chain.
Generally speaking, it is not lowered income that breaks promoters’ neck, it’s the unpayable bills accumulated from previous commitments that do it.
Borek Jirik has worked as a show and festival promoter and arranged technical production for various arena and stadia tours. He now consults for live events, focusing on quality management, safety plans, studies, publishing and research. He was an initiator and editor of the Comprehensive Guide for Event Production and Organisation in the Czech Republic, 2018.
Refunds may lead to mass bankruptcies, warn EE promoters
The absence of a scheme to protect the concert industry from the financial impact of issuing refunds en masse could leave to a wave of insolvencies, leading Estonian promoters have warned.
In many countries in Europe, including Germany, Portugal and Italy, concert organisers are being allowed to offer ticket vouchers (ie credit) in lieu of cash refunds for cancelled events, while others, including Estonia’s Baltic neighbours, have extended the window in which refunds must be given (typically a year).
“In other countries, such as Latvia and Lithuania, solutions have been found,” says Live Nation Estonia’s Mart Eensalu, “and longer periods for the repurchase [refund] of tickets have been granted. But it hasn’t been done here.”
Estonia – which, along with most Europe, put the brakes on live events in March – ended its state of emergency and began easing coronavirus lockdown restrictions on 17 May, with shows of up to 1,000 people permitted from 1 July.
That 1,000-capacity limit (or 500 for indoor shows), of course, precludes major live music events, such as Rammstein’s highly anticipated performance in Tallinn, originally scheduled for July – for which 62,000 people will now be asking Live Nation for refunds, writes the Baltic Times.
“We are effectively jobless, but we must keep our offices open”
Tanel Samm, of promoter Monster Music, says the Estonian government is not taking concert professionals’ concerns seriously. “The money entrusted to us by customers who have bought tickets does not belong to us if the event has not taken place,” he tells the paper. “We are effectively jobless, but we must keep our offices open to bring the rescheduled events to people next year.”
Samm says authorities must “finally enter into a dialogue with us” in order to ensure the survival of much of Estonia’s live music industry.
That long-overdue help may finally be coming in the form of culture minister Tonis Lukas, who recently met with promoters to discuss a way forward for the sector, Postimees reports.
Lukas urges both concertgoers and Estonia’s consumer watchdog, the Consumer Protection and Technical Regulatory Authority, to be patient with concert promoters. “My call […] is for us to be prepared to give concert organisers just over a year to return the money,” he says, “because when a concert is postponed by a year, organisers will be able to return to a normal cash flow then and then pay refunds.”
According to the Baltic Times, current Consumer Protection and Technical Regulatory Authority guidelines say customers should receive refunds for cancelled events within a month.
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Portugal to ban festivals until 30 September
Under the Portguese cabinet’s stabilisation plan, festivals and shows “of a similar nature” will not be permitted until October 2020 and organisers will not be obliged to offer fans a cash refund for cancelled events.
The plan, which needs approval from the Portuguese parliament before becoming law, offers some clarity to promoters in the country, many of whom were awaiting an official declaration before deciding the fate of their 2020 events.
Festivals including NOS Alive, Paredes de Coura, Meo Sudoeste, Super Bock Super Rock and EDP Vilar de Mouros have acknowledged the government’s decision and state they are waiting for parliament to approve the measures before announcing how they will proceed.
Organisers of NOS Primavera Sound Porto, which had moved to early September in an attempt to avoid virus-related restrictions, made a similar announcement, adding that: “It seemed like a good idea, when we decided to celebrate Primavera in summer, we did it because we believed that in September we would be living in safer times.
“This new scenario does not allow us to celebrate what we wanted most. We continue to work hard so that, in 2021, we can celebrate more than NOS Primavera Sound.”
“When we decided to celebrate Primavera in summer, we did it because we believed that in September we would be living in safer times”
Under the government guidelines, organisers of festivals and other events scheduled for between 28 February and 30 September 2020 which were unable to take place due to the Covid-19 outbreak, can offer ticketholders a voucher of equal price to the original ticket.
This “guarantees the rights of the consumers”, reads the government document.
However, organisers of Afro Nation, which was due to host its second outing from 1 to 3 July, received criticism from some fans on social media upon announcing that they will not be issuing refunds for Afro Nation 2020.
“According to the new Portuguese law, your ticket will be automatically transferred to the new date,” reads a statement from organisers.
“Should you wish not to transfer to 2021, you will have the opportunity to sell your ticket via our primary ticket provider Festicket. Afro Nation will delay putting any tickets on sale in order to give ticket holders as much time as possible to resell tickets if that is what you choose to do.
