Does Ticketmaster Scalp its Own Tickets?

Is Ticketmaster deceitfully abusing its Verified Fan program to drive up prices?

Last October, Ticketmaster filed a lawsuit against Prestige Entertainment and Renaissance Ventures.  According to the Live Nation subsidiary, both companies had used bots to circumvent ticket selling rules.

The lawsuit came after both ticket brokers admitted to using bots to purchase tickets.  According to New York Attorney General Eric Schneiderman, Prestige and Renaissance would buy up tickets to gain a selling advantage.  By circumventing CAPTCHA technology, the ticket brokers had actually violated the Digital Millennium Copyright Act.

Once Schneiderman took both companies to court, they agreed to stop the practice.  Prestige and Renaissance agreed to a $4.2 million settlement.

In October, Ticketmaster had claimed that both ticket brokers had broken their agreement with Schneiderman.  Allegedly continuing the deceitful practice, Prestige and Renaissance drove down the price of theater play tickets, specifically those for Hamilton.

Now, Prestige and Renaissance have fought back.  According to the ticket brokers, Ticketmaster had actually created bots to drive down Hamilton prices.  The company then secretly distributed its own bots to drive down the play’s price.

Denying Ticketmaster’s claims, Prestige and Renaissance stated that the company’s market position abuse actually extends to the secondary market.

This practice doesn’t only apply to theater tickets, the brokers claim.  Resellers “purchase the best seats to the most popular shows…at a rate faster than a consumer can type.”  Prestige and Renaissance claim Ticketmaster “has full knowledge” that resellers and bots purchase tickets for shows across the US.  In fact, the company “knowingly and intentionally” chooses not to terminate or block these accounts.

But why does this happen?  According to the ticket brokers, because Ticketmaster actually benefits from scalping its own tickets to resellers.

“TM relies upon and reaps substantial profits from its sale of tickets to ticket resellers… TM encourages the use of its system by such resellers, whether or not those resellers use alleged ‘bots’, or other automated systems, or engage in other alleged violations of the TOU [Terms of Use].”

Going further, the ticket brokers explained how Ticketmaster games its own system.

“When TM sells a ticket to a reseller, it not only collects the full commission from that primary sale, but it has a significantly higher chance of that ticket being placed on one of its secondary ticket exchanges — after all, resale is what resellers do.”

Ticketmaster then secretly receives a second “double-dip” commission on the resale of that ticket.  The company allegedly floods its own resale exchange website with tickets at a substantially higher cost.

How do they do this?  Quite simple, actually.

Ticketmaster, not Prestige or Renaissance, provides automated programs to ticket resellers.  The software then purchases tickets from Ticketmaster and immediately posts them on its own secondary exchange site.  The practice includes sabotaging its own Verified Fan program in the process.

In the lawsuit, Prestige and Renaissance have filed six counterclaims against Ticketmaster.

First, the Live Nation subsidiary’s ticket purchasing software clearly violates the New York Arts and Cultural Affairs Law.

Second, Ticketmaster has committed acts of unfair competition, violating California Business and Professions Code Section 17200.

Third, the company has engaged in a conspiracy in its attempt to unreasonably restrict trade in the secondary ticket exchange market.  This violates the Sherman Act.

Fourth, in another violation of the Sherman Act, Ticketmaster’s practices show an intentional and unlawful maintenance of monopoly power.

Fifth, the company has violated California Business and Professional Code 16720, better known as the Cartwright Act.  This limits companies from restricting trades through price fixing, group boycotting, market division schemes, exclusive dealings, price discrimination, and tying.

Sixth, Ticketmaster has attempted to secure a monopoly contrary to public policy and not granted by the copyright office.

A spokesperson for the company has since responded to the allegations. Lambasting Prestige and Renaissance, Ticketmaster said,

“The claims made in this filing are patently false.  Ticketmaster in no way, shape or form supplies automated programs known as bots to give ticket resellers an advantage over real fans.  Ticketmaster has taken a strong stance against bots, has zero tolerance for their use, and cancels tickets that are purchased using them.  Prestige Entertainment is one of the country’s most notorious bot users, and these claims are a desperate attempt to shift the focus away from their illegal business model, which the court previously stated is built on a scheme to evade Ticketmaster’s policies for profit.”

The company may have a point. In the lawsuit – which you can read below – the brokers failed to provide proof to support their claims.

Unedited featured image by Brian Donovan (CC by 2.0)