Category: Ticketing and Scalpers

Step Right Up: The Chamber of Progress’s Ticketing Chamber of Horrors Fools Nobody

It’s one of those sad facts there are people you meet in life who just always seem to have the wrong side of the deal. Sometimes it’s emotionally understandable in the case of kids like the Cox character from William Boyd’s Good and Bad at Games or even Smike from Nicholas Nickleby. But when you see one of these cringy Silicon Valley policy laundries like “Chamber of Progress” keep getting the wrong side of the deal, there’s a much simpler explanation.

And now they are wrapping themselves in the flag of progressivism as they run the thimblerig on–of all things–ticketing. And cutesy names like “Chamber of Progress” notwithstanding, the group’s latest “report” if you can call it that would have state legislators believe that the StubHubs of this world are actually on the side of all that is good, just innocent puppies scampering across the stage with an IPO in their mouth. 

These high minded choir boys fancy their souls are just purer than everyone else’s in their cyberlibertarian progressivism who oppose asymmetrical commercial power except when it suits them and only when it suits them. We see it with Chamber of Progress’s “Generate and Create” obfuscation campaign to promote Silicon Valley’s interests in the “fair use” copyright exception absurdly applied to generative AI. This under the guise of “supporting” artists while destroying their craft and, yes, their humanity. OK, I went there. And we now we see it in ticketing, too. Can’t these guys get a real job?

As we will see, what the Chamber of Progress is really about when it comes to our community is locking in asymmetrical power relationships and protecting Silicon Valley’s cybergod-given right to extract money from relationships where they are not wanted and transactions where they don’t belong. Far from “forget the middleman”, StubHub’s entire business model is based on imposing themselves as the middleman with, it would appear, some pretty nefarious partners. While Chamber of Progress wants to point to the pending Department of Justice case against LiveNation as an excuse for just about anything you can think of, it is well to remember that pending cases don’t always turn out as advertised and flags can become shrouds. Since they seem to like DOJ investigations so much, let’s not forget there’s another one that may be in the offing they’ll like a lot less.

The Flawed Premise of Faux Property Rights

The report starts off from a very flawed premise and a classic projection about the plethora of state ticketing laws backed or opposed by StubHub & Co. The Chamber tells us that “legislators should adopt resale ticketing laws to foster competition, reduce ticket prices, and increase transparency.” Reduce ticket prices? Really? If anyone is acting to increase ticket prices it’s the middleman resellers whose very existence undermines the longstanding economic relationship between artists and fans. Economic relationships that thrive in an environment of classical enforceable property rights.

It begins like a lot of these propaganda campaigns do–identify your villains (those you want to unseat) and then trot out a parade of horrors you create by shading the facts. By the end, a busy legislator or staffer is ready to believe they discovered the cause of cancer and that the potholes are somebody else’s fault!

But here is the essential flaw that I think brings down the entire chamber of horrors this report tries to manufacture. They really want you to believe that once an artist sells a ticket, that ticket can then be resold or repackaged because the artist has sold the right to control the ticket to the purchaser. This tortured analysis of the artist’s property rights is simply incorrect and this one error is the beginning of a cascading effect of really bad stuff for everyone in the chain. Here’s what the report says:

The use of “license” language in ticketing legislation has created a loophole that unscrupulous venues can exploit. When a ticket is defined as a “license” rather than a property right, it gives venues and event organizers the power to revoke the license of any ticket that is resold. This means that even if a ticket was legally purchased, the venue can declare it invalid if it is resold to another party. 

Resale freedom laws provide essential benefits to consumers by ensuring their rights to buy, sell, and transfer tickets without arbitrary restrictions by primary sellers like Live Nation. These laws help to keep ticket prices affordable and enhance consumer choice and access to live events. Resale freedom laws ban anti-consumer practices and empower fans to find tickets on the platform of their choice, increasing their chances of securing seats for popular events. 

See what they did there? First, they are selling “freedom” as in “resale freedom.” This is both laughable but truly Orwellian Newspeak, as in SLAVERY IS FREEDOM. This is not supposed to be a funny joke, somebody paid a lot of money for this report. Yet what do you expect from people who think “Chamber of Progress” is a great brand?

But seriously, they skip over the fact that the artist sets the price for their ticket. They skip over it because they have to if they want to make their sponsor’s case. That doesn’t make them correct, however. The report bungles the economic relationships in ticketing because they either fail to understand or don’t want to understand the reality.