“Your provider will be in touch today via email with further details on how to transfer to 2021 and how to resell your ticket via Festicket.”
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SeatGeek sued over alleged U-turn on refunds
A US SeatGeek customer has filed a class-action lawsuit that accuses the secondary ticketing site of changing its refund policy mid-way through the Covid-19 pandemic.
The suit, which alleges that SeatGeek rescinded its money-back guarantee amid the widespread cancellation of live events, comes three weeks after similar legal action was initiated against ticket-resale rival StubHub, which is also offering credit instead of cash refunds for cancelled or postponed events.
In a filing in a Manhattan court, William Trader says New York-based SeatGeek – which also has a significant European presence, where it primarily focuses on primary ticketing for arts venues – changed the terms of its ‘buyer guarantee’ from a full refund to “a credit to be used for a future purchase to be determined in SeatGeek’s sole discretion”.
“Defendant has sought to surreptitiously shift its losses onto its innocent customers”
Trader had purchased two tickets to a now-cancelled Dead and Company concert in Chicago, reports the New York Post.
“In the midst of the greatest public health and economic crisis in living memory, defendant has sought to surreptitiously shift its losses onto its innocent customers, furthering the financial hardship endured by people across the country,” says Trader’s lawyer, Nicholas Coulson.
SeatGeek has been contacted for comment.
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Brazilian promoters to offer credit for shows
The Brazilian association of event promoters Abrape (Associação Brasileira de promotores de eventos) has welcomed new measures allowing promoters to offer credit to events that are rescheduled or cancelled due to the Covid-19 pandemic.
Under the conduct adjustment agreement, reached between Abrape, the national consumer secretariat of the Ministry of Justice (Senacon), the national association of consumer prosecutors (Mpcon) and the federal district attorney’s office, promoters will not be obliged to refund the customer, provided they ensure a rescheduled date for the event or offer credit or discount for use in the purchase of other services.
If an event is cancelled outright and the promoter is unable to offer credit, a refund must be provided to the customer within six months of the cancellation announcement. However, the promoter can keep up to 20% of the ticket price “to reduce any unrecoverable expenses”.
“The initiative aims to guarantee consumers’ rights, without disregarding the effects caused by cancellations of events and shows in the country”
Promoters are given a range of options to offer customers in the case of postponed events. Ticketholders may use the ticket for the rescheduled date, transfer it to a third party, exchange it for another event by the same promoter (not paying a price difference if it is up to 10%), or request credit to use on another of the promoter’s event within 12 months.
According to the agreement, promoters must have dates for rescheduled shows within six months of the pandemic ending, with all postponed events to happen within a year of its end. They must also ensure the rescheduled event contains “the same main attraction” as the original and, if replaced, that it be by others “of the same musical style and status”.
A ticketholder may only request a refund for a postponed show if they can prove that they cannot attend the new date.
“The initiative aims to guarantee consumers’ rights, without disregarding the effects caused by cancellations of events and shows in the country,” says Abrape president Doreni Caramori.
Third of TicketCo customers in UK, Norway opt for vouchers
New data obtained by event payment platform TicketCo has shown that over third of consumers that bought tickets via its platform in the UK and Norway chose to be reimbursed with credit or to forgo their money in place of a refund.
TicketCo has developed a functionality to allow event organisers to offer vouchers worth the value of original spend and payment waiver options as an alternative to cash refunds.
The TicketCo feature comes as the German government today (8 April) introduced legislation allowing promoters to offer credit in place of refunds for cancelled events, joining authorities in countries including Poland and Italy to implement a voucher scheme.
Following the first full week of data collection, results show that 32% of customers in the UK chose the voucher, with just over 2% forgoing their money in support of the event organiser.
In Norway, a similar percentage of ticketholders passed on refunds, with a much higher proportion (15%) waiving any form of compensation and 20% choosing vouchers.
“We hoped our waiver and voucher features would be chosen in support of event organisers and the response from the market so far has been positive”
“We sincerely hoped our waiver and voucher features would be chosen by some in support of event organisers and the response from the market so far has been positive,” comments TicketCo co-founder Carl-Erik Michalsen Moberg.
“One week of data is not much to build solid statistics on, but encouragingly it demonstrates the strength of goodwill that exists in the event industry that we had to share. It’s a truly uplifting show of support.
“The impact will make a real difference to event organisers,” continues Moberg. “This proves organisers and ticket buyers are close and the connections are strong. It’s clear ticket buyers where they can want to help their favoured organisers through this crisis.”
