UCLA
UCLA Entertainment Law Review
Title
Beyond the Bots: Ticked-Off Over Ticket Prices or The Eternal
Scamnation
Permalink
https://escholarship.org/uc/item/056242s2
Journal
UCLA Entertainment Law Review, 25(1)
ISSN
1073-2896
Author
Elefant, Sammi
Publication Date
2018
DOI
10.5070/LR8251039716
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Copyright 2018 by the author(s). All rights reserved unless otherwise
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1
BEYOND THE BOTS: TICKED-OFF OVER
TICKET PRICES OR THE ETERNAL
SCAMNATION?
Sammi Elefant
*
A
In 2016 alone, despite the passing of federal legislation banning its use,
automated ticket-buying software known as “ticket bots” attempted to purchase
ve billion tickets at a rate of ten thousand tickets per minute on Ticketmas-
ter’s website. The secondary market for tickets to live music, live theater, and
sporting matches is worth roughly $8 billion worldwide,
1
and so far, the prots
accrued by cyber-scalpers have proven valuable enough for violators to run the
risk of facing nes or criminal penalties legislation may impose.
It turns out that ticket bots are not the only problem contributing to
secondary-market resale and price ination. Industry insiders such as artists,
managers, and producers, have a storied history of reducing the number of tick-
ets actually made available to the general public. In some instances, less than
half of available tickets for concert stadium tours have been put on sale.
Courts have struggled to protect public interests against monopolization
of the free market. They have often employed a “rational basis” test to defend
laws prohibitive of ticket resales, including anti-scalping measures. However,
with the advent of e-commerce technology, cyber-scalping brings jurisdictional
and identication issues to the forefront.
This Article suggests that current federal legislation should be amended
to ban industry insider hold-back practices and the internal resale of tickets
at inated prices, thus making more tickets available for public sale at face
value. This Article further argues for the implementation of non-transferrable
paperless ticketing procedures claiming the already proven benets of such
procedures signicantly outweigh minor inconveniences to the consumer.
Lastly, this Article explores the likely effects of moving the sale and
purchase of tickets onto an open-source blockchain that the public can par-
ticipate in on a global scale. The golden ticket here is that such blockchain
technology does away with the need for a central database controlled by a
ticket-sale platform vulnerable to scalpers. Instead, blockchain constitutes a
* J.D., Suffolk University Law School, 2018; B.S. & B.A., Emerson College, 2015. Sammi
Elefant can be contacted at [email protected].
1 All dollar amounts are in U.S. dollars unless otherwise indicated.
© 2018 Sammi Elefant. All rights reserved.
2 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
decentralized transaction platform that removes scalpers from the equation
entirely; tickets exist as digital assets that cannot be transferred outside of the
blockchain, rendering ticketing transactions virtually impervious to scalpers
and free of the inammatory forces cyber scalping otherwise superimposes on
the marketplace.
T C
I .................................................................................................2
I. H: O W T B .................................. 7
A. Tickets as Licenses and the Right to Exclude Patrons ................7
B. The Birth of an Industry: Scalping Finds Fertile Ground on
Broadway ........................................................................................9
II. T T I: N Y B M S .... 12
III. L E C C-S ..............................20
A. State Regulation Before the BOTS Act ......................................20
B. Federal Regulation and Legislative Enforcement .....................21
IV. S O T ......................................................27
V. P ............................................................................................30
A. Enhancing the BOTS Act ............................................................30
B. The Non-Transferrable Paperless Ticket Debate ......................33
C. Marketplace Restructuring With Dynamic Pricing ...................35
D. The Promises of Blockchain .......................................................37
C .................................................................................................. 40
I
As U2 was accepting their third award of the evening at the 2005 Grammy
Awards, drummer Larry Mullen used the stage to apologize to the band’s
fans.
2
“Due to circumstances beyond our control, a lot of our long-suffering
fans...didn’t get tickets [to our tour] and I’d like to take this opportunity on
behalf of the band to apologize for that.”
3
Why were loyal fans unable to pur-
chase tickets?
4
The simple answer: Kenneth Lowson.
5
2 James Montgomery with John Norris, U2 Working On How To Dismantle A Tick-
et-Scalping Bomb, MTV N (Feb. 16, 2005), http://www.mtv.com/news/1497040/u2-
working-on-how-to-dismantle-a-ticket-scalping-bomb [https://perma.cc/TJ42-MMPW]
(describing the band as once again apologizing for the way tickets had been distributed).
3 Id.
4 Jason Koebler, The Man Who Broke Ticketmaster, M (Feb. 10, 2017), https://
motherboard.vice.com/en_us/article/mgxqb8/the-man-who-broke-ticketmaster (outlin-
ing the career of Kenneth Lowson and his effects on the ticketing industry).
5 Id. (showing the vast and permanent effects of Lowson’s scalping business).
2018] BEYOND THE BOTS 3
Lowson, the former CEO of Wiseguy Tickets,
6
earned his title as the
most successful ticket scalper
7
in recent history for buying nearly all general
admission tickets to all types of live entertainment events and reselling them
at hugely inated prices.
8
He is further credited with creating the rst ever
automated software known today as “ticket bots.”
9
In an interview, Lowson
recalled the U2 tour: “They apologized on the Grammys because of us, and
then they had a second round of sales to make up for it. We took all the good
tickets in that second round too.”
10
Five years later, Lowson would nd himself at the center of a legal dis-
pute, with forty-two counts of wire fraud charges against him and two other
colleagues in the seminal scalping case U.S. v. Lowson.
11
The case ultimately
concluded with a plea deal that dropped all wire fraud charges.
12
Lowson and
his colleagues were charged with one count of conspiracy to commit wire fraud,
narrowly avoiding a conviction that could have carried a prison sentence of up
to twenty years.
13
Even though Wiseguy Tickets has since folded, the initial sale price of
live-event tickets has increased exponentially over the past few years.
14
Wary
of losing markup potential to scalpers, primary ticket vendors have hiked
the initial price of tickets for live events to the point where most consumers
can no longer afford to purchase them at face value.
15
Scalpers remain the
primary reason for price surges.
16
Indeed, scalpers have proted off of live
6 U.S. v. Lowson, WL (D.N.J. Oct. 12, 2010) (charging Lowson and Wiseguy
Tickets as “knowingly and willfully” engaging in fraud).
7 See Scalper, C E D (Online ed. 2016), https://dictionary.cam-
bridge.org/us/dictionary/english/scalper (dening a scalper as a person who sells tickets
at an increased price without ofcial permission).
8 See Koebler, supra note 4 (characterizing Lowson as the man who broke Ticketmaster).
9 Id. (crediting Lowson with writing the software that automated ticket purchases in mass
amounts); see also Lowson, WL at *2 (reporting Lowson as the creator of
CAPTCHA Bots that circumvent security walls).
10 See Koebler, supra note 4.
11 See Lowson, WL .
12 See id.
13 See Koebler, supra note 4 (discussing the outcome of the case).
14 See Marie Connolly & Alan B. Krueger, Rockonomics: The Economics of Popular Mu-
sic 13 (Nat’l Bureau of Econ. Research, Working Paper No. 11282, 2005) (concluding
that concert ticket prices rose at a greater rate than ination).
15 See Catherine Valenti, Concert Ticket Prices Rise, Sales Fall, ABC N (July 9, 2015),
http://abcnews.go.com/Business/story?id=87981&page=1 [https://perma.cc/59HV-
UER4] (exhibiting how the music industry began charging premium prices for the best
seats as they were losing that prot from scalpers).
16 See James J. Atkinson, The Economics of Ticket Scalping, JA. (May
3, 2004), http://jimmyatkinson.com/papers/the-economics-of-ticket-scalping [https://
perma.cc/C97B-47NN] (using Paul Krugman’s three marketing theories to show how
scalpers impact the market).
4 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
entertainment since the 1800s.
17
The rst recorded account of ticket scalping
was in a letter, dated in the year 1850, from opera singer Jenny Lind
18
to her
promoter P.T. Barnum
19
during the rst leg of her New York tour.
20
In that
letter she wrote:
You know that I have always been in favor of having lower prices to my
concerts, and you have invariably expressed your willingness to them so far
as could safely be done and at the same time prevent speculators
21
from
taking advantage of the reduction. Will you permit me to suggest that
Tripler Hall is immensely large and that with proper precaution you might
certainly avoid selling tickets to speculators and at the same time put the
prices within reach of the people at large.
22
Lind’s advocacy for her fans reects just how difcult it was to combat
scalpers, even at a time when it was easier to identify them as they were phys-
ically present outside the venue.
23
Those responsible for fueling the secondary
market were not just individuals, but also multiple networks of people, includ-
ing ushers and theater managers who would enjoy a cut of the markup obtained
by the scalpers to whom they siphoned off tickets purchased from primary ven-
dors.
24
New York City theater manager Harry Miner explained the inltration:
“I don’t mean to say that it is customary for managers to take out nearly the
whole of their orchestra and give it to the speculator in the lobby, but I have
seen it done on several occasions.”
25
Scalping proved to be a viable business,
17 See James Anthony Devine, Ticket Scalping in the Late 1800s and the early 2000s—
Much has Changed, Much is the Same, S H L. S. S S 210
(2014) (providing an early history of the ticket scalping business).
18 See G D S, J L T S N 11 (1962) (detailing
the life of one of the most highly regarded singers in the nineteenth century).
19 See P.T. B, T L P.T. B (1888) (narrating the life of showman and
promoter P.T. Barnum).
20 See K S, T S: A A H, – 3 (2006) (show-
ing a transcript of the letter from Jenny Lind to P.T. Barnum).
21 See Speculation, O E D, https://www.etymonline.com/word/
speculation (last visited Mar. 23, 2018) (dating the term ‘speculation’ back to 1774 and
dening it as “buying and selling in search of prot from rise and fall of market value”).
22 See S, supra note 20 (quoting Lind’s letter to Barnum).
23 See James Anthony Devine, Student Paper, Ticket Scalping in the Late 1800s and the early
2000s—Much has Changed, Much is the Same, S H L. S. S S
(2014) (discussing the lack of regulation and enforcement against ticket scalpers).
24 See id. (explaining that theater managers and secondary sellers were working as allies
to withhold seats and pass them onto scalpers for a cut of the prot).
25 See Dividing The Pudding, N.Y. T at 5 (Dec. 14, 1883 at 5), https://timesmachine.
nytimes.com/timesmachine/1883/12/14/issue.html?action=click&contentCollection=-
Archives&module =ArticleEndCTA®ion=ArchiveBody&pgtype=article [https://per-
ma.cc/9GKT-2YU3] (observing that theater managers often conduct business with the
scalpers). These networks also included hotels who received advanced tickets for out of
town guests, grocers who received advanced tickets in exchange for advertising, students,
and even artists themselves. Id. See also M R, R D: T B
F B 6 (2015) (detailing “ice” as the term for ticket corruption in New York
2018] BEYOND THE BOTS 5
and would continue to ourish with the creation of the internet and the prolif-
eration of online transactions.
As internet usage became mainstream, broadband access and technolog-
ical developments created an online marketplace, giving scalpers a more direct
target.
26
Arguably, the main cause of resale market growth was the implementa-
tion of the computerized ticket-buying software known as “ticket bots,” which
Lowson himself pioneered.
27
Ticket bots are hawkish computer programs that
thwart security walls on authorized internet sale sites such as Ticketmaster,
AXS, and Telecharge.
28
This software enables scalpers to purchase large num-
bers of tickets within seconds of the time they are made available to the public
for purchase.
29
Through what amounts to unauthorized priority buyouts, the
ticket bots leave the average consumer with no other option but to purchase
tickets on the secondary market for potentially up to ten times face value.
30
In an effort to ght monopolization by the secondary ticket market, fteen
states have either passed or proposed legislation to criminalize or impose nes
for the use of ticket-bot software and to offer a civil remedy to those who have
been injured by its use.
31
As live entertainment productions often tour across
theatres, particularly on Broadway). This is what Harry Miner was describing. Some the-
ater historians argue that ticket corruption dates as far back to Ancient Athens, where fans
had to bribe someone to get a ticket to Medea’s sold-out run at the Theater of Dionysus. Id.
26 See Zak Guzman, The Surreptitious Rise of the Online Scalper, CNBC (Mar. 4, 2015,),
[https://perma.cc/JFG3-NQ3D] (explaining how new software developments make
scalping more accessible).