The Report Gets the Economics Backwards

Live shows are not fungible or interchangeable. The ticket starts out as the artist’s property and the artist decides the ticket’s face price based on the economic relationship the artist wants with their fan. As David Lowery has said many times, the economic relationship between artists and fans is analogous to a subscription, it’s not a one-time transaction from which the artist wants to extract the net present value of all possible transactions with the fan. The resellers have the opposite relationship with the fan because to them, fans are fungible. Resellers want to extract the maximum from each fan transaction because they don’t care about a long-term relationship with the fan. Upside down world, right?

When the artist sells a ticket, they sell a right to attend the show under certain conditions. They don’t sell a piece of property. They don’t sell a pork belly or a can of Coke. They sell an emotional connection. That’s not a “loophole.” Pretending that a ticket is a pork belly is creating a loophole out of thin air.

That is true of cover charge for bands at your local dive bar and it is true of Taylor Swift at your local soft-seat venue or stadium. It’s also true in dynamic pricing situations–I’m not a fan of dynamic pricing, but I respect the artist’s decision if they think it’s right for them. Big or small, this is the core relationship that must be respected if you want live music to survive and it’s something I think about in Austin where the city styles itself the Live Music Capitol of the World.

So Chamber of Progress objects to state laws that confirm this license relationship, and that’s an important distinction. These laws confirm the reality of the true original property right, they don’t recreate an alternate reality out of whole cloth. The fact that it is even necessary to pass these laws belies the oligopoly power of StubHub & Co. 

But Chamber of Progress goes even further because the point of the report is to identify a villain. And here is where the fudging starts. They tell you “When a ticket is defined as a “license” rather than a property right, it gives venues and event organizers the power to revoke the license of any ticket that is resold.”

Not true. The artist has that right and delegates that right to the venues as part of the ticketing function. But even StubHub is leery of attacking artists directly so they devise this bizarre rhetorical construct of licensing vs. ownership in order to blame venues, and for what? Preventing scalpers from profiting from their scams and preventing resellers from profiting from their arbitrage. 

Bots and Scammers

This fallacy alone is really enough to refute the entire report, but wait, there’s more. There are two key foundations for the ticket reselling business at scale: bots and making a market for scammers to sell what they don’t own, aka speculative ticketing. They need bots because it allows scalpers to beat fans to tickets in quantity and they need spec ticketing because it allows them to sell a ticket that doesn’t even exist yet but for which there is demand.

Remember–bots are illegal. The Better Online Ticket Sales Act of 2016 sponsored by Senators Marsha Blackburn and Richard Blumenthal banned the use of bots for ticket sales in the US. The National Independent Talent Association asked the Federal Trade Commission to investigate open and notorious bot technologies on sale at the big ticket resellers convention:

Our organization recently attended the World Ticket Conference organized by the National Association of Ticket Brokers (NATB). At this event, we observed a sold-out exhibition hall filled with vendors selling and marketing products designed to bypass security measures for ticket purchases, in direct violation of the BOTS Act.

Realize, this isn’t a question of whether or not resellers profit from the use of bots on their platforms–the question is why aren’t people being prosecuted for violating the BOTS Act. But the Chamber of Progress wants you to believe there is something wrong with passing state laws to give state Attorneys General the power to prosecute these laws shoulder-to-shoulder with the overworked and under-resourced FTC.

Bills that purportedly claim to enhance transparency through speculative ticket bans, protect consumer rights through anti-bots legislation, or improve access through customer data sharing often contain hidden provisions that restrict competition and limit consumer choices. 

In other words, the report opposes banning speculative ticket sales–selling something you don’t own is already illegal, probably since the dawn of our legal systems–and opposes state anti-bots legislation–already illegal under the federal BOTS Act. This should tell you all you need to know.

It’s Just Business: Racketeering, Silicon Valley Style

The real story that goes unreported is that StubHub is currently being sued in a New York class action for violating the civil Racketeer Influenced and Corrupt Organizations laws in selling tickets to a UK football match without rights. They have managed to punt that case based on their one-sided adhesion contract requiring arbitration in their terms of service, but interestingly the federal judge overseeing the case has retained jurisdiction. Imagine the risk factor in the StubHub IPO prospectus about how they could be subject to the RICO laws.

