The Trichordist

By Chris Castle

Yes, the sound you hear echoing from Silicon Valley is the sound of gnashing teeth and rending garments—some freaking guitar player did an end run around Big Tech’s brutal lobbying power and got to the President of the United States.  Don’t you just hate it when that happens?  Maybe not, but trust me, they really hate it because in those dark hours they don’t talk about at parties, they really hate us and think we are beneath them.  Remember that when you deal with YouTube and Spotify.

But to no avail.  President Trump signed an executive order yesterday that can only be described as taking a whole of government approach to enforcement of the BOTS Act.  As readers will recall, I have long said when it comes to StubHub, SeatGeek and their ilk, no bots, no billionaires.  It is hard to imagine a world where StubHub & Co.  are not basing their entire business model on the use of bots and other automated processes to snarf up tickets before the fans can get them.  This was also the subject of our ticketing panel at the 2024 Artist Rights Symposium in Washington, DC.

Remember, the BOTS Act, sponsored by Senator Marsha Blackburn and 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 was so under-enforced that until the Executive Order it was entirely possible that StubHub could have sneaked out an IPO to slurp up money from the pubic trough before anyone knows better.

The government’s enforcement of the BOTS Act is so poor that Senator Blackburn 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.

There are entire business lines built around furthering illegal ticket scalping that are so blatant they actually hold trade shows.  For example, NITO complained to the FTC that their investigators found multiple software platforms on the trade show floor  at a ticket brokers conference that are illegal under the BOTS Act and possibly under other laws such as Treasury Department regulations, financial crimes, wire fraud and the like.

The NITO FTC complaint details how multiple technology companies, many of whom exhibited at World Ticket Conference hosted by The National Association of Ticket Brokers in Nashville on July 24-26, 2024, provide tools that enable scalpers to circumvent ticket purchasing limits. These tools include sophisticated browser extensions, proxy services, and virtual credit card platforms designed to bypass security measures implemented by primary ticket sellers.

As is mentioned in the Executive Order, 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.   Which is why President Trump’s executive order is so critical in stopping these scoundrels.

Kid Rock apparently had a chance to present these issues to President Trump and was present at the signing ceremony for the Executive Order. He said:

First off thank you Mr. President because this has happened at lightning speed.  I want to make sure Alina Habba gets her credit too because I know she worked very hard in this but thank you for making this happen so quick.

Anyone who’s bought a concert ticket in the last decade, maybe 20 years, no matter what your politics are knows it is a conundrum.  You buy a ticket for $100 but by the time you check out it’s $170.  You don’t know what you were charged for, but more importantly these bots come in and get all the good tickets to your favorite shows you want to go to.  Then they’re relisted immediately for sometimes a four or five hundred percent markup—the artists don’t get that money!

Ultimately I think this is a great first step. I would love down the road if there be some legislation that we could actually put a cap on the resale of tickets.

Yes, folks, we may be onto something here.

The reason I say that the EO establishes a “whole of government” approach is because of what else is in the order.  The actual EO was published, and the press release on the White House site says this:

• The Order directs the Federal Trade Commission (FTC) to:
  • Work with the Attorney General to ensure that competition laws are appropriately enforced in the concert and entertainment industry.
  • Rigorously enforce the Better Online Ticket Sales (BOTS) Act and promote its enforcement by state consumer protection authorities.
  • Ensure price transparency at all stages of the ticket-purchase process, including the secondary ticketing market.
  • Evaluate and, if appropriate, take enforcement action to prevent unfair, deceptive, and anti-competitive conduct in the secondary ticketing market.
    
• The Order directs the Secretary of the Treasury and Attorney General to ensure that ticket scalpers are operating in full compliance with the Internal Revenue Code and other applicable law.
  
• Treasury, the Department of Justice, and the FTC will also deliver a report within 180 days summarizing actions taken to address the issue of unfair practices in the live concert and entertainment industry and recommend additional regulations or legislation needed to protect consumers in this industry.

In other words, the EO directs other Executive Branch agencies at the DOJ, FTC, Treasury to take enforcement seriously.  If the Department of Justice is involved, that could very well lead to enforcement of the BOTS Act’s criminal penalties.  And it’s kind of hard to have a StubHub IPO from prison although President Trump may want to add the Securities and Exchange Commission to the list of agencies he is calling into action.

In addition to fines, individuals convicted under the BOTS Act could face imprisonment for up to 1 year for a first offense. Repeat offenders may face longer prison sentences, depending on the nature of the violation and if there are aggravating factors involved (such as fraud or large-scale operations).  And remember, wire fraud is a common RICO predicate under the racketeering laws which is where I personally think this whole situation needs to go and go quickly. Remember, StubHub narrowly escaped a claim for civil RICO already.

So we shall see who is serious and who isn’t.  But I will say I’m hopeful. If you wanted to seriously go after actually solving the problem on the law enforcement side, this is how you would do it.

If you wanted to go after it on the property rights side, Kid Rock’s line about establishing a cap is how you would start.  The guy has clearly thought this through and we’re lucky that he has.  We’ll get around to speculative ticketing and taking out some of the other trash down the road if that’s even a problem after getting after bots.  But on property rights, let’s start with respecting the artist’s rights to set their own prices and have them followed instead of the current catastrophe.

The other take away from this is that Marsha was right—BOTS Act is probably enough law to handle the problem.  You just need to enforce it.

I always say you can’t get Silicon Valley to behave with fines alone because they print money due to the income transfer.  Prison, though, prison is the key that picks the lock.

[Editor Charlie sez: This post first appeared on MusicTechPolicy]