27 See Jim Zarroli, Can’t Buy A Ticket To That Concert You Want To See? Blame Bots,
NPR (Jan. 28, 2016) [https://perma.cc/C7ZJ-NV8V] (explaining how scalpers use tech-
nology to buy mass amounts of tickets instantaneously).
28 See Alexis Kramer, Pushy Ticket-Buying Bots Feel Heat From Federal, State Ofcials,
B BNA D R F E, Mar. 26, 2015 (showing how bot soft-
ware simulate the actions of human beings).
29 See id. at 1 (detailing the capabilities of ticket bots).
30 See Josh Corneld, Lawmaker Fighting Ticket Freeze-Out in the Name of Springsteen,
A P: T B S (Aug. 21, 2016) [https://perma.cc/ZW9Y-4V58] (high-
lighting the investigation conducted by Attorney General Eric Schneiderman’s ofce
that found third-party brokers resell at average margins of 49 percent over face value).
31 See Alexis Kramer supra note 28 (discussing the laws passed by different states); see
also C. B. & P. §22505.5 (2015) (making it unlawful to use computerized soft-
ware to circumvent security measures); C. R. S. §6-1-720(1)(a) (2009) (provid-
ing the increase in civil penalties recoverable by the State with regard to deceptive trade
practice concerning online ticket sales); F. S. §817.36(5) (2016) (concerning the au-
thorized resale of tickets for not more than one dollar above admission price charged);
M. C A., C. L §14-4002 (2014) (lacking specic provision for online ticket
resale); M. S. §609.806 (2016) (recognizing the use of ticket bot buying software
as a misdemeanor); O. R. S. §646A.115(2) (2010) (making it unlawful for a per-
son to intentionally use or sell software that bypasses security measures established to
ensure equitable distribution of tickets); T. C A. §39-17-1104(b) (2014) (pun-
ishing conduct designed to interfere with operations of ticket sellers by ne); V. S.
A. . 9, §4190(a) (2009) (constraining interference with internet ticket sales).
6 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
state lines, lack of interstate enforcement has, however, diminished the effective-
ness of these statutes.
32
At the federal level, the Better Online Ticket Sales Act
33
(BOTS Act) appeared before Congress on February 4, 2015, and was signed
into law on December 14, 2016.
34
The BOTS Act prohibits the circumvention of
security software and access control systems used to enforce limits on ticket pur-
chases.
35
Specically, it sanctions the imposition of online purchasing rules, such
as per-person purchase limits, set by ticket vending websites when public events
have an attendance capacity that exceeds two hundred persons.
36
Further, the
BOTS Act prohibits any sale of or offer to sell in interstate commerce
37
event
tickets obtained using circumvention methods.
38
In addition to outlawing the
unauthorized use of circumvention software,
39
the BOTS Act also grants the Fed-
eral Trade Commission (FTC)
40
with the authority to severely ne
41
violators.
42
This Article will analyze the BOTS Act’s effectiveness as the most com-
prehensive federal law to date working to protect consumers and maintain the
economic integrity of the live-event ticket sales market. It will provide insight
and opinion as to whether Congress should consider amending the BOTS Act
to prohibit primary vendors and artists from engaging in common hold-back
practices. Part I will discuss the history of live-entertainment ticket sales as well
as the legislature’s past attempts to regulate the xed game of ticketing. Part
32 See Bryce Cashman, New Bill Tackles Ticket-Buying Bots, F M C,
Apr. 8, 2015, [archived at https://perma.cc/7SPE-ZBNW] (showing that supporters of
legislation are ne with some forms of ticket bots and only want to monopolize the
secondary market); see also Eliot Van Buskirk, Artists, Venues, and Fans Are Respon-
sible for Inating Ticket Prices, Not Scalpers, B I, Apr. 5, 2011, [archived
at https://perma.cc/9RYZ-4MG6] (portraying artists as responsible for the secondary
market).
33 See BOTS A, H.R. 708, 114th Cong. (2016) (outlining violations that will be treated as
deceptive and unfair acts under the Federal Trade Commission).
34 See id. (The bill passed the Senate and House quickly after much support by prominent
industry inuencers).
35 See BOTS A S.3183, 114th Cong. (2016) (outlining the effects of the bill).
36 Id. (describing what activities shall be deemed unlawful).
37 See Commerce, US L, https://denitions.uslegal.com/i/interstate-commerce (den-
ing interstate commerce as “purchase, sale or exchange of commodities, transportation
of people, money or goods, and navigation of waters between different states”).
38 See BOTS A S.3183, 114th Cong. (2016) (citing violation if the seller participated in,
had the ability to control, or should have known about the violation).
39 See Shawntaye Hopkins, Blame it on the Bots: States Act To Ban Ticket-Buying Software,
T C S G, Mar. 14, 2016, [archived at https://perma.cc/2PRY-
AS9J] (discussing how the bot technology, also known as circumvention software, by-
passes online security measures).
40 See F.T.C Act, 15 U.S.C. §§41–58 (preventing businesses from engaging in deceptive and
unfair practices that harm consumers).
41 See id. (detailing the range of nes violators may be subject to).
42 See BOTS A S.3183, 114th Cong. (2016) (granting power under the FTC to enforce
criminal punishment against violations).
2018] BEYOND THE BOTS 7
II will explore the atypical market structure prevalent in the ticketing indus-
try, discussing the effects of e-commerce on price oors, premium levels, and
motives for price uctuations. Part III will examine past legislative attempts
at both the state and federal levels. It will then discuss the current federal law,
the BOTS Act, which aims to deter cyber scalpers and ticket bot software. Part
IV will present proposals for the implementation of non-transferable paperless
ticketing procedures and will contend that the benet to consumers signi-
cantly outweighs any minor inconveniences such procedures may cause. It will
also consider the effects of a dynamic pricing structure to keep ticket prices
uid and in the range of face value. Finally, it will examine the potential for
moving ticketing transactions onto a blockchain to help eliminate interfer-
ence by scalpers. Lastly, this Article will predict the inability of the BOTS
Act, as it currently stands, to remedy the cyber-scalping epidemic. It will show
that a much more comprehensive approach is necessary to effectively stimu-
late cooperation by all key stakeholders, an approach that incentivizes industry
insiders to be accountable for their pre-sale and ticket hold-back practices.
I. H: O W T B
A. Tickets as Licenses and the Right to Exclude Patrons
Many consumers are unaware of their legal rights when they purchase a
ticket to a live entertainment event.
43
Dating back to 1866, courts have held that
an admission ticket to an entertainment event is a “freely revocable license.”
44
While technology has changed the ticketing business, modern courts still con-
sider such a ticket—whether it be to a concert, sporting match, or live theater
performance—a freely revocable license.
45
A revocable license provides the
licensee with a right to temporary possession granted by the licensor or prop-
erty owner.
46
This means the party granting the license, a primary vendor, is
43 See Ticketmaster Purchase Policy, T, [archived at https://perma.
cc/5SMU-NQJR] (delineating the rights and limitations granted to consumers upon
purchase of tickets).
44 Purcell v. Daly, 19 Abb. N. Cas. 301, 304 (1886) citing Mendenhall v. Klinch, 51 N.Y 26
(holding that “A theatre ticket is simply a license to the party presenting the same to
witness a performance to be given at a certain time, and being a license personal in its
character can be revoked.”); see also Aaron v. Ward, 203 N.Y. 351, 355 (1911) (nding
that a proprietor has the right to revoke the license even when the ticket holder had
already gained admission through the ticket); see also Adam Vaccaro, From Concert
Goers to Big Business Concerns Inside the Fight Over Paperless Tickets, B.C,
Jan. 10, 2015, [archived at https://perma.cc/28WK-QVE8] (examining the debate over
paperless tickets as non-transferrable licenses).
45 Yarde Metals, Inc. v. New Eng. Patriots P’shp, 64 Mass. App. Ct. 656, 658 (2005) (discussing
how purchasing a ticket to an event typically creates a revocable license and revocation of
a license may constitute a breach in contract giving rise to an action for damages).
46 See Gregory M. Stein, Will Ticket Scalpers Meet the Same Fate As Spinal Tap Drum-
mers? The Sale and Resale of Concert and Sports Tickets, 42 P. L. R. 1, 24 (showing
that “the license gives the holder the right not to be considered a trespasser while she
8 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
able to restrict the licensee, a ticket purchaser, from assigning his or her limited
property rights in the ticket to someone else.
47
Those who oppose this interpre-
tation argue that tickets are much more than a mere revocable license.
48
These
critics view tickets as personal property.
49
That is, when you buy a ticket, you
own it and all the rights it affords,
50
a concept that is at the very foundation of
our current legal and economic systems.
51
It has long been held a fundamental principle of property law to pro-
tect the rights of consenting parties, those who voluntarily enter a legally
valid agreement for the conveyance of property, by allowing them to transfer
their property freely while also permitting them to impose restrictions on that
alienability
52
as they see t.
53
This protection, common in transactions such
as assignments and leases, is signicantly more limited for licenses.
54, 55
The
debate over whether a ticket should be considered a license or personal prop-
erty is usually resolved by the terms and conditions found on the back of the
ticket itself.
56
For example, a Broadway Across America (BAA)
57
ticket states
occupies the space”).
47 See Anastasia Boden, Are Justin Bieber Tickets Property? P. L F.: L
B, Apr. 26, 2013, [archived at https://perma.cc/BM9E-TJPC] (discussing licenses as
an extremely limited right because they are non-assignable and freely revocable).
48 See Mark J. Perry, Ticket Sales A Matter of Property Rights, M C. P.
P’, Apr. 22, 2014 (arguing that ticket scalping is “nothing more than a voluntary
market transaction between two consenting parties”); see also Hannah Karp, Scalpers
Beware: New Laws Redene What A Ticket Is, W S. J., Apr. 26, 2013, (discussing the
ongoing battle between promoters and resale websites like StubHub). StubHub argues
that tickets are a personal property right until the ticketholder steps foot into the venue
at which point it becomes a revocable license. Id. StubHub further argues because
ticketholders own that right they should be able to re-sell the tickets. Id.
49 See Mark J. Perry, Ticket Sales A Matter of Property Rights, M C. P.
P’, Apr. 22, 2014, (arguing that scalping is nothing more than “a voluntary market
transaction between two consenting parties”).
50 See id. (arguing that consumers have the right to do what they wish with their personal
property).
51 See id. (discussing the interest in regarding a ticket as personal property rather than a
license).
52 See Alienable, B’ L D (2nd ed. 1910) (dening “alienability” as the
lawful ability to transfer property or rights to another).
53 See generally, E H. R et al., F O M P L
(Found. Press, 6th ed. 2011) (providing the scope of protection for personal property
rights and why it is important to enforce such protections).
54 See id. (dening a license as “a personal revocable and unassignable permission to use
the property without possessing any interest in it”).
55 See id. (showing that the law allows temporary rights to be conferred to do some act—
i.e. transfer a ticket—without which such authorization would be illegal).
56 Broadway Across America Standard Terms and Conditions, T J G O., Sept.
2016, [archived at https://perma.cc/3CUY-PTT2] (stating the terms ticket holders must
adhere to and the rights the venue has in revoking tickets from ticketholders).
57 See Broadway Across America, B. [https://perma.cc/Q53Q-N86R] (portraying
2018] BEYOND THE BOTS 9
on its back, “[t]ickets are personal licenses revocable at the sole discretion of
BAA...with or without cause, including without limitation...as determined
by the BAA in its sole discretion.”
58
Courts have held, in a series of decisions
known as “The Ticket Cases,” that the terms and conditions on tickets are bind-
ing whether or not a ticket user has actually read them.
59
Using the ticket,
the courts have noted, is analogous to signing a contract effectively accept-
ing the terms.
60
B. The Birth of an Industry: Scalping Finds Fertile Ground on Broadway
It is reported that Joseph Siegrist
61
began New York’s secondary ticket
market.
62
With no legislation deterring scalpers in the 1800s and no explicit
terms and conditions printed on tickets themselves, self-policing efforts
surfaced in the wake of frustrated fans’ growing concerns about the inltra-
tion of scalpers.
63
Theaters began experimenting with different strategies to
combat ticket scalping.
64
One of the many tactics deployed included the use
of “spotters,”
65
people tasked with watching for and blacklisting anyone pur-
chasing a “speculated”
66
ticket and then denying such persons entrance to the
show.
67
This effort inevitably led to many confrontations between ticket hold-
ers attempting to assert their alleged rights and theater ushers attempting to
enforce sales on the primary market only.