I recently posted about a “model” ticketing legislation that some of these characters were trying to get adopted by ALEC (the conservative state lobbying operation) which I gather has been dropped since the old link to the model bill is dead. It looks to me like the Chamber report is a new offensive rising out of the ashes of the ALEC lobbying effort. 

“Progressives” Who Fail to Address Asymmetry between Big Tech and Artists are Not Progressives

So once again, our friends in Silicon Valley are trying to elbow their way into a place they are not wanted, not needed, and are poisonous all in the aid of making them even richer all under a miasma of crap about “reseller freedom.” Fortunately, the public is getting wise to their scams no matter how much they try to sell their oppressive tactics as some kind of freedom. If they want to really be progressive, they’d help artists establish a resale royalty so that we could share in the riches from their arbitrage in return for a right to resell our tickets. Don’t hold your breath.

As we’ve seen with their logical backflips in AI and now with ticketing, the Chamber of Progress may be a lot of things, but “progressive” they ain’t. Maybe we can help them find productive work in this season of hope.

[A version of this post first appeared on MusicTechPolicy.]

by thetrichordist

Stubhub & Co. Launch Stealth state-by-state legislative offensive strategy for Astroturf “Model” State Ticketing Laws

By Chris Castle

Yes, it’s kismet in the legislature–the sketchy ticket resellers are redoubling their efforts to normalize “speculative tickets.” They have found a willing partner in gaslighting with an organization called “ALEC”.

The American Legislative Exchange Council (hence “ALEC“) is a nonprofit organization that brings together private sector representatives and relatively conservative state legislators to draft (and pass) “model legislation” that pushes a particular narrative. (That private sector representation is led by Netchoice, aka, Big Tech.) Unlike other model legislation with a social benefit like say the Uniform Partnership Act, ALEC’s “model legislation” pushes a particular agenda. Examples would be “stand your ground” gun laws, Voter ID laws, and “right to work” laws.

Netchoice Members (Netchoice leads ALEC’s Private Enterprise Advisory Council)

ALEC’s many successfully-passed “model” laws are intended to be passed by state legislatures as-written. Like Al Capone’s green beer, it ain’t meant to be good it’s meant to be drunk. A cynic–not mentioning the names of any particular cynics–might say that the ALEC strategy is an end-run around federal legislation (like the fake library legislation that was shot down in New York). If ALEC can get a critical mass of states to pass one of their “model bills” as-drafted on any particular subject, then the need for federal legislation on that topic may become more muted. In fact, if federal legislation becomes inevitable, the ALEC model bills then provide guidance for federal legislation, or new federal legislation has to draft around the states that adopt the model bill.

So much for Justice Louis Brandeis’ concept of states as laboratories of democracy (New State Ice Co. v. Liebmann, 285 U.S. 262 (1932)), unless that lab belongs to Dr. Frankenstein. ALEC’s mission claims to promote principles of limited government, free markets, and federalism; I will leave you to decide if it’s more about checkbook federalism.

Ticketing Panel, Artist Rights Symposium 11/20/24, Washington DC
L-R: Chris Castle (Artist Rights Institute), Dr. David Lowery (Univ. of Georgia, Terry College of Business), Mala Sharma (Georgia Music Partners), Stephen Parker (National Independent Venue Association), Kevin Erickson (Future of Music Coalition)

Like so many of these bills, ALEC’s Live Event Ticketing Consumer Protection & Reform Act disguises its true objective with a bunch of gaslighting bromides that they evidently believe to be persuasive and then when you’re not looking they slip in the knife. Then when the knife is protruding from your back you discover the true purpose. I think this section of the bill is the true purpose:

This is an odd construct. The model bill starts out by requiring positive behavior of a primary seller (which would be the band on fan club sales or other direct to fan sales). That positive behavior immediately turns to using the ticket purchaser into an enforcer of the values beneficial to the ticket reseller. This is done by forcing a purchaser to be able to resell their ticket without regard to any restrictions placed on reselling by the artist. 

And you know that’s the intention because the section also requires there to be no maximum or minimum price. While the model bill doesn’t require any particular restriction on the platforms, it has enough in it that it can look like a consumer protection bill, but what it is really doing and apparently was designed to accomplish is eliminate an artist’s a ability to set prices.