In addition to the refund alternative features, TicketCo has also created new functions to help event organisers manage high volumes of postponements and cancellations, as well as launching pay-per-view streaming service, TicketCo TV. The platform allows promoters to broadcast virtual events and sell tickets for them via the TicketCo app.
TicketCo has offices in Norway, the UK, Poland and Sweden.
Germany introduces ticket voucher scheme
The government of Germany confirmed today (8 April) it will allow promoters to offer customers credit instead of refunds for cancelled events, becoming the latest country to introduce a voucher scheme to shield its live sector from the financial impact of the coronavirus.
A news release from the German federal government explains: “According to existing laws, holders of tickets can request reimbursement of the entry and service fees they have already paid. [However], many operators currently have no new income. If they had to reimburse fees for all canceled events at short notice, the existence of many of them would be threatened. A voucher solution, therefore, could be of great help.”
“A wave of bankruptcy would also likely mean that claims for reimbursement could no longer be made,” adds the announcement.
“A wave of bankruptcy would mean that claims for reimbursement could no longer be made”
As reported by IQ on Friday, Germany was one of a number of European states considering legislating in favour of ticket vouchers and/or an extended refund grace period – measures which have already been introduced in countries such as Italy and Poland.
For all tickets purchased before March 8, fans who wish to receive credit in lieu of a cash refund (refunds will still be available for those who need them due to their “personal situations”) will receive a voucher that expires at the end of 2021. If the voucher is not redeemed by that date, the organiser of the event must refund its value.
Bremen-based CTS Eventim, Europe’s biggest ticket seller, welcomes the introduction of a voucher scheme, saying the move represents a lifeline to the corona-hit German live music industry.
“The voucher solution… gives promoters the vital liquidity they need to continue operating”
“We welcome the initiative of the federal cabinet to enact a voucher scheme for cultural, concert, sports and leisure events,” says the company’s CEO, Klaus-Peter Schulenberg. “Culture is systemically essential, and the bill proposed today by the government supplements the current contract law governing events with urgently needed provisions to mitigate the financial impacts of the Covid-19 pandemic for promoters, and thus for the entire cultural sector in Germany.
“The resolution is a very important step towards preserving cultural diversity in Germany. The voucher solution is pure consumer protection at the same time, because it gives promoters the vital liquidity they need to continue operating as going concerns during and beyond the coronavirus crisis. Consumers are thus protected from what would otherwise be unavoidable losses due to insolvency.”
StubHub sued over new no-refund policy
Secondary ticketing giant StubHub has become the first ticket seller to face legal action as a result of a refund policy that offers credit vouchers in lieu of cash.
Ticket vouchers have become a popular refund mechanism for cancelled shows during the ongoing coronavirus crisis, with a growing number of governments backing industry associations’ calls for their members to be able to temporarily hold onto customers’ funds. Vincenzo Spera, president of Italian promoters’ association Assomusica, last week described a government-backed voucher scheme in Italy as a “lifesaver” for the struggling concert business.
StubHub similarly recently moved to a voucher-only model in North America, amid speculation the US ticket resale site, which is in the process of being acquired by Viagogo, is struggling financially.
Now, a class-action lawsuit filed in Wisconsin on Friday (3 April) afternoon accuses StubHub of violating its own consumer protection promise with the move, with plaintiff Matthew McMillan saying the company is “retroactively” backing out of its “longstanding ‘FanProtect’ guarantee […] in response to apparent liabilities it would incur stemming from the Covid-19 pandemic.”
“Instead of instituting responsible financial transaction policies, StubHub made it their practice to pay ticket sellers before the event had occurred
According to Law360, McMillan’s suit alleges StubHub brought on its financial crisis itself through its own policy of paying ticket resellers (touts/brokers) before the event has occurred, despite the “entirely foreseeable scenario that world occurrences would cause the simultaneous cancellation of numerous public events.”
“Instead of instituting responsible financial transaction policies, defendants [StubHub] made it their practice to pay ticket sellers before the event had occurred,” the complaint reads, “exposing themselves to the possibility that they would be left holding the bag (or have to ignore their own guarantee and cheat their customers) if an event was canceled and they could not promptly collect from sellers.”
In a statement, McMillan’s lawyer, Nicholas Coulson of Liddle & Dubin, says: “Dumping promised refunds for expiring coupons during the time of greatest financial suffering in recent history is cruel and wrong, especially because people have no idea if they’ll even be able to use the coupons. We don’t know what the next 12 months are going to look like.
“Through this action, we hope to provide people some small bit of relief during this uncertain time.”
As of 25 March, StubHub is offering fans with tickets for cancelled events with a coupon valued at 120% of their original purchase.