68
BAA as a presenter and producer of live theatrical events since 1982).
58 See Broadway Accorss America Standard Terms and Conditions supra note 56 (provid-
ing the language found on the back of the ticket).
59 See Parker v. The South Eastern Railway Co. 2 CPD 416 (1877) (holding a reasonable
person test is to be the standard in determining whether the terms are binding). This
became known as the exclusion clause in contract law. Id.
60 Id.
61 See K S, T S: A A H, – 4 (2006) (citing
an 1870 police crackdown that identied Siegrist as the originator of the theatre ticket
scalping business).
62 Id. (reporting that Siegrist was a ticket speculator for over thirty years and could always
be found in front of the Academy of Music).
63 James Anthony Devine, Student Paper, Ticket Scalping in the Late 1800s and the early
2000s—Much has Changed, Much is the Same, S H L. S. S S-
(2014) (discussing the legislative history of ticket scalping dating back to the
1800s).
64 Id. (outlining the different methodologies theatres attempted to employ in deterring
scalpers).
65 Id. at 4 (describing “spotters” as people who observed consumers buying scalped tickets
outside the theatre and later deny them entrance).
66 Id.
67 Devine, supra note 63 (arguing that spotters were effective as ticket speculators often
stood directly outside the theatres and were easy to catch).
68 K S, T S: A A H, – 4 (2006) (referenc-
ing an 1870s N.Y. T article discussing different tactics to deter scalpers).
10 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
Another anti-scalper method employed by theaters was to impose a
“limits per person” regulation, which restricted the number of tickets a con-
sumer could purchase.
69
However, this proved ineffective given the use of
proxies—agents who would help scalpers circumvent measures by posing as
genuine consumers.
70
Other preventative measures included complex regis-
tration systems
71
and direct competition, which took the form of authorizing
theater employees to stand out on the sidewalks and compete with scalpers by
offering tickets at the original face value price.
72
In 1860, theaters also exper-
imented with auction systems,
73
though these auctions quickly dissolved once
raided by scalpers who would place bids.
74
In 1963, David Clurman, special assistant to then-New York State Attor-
ney General Louis J. Lefkowitz, began an investigation on the nancing of
Broadway shows after receiving a tip from a private investor.
75
According to
the tipster, investors had no idea where their money went—sometimes the
money backed the productions the investor wanted to support, but other times
the money was funneled into shows the investor did not even know about,
or worse, used to nance a producer’s personal wish list.
76
Clurman even-
tually discovered that nancial disclosure documents were non-existent on
Broadway, and angel investors, enamored of the glamorous Great White Way,
accepted whatever nancial documents and records the producers made avail-
able to them.
77
Early in the investigation, Morris Ernst, founder of the American Civil
Liberties Union, invited Clurman to his apartment for an informal meeting on
69 See The Booth-Barrett Season—An Effort To Prohibit Speculation In Tickets In Chica-
go, N.Y. T, at 1 (Sept. 29, 1887) (describing efforts theatres made to keep tickets out
of the hands of scalpers and detailing that “no stranger not vouched for as wanting the
tickets for legitimate purposes was sold more than four seats for each evening”). The
article also provides an ordinance against ticket scalping that was introduced in front
of the Chicago City Council. Id. The ordinance made “selling or buying, with intent to
sell, either on the street or at any place save the regularly appointed ofce of a ticket
or tickets to any theatre or place of amusement, a misdemeanor punishable with a ne
ranging from $20 to $200.” Id.
70 Id. (describing the use of proxies acting as consumers enabling the scalper to work
around the imposed purchase limit).
71 S, supra note 68 at 27 (describing a 5
th
Avenue theater manager in New York who
would write down a purchaser’s name and seat number on the ticket and in a book—
generating two separate records). When patrons arrived for a performance, the two
records were compared requiring extra box ofce staff and lobby ushers. Id.
72 Id. at 25 (outlining the different stratagems attempted by theatres to curb scalping).
73 Id. (describing tickets being sold at auctions so as not to give scalpers too much of an
opportunity). The auctions capped the number of tickets at ten for a single bidder. Id.
74 Id. (detailing the reasons why each self-policing attempt was essentially ineffective).
75 M R, R D: T B F B 2 (2015) (describing the
beginning of the investigation into scalping on Broadway).
76 Id. (delineating the many different ways an investor’s money was used).
77 Id. (comparing Broadway investors to slot machine players in Vegas).
2018] BEYOND THE BOTS 11
the corrupt nancial practices of Broadway.
78
Clurman learned that box ofce
operators were incentivized to sell tickets to brokers at inated prices because
they reaped the benets of “ice,” the term used to describe ticket corruption
on Broadway.
79
Hayward told Clurman that he had once called the box ofce
of one of his own shows to get tickets only to be told that the show was sold
out.
80
When he arrived at the theater, entire rows were empty—the brokers
had not been able to sell all of their tickets.
81
It was now clear to Clurman that
ticket scalping and misuse of investor money were out of control on Broad-
way. Anyone with access to tickets could get a cut of the “ice”: Theater owners,
general managers, producers, writers, directors, designers, and even actors were
getting in on the money.
82
The Shubert Organization controlled seventeen of Broadway’s most
protable and respected theaters at the time of the investigation, and the com-
pany was later found to have centralized the black market in tickets.
83
Above
the famed Sardi’s restaurant was room 504, mission control for brokers to buy
tickets to shows in Shubert theaters. Clurman discovered that several Shu-
bert employees were collecting hundreds of thousands of dollars, and possibly
millions, annually without reporting any of the money to the Internal Reve-
nue Service.
84
At a two-day public hearing, state investigators disclosed widespread
bribery of producers and theatrical employees, as well as the existence of a
black market in theater tickets that netted about ten million dollars annually.
85
The investigation culminated in a three-bill package proposed by Attorney
General Lefkowitz to end loose accounting practices, kickbacks, and scalping
on Broadway.
86
Of the three bills, only two passed.
87
The rst bill required
every producer to clear any nancial offering for an investment in a show
78 Id. at 5. World-class artists and businesspeople including Leland Hayward, Gilbert Mill-
er, Roger Stevens, Dickie Moore, and Richard Rodgers, were in attendance. The biggest
discovery for Clurman that night was “ice,” the industry term for ticket corruption. No
one at the meeting was able to say for sure how much “ice” there was—but the biggest
names in the theater knew a lot of the money was being pocketed by people who had
nothing to do with the creation of any given Broadway show. Id.
79 Id.
80 Id.
81 M R, R D: T B F B 2 (2015).
82 Id.
83 Id.
84 Id.
85 Milton Esterow, Lefkowitz’s Aide Says Ice Is Back, NY T (Apr. 28, 1964), https://
www.nytimes.com/1964/04/28/lefkowitzs-aide-says-ice-is-back.html [https://perma.cc/
7F5R-RB2V] (articulating the results of the investigation).
86 Ticket Registration Bill Dies in Senate, NY T (Mar. 28, 1964) [https://perma.cc/
HKF2-JN62] (describing the three bills proposed by Attorney General Lefkowitz).
87 Id.
12 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
through the Attorney General’s ofce.
88
If an offering were approved, the pro-
ducer would have to put all of the money raised into a trust account solely
for production expenses.
89
The bill also required producers to maintain pre-
cise books and records from which reports would be created by independent
third-party accountants for investors.
90
The second bill broadened the scope of
penal law to criminalize ticket scalping, providing both district attorneys and
the attorney general with jurisdiction over violations.
91
II. T T I: N Y B M S
Ticketing economics are skewed and generally unlike most other market
models.
92
There are several outside factors inuencing ticket price uctuation
such that the initial on-sale price will have changed drastically by the time the
ticket reaches the user.
93
First, because the vendor’s primary goal is to ll seats
for the venues, tickets are often sold on the primary market for a face value
that is below actual market price.
94
And, as mentioned herein, primary ven-
dors often do not release the total number of tickets available at the initial
on-sale, thus decreasing availability and accessibility for the genuine fan from
the outset.
95
Second, the percentage of tickets not held back are purchased in
large part by scalpers using advanced circumvention software, or ticket bots,
enabling scalpers to stockpile a majority of the available tickets and resell
them at inated prices.
96
This vicious cycle is incredibly difcult to penetrate,
which is why it is critical that the legislature address the issue as a whole rather
than passing laws attempting to treat individual symptoms.
97
88 Id.
89 Id.
90 Id.
91 Id.
92 See Ofce of the New York State Attorney General Eric T. Schneiderman, Obstructed
View: What’s Blocking New Yorkers from Getting Tickets (2016) at 27, https://ag.ny.gov/
pdfs/Ticket_Sales_Report.pdf [https://perma.cc/YGZ4-GPM3] (characterizing the
market structure as atypical).
93 See Milgram v. Orbitz, 419 N.J. Super. 305, 315–16 (N.J. Super. Ct. Law Div. 2010) (noting
a strong interest in maintaining a competitive free market).
94 See Telephone Interview with Luis A. Miranda, Jr., Founding Partner, MirRam Group
(detailing the Hamilton producers set a group of premium seats at a cost of $10 for
every show). Miranda also explained that the priority for ‘Hamilton’ was and still is to
make the show accessible to younger fans or those of ordinary incomes. Id.
95 See Ofce of the NYAG supra note 92 at 11 (quantifying the number of tickets made
available to the public as around 46 percent of those obtainable).
96 See Jim Zarroli, Can’t Buy A Ticket To That Concert You Want To See? Blame Bots,
NPR (Jan. 28, 2016) [https://perma.cc/C7ZJ-NV8V] (showing the use of ticket bot soft-
ware as an enabler for scalpers).
97 See Telephone Interview with Noah Stein and Kathleen McGee, Assistant Attorney
General and Bureau of Internet and Technology Chief (Dec. 7, 2016) (recognizing that
the laws currently in place acknowledge certain parts of the problem rather than the
problem in its entirety).
2018] BEYOND THE BOTS 13
Ticket pricing is also affected by a combination of other economic and
non-economic motives.
98
For example, sports leagues might utilize variable
pricing to allow fans of all nancial means to attend their games, thus promot-
ing a culture of shared experience by those who love the game.
99
Some artists
might want to sell out their shows for promotional purposes and so price tick-
ets below market value.
100
Others might price a set number of tickets below
what they might otherwise charge to ensure accessibility to younger fans or
those who cannot afford premium pricing.
101
However, even with this con-
scious pricing effort, affordable tickets do not always end up in the hands of the
fans for which they were meant.
102
As ticket scalping transitioned into an e-commerce
103
industry,
104
tech-
nology has allowed for the creation of software that enhances online ticket
98 See Ofce of the New York State Attorney General Eric T. Schneiderman, Obstructed
View: What’s Blocking New Yorkers from Getting Tickets (2016) at 27, https://ag.ny.gov/
pdfs/Ticket_Sales_Report.pdf [https://perma.cc/YGZ4-GPM3] (considering the differ-
ent types of motives live events may face in determining ticket prices). The Attorney
General’s Ofce noted that investigations found factors such as goodwill and reputa-
tion are so important to certain performers that they are reected in lowered price
points. Id. The example given in the report for non-commercial goals is that of Pope
Francis distributing free tickets for his public appearances. Id.
99 See D.R. The Price Is Right, T E (Jan. 9, 2012) archived at https://perma.cc/
DUQ9-24G3 (observing that the dynamic pricing model alienates less fans and simulta-
neously combats the scalping issue).
100 The Ofce of the New York Attorney General discovered:
Some of the promoters we spoke with argued that a public sense of high demand
and ticket scarcity is necessary to create strong demand for tickets. Hence, set-
ting ticket prices at a low level, so as to drive sales, may be necessary to create
the sense of a “sellout tour” that stokes demand to attend it.
See Ofce of the NYAG supra note 98, at 27 (delineating the rationale for low prices).
101 See O N Y S A G E T. S, Ob-
structed View: What’s Blocking New Yorkers from Getting Tickets (2016), https://ag.ny.
gov/pdfs/Ticket_Sales_Report.pdf [https://perma.cc/YGZ4-GPM3] (outlining justica-
tions for pricing below perceived market value); see also Examining the Bettor Online
Ticket Sales Act of 2016: Hearing on S.3183 Before the U.S. Subcomm .on Consumer
Protection, Prod. Safety, Ins., and Data Security, and Comm. on Commerce, Sci., and
Transp., 114th Cong. (2016), https://www.gpo.gov/fdsys/pkg/CHRG-114shrg25173/pdf/
CHRG-114shrg25173.pdf [https://perma.cc/HVW9-3KLX](statement of Jeffrey Seller,
lead producer, Hamilton: An American Musical) (highlighting Hamilton’s educational
initiative, which will make 20,000 10-dollar tickets available each year to high school
juniors who would otherwise not be able to afford to see the musical).