ALEC is serious about violations of the act, including civil penalties. Their model ticketing legislation can be enforced by both the Federal Trade Commission and state attorneys general. Penalties can include fines of up to $15,000 per day of violation and $1,000 per event ticket advertised or sold. One problem with the model bill is that it appropriates jurisdiction already available to federal agencies like the FTC which is already failing to enforce the existing BOTS Act and other property theft laws.

The main targets seem to be Stubhub’s competitors like “Primary Ticket Merchants,” These are the original sellers of event tickets, such as event organizers or venues. “Secondary Ticket Merchants” may also be prosecuted as well as individuals.

We continue to study the proposed model legislation, but I tend to agree with Stephen Parker (NIVA) and Kevin Erickson (Future of Music) on my Artist Rights Institute panel in DC yesterday. The better model bill may be their bill passed in Maryland, recently signed into law by Maryland governor Wes More.

Key differences between Maryland and the ALEC bill I could spot:

  • Scope of Penalties: The Maryland bill specifies fines for speculative ticket sales, while the ALEC bill includes broader penalties for various violations.
  • Refund Policies: The Maryland bill explicitly requires refunds for counterfeit tickets, canceled events, or mismatched tickets, whereas the ALEC bill focuses more on transparency and restrictive practices.
  • Study on Resale Impact: The Maryland bill includes a provision for studying the impact of resale price caps, which is not present in the ALEC bill.

    It appears that the Live Event Ticketing Consumer Protection & Reform Act will be introduced at the ALEC meeting on December 5, 2024. This is where ALEC members, including state legislators and private sector representatives, will discuss and vote on the model policy. 

    Watch this space.
by Trichordist

Updates for Nov. 20 @ArtistRights Symposium at @AmericanU @KogodBiz in Washington DC

We are announcing the time schedule and speakers for the 4th annual Artist Rights Symposium on November 20. The symposium is supported by the Artist Rights Institute and was founded by Dr. David C. Lowery, Lecturer at the University of Georgia Terry College of Business.

This year the symposium is hosted in Washington, DC, by American University’s Kogod School of Business at American’s Constitution Hall, 4400 Massachusetts Avenue, NW, Washington, DC 20016.  We are also pleased to have a Kogod student presentation on speculative ticketing as part of the speaker lineup.

Admission is free, but please reserve a spot with Eventbrite, seating is limited!

The symposium starts at 8:30 am and ends with a reception at 4:30pm. The symposium will be recorded as an audiovisual presentation for distribution at a later date, but will not be live-streamed. If you attend, understand that you may be filmed in any audience shots, questions from the floor or still images. The symposium social media hashtag is #ArtistRightsKogod.

Schedule

8:30 — Doors open, networking coffee.

9:00-9:10 — Welcome remarks by David Marchick, Dean, Kogod School of Business

9:10-9:15 — Welcome remarks by Christian L. Castle, Esq., Director, Artist Rights Institute

9:15-10:15 — THE TROUBLE WITH TICKETS:  The Challenges of Ticket Resellers and Legislative Solutions:

Kevin Erickson, Director, Future of Music Coalition, Washington DC
Dr. David C. Lowery, Co-founder of Cracker and Camper Van Beethoven, University of Georgia
  Terry College of Business, Athens, Georgia
Stephen Parker, Executive Director, National Independent Venue Association, Washington DC
Mala Sharma, President, Georgia Music Partners, Atlanta, Georgia

Moderator:  Christian L. Castle, Esq., Director, Artist Rights Institute, Austin, Texas

10:15-10:30: NIVA Speculative Ticketing Project Presentation by Kogod students

10:30-10:45: Coffee break

10:45-11:00: OVERVIEW OF CURRENT ISSUES IN ARTIFICIAL INTELLIGENCE LITIGATION: Kevin Madigan, Vice President, Legal Policy and Copyright Counsel, Copyright Alliance

11:00-12 pm: SHOW ME THE CREATOR – Transparency Requirements for AI Technology:

Danielle Coffey, President & CEO, News Media Alliance, Arlington, Virginia
Dahvi Cohen, Legislative Assistant, U.S. Congressman Adam Schiff, Washington, DC
Ken Doroshow, Chief Legal Officer, Recording Industry Association of America, Washington DC 

Moderator: Linda Bloss-Baum, Director of the Kogod School of Business’s Business & Entertainment Program

12:00-12:30: Lunch break

12:30-1:30: Keynote: Graham Davies, President and CEO of the Digital Media Association, Washington DC.