Let us offer credit for cancelled shows, say assocs
As the coronavirus crisis continues to exert financial pressure on the live sector, industry associations and businesses in Europe, Asia and North America are asking for changes in the way refunds are issued for cancelled events.
In Europe, research shows digital footfall to event ticket sales sites has collapsed in recent months, with only travel agencies harder hit by concerns over the virus. According to Comscore, visits to ticketing sites fell by 47% in France, 12% in Germany, 52% in Italy, 55% in Spain and 26% in the UK between 17–23 February and 9–5 March.
The figures come as associations in the the UK warn of a cashflow “crisis” amid widespread concert cancellations – with British artists and managers alone expected to lose more than £60 million should a ban on mass gatherings last for the next six months – and other sectors, including cinema and aviation, similarly grapple with an unprecedented drop-off in ticket sales.
In countries including Germany, Spain, the Netherlands, Portugal, the UK, Russia and Kazakhstan, associations representing cash-strapped local operators are pushing for an extended refund grace period (up to 365 days), to be permitted to give vouchers in lieu of cash refunds, or a combination of the two.
“If you can afford it, you should consider whether it is really necessary to return your ticket for a refund,” reads a blog from Ticketmaster Germany, which is supporting the European Association of Event Centres (EVVC)’s #keepyourticket campaign. “Every ticket that is not returned helps organisers, venues and [sports] clubs, even after the coronavirus has passed, and enables them to be able to organise great events in future.”
The EVVC, which represents arenas and conference centres in central and southern Europe, is inviting its members to support the campaign by sharing text and visual materials calling for solidarity with promoters and venues. “For organisers, suppliers and cultural professionals, the corona pandemic is a threat to their existence,” says the association.
“If you can afford it, you should consider whether it is necessary to return your ticket for a refund”
Promoters’ association BDKV – which estimates its ~450 members will lose a combined €1.25 billion from March to May as a result of Germany’s event ban – is asking the German government to extend temporarily, to 365 days, the time within which a refund must be paid, as well as offer credit for tickets instead of cash refunds (a solution it says would especially benefit members sitting on large ticket inventories, such as theatres).
In Spain, newly launched umbrella body Esmúsica (which includes the Association of Music Promoters) is also asking for a grace period, lasting until 31 December, for cancelled events. For postponed events, however, “given the exceptional situation”, the organisation says promoters must not be obliged to offer a refund, instead offering only a new ticket for rescheduled date(s).
“Several organisations and municipalities are cancelling events on a daily basis. Shows on sale for the end of the year and early 2021 are not selling. We have to work together on a reimbursement policy for postponed and cancelled shows that helps to minimise catastrophic losses,” says Portugal’s APEFE, which backs Esmúsica’s position on no refunds for postponed shows, suggesting that “purchased tickets must be valid for postponed shows without mandatory reimbursement”.
Both Esmúsica and APEFE (Association of Promoters of Shows, Festivals and Events) are also calling for a temporary reduction in VAT charged on tickets, among other relief measures.
In the Netherlands, meanwhile, the associations’ counterpart there, VVEM (Association of Event Producers), appears to be making headway with its campaign for ticket vouchers, with the Dutch cabinet discussing the issue this week.
“It is currently impossible for us to offer immediate cash refunds to all buyers”
Dutch culture minister Ingrid van Engelshoven has previously asked ticketholders not to request cash refunds, while VVEM has also reportedly found a sympathetic ear in the form of economy minister Eric Wiebes, who has said the government will provide further “strong help” for the sector (though it remains to be seen in what form).
While European associations focus on lobbying their respective governments, US secondary ticketing giant StubHub has taken the matter into its own hands, announcing that – where legal – it will no longer provide refunds for cancelled events to its American and Canadian customers. Instead, ticketholders will receive a voucher worth 120% of the original value of the ticket.
The change in policy comes as StubHub, which is in the process of being acquired by European rival Viagogo, lays off as much as two thirds of its workforce, in what it calls a “difficult but sensible decision”.
Explaining the shift in its refund terms, a StubHub spokesperson says: “In normal times, we’ve made the decision to refund buyers before collecting money from the seller to offer buyers more convenience. And under normal circumstances, this works well, even with StubHub taking the risk of timing delays and some losses when we are unable to collect from the seller. With the coronavirus impacting 28,000+ events and the associated magnitude of challenge in recouping monies owed by sellers over the coming months, it is currently impossible for us to offer immediate cash refunds to all buyers.
“When the volume of cancellations accelerated a few weeks ago, we were the first in our industry to offer a coupon worth 120% of the ticket value. This will now be our default option in Canada and in the US. Outside of the US and Canada, fans are defaulted to a refund.”