102 See Ofce of the NYAG supra note 101 at 27 (indicating that the benets only exist
when the tickets end up in the rightful hands of fans).
103 E-commerce, I (Online ed. 2017) https://www.investopedia.com/terms/e/
ecommerce.asp [https://perma.cc/4ZZC-QQUR] (dening e-commerce as a business
model that allows transactions to conduct business over an electronic network, most
commonly on the internet).
104 See John Michael Gibbs, Cyberscalping: On-Line Ticket Sales, 31 U. T. L. R. 471 (2000)
(discussing how businesses reduce their overhead costs through paperless transactions).
14 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
scalping, or cyber-scalping.
105
Cyber-scalping relies on “ticket bot” software
that allows resellers to “cut the line” and purchase high volumes of tickets
before the average human consumer can even press “check out.”
106
As a result,
ticket bots now pose one of the most serious threats to the fairness of today’s
ticket resale market.
107
Consumer protection is effectively being subordinated
to the interests of the middleman cyber-scalper.
108
Ticket bot software programmers pride themselves on the ability to
bypass CAPTCHA
109
technology, quantity limits, and queues, to “grab hun-
dreds of tickets for multiple event[s] [...] with just a single click.”
110
Once the
use of this ticket bot software became pervasive, several states passed statutes
attempting to regulate the software’s use by criminalizing the activity, impos-
ing civil nes, and providing legal recourse for consumers.
111
These statutes,
however, have had little to no effect in deterring cyber-scalpers due to lack of
enforcement by government ofcials, regulators’ inability to actually identify
105 See James Anthony Devine, Student Paper, Ticket Scalping in the Late 1800s and the ear-
ly 2000s—Much has Changed, Much is the Same, S H L. S. S S-
(2014) (showing the shift from in person transactions to online forms—mak-
ing scalping more efcient).
106 See LeRoy Comrie, Transparency That’s The Ticket, N.Y. D N (Oct. 19, 2012)
http://www.nydailynews.com/opinion/transparency-ticket-article-1.1186936 [https://per-
ma.cc/P5ZY-QLM9] (arguing that stronger enforcement is necessary even though the
use of ticket bots is already outlawed in New York State).
107 See Peggy McGlone, Online Ticket Buyers Find Themselves Outgunned By High-Tech
Bots, NJ. (Mar. 19, 2010) http://www.nj.com/news/index.ssf/2010/03/online_ticket_
companies_strugg.html [https://perma.cc/R55H-5W9F] (stating that “the prevalence of
bots has already raised questions about the industry’s claims of fairness in online sales”).
108 Id. (noting the shift in interests towards large prots).
109 The Ofcial CAPTCHA Site archived at https://perma.cc/M53U-GH25 (explaining
CAPTCHA as a program that protects websites against bots). CAPTCHA stands for
Completely Automated Public Turing Test to tell Computers and Humans Apart. Id.
110 TicketMaster Spinner/Drop Checker Bot, TicketBots.net archived at https://perma.cc/
WH8N-3YXP (describing the software available for purchase and how it works on au-
thorized ticket seller websites to bypass securities).
111 See C. B. P. C §. (2015) (making circumvention software unlawful);
C. R. S. § 6-1-720(1)(a)-(b) (2015) (dening ticket bots as a deceptive trade
practice when used to purchase tickets in excess of the authorized limits); F. S.
§817.36(5) (2015) (applying a civil penalty equal to the amount for which the ticket
was sold to persons who intentionally use or sell ticket bot buying software); M.
S. §609.806(a) (2015) (dening the use of bots as a misdemeanor); M. C A.,
C. L §14-4002 (2015) (delegitimizing the circumvention of security measures that
disrupts the equitable ticket buying process); O. R. S. §646A.115(2) (2015) (de-
scribing the prohibitions as to the use of online software to purchase tickets to an en-
tertainment event); T. C A. §39-17-1104(b) (2015) (measuring cyber scalping
software as an offense); V. S. A. . 9, § 4190(a) (2015) (dening the scope of
constraint placed on bot software for admission to sporting event, theatre, musical per-
formance, or place of public entertainment or amusement of any kind).
2018] BEYOND THE BOTS 15
cyber-scalpers, and noncompliance by primary vendors.
112
A big part the prob-
lem is that the ticket scalping industry straddles unsettled areas of the law.
113
Specically, many ticket resale transactions occur across state lines or even
national borders, creating formidable issues in determining which state has
jurisdiction over violators of anti-scalping statutes, or if there has even been a
violation at all.
114
New York State Attorney General Eric T. Schneiderman
115
published the
results of an investigation evidencing that most ticket inaccessibility is due to
the use of ticket bot software.
116
In effect, ticket bots continuously deny con-
sumers the ability to deal in fair markets.
117
While the law has in recent years
taken a giant step forward, technology experts remain skeptical as to regula-
tors’ ability to identify violators.
118, 119
Entertainment industry giants, artists,
promoters, venues, and even big ticket distributors such as Live Nation and
Ticketmaster have attempted to defeat cyber ticket scalpers with little to no
112 See Daniel J. Glantz, For-Bid Scalping Online? Anti-Scalping Legislation In An Internet
Society, 23 C A E. L.J. 261, 287 (2005) (indicating that “[b]ecause of the
consensual nature of purchasing a ticket above its face value, as well as the anonymity of
Internet transactions, enforcing scalping laws across state borders may be too costly”).
This further indicates that the cost to enforce the law does not t the ne. Id.
113 Id. at 269 (showing the uncertainty in the law with regard to ticket scalping regulations).
114 Id. (evidencing the many places where e-commerce transactions typically occur). In
order to determine where a transaction occurred courts might look to: (1) where the
seller is located, (2) where the buyer is located, (3) the location in which the transaction
is processed, or (4) the location of the auction website’s servers) Id.
115 A G E T. S, ag.ny.gov., archived at https://perma.cc/
L8T4-HCBA (portraying the highest ranking law enforcement ofcer for the state of
New York).
116 Id. (concluding that tens of thousands of tickets in New York are acquired each year
using this software).
117 Better Online Ticket Sales Act of 2016, S. 3183, 114th Cong. (2016) (acting as a compan-
ion bill to the BOTS Act to combat the software’s ability to scoop up tickets before the
regular human consumer can make a purchase).
118 Examining the Better Online Ticket Sales Act of 2016: Hearing on S. 3183 Before the U.S.
Subcomm. on Consumer Protection, Prod. Safety, Ins., and Data Security, and Comm. on
Commerce, Sci., and Transp. (2016) (statement of Jerry Moran, U.S. Senator) (discuss-
ing the increase in bot buying software in the entertainment industry). See also Jason
Koebler, The Man Who Broke Ticketmaster, M (Fed. 10, 2017), archived at
https://perma.cc/JH8Z-J4RB (describing Lowson as “uniquely placed” to plug the holes
in the system he once exploited). Now that the ticket bots are illegal, even Ken Low-
son, once scalper and programmer extraordinaire is inspired to solve the corruption
embedded within the ticket buying experience with his new consultancy rm TIXFAN.
TIXFAN works with artists and management teams to tackle scalpers by enforcing pub-
lished ticket limits, microtargeting presales, and refusing to sell tickets to known scalp-
ers. Id.
119 Taylor Armerding, Congress Joins Battle Against Ticket Bots, CSO (Dec. 3, 2015) ar-
chived at https://perma.cc/TBM2-J3C7 (arguing that legislation cannot protect against
some enemy enforcement ofcials are unable to identify).
16 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
success.
120
Due to the speed of modern-day technology developments, hack-
ing experts have the ability to develop their own programs that enable them
to bypass any security measure, old and new, with ease.
121
As such, federal law
needs to reach beyond criminalizing the use of ticket bot buying software and
focus on targeting scalping practices at their core.
122
Ticket bots represent only a fraction of the anti-consumer practices that
plague the ticketing industry. Outlawing ticket bots, while helpful, has done
little to ensure that fans, as opposed to scalpers, have meaningful opportu-
nity to purchase tickets at face value.
123
Online ticket marketplaces, such as
StubHub, contend that a lack of transparency with the practice of ticket-hold-
backs
124
is largely to blame.
125
However, Lowson has argued that artists, sports
teams, and primary vendors such as Ticketmaster cannot condemn scalpers
while continuing to engage in deals that help them.
126
According to Attorney General Schneiderman’s
127
report on ticket sales
in New York, on average, only 46 percent of concert tickets are actually made
available to the general consuming public for purchase.
128
The held-back tickets
are generally reserved for industry insiders, forcing the average fan to compete
against cyber ticket scalpers for less than half of the available tickets to the
entertainment event.
129
Even though some consumers may be able to purchase
120 Id. (showing the ineffectiveness of legislation tried in 14 different states).
121 Id.
122 Id. (discussing the capabilities of scalpers to adapt circumvention technology to bypass
any new measures).
123 Koebler, supra note 118 (emphasizing transparency and target audience as the main
cause for scalper domination).
124 See Ofce of the Federal Register, Code of Federal Regulations, Title 28, Pt. 0-42 (July
1, 2012) (noting that it has been industry practice to hold back a set number of tickets
from those released for groups connected with the event).
125 See Ofce of the New York State Attorney General Eric T. Schneiderman, Obstructed
View: What’s Blocking New Yorkers from Getting Tickets (2016) at 21, https://ag.ny.gov/
pdfs/Ticket_Sales_Report.pdf [https://perma.cc/YGZ4-GPM3] (attributing ticket hold
back practices by artists, venues, and promoters as a reason for lack of available tickets
on the free market).
126 Koebler, supra note 118.
127 See A G E T. S, A.N.G., archived at https://perma.
cc/L8T4-HCBA (detailing the work of Attorney General Schneirderman).
128 Ofce of the New York State Attorney General Eric T. Schneiderman, Obstructed View:
What’s Blocking New Yorkers from Getting Tickets (2016) at 11, https://ag.ny.gov/pdfs/
Ticket_Sales_Report.pdf [https://perma.cc/YGZ4-GPM3](disclosing ndings on the
amount of tickets available to the general public including scalpers); see also Justin Jof-
fe, Ticket Bots Are Now Illegal, But They’re Part of a Much Bigger Problem, O
(Dec. 1, 2016) archived at https://perma.cc/TE6W-E845 (addressing similar concerns
found in the NYAG report).
129 Ofce of the New York State Attorney General Eric T. Schneiderman, Obstructed View:
What’s Blocking New Yorkers from Getting Tickets (2016) at 7, https://ag.ny.gov/pdfs/
Ticket_Sales_Report.pdf [https://perma.cc/YGZ4-GPM3] (discussing the increased dif-
culties in obtaining tickets); see also Examining the Better Online Ticket Sales Act of
2018] BEYOND THE BOTS 17
tickets at the initial on-sale, there are often downstream restrictions imposed
by primary ticket vendors, artists, producers, and venues as a condition of the
sale.
130
Such restrictions typically affect the purchaser’s ability to transfer the
ticket to another person.
131
StubHub argues that these restrictions do less to
deter cyber-scalping than they do to limit the average fan’s ownership rights.
132
Thus, as artists turn to tactics such as paperless ticketing
133
in an attempt to
curb scalping, the consumer’s transfer abilities are further restricted.
134
Non-transferrable paperless ticketing is often criticized by consumers
because the restrictions prevent them from gifting or making last-minute trans-
fers to friends and family.
135
In 2011, New York responded to these consumer
frustrations by becoming the only state to outlaw non-transferrable paperless
ticketing unless certain options are made available to consumers.
136
Under
the New York Arts & Cultural Affairs Law, artists and venues may implement
paperless ticketing only if (1) the paperless tickets are freely transferrable
2016: Hearing on S. 3183 Before the U.S. Subcomm. on Consumer Protection, Prod. Safe-
ty, Ins., and Data Security, and Comm. on Commerce, Sci., and Transp. (2016) (statement
of Tod Cohen, General Counsel, StubHub) (encouraging a discussion on the primary
ticketing market’s allocation practices).
130 Ticket Act, H.R. 4795, Sec. 2 Findings, 111th Cong. (2010) (exploring Congress’ ndings
that producers and artists are seeking to control the resale of tickets by employing re-
strictive state laws, imposing contractual and licensing terms, and imposing technologi-
cal barriers on ticket resale).