1:30-1:45: Coffee break

1:45-2:45: CHICKEN AND EGG SANDWICH:  Bad Song Metadata, Unmatched Funds, KYC and What You Can Do About It

Richard James Burgess, MBE, President & CEO, American Association of Independent Music, New York
Helienne Lindvall, President, European Composer & Songwriter Alliance, London, England
Abby North, President, North Music Group, Los Angeles
Anjula Singh, Chief Financial Officer and Chief Operating Officer, SoundExchange, Washington DC

Moderator:  Christian L. Castle, Esq, Director, Artist Rights Institute, Austin, Texas

2:45-3:15: Reconvene across street to International Service Founders Room for concluding speakers and reception

3:15-3:30: OVERVIEW OF INTERNATIONAL ARTIFICIAL INTELLIGENCE LEGISLATION: George York, Senior Vice President International Policy from RIAA.

3:30-4:30: NAME, IMAGE AND LIKENESS RIGHTS IN THE AGE OF AI:  Current initiatives to protect creator rights and attribution

Jeffrey Bennett, General Counsel, SAG-AFTRA, Washington, DC
Jen Jacobsen, Executive Director, Artist Rights Alliance, Washington DC
Jalyce E. Mangum, Attorney-Advisor, U.S. Copyright Office, Washington DC

Moderator: John Simson, Program Director Emeritus, Business & Entertainment, Kogod School of Business, American University

4:30-5:30: Concluding remarks by Linda Bloss-Baum, Director of the Kogod School of Business’s Business & Entertainment Program and reception.

by Trichordist Editor

CHICKEN AND EGG SANDWICH:  Bad Song Metadata, Unmatched Funds, KYC and What You Can Do About It: Speaker Update for Nov. 20 @ArtistRights Symposium at @AmericanU @KogodBiz in Washington DC

We’re pleased to announce additional speakers for the 4th annual Artist Rights Symposium on November 20, this year hosted in Washington, DC, by American University’s Kogod School of Business at American’s Constitution Hall, 4400 Massachusetts Avenue, NW, Washington, DC 20016.  The symposium is also supported by the Artist Rights Institute and was founded by Dr. David Lowery, Lecturer at the University of Georgia Terry College of Business.

The Symposium has four panels and a lunchtime keynote. Panels will begin at 8:30 am and end by 5 pm, with lunch and refreshments. More details to follow. Contact the Artist Rights Institute for any questions.

Admission is free, but please reserve a spot with Eventbrite, seating is limited! (Eventbrite works best with Firefox)

Keynote: Graham Davies, President and CEO of the Digital Media Association, Washington DC.  Graham will speak around lunchtime.

We have confirmed speakers for another topic! 

CHICKEN AND EGG SANDWICH:  Bad Song Metadata, Unmatched Funds, KYC and What You Can Do About It

Richard James Burgess, MBE, President & CEO, American Association of Independent Music, New York
Helienne Lindvall, President, European Composer & Songwriter Alliance, London, England
Abby North, President, North Music Group, Los Angeles
Anjula Singh, Chief Financial Officer and Chief Operating Officer, SoundExchange, Washington DC

Moderator:  Christian L. Castle, Esq, Director, Artist Rights Institute, Austin, Texas

Previously confirmed panelists are:

SHOW ME THE CREATOR – Transparency Requirements for AI Technology:

Danielle Coffey, President & CEO, News Media Alliance, Arlington, Virginia
Dahvi Cohen, Legislative Assistant, U.S. Congressman Adam Schiff, Washington, DC
Ken Doroshow, Chief Legal Officer, Recording Industry Association of America, Washington DC 

Moderator: Linda Bloss-Baum, Director of the Kogod School of Business’s Business & Entertainment Program

THE TROUBLE WITH TICKETS:  The Economics and Challenges of Ticket Resellers and Legislative Solutions:

Kevin Erickson, Director, Future of Music Coalition, Washington DC
Dr. David C. Lowery, Co-founder of Cracker and Camper Van Beethoven, University of Georgia
  Terry College of Business, Athens, Georgia
Stephen Parker, Executive Director, National Independent Venue Association, Washington DC
Mala Sharma, President, Georgia Music Partners, Atlanta, Georgia

Moderator:  Christian L. Castle, Esq., Director, Artist Rights Institute, Austin, Texas

by Trichordist Editor

Save the Date:  4th Annual Artist Rights Symposium on Nov. 20 in Washington DC

We’re excited to announce that the 4th Annual Artist Rights Symposium will be held on November 20, this time in Washington DC.  We have some big surprises in store that will be announced soon with new partners and speaker lineups. 

The topics we plan on covering will be ticketing, song metadata and black box issues, creator rights of publicity and transparency for artificial intelligence.

Watch this space!

by Trichordist Editor

No Bots, No Billionaires: StubHub’s Grotesque IPO Demonstrates Another Artist Ripoff By Our Tech Oligarchs

By Chris Castle

StubHub is one of the richest thieves in the live ticket arbitrage market. The company is also a direct beneficiary of the U.S. government’s abysmal failure to enforce the Better Online Ticket Sales (BOTS) Act. Just like Spotify, another Goldman Sachs’ grifter, StubHub’s main objective is about to be a reality–a $16.5 billion initial public offering that will make its executives even richer. In case you were wondering where the value of all that touring was going, now you know. And StubHub’s IPO is yet another slap in the face to artists, not to mention the fans exploited by this tech oligarch.

Given the government’s newly acquired interest in the ticketing business as measured by the Department of Justice antitrust lawsuit against Live Nation, you would think that the DOJ and FTC would also step up to their obligation to enforce the BOTS Act. Remember, The BOTS Act, signed into law by President Obama in 2016, was designed to curb the use of automated software (bots) that purchase large quantities of event tickets, often within seconds of their release, to resell them at inflated prices through market makers like StubHub. It is so under-enforced that StubHub will no doubt be able to sneak out an IPO and slurp up money from the pubic trough before anyone knows better.

BOTS-driven Risk Factors

If it were ever enforced, the BOTS Act could have a significant financial downside for StubHub. I can’t wait to see the risk factors about bots in their IPO prospectus because let’s face it–if there were no bots and no boiler room operations, StubHub probably wouldn’t have much of a business. No bots, no billionaires. This one is not a theoretical antitrust case, this one is dealing with real-time massive consumer fraud about to be perpetuated and funded by the public financial markets.

The government’s enforcement of the BOTS Act is so poor that Senator Marsha Blackburn, a gifted legislator and one of the law’s co-authors, found it necessary to introduce even more legislation to try to get the FTC to do their job. The Mitigating Automated Internet Networks for (MAIN) Event Ticketing Act is a bill introduced in 2023 by Senators Blackburn and Ben Ray Luján that aims to give the FTC even fewer excuses not to enforce the BOTS Act. It would further the FTC’s consumer protection mission against IPO-driven ticket scalping. 

The sad truth is that the FTC didn’t take its first action to enforce the 2016 law until 2021. And that’s the only action it has ever taken. Yet we live in hope.

When the drafting sessions get started for the StubHub IPO, the underwriters really need to ask themselves how big a hit the company’s valuation will take when prosecutors figure out how dependent reseller platforms are on bots and market manipulation to extract hard-earned dollars from enthusiastic fans.

And it isn’t just bots by the way. MTP readers will recall our discussions about speculative ticketing which turns live event tickets into commodities to be traded like pork bellies–minus the consumer protection of the securities laws. Speculative ticketing is when a market maker like StubHub allows shady operators to offer the public a ticket that the seller doesn’t actually own and may not even exist. This is what happens when an artist has publicly announced a concert tour but has not yet put the tickets on sale. Speculative ticketing lets a scalper offer a ticket that doesn’t exist without properly disclosing that the seller doesn’t own the ticket being sold.

Now that just sounds criminal, doesn’t it? Selling something you don’t own?

StubHub RICO Suave

And speaking of criminal, StubHub is currently defending a civil RICO case in New York, accused of making a market for tickets it is not able to sell. The Kaiser v. StubHub class action lawsuit, filed on January 3, 2024, in the Supreme Court of the State of New York, alleges fraudulent ticket sales by StubHub, Inc. The plaintiff, Daniel J. Kaiser, a resident of Brooklyn, New York, claims that StubHub knowingly and repeatedly advertised and sold fraudulent tickets, thereby defrauding consumers and violating the Racketeer Influenced and Corrupt Organizations Act. 

What’s RICO? Civil RICO can be brought by private plaintiffs like Mr. Kaiser, but criminal RICO has to be brought by the government. Criminal RICO cases are initiated by government prosecutors, who must first obtain an indictment from a grand jury, followed by a criminal trial. While both civil and criminal RICO cases address racketeering activity, criminal RICO focuses on punishing and deterring criminal behavior, requiring a high standard of proof and resulting in severe penalties. Now there’s a risk factor. How’s this sound:

Potential Liability Under the Racketeer Influenced and Corrupt Organizations Act (RICO)

We are currently under investigation for potential violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). RICO is a federal law designed to combat organized crime by allowing for both criminal and civil penalties for acts performed as part of an ongoing criminal organization. The investigation is focused on allegations that certain activities conducted by our company and its affiliates may constitute a pattern of racketeering activity under RICO.

Uncertainty and Potential Impact on Business Operations

The outcome of this investigation is uncertain, and we cannot predict the timing, outcome, or potential impact on our business, financial condition, or results of operations. If we are found to have violated RICO, we could face severe penalties, including substantial fines, forfeiture of assets, and significant reputational damage. Additionally, a criminal conviction under RICO could result in imprisonment for our key executives, which would severely disrupt our management and operations.

Nothing says white collar crime like RICO. This kind of consumer fraud is happening on a massive scale, yet the FTC apparently doesn’t feel it rises to the level of an investigation priority. 

Making it Stop

In the face of this weak-kneed approach to law enforcement, artists could simply prohibit the resale of their concert tickets. If companies like StubHub keep trying, that very well may be the result, particularly with fan-to-fan solutions like Twickets competing with the likes of StubHub. How about this risk factor:

Restrictions on Ticket Resales Could Adversely Affect Our Business

Our business model relies significantly on the resale of concert tickets. However, many artists and event organizers have implemented policies that prohibit the resale of their tickets above the face price. These restrictions are designed to prevent ticket scalping and ensure that fans can purchase tickets at reasonable prices.

If artists or event organizers enforce these resale restrictions, it could limit our ability to sell tickets at a premium, which is a key component of our revenue generation. This could result in reduced profit margins and negatively impact our financial performance. Additionally, compliance with these restrictions may require us to implement new systems and processes, which could increase our operational costs.

Furthermore, any violation of these resale restrictions could lead to legal actions against us, including fines and penalties, and could damage our relationships with artists, event organizers, and customers. This could harm our reputation and result in a loss of business opportunities.

Investors should consider the potential impact of these resale restrictions on our business and financial condition before making an investment decision. There can be no assurance that we will not face additional restrictions or legal challenges related to ticket resales in the future, which could further adversely affect our business.

Underwriters be thinking, where do I sign up, right? Maybe not.

[This post previously appeared on MusicTechPolicy]

by Trichordist

Minnesota Bans Speculative Ticketing

There will be no pork bellies for StubHub in Prince Country. Minnesota Governor Tim Walz today will visit the iconic First Avenue venue in Prince Country to sign HF 1898, the state’s expansive new protection for fans, venues and artists against speculative ticketing abuse by the StubHubs of this world.

Readers will remember we have a big issue with speculative ticking (which we think is illegal securities trading like trading pork belly futures) so we are naturally quite pleased to see the Governor champion this legislation along with Minnesota Lieutenant Governor Peggy Flanagan plus State Senator Matt Klein and Representative Kelly Moller who co-authored the legislation. David and Mala Sharma testified against speculative ticketing in Georgia and Chris testified in Pennsylvania supporting that state’s proposed ban on the practice.

The key provisions of the new Minnesota law include prohibitions for:

  • directly or indirectly employing another person to wait in line to purchase tickets for the purpose of reselling the tickets if the practice is prohibited or if the venue has posted a policy prohibiting the practice
  • sell or offer to sell a ticket without first informing the person of the location of the venue and the ticket’s assigned seat, including but not limited to the seat number, row, and section number of the seat
  • advertise, offer for sale, or contract for the sale of a ticket before the ticket has been made available to the public, including via presale, without first obtaining permission from  the venue and having actual or constructive possession of the ticket, unless  the ticket reseller owns the ticket pursuant to a season ticket package purchased by the ticket  reseller. 
  • An operator, online ticket marketplace, or ticket reseller must not sell a ticket unless:
  • the ticket is in the possession or constructive possession of the operator, online ticket marketplace, or ticket reseller; or
  • the operator, online ticket marketplace, or ticket reseller has a written contract with the place of entertainment to obtain the ticket.

Good stuff, another step forward for the good guys.

by Trichordist Editor

I Grift Therefore I Am: Jared Polis Supports Silicon Valley’s “Speculative Tickets” Grift in Colorado

If you had a chance to watch the CLE panel that David Lowery, Mala Sharma and Chris Castle did for the University of Texas School of Law CLE last week, you’ll remember that the panel spent a good deal of time talking about “speculative tickets”. In fact, the title of the panel was “When is Ticketing Like Pork Bellies?” which was a direct reference to the similarities between speculative tickets and commodities futures contracts (like pork bellies).

The way this grift works is that somebody (or some thing in the case of bots) offers to sell a promise to sell a ticket in the future. The trick is that the ticket is not yet on sale anywhere but certain dates have been announced so it will be on sale. This could be any ticket, like a concert tour or a sporting event like the Super Bowl, the Rose Bowl, the World Series, and so on.

This is actually worse than a pork belly contract, because you know that the pork bellies exist when you buy the contract, you just don’t know the price. Market events could cause the price to fluctuate, but there will be some pork belly available somewhere. So to even call it a ticket is a misnomer. It’s a promise to sell something that may exist to get all Cartesian about it.

The grifter prices the speculative ticket promise at a premium, naturally. Some of them actually promise an actual seat, some promise a certain section or block of seats. They then list that ticket on a ticket reseller market place like Stubhub which was most definitely lobbying in force for the nonsensical Georgia ticketing bill that failed and which we assume is behind all these bills that keep popping up like syphilitic warts.

After the ticket is listed, a fan buys the speculative ticket promise and waits to get their actual tickets. And this is the really insidious part. As David noted on our panel, the grifter’s transaction is like covering on a naked short in short selling. Naked shorts are a very risky thing because unlike with speculative tickets, the market enforces the trade. You will pay on that bet unlike speculative tickets where there is no market enforcement except the occasional prosecution by a state attorney general or the FTC.

It seems impossible for the speculative ticket short seller to obtain the actual tickets without using bots. Plausible, perhaps, but seems very unlikely. Thanks to Senator Marsha Blackburn and Richard Blumenthal and their BOTS Act, federal law prohibits using bots, but again, it’s a science of getting caught. Senator Blackburn recently complained quite rightly that the FTC is not sufficiently enforcing the BOTS Act.

If the grifter cannot come up with the tickets, it is apparently very rare that the fan gets their money back. The fan will be offered all manner of things other than cash or maybe the grifter just slithers off into the night. Awful stuff, right?

The grifter is preying on the buyer’s love of the artist or the team (or the family member of the buyer) which is so great that they are willing to spend the money because they are made to believe they have a sure bet that will pay off with a real ticket. What kind of a heartless dickweed would do that to someone?

And here’s where Jared Polis comes in. If you’ve never heard of him, Jared Polis is the governor of Colorado. The Colorado legislature recently passed SB60 that would have joined other states in banning speculative tickets. But–on June 6, 2023 Jared Polis vetoed the bill.

So how did StubHub get to Jared Polis? Remember, Jared Polis is a 99er who made a fortune on the Internet before the Internet repriced itself. He also founded TechStars, so he’s a VC, too. So he knows all about grifters and could not give a rip about artists–as he has demonstrated many times. But his veto letter is worth reading because of its complete head up the ass approach to speculative tickets.

Polis goes through the “if you only had a brain” analysis saying there are some good things in SB60 which he could support but then there are the bad things which he, Polis the Lawmaker, simply cannot abide–like a prohibition on speculative tickets. Except he doesn’t call them speculative tickets like the Federal Trade Commission does, or the Attorney General of New York. Oh, no. In his veto letter, he calls them “innovative products that address existing market failures, such as online ticket waiting services“.

Wait a minute–are we talking about the same thing here?

The bill prohibits anyone that “Advertises, offers for sale, or contracts for the resale of a ticket unless the person has possession or constructive possession of the ticket and the person has an agreement with the rights holder.”

Somehow the bill language got transformed from protecting consumers against speculative ticketing to a whole new thing, an innovative product that a VC might invest in and even take that company public. Or could have in 1999.

Sure seems like Polis is in on the grift, don’t it? You can’t call it a conspiracy theory because there’s nothing theoretical about it.



by thetrichordist