131 Examining the Better Online Ticket Sales Act of 2016: Hearing on S. 3183 Before the U.S.
Subcomm. on Consumer Protection, Prod. Safety, Ins., and Data Security, and Comm. on
Commerce, Sci., and Transp. (2016) (statement of Tod Cohen, General Counsel, Stub-
Hub) (exploring the burdensome licensing conditions placed on ticket purchasers).
132 Id. (noting that licensing restrictions prohibit fans from buying tickets as gifts, giving
them away to friends or family, or donating tickets for a charitable cause).
133 Miley Cyrus “Paperless Ticket” FAQs, TM. (Apr. 4, 2017) archived at
https://perma.cc/2F87-L56E (dening paperless ticketing as a technology that creates
an electronic ticket on the purchaser’s credit card up until time of entry to the venue).
134 Id. (stating that paperless ticketing ensures that only fans can purchase tickets and
attend the event); see also Robert Viagas, London “Touts” Getting $6k for ‘Hamilton’
Tickets Despite Anti-Scalping Measures (Jan. 31 2017) archived at https://perma.cc/
S4FD-F9WF (describing the implementation of paperless ticketing to one of the most
anticipated West End productions).
135 Ofce of the New York State Attorney General Eric T. Schneiderman, Obstructed View:
What’s Blocking New Yorkers from Getting Tickets 36 (2016), https://ag.ny.gov/pdfs/
Ticket_Sales_Report.pdf [https://perma.cc/YGZ4-GPM3] (noting end-user frustrations
with paperless ticketing).
136 Alfred Branch Jr., Gov. Cuomo Signs New York Paperless Ticket Bill Into Law, T-
N (2011) archived at https://perma.cc/KF8N-R9PN (delineating the bill’s effects
and scope within New York’s entertainment industry); see also Alfred Branch Jr., New
York Legislature Renews Paperless Ticketing Bill, TN (2011) archived at https://
perma.cc/XRC5-ANPK (highlighting the support this bill’s renewal received from both
the New York State Assembly and the Senate); see also N.Y. Arts & Cult. Aff. Law
§25.30 (2014) (leaving open options for fans to freely transfer their tickets).
18 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
without requiring that consent be obtained from the primary vendor, or (2) the
purchaser is offered, at the time of the initial sale, the option to purchase the
identical ticket in paper or other form at the same price point.
137
Supporters
highlight the importance of consumer choice and an open and free market that
values competition.
138
A potential solution primary vendors may consider is dynamic pric-
ing.
139
This practice has successfully deterred scalping and hindered massive
price ination in various industries such as airline and hotel businesses, and
most recently, sports event ticketing.
140
Dynamic pricing has been successful
because by eliminating the single price set for each seat, sports franchises have
the ability to match demand uctuation, which ultimately raises stadium atten-
dance and total ticket revenue.
141
Scalpers have helped primary vendors more
appropriately price their tickets based on the perceived value the consumer
attaches to it—proving the viability of a dynamic pricing model.
142
Another potential solution is decentralizing the industry and placing all
transactions on a blockchain.
143
This has been validated by BitTicket, the rst
digital event ticketing process to take place on a blockchain, successfully guar-
anteeing the value of a ticket and publicly verifying every sale.
144
Jeffrey Seller, lead producer on Hamilton: An American Musical, con-
tends that ticket-holdback practices are unique to concert events and do not
affect the theater industry.
145
This is true partly because theatrical productions,
137 N.Y. Arts & Cult. Aff. Law §25.30 (2014) (providing an opt-out provision for consumers).
138 Alfred Branch Jr., New York Legislature Renews Paperless Ticketing Bill, TN
(2011) archived at https://perma.cc/XRC5-ANPK (characterizing the purchasing of
tickets to live events as a competition).
139 Dynamic Pricing, B D (Online ed. 2017) (dening dynamic pricing
as determining a product’s value in uid manner depending on a customer’s perceived
ability to pay).
140 D.R. The Price Is Right, T E (Jan. 9, 2012) archived at https://perma.cc/
DUQ9-24G3 (observing the benets of a dynamic pricing model versus a proprietary
pricing model).
141 Id. (detailing the massive prot benets franchises reaped as well as the benets to
consumers of available seats).
142 H B R, Pricing Secrets Of Ticket Scalpers, HBR Idea Cast, archived
at https://perma.cc/NLZ5-M3GK (July, 2011) (discussing how companies use price to
prot and grow).
143 D T A T, B R (1st ed. 2016) (demonstrat-
ing the benets of removing the middle man).
144 Rebecca Campbell, Using Blockchain Tech to Keep Concert Tickets Honest, B
M (May 2017), archived at https://perma.cc/DEJ7-UZ6Y (describing the ways
in which BitTicket have proved benecial).
145 See Examining the Better Online Ticket Sales Act of 2016: Hearing on S. 3183 Before
the U.S. Subcomm. on Consumer Protection, Prod. Safety, Ins., and Data Security, and
Comm. on Commerce, Sci., and Transp. (2016) (statement of Jeffrey Seller, lead produc-
er, Hamilton: An American Musical) (stating that less than 10 percent of the house is
controlled by the writer, director, and actors for their personal use); see also Hamilton
2018] BEYOND THE BOTS 19
if successful, often see a longer lifecycle than sporting events or live concerts.
146
Concerts range anywhere from two to ten performances in any given city.
147
Concerts’ limited seating and short run periods allow ticket scalpers to earn
larger prots off of immediate demand.
148
However, when it comes to the the-
ater, cyber ticket scalpers have tended to inltrate the ticket market only when
there are critically acclaimed shows such as The Producers,
149
The Book of
Mormon,
150
and most recently Hamilton.
151
What the theater industry has in common with sporting and live concert
events is the fact that productions tour from state to state.
152
Ticket vendors,
presenters, sports commissioners, and online marketplaces are not looking to
prohibit free market exchanges.
153
Rather, what is at issue for these stakehold-
ers is the preservation of a level playing eld within a ticketing system designed
to make tickets accessible and convenient for consumers, no matter their loca-
tion.
154
The foreseeable exponential growth of technology and e-commerce,
combined with a lack of independent federal legislation regulating the ticket-
ing industry has given entertainment executives a cause for action.
155
Utilise Paperless Ticket System, (Dec. 1, 2017) archived at https://perma.
cc/3XK3-43CA (showing how Hamilton continues to combat scalpers in its worldwide
productions).
146 Telephone Interview with Luis A. Miranda, Jr., Founding Partner, MirRam Group (Nov.
16, 2016) (discussing the longevity that is characteristic of theatrical productions).
147 Id.
148 Id. (citing the short term as the leading cause for holdbacks and scalper buyouts for live
concerts).
149 See M B T M, T P (2001) (a musical based on Mel
Brooks’ 1968 lm of the same name, which won a record breaking 12 Tony Awards).
150 See T P, R L, M S, T B M (2011) (a reli-
gious satire musical on the Church of Jesus Christ of Latter-Day Saints).
151 See L-M M, H: A A M () the acclaimed
Broadway musical about the life of founding father Alexander Hamilton); see also R
C, A H (The Penguin Group, Inc., 2004) (Chernow’s book
provided the basis for Miranda’s musical).
152 Telephone Interview with Luis A. Miranda, Jr., Founding Partner, MirRam Group (Nov.
16, 2016) (observing that for Hamilton cyber scalper buyouts affected not only Broad-
way, but also the Chicago production). Miranda expects the same aggression by ticket
buying software when the production opens on the West Coast later this year. Id.
153 See Examining the Better Online Ticket Sales Act of 2016: Hearing on S. 3183 Before
the U.S. Subcomm. on Consumer Protection, Prod. Safety, Ins., and Data Security, and
Comm. on Commerce, Sci., and Transp. (2016) (statements of Jeffrey Seller, Tod Cohen,
Senators Moran, Blumenthal, and Fisher) (agreeing that the answer is not to prevent
buying and selling).
154 See id. (suggesting the bot buying software destroys the intent of creating consumer
convenience through online purchases).
155 See id. (citing that regulation of the ticket industry has been left to state, local, and mu-
nicipal governments).
20 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
III. L E C C-S
A. State Regulation Before the BOTS Act
The rst U.S. laws specically targeting ticket scalping originated in
the early twentieth century at the state level, decades before Attorney Gen-
eral Lefkowitz proposed bills in New York.
156
In 1905, some state legislatures
passed laws prohibiting the resale of tickets for amounts greater than the ini-
tial sale price.
157
Once these new laws took effect, scalpers almost immediately
challenged them on the basis of their constitutionality arguing that the second-
ary market works in the interest of the public by ensuring that theaters do not
hold a monopoly in determining ticket pricing.
158
After much pushback from
scalpers, courts ultimately ruled in their favor, overturning existing laws by
nding that regulating ticket prices ultimately violated Due Process and was
not within the scope of state governments’ power.
159
However, in 1965, the United States Supreme Court upheld the New York
District Court’s ruling in Gold v. Di Carlo that “the test of constitutionality is
whether the method of regulation embodied in the statute bears a rational
relation to a constitutionally permissible objective.”
160
The District Court had
upheld a state statute that made it illegal to resell tickets for more than $1.50
over the initial price, nding that because “prices for public amusement are
matters of public interest” the government is therefore justied in imposing
price regulations.
161
Recently, courts carried over this “rational basis” test to
defend laws governing the resale of tickets on the grounds that the laws are
“rationally related to legitimate public concern.”
162
Using this test, state courts,
after the Gold v. DiCarlo decision, now hold most anti-scalping laws to be con-
stitutional and enforceable pursuant to the states’ police powers.
163
156 People ex rel. Cort Theatre Co. v. Thompson, 283 Ill. 87, 88 (1918) (addressing a city or-
dinance prohibiting secret partnerships between theatres and scalpers).
157 Ex Parte Quarg, 149 Cal. 79 (amending the California Penal Code to classify the resell
of tickets at inated prices as a misdemeanor).
158 Tyson & Bro.-United Theatre Ticket Ofces v. Banton, 273 U.S. 418 (1927) (reviewing
an appeal by a ticket broker corporation who argued that the act was unconstitutional
under the Fourteenth Amendment).
159 Id. at 441. (holding it was unconstitutional for New York State to prohibit reselling tick-
ets for fty cents above face value because it interfered with ticket holders’ property
rights and therefore violated Due Process).
160 Gold v. Di Carlo, 235 F. Supp. 817, 820 (S.D.N.Y. 1964), aff’d 380 U.S. 520 (1965) (describ-
ing the rational basis test to determine the constitutionality of regulating the secondary
ticket market).
161 Id. (analyzing whether the statute reaches too far in scope or is a correct exercise of
governmental authority); see also Nebbia v. New York, 291 U.S. 502 (1934) (nding that
the dairy industry was subject to price regulation in the public interest and therefore did
not violate the Fourteenth Amendment).
162 See Gold v. Di Carlo, 380 U.S. 520 (1965) (detailing the rational basis analysis used by
courts in favor of consumers).
163 John Michael Gibbs, Cyberscalping: On-Line Ticket Sales, 31 U. T. L. R. 471 (2000)
2018] BEYOND THE BOTS 21
Since Gold v. Di Carlo, Alabama and Massachusetts have enacted stat-
utes regulating the secondary ticket market.
164
These statutes range in scope
from requiring that scalpers obtain business permits as a condition of lawful
operation to completely banning ticket resale above face value.
165
Other state
laws permit scalping but place restrictions on price, place, and time of resale,
and the types of events for which scalpers may resell tickets.
166
For example,
Virginia allows ticket scalping practices to occur at the discretion of the venue
hosting the event, and the prohibitions of the statute do not apply to online
transactions.
167
B. Federal Regulation and Legislative Enforcement
Lawmakers have successfully passed federal legislation targeting
cyber-scalping, but much of that legislation has been ineffective in practice
because the entities with the power to enforce the law do not prosecute known
violators.
168
The federal Communications Decency Act
169
(CDA) aims to pre-
serve the “vibrant and competitive free market that [currently] exists for the
Internet and other interactive computer services, unfettered by Federal or
State regulation.”
170
However, it is questionable whether ticket broker services
even constitute a “viable and relevant product market” entitled to protection
under the CDA.
171
The CDA accomplishes this free market preservation in
(stating that the Supreme Court deems anti-scalping legislation a permissible applica-
tion of state police powers).
164 A. C §-- (2015) (employing a $100 license tax for scalpers selling at in-
ated prices); see also M. G. L A. . ,§§A, 185D (2015) (prohibiting
scalping as a business without a license and capping the inated resell price at no more
than $2 above face value); see also N.Y. A C. A. L §.() (2015) (re-
quiring a license be procured each time resell is conducted).
165 James Anthony Devine, Ticket Scalping in the Late 1800s and the early 2000s—Much
has Changed, Much is the Same, Law School Student Scholarship, Paper 210 (2014)
(comparing the different state statutes across the United States showing those that en-
courage scalping and those that work against the practice).
166 See Gibbs, supra note 163 at 475 (describing the statutes that affect after-market ticket
sales).
167 V. C A. §.- (2009) (stating that scalping shall be left to the discretion
of the host and transactions that occur online are not covered within the statute). The
statute states: “Any locality may provide, by ordinance, that it is unlawful for any person
[...] to resell for prot any ticket for admission....Such ordinance may provide that
violators thereof are guilty of a Class 3 misdemeanor. This section shall not apply to any
resale of a ticket that occurs on the Internet.” Id.
168 Bryce Cashman, New Bill Tackles Ticket-Buying Bots, F M C
(Apr. 8, 2015, 8:19 AM) https://futureofmusic.org/blog/2015/04/08/new-bill-tackles-tick-
et-buying-bots [https://perma.cc/7SPE-ZBNW] (detailing the lack of enforcement).
169 Communications Decency Act 47 U.S.C. §230 (1996) (providing immunity from liability
for service providers and users of an “interactive computer service”).
170 Milgram v. Orbitz Worldwide, Inc., 16 A.3d 113, 1120 (N.J. Super. Ct. Law Div. 2010)
(exhibiting Congress’ intent when passing the CDA).
171 See Eriq Gardner, Ticket Broker Claims Hollywood’s Gated Events Amount to
22 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
part by affording interactive computer service providers immunity from civil
liabilities that might otherwise arise by virtue of their ltering or regulating
user-generated content.
172
The concern among interactive computer service
providers had been that, by restricting—or failing to restrict—lewd, violent, or
otherwise objectionable user-generated content, they would assume liability as
“publishers or speakers” of that information. In Milgram v. Orbitz, the court
held that under the CDA online ticket vendors like StubHub would not neces-
sarily be responsible for third-party content created on their websites, namely,
the resold tickets.
173
The Seventh Circuit, however, rejected this interpretation
of the CDA, holding that the law does not apply outside of the publishing con-
text and cannot grant broad immunity to online service providers.
174
However,
preserving free markets is an important interest to our courts, as evidenced
by the appellate decision in Hill v. StubHub, Inc.
175
In Hill, the appeals court
treated StubHub as a “venue” that enables buyer-seller interactions.
176
With
this classication, the grant of broad immunity follows naturally, because the
seller sets the nal price for the tickets they have, which makes the price and
the tickets third-party content for which StubHub is not liable.
177
Another attempt at federal regulation is the Computer Fraud and
Abuse Act
178
(CFAA), which criminalizes unauthorized computer access.
179
an Antitrust Conspiracy, T H R (Feb. 29, 2017,11:35 A.M.),
https://www.hollywoodreporter.com/thr-esq/ticket-broker-claims-hollywoods-gat-
ed-events-amount-an-antitrust-conspiracy-981541 [https://perma.cc/WL2M-FG2A]
(questioning the relevance of scalpers as a viable product market); see also Complaint
at 41, Disney Enterprises, Inc. v. Hollywood Entertainment Group (No. 16-9432-JW-
F(MRWx)) (offering defendant’s answer to a lawsuit led against him which argues that
there are no laws against ticket selling and that studio executives are just as guilty for
proting off of ticket resales).
172 Milgram 16 A.3d 113 at 1122 (holding that service providers are immune for content
created by third parties).
173 Id. at 1120 (holding that §230 preempted the state Consumer Fraud Act and that im-
munity is given to “interactive computer services” acting as publishers of third party
content). See also Ambike Doran & Tom Wyrwich, The Test of Time: Section 230 of
the Communications Decency Act Turns 20, M L M (Aug. 9, 2016), http://
www.medialawmonitor.com/2016/08/the-test-of-time-%E2%80%A8section-230-of-
the-communications-decency-act-turns-20 [https://perma.cc/JY6D-S4UU] (noting that
courts generally rule in favor of broad immunity).
174 Doe v. GTE Corp., 347 F.3d 655, 659–60 (7th Cir. 2003) (holding that §230 may act as a
denitional clause rather than as immunity).
175 Hill v. StubHub, Inc., 727 S.E.2d 550, 564 (N.C. Ct. App. 2012) (holding that §230 does
grant broad immunity to StubHub against the scalping its site facilitates).
176 See id. at 552.
177 See id. at 558–59.
178 Computer Fraud and Abuse Act, 18 U.S.C. §1030 (1986) (criminalizing unauthorized
access of nonpublic computers of a department or agency of the United States or pro-
tected computers, which includes basically all computers).
179 See Orin S. Kerr, Vagueness Challenges to the Computer Fraud and Abuse Act, 94 M.
L. R. 1561, 1561 (2010) (explaining that the legislative intent behind that statute was
2018] BEYOND THE BOTS 23
The legislative intent behind the CFAA was to criminalize high-interest fed-
eral computer hacks.
180
However, the act has been interpreted expansively by
courts, making it one of the most over-inclusive criminal laws
181
in the United
States Code.
182
United States v. Lowson provides an example of the courts’ awed appli-
cations of the CFAA.
183
With Ken Lowson at the helm, four men conducting
business as “Wiseguy Tickets”
184
were charged with manipulating the ticket
market to buy scores of tickets to a variety of events.
185
They were alleged to
have engaged in cyber fraud by manipulating the ticket market using thousands
of non-consecutive IP addresses to trick the CAPTCHA systems, register-
ing under pseudonyms, and using more than 150 credit cards to effect their
purchases.
186
With the Wiseguys indicted in March 2010, the owners of ticket
vending sites, Ticketmaster among them, argued that criminal fraud occurs
when a party violates a website’s terms of service.
187
The website owners also
argued that they had an interest in being exclusive ticket distributors for given
events and, claiming a property interest in the tickets they sold on their sites,
that their property rights were violated by the conduct of the defendants.
188
On
the other hand, the Wiseguys contended that such an application of the CFAA
would shackle the secondary market, undermine ticket purchasers’ interest in
to create a private right of action for violations).
180 Id.
181 See Victor Manoloche, Computer Fraud And Abuse Or Prosecutorial Fraud And Abuse:
Time For Change, 6 C W. R. J.L., T. I 67 (2015) (challenging the act
as over-inclusive due to a lack of congressional specicity). Manoloche reasons that
because Congress failed to dene “authorization” within the Act it resulted in a split
between the Seventh and Ninth Circuits. Second, Manoloche believes the CFAA is a
bright-line rule, which affords no exceptions. Id.
182 See Kerr supra note 179 at 1578 (noting that under the current version of the CFAA any
action that accesses any protected devices is subject to liability so long as some informa-
tion is obtained by the violator).
183 U.S. v. Lowson, 2010 U.S. Dist. L 145647 at 18 (detailing the challenges in applying
the CFAA broadly, in determining what constitutes “obtaining information”).
184 Id. at 4 (describing Wiseguy Tickets and how the company circumvented computer code
to acquire event tickets that were then resold).
185 Id.
186 Id. at 5 (showing the different measures of deception the company employed to pur-
chase tickets). Although this is a criminal case, it is also related to e-commerce and the
state of the law remains unclear. Id. Judge Hayden’s opinion was criticized as being too
lenient. However, if the CFAA is interpreted too broadly as any violation of a website’s
terms of use, many internet users would be considered misdemeanor criminals. Id.
187 See Peter F. Bariso III, No Need to Fear Robots: Online “Bot” Use under the Computer
Fraud and Abuse Act, S H L S S P, No. 757 (2016)
(discussing the scope of the CFAA in protecting against bot use).
188 Brief of Amici Curiae Electronic Frontier Foundation et al., in Support of Defendant’s
Motion to Dismiss the Indictment at 28, U.S. v. Lowson 2010 U.S. Dist. L 145647
(2010) (No. 10-114) (explaining the positions of both parties).
24 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
a free economy, and confer property rights in tickets where historically the
law has not recognized any.
189
Furthermore, the defendants emphasized that
the software employed did not hack the website owners’ CAPTCHA.
190
In
the words of the defense, “CAPTCHA was not hacked. It was responded to
by a computer....[T]he computer acted as an individual and answered the
CAPTCHA response correctly, which allowed the computer to then go to the
buy page to order tickets.”
191
Faced with a motion to dismiss by the defense, the
district court effectively sided with the prosecutors, holding that the indictment
sufciently alleged Wiseguys’ intent to gain unauthorized access, and thus to
contravene the CFAA.
192
Although the case ultimately settled, the fact that the vague language of
the CFAA is capable of incriminating a vast range of conduct is important.
193
The district court’s interpretation in Lowson should be regarded cautiously
because imposing criminal liability based on a website’s terms of service may
still violate the Constitution.
194
Firstly, terms of service arguably fail to provide
users with sufcient notice that the actions they may be engaging in are ille-
gal, whereby users’ due process rights are threatened.
195
Additionally, pursuant
to the Lowson court’s interpretation, the CFAA may be void for vagueness
because it fails to dene “authorization,” a term subject to various interpreta-
tions.
196
Ultimately, the distinction as to whether Lowson’s ticket bots hacked
CAPTCHA or simply responded to it was vital to the court’s determination in
nding against Lowson and Wiseguy Tickets.
197
189 Id. (describing the alternative argument to the application of the CFAA).
190 Jason Koebler, The Man Who Broke Ticketmaster, M (Feb. 10, 2017), https://
motherboard.vice.com/en_us/article/mgxqb8/the-man-who-broke-ticketmaster (de-
scribing the intricacies of the case).
191 Id.
192 Kim Zetter, Wiseguys Plead Guilty in Ticketmaster CAPTCHA Case, W, [https://
perma.cc/73FR-FZ29] (Nov. 19, 2010) (noting Judge Hayden’s reasoning for declining
to dismiss the charges).
193 Id.
194 See Brief of Amici Curiae Electronic Frontier Foundation in Support of Defendant’s
Motion to Dismiss the Indictment at 28, United States v. Lowson 2010 U.S. Dist. L
145647 (2010) (No. 10-114) (showing the dangers in applying a broad interpretation of
the CFAA).
195 Id.
196 Id.
197 Jason Koebler, The Man Who Broke Ticketmaster, M (Feb. 10, 2017), https://
motherboard.vice.com/en_us/article/mgxqb8/the-man-who-broke-ticketmaster (high-
lighting the issue on which the case centered).
2018] BEYOND THE BOTS 25
In 1998, Representative Gary Ackerman
198
brought the Ticket Scalping
Reduction Act
199
(TSRA) before the House of Representatives.
200
The TSRA
was sparse and sought to amend the federal criminal code to prohibit anyone
from “using the mails or any facility of interstate or foreign commerce to scalp
ve or more tickets in a single transaction,” setting penalties for violators.
201
Additionally, it dened ticket scalping as the “resell[ing] [of a] ticket, or offer
to resell a ticket, at a markup of more than $5 or 10 percent of its face value.”
202
The TSRA was never signed into law due to its insubstantiality.
203
Several years later, the Better Oversight of Secondary Sales and
Accountability in Concert Ticketing Act
204
(BOSS Act), was introduced by
Representative Bill Pascrell.
205, 206
Utilizing the FTC’s authority to enforce
federal consumer protection laws that prevent fraud, deception, and unfair
business practices, and in an effort to preserve transparency in the market, the
BOSS Act sets forth rules for ticket marketing, distribution, and pricing.
207
The
BOSS Act directly targets primary ticket vendors, requiring them to disclose
the number of tickets made available to the general public and the amount
that would be withheld through ticket-holdback practices,
208
which reserve
stockpiles of tickets for industry insiders, such as artists, venues, promoters,
marketing departments, record labels, and sponsors, among others.
209
These
198 GT, govtrack.us [https://perma.cc/5ZYU-HAQM] (highlighting sponsored bills
and issues by Gary Ackerman, Former Representative from New York’s 5th District).
199 Ticket Scalping Reduction Act of 1998, H.R. 3951, 105th Cong. (1998) (amending the
federal criminal code to prohibit and set penalties for scalping ve or more tickets in a
single transaction).
200 Id. (summarizing the scope of protections afforded by the Act).
201 Id. (stating the punishments for violations of the Act).
202 Id. (dening the term “scalp”).
203 Id. (noting that the bill was only ever introduced in the House).
204 The Better Oversight of Secondary Sales and Accountability in Concert Ticketing Act,
H.R. 5245, 114th Cong. (2016) (suggesting it is the F.T.C.’s role to designate rules and
regulations for the primary or secondary ticket sale markets).
205 C B P, R T D N J, P -
.H.G. archived at https://perma.cc/3H3B-CCD5 (providing a biography of
Representative Bill Pascrell from New Jersey’s 9th District).
206 The BOSS Act, H.R. 5245, 114th Cong. (2016) (introducing heightened measures to
combat cyber scalping).
207 Id. (requiring ticket vendors to maintain records of who is selling); see also Alfred
Branch Jr., Ticketmaster, Taylor Swift, and Keith Urban Ticket Holdbacks Exposed,
TN (Nov. 12, 2009) [https://perma.cc/D9YX-3NM2] (discussing artists as
equally problematic as scalpers, through their use of ticket hold-back practices).
208 The BOSS Act, H.R. 5245, 114th Cong. (2016) (placing transparency requirements on
ticket vendors to fully and completely disclose distribution and pricing to consumers).
209 Ofce of the New York State Attorney General Eric T. Schneiderman, Obstructed View:
What’s Blocking New Yorkers from Getting Tickets (2016) at 3, https://ag.ny.gov/pdfs/
Ticket_Sales_Report.pdf [https://perma.cc/N9U4-3FE6] (arguing that transparency in
ticketing practices are rarely disclosed to the general public).
26 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
holdback practices started making headlines in 2009 when both Keith Urban
and Taylor Swift faced great criticism after their enormous holdback numbers
were exposed.
210
Moreover, the BOSS Act mandates the disclosure of tickets’
face value, as well as any applicable processing fees.
211
As to ticket scalpers, the
BOSS Act radically limits the timeframe for purchases by scalpers to the for-
ty-eight hours immediately following the primary on-sale, when tickets are rst
released to the general consuming public.
212
To date, The BOSS Act’s progress
has remained stagnant; it has yet to reach the Senate.
213
In 2015, Representative Marsha Blackburn
214
introduced the Better
Online Ticket Sales Act
215
(BOTS Act) to Congress.
216
The intent behind this
bill is to regulate the use of ticket-buying bots that bypass security walls on
authorized online ticket marketplaces.
217
The BOTS Act proposes federal crim-
inal sanctions for use of bot software, deeming such use an “unfair or deceptive
practice” under the Federal Trade Commission Act.
218
210 Alfred Branch Jr. Ticketmaster, Taylor Swift, and Keith Urban Ticket Holdbacks Ex-
posed, TN (Nov. 12, 2009) [https://perma.cc/D9YX-3NM2] (discussing the re-
allocation of thousands of tickets to credit card holders and the artist’s entourage).
211 The BOSS Act, H.R. 5245, 114th Cong. (2016) (favoring consumer knowledge and fair-
trade practices).
212 Id. (promoting stricter limitations on scalper access to rst ticket sales).
213 Id. (indicating that the bill was referred to the Subcommittee on Commerce, Manufac-
turing, and Trade).
214 U.S. C M B, B.H.G archived at https://
perma.cc/NTW8-BZ8M (serving the 7th District of Tennessee).
215 The Better Online Ticket Sales Act, H.R. 708, 114th Cong. (2015) (prohibiting the sale
and use of circumvention software as well as the resell of tickets acquired through use
of the software).
216 Id.
217 Id. (prohibiting “unfair and deceptive act or practice in commerce, the sale or use of cer-
tain software to circumvent control measures used by Internet ticket sellers to ensure
equitable consumer access to tickets for any given event, and to provide for criminal
penalties for such acts”).
218 Legislation Tracker, F M C (Sept. 13, 2016) [https://perma.
cc/8PXG-EV49] (tracking the evolution of the proposed bill); see also Press Release
U.S. Congresswoman Marsha Blackburn, Tennessee Representatives Lead Bipartisan
Effort to Level Online Ticket Sales Playing Field for Fans of Live Entertainment, (Sept.
12, 2016) (stating the purpose of pushing the BOTS Act forward) Representative Black-
burn has said:
For years ticket scalpers have been taking advantage of computer hacking
software (BOTS) to overwhelm on-line ticketing websites with requests. The
BOTS Act will make it an unfair and deceptive practice to use a bot to violate
the terms and conditions of a ticketing site and will allow the FTC to take ac-
tion against online scalpers. These anti-consumer tactics have no place in our
society and it’s time that we take action to protect fans of live entertainment. I
encourage my Senate colleagues to pass this bi-partisan legislation immediately.
Id.
2018] BEYOND THE BOTS 27
Senator Charles Schumer,
219
alongside award-winning composer-lyri-
cist-actor and Hamilton220 creator Lin-Manuel Miranda, launched a successful
campaign calling on Congress to ratify the BOTS Act, which on December 14,
2016 was signed into law.
221
The BOTS Act, however, only addresses part of the
greater ticket scalping epidemic, compelling the New York Attorney General
(NYAG) to lead an ongoing multi-state investigation of the sale and resale of
tickets, an undertaking that reaches beyond scrutiny of ticket bots.
222
I V. S O T
The ubiquity of online communication and e-commerce has both posi-
tive and negative effects.
223
The secondary ticket market would not hold such
sway over ticket prices but for ticket bots’ ability to hack security features
employed by online vendors.
224
The internet has created more opportunity
for the commission of cybercrimes such as identity theft, phishing, hacking,
and data-napping to occur.
225
While innovators have tried to mitigate cyber-
crimes by using cryptography,
226
each attempt to secure transactions has failed
219 C E. S U S S F N Y, S.S.G.,
[https://perma.cc/8DXG-TFZ8].
220 See L-M M, H: A A M () (the acclaimed
Broadway musical about the life of founding father Alexander Hamilton); see also R
C, A H (The Penguin Group, Inc., 2004) (Chernow’s book
provided the basis for Miranda’s musical).
221 Press Release, Standing With Broadway’s Lin-Manuel Miranda, Schumer Spotlights
& Rallies For Critical Senate Bill That Finally Cracks Down On Hackers Who Use
Bots To Steal Popular Broadway & Concert Tickets Before True Fans Have A Chance
To Even Turn On Their Computer (Aug. 14 2016) (stating “bots have gotten com-
pletely out of control and their dominance in the market is driving up prices for music
and sports fans as well as tourists and theater-goers”). This new legislation, support-
ed by Lin-Manuel Miranda, will crack down on online hackers and scalpers that use
‘bots’ to purchase thousands of tickets in a matter of milliseconds, and then sell them
at outrageously-inated prices. Id.; see also Lin-Manuel Miranda, Stop The Bots From
Killing Broadway, N.Y. T (June 7, 2016) [ https://perma.cc/99YR-28RD] (endors-
ing the BOTS Act as an adequate rst step in dissuading scalpers through criminal
penalties).
222 Ofce of the New York State Attorney General Eric T. Schneiderman, Obstructed View:
What’s Blocking New Yorkers from Getting Tickets (2016) https://ag.ny.gov/pdfs/Ticket_
Sales_Report.pdf [https://perma.cc/N9U4-3FE6] (providing investigatory ndings and
data on the use of bots by scalpers as well as other industry practices affecting consumer
access to live entertainment at fair market value).
223 D T A T, B R (Portfolio/Penguin, eds. 1st
ed. 2016) (describing the new landscape the Internet affords).
224 Kyle Torpey, Bitcoin Could Put Ticket Scalpers Out of Business, I B (Oct.
2014).
225 T supra note 223 (citing Moore’s law as the explanation). “Moore’s law of the
annual doubling of processing power doubles the power of fraudsters and thieves.” Id.
226 Cryptography, M-W D (online ed. 2017) (dening cryptog-
raphy as the computerized encoding and decoding of information). Cryptography
28 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
because innovators have relied on third parties, such as banks, to facilitate
transactions and maintain free and open markets.
227
Given that conducting
transactions over the internet requires a leap of faith, the existence of these
middlemen has been crucial in maintaining the appearance of consumer pro-
tection.
228
That is, consumers place value in knowing that their transactions are
secure, and thus far banks and other third parties have been tasked with pro-
viding such security.
229
New technology underlying cryptocurrencies like Bitcoin offers a prom-
ising alternative to this reliance on third parties.
230
It ensures the protection of
the data exchanged while removing the “trusted third party” from the trans-
action.
231
This new way of transacting is referred to as the blockchain.
232
In
its most basic form, the blockchain is an open source code that anyone can
freely download and participate in on a global scale.
233
It comprises a “digi-
tal ledger” that is “shared, replicated, and synchronized among the members
of a network.”
234
Because blockchain technology is distributed—running
allows for secured communications that prevent third parties from deciphering the
communication.
227 See T, supra note 223 (describing the role of third parties as detrimental to pri-
vacy and security); see also Rebecca Campbell, BitTicket Uses Ethereum Classic to Book
Tickets on a Blockchain, CC N (May 21, 2017) [https://perma.cc/GQ8Q-
B4UD] (showing how the blockchain is already being utilized to sell tickets); see also
Imogen Heap & Don Tapscott, Blockchain Could Be Music’s Next Disruptor, F
(Sept. 22, 2016) [https://perma.cc/P529-V8G8] (characterizing blockchain as the tech-
nology that could create a sustainable economic model for artists); see also Imogen
Heap, Blockchain Could Help Musicians Make Money Again, H B R-
(June 5, 2017) [https://perma.cc/D2WA-8CPB] (discussing why blockchain is worth
exploring for creatives); see also Olusegun Ogundeji, Imogen Heap Sees Blockchain
as the Music Industry’s Savior, CC N (Oct. 18, 2016) (explaining Heap’s
views as to why it’s time to redene the way creators get paid); see also Paul Resnikoff,
I’m Imogen Heap. And This Is Why I’m Releasing My Music on Blockchain, D
M N (Oct. 5, 2015) [https://perma.cc/E85W-R2G7] (describing blockchain’s
ability for real-time distributions of royalties to all parties involved in song creation);
see also Kyle Torpey, Bitcoin Could Put Ticket Scalpers Out of Business, I B
(Oct. 2014), [https://perma.cc/8QLU-GF9K] (arguing for ticketing companies to adopt
an open distribution model); see also Jonathan Keane, Blockchain Startups Take On
Ticket Touting, But Will They Gain Traction? (July 2017), [https://perma.cc/8QK4-9P9R]
(articulating the hurdles blockchain may pose to ticketing).
228 See T, supra note 223.
229 See id. (articulating why consumers and businesses alike have treated the middlemen as
“deities”).
230 Id. (discussing how Bitcoin was born and the technology that enabled its success).
231 Id. at 5.
232 Id. at 5.
233 Id. at 6.
234 Sloane Brakeville & Bhargav Perepa, Blockchain Basics: Introduction to Distributed Led-
gers, IBM W, (Aug. 21, 2017) https://www.ibm.com/developerworks/cloud/
library/cl-blockchain-basics-intro-bluemix-trs/cl-blockchain-basics-intro-bluemix-trs-pdf.
2018] BEYOND THE BOTS 29
on computers around the world—there is no central database to hack; and
each transaction—such as the exchange of assets or data—is recorded within
the network.
235
For a transaction to be validated, each “block” on the blockchain must
refer to the block that came before it.
236
Don and Alex Tapscott, avid blockchain
investors and researchers, aptly describe the security impact this technology
affords: “Blockchains enable us to send money directly and safely from me to
you, without going through a bank, a credit card company, or PayPal....If
you wanted to steal a bitcoin, you’d have to rewrite the coin’s entire history
on the blockchain in broad daylight.”
237
The internet is experiencing a shift,
transitioning from a source of information to a source of value for consum-
ers.
238
With monetary worth now attached, it is vital to secure our transactions
and data so that they remain inaccessible to hackers.
239
If within the ticketing
industry scalpers are the middlemen, moving the purchase and sale of tickets
onto the blockchain could remove the threat of hacking entirely.
240
Blockchain
decentralizes the ticket vending process by making a certain number of tickets
available for purchase at any given moment.
241
With each transaction taking a
predetermined amount of time to be publicly veried, the modus operandi of
scalpers and the bots they use to buy thousands of tickets within seconds would
be impracticable; once the verication time limit expires, the transaction is no
longer valid.
242
Though blockchain promises to deter scalpers, the technology’s status
under the law remains unclear because jurisdictional boundaries can be
crossed and Congress has yet to dene “smart contract” enforceability within
traditional contract law.
243
What is known is that security exchange regula-
tors have established intel groups to explore what kind of legislation, if any, is
pdf [https://perma.cc/5WB8-YWRW] (dening distributed ledgers as a global network).
235 Id.
236 D T A T, B R (Portfolio/Penguin, eds. 1st
ed. 2016) (describing the new landscape the internet affords).
237 Id.
238 Id. at 6.
239 Id.
240 Id. at 21. (showing the possibilities of utilizing blockchain in entertainment allowing
creators to get fully compensated for the value they create).
241 TheTicketingBusiness, Blockchain Could Beat the Bots Says Tao Chief, T B-
N (July 11, 2016), http://www.theticketingbusiness.com/2016/07/11/blockchain-
could-beat-the-bots-says-tao-chief [https://perma.cc/6J3G-YFXW] (articulating the
way blockchain could disarm scalpers permanently); see also C T, https://
www.citizenticket.co.uk/bitticket [https://perma.cc/96DS-2B79] (showing a blockchain
network that can distribute tickets to live events).
242 TheTicketingBusiness, supra note 241(portraying the verication component of
blockchain).
243 D T A T, B R (Portfolio/Penguin, eds. 1st
ed. 2016) (examining the role the judiciary will play).
30 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
appropriate to help shape the development of this technology.
244
Investment
in research and development by venture capitalists in the U.S. is signicant, and
support from top economists and senior deputy governors of banks has only
heightened curiosity for and credibility of this technology.
245
V. P
The implementation of the BOTS Act of 2016 and its companion bill
(together, the BOTS Act) has been an important step in stabilizing the imbal-
anced ticketing industry. However, the BOTS Act is not an exhaustive or
foolproof solution for combatting the forces that control the market for tickets.
A. Enhancing the BOTS Act
The BOTS Act outlaws the use of ticket-bot software across the nation.
However, careful examination of this legislation shows that it is a temporary
x for a problem that requires much more proactive attention from regulators
and industry insiders.
246
In its current form, the BOTS Act prohibits the sale
and use in interstate commerce of ticket bots, subjecting violators to civil pen-
alties, such as hefty nes, at the federal level.
247
Notably, the BOTS Act defers
to the individual states the option to impose criminal sanctions
248
and fails to
directly address the complicity of primary vendors, artists, and licensed brokers
in causing price ination in the secondary market.
249
To purchase tickets to popular live entertainment events, the general
public is at the mercy of industry insiders and scalpers.
250
This is due in part to
the fact that ticket bots have not been uniformly criminalized at the national
level.
251
As a result, bot operators are able to evade criminal charges simply by
moving the bases of their operations to those states where the use of the soft-
ware is not deemed a criminal offense.
252
Moreover, cyber scalpers reap such
244 Id.
245 Id.
246 Justin Joffe, Ticket Bots Are Now Illegal, but They’re Part of a Much Bigger Problem,
O (Dec. 1, 2016) http://observer.com/2016/12/ticket-bots-are-now-illegal-but-
theyre-part-of-a-much-bigger-problem [https://perma.cc/TE6W-E845] (arguing that
laws still allow for the culture of secondary sales to drive the market).
247 BOTS Act, H.R. 708, 114th Cong. (2016).
248 BOTS Act of 2016, S. 3183, 114th Cong. (2016) (detailing the civil actions that may be
pursued).
249 Id.
250 Ofce of the New York State Attorney General Eric T. Schneiderman, Obstructed View:
What’s Blocking New Yorkers from Getting Tickets 1, 11 (2016) https://ag.ny.gov/pdfs/
Ticket_Sales_Report.pdf [https://perma.cc/N9U4-3FE6] (nding that the majority of
live event tickets are diverted away from the general consuming public).
251 BOTS Act of 2016, S. 3183, 114th Cong. (2016) (lacking any mention of criminal
penalties).
252 See id. (providing civil punishments under the Federal Trade Commission).
2018] BEYOND THE BOTS 31
large prots from their ticket resale enterprise that any civil nes they may face
under the BOTS Act can be internalized as basic operating costs.
253
Despite its shortcomings, the BOTS Act does successfully account for
the uidity of ticket purchases, transfers, and online marketplaces by making
unlawful the “selling or offering to sell” in interstate commerce any event ticket
acquired using ticket bots.
254
Although the language is likely included to give
the federal government jurisdiction only when such activity occurs across state
lines,
255
it is likely to be interpreted as inclusive enough to enable lawmakers to
broaden the scope of its application—allowing cyber-scalpers who operate in
a state that has not outlawed the use of ticket-bot software to be prosecuted.
256
As discussed earlier in this Article,
257
in addition to the cyber-scalp-
ing issue, artists and their teams engage in various ticket-holdback practices
and pre-sale programs that reduce the number of tickets sold in the primary
market.
258
These practices substantially contribute to the ticket accessibility
problem.
259
The BOTS Act is decient because it does not hold artists and
management accountable.
260
By not including a clause that addresses this glar-
ing and pervasive transparency issue, the BOTS Act limits itself to tackling just
one prong of an industry-wide phenomenon.
261
A more comprehensive law
would acknowledge this other major factor that contributes to inated ticket
prices.
262
The unpassed BOSS Act achieves this very objective by setting forth
concrete rules for primary and secondary ticket sale distribution and pricing,
and thus would serve as a strong companion bill to the BOTS Act, or even per-
haps as inspiration for possible amendment to the BOTS Act.
263
253 See Telephone Interview with Luis A. Miranda, Jr., Founding Partner, MirRam Grp.
(Nov. 16, 2016) (noting that nes up to thousands of dollars had not deterred scalpers in
New York City).
254 BOTS Act of 2016, S. 3183, 114th Cong. (2016) (addressing interstate commerce).
255 See id. (noting it shall be “unlawful for any person to sell or offer to sell any event ticket
in interstate commerce”).
256 See id. (connecting interstate commerce to ticket sales generally).
257 See supra Parts II and III.
258 See O F. R, C F R, T , P. -
(2012) (noting that it has been industry practice to hold back a set number of tickets
from those released for groups connected with the event).
259 Ofce of the N.Y. State Attorney Gen. Eric T. Schneiderman, Obstructed View: What’s
Blocking New Yorkers from Getting Tickets 11 (2016) https://ag.ny.gov/pdfs/Ticket_
Sales_Report.pdf [https://perma.cc/N9U4-3FE6] (citing that on average only 46 percent
of tickets are reserved for the public). The remaining 54 percent of tickets are divided
amongst holds and presales. Id.
260 See BOTS Act, H.R. 5104, 114th Cong. (2016) (making no mention of industry insiders).
261 See BOTS Act of 2016, S.3183, 114th Cong. (2016); (showing the federal law’s reach is
specic to ticket-buying and circumvention software).
262 See Telephone Interview with Noah Stein, Assistant Attorney Gen., Bureau of Internet
& Tech., and Kathleen McGee, Chief, Bureau of Internet and Tech. (Dec. 7, 2016) (dis-
cussing ticket bots as an important yet small issue in the xed game of ticketing).
263 See The BOSS Act, H.R. 5245, 114th Cong. (2016) (requiring full disclosure of ticket
32 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
The BOSS Act holds primary vendors accountable by requiring them to
disclose and display on their websites at least seven days prior to the date of
on-sale the total number of tickets to be made available.
264
Furthermore, the
BOSS Act ensures that ticket distribution methods are made known to con-
sumers, that ancillary charges are clearly displayed alongside the initial ticket
prices, and that consumers who purchase directly from primary vendors retain
the right to transfer.
265
As to the secondary market, the BOSS Act, like the
BOTS Act, outlaws the use of ticket-bot software.
266
Uniquely, however, the
BOSS Act requires the secondary seller to disclose whether or not it is in pos-
session of the ticket at the time of sale, the precise location and description of
the seat and venue, as well as refund policies.
267
This is a crucial requirement
because scalpers will often sell a ticket before they actually have the ticket in
their possession—ultimately making a prot without any guarantee of actually
transferring the ticket to the purchaser.
268
And most signicant is the BOSS
Act’s prohibition on the resale of a ticket by
an individual employee of any venue, primary ticket seller, team, artist,
online resale marketplace, or box ofce that is involved in hosting, promot-
ing, performing in, or selling tickets if such resale is for a higher price than
face value of the ticket or is made to any third party and the employee has
actual knowledge, or knowledge fairly implied on the basis of objective cir-
cumstances, that the third party intends to sell the ticket for a higher price
than face value of the ticket.
269
If the BOTS Act were amended to include such a clause, information would be
more effectively relayed to the public and likely level the playing eld in terms
of ticket acquisition because every person and entity involved in ticket transac-
tions would be held accountable in ensuring equitable consumer access.
270
It is
known that scalpers often begin amassing tickets at presale events, accumulat-
ing large numbers of tickets for resale even before the general on-sale occurs.
271
When big players are required to be transparent toward their consuming
allocation by industry players).
264 See id. (detailing the transparency requirements).
265 See id. (emphasizing the interest in consumer protection and rights).
266 See id.
267 See id. (placing transparency requirements on secondary resellers).
268 See D D, C. G. A, O L R, T
S (2006) https://www.cga.ct.gov/2006/rpt/2006-R-0761.htm [https://perma.cc/
Z3UA-MNAE] (providing a state survey on ticket scalping).
269 The BOSS Act, H.R. 5245, 114th Cong. (2016) (prohibiting industry insiders from en-
gaging in scalping practices).
270 Ofce of the N.Y. State Attorney Gen. Eric T. Schneiderman, Obstructed View: What’s
Blocking New Yorkers from Getting Tickets 35 (2016), https://ag.ny.gov/pdfs/Ticket_
Sales_Report.pdf [https://perma.cc/N9U4-3FE6] (arguing that this information void is
what allows industry insiders to escape responsibility for consumer hardships).
271 Id. at 11 (showing brokers are members of artist fan clubs as well as exclusive credit
card holders).
2018] BEYOND THE BOTS 33
audiences, the business will likely benet from increased customer retention
and public approval.
272
B. The Non-Transferrable Paperless Ticket Debate
Ticketmaster developed the Paperless Ticket as an alternative delivery
method to paper ticketing to ensure that genuine fans have access to secure
and validated event tickets at the original sale price.
273
This practice makes
it harder for the ticket to be resold on the secondary market. Indeed, many
high-prole artists such as Bruce Springsteen
274
and Miley Cyrus
275
have advo-
cated the importance of non-transferrable paperless tickets as a successful
anti-scalping effort.
276
Nevertheless, few artists and venues are willing to implement this system
because it can cause end-user inconveniences for those purchasing the ticket
as a gift or those who need to transfer the ticket to another person in the
event of a last-minute scheduling conict.
277
Non-transferrable paperless tick-
ets require that holders present personal identication as a condition of being
granted access to the venue.
278
The New York law banning non-transferrable
paperless tickets discussed earlier is a strong example of the uncertainty in
how to best balance the interests of consumer freedom and consumer pro-
tection.
279
By including a unique opt-out, this New York law portrays the
struggle of creating a world where scalpers do not exist and consumers are
able to transfer their tickets freely.
280
Notably, this mandated opt-out provi-
sion for primary ticket sellers, which allows consumers to transfer the ticket
at no additional cost, essentially destroys the purpose of the non-transferra-
ble paperless ticket because it directly counteracts the expected benet of its
272 Id. at 35 (maintaining that current laws encourage behind-the-scenes deception).
273 T, M C “P T” FAQ, http://www.ticketmaster.com/
mileycyrus/faq.html [https://perma.cc/2F87-L56E] (last visited Apr. 17, 2017) (stating the
goal of the system is to ensure total fan access to live entertainment).
274 See BOSS Act supra note 269(discussing the proposed bill named after Bruce Spring-
steen that supports heightened anti-scalping measures such as paperless ticketing);
but see Robert Viagas, London “Touts” Getting $6k for ‘Hamilton’ Tickets Despite An-
ti-Scalping Measures, P (Jan. 31, 2017), http://www.playbill.com/article/london-
touts-getting-6000-for-hamilton-tickets-despite-anti-scalping-measures [https://perma.cc/
S4FD-F9WF] (describing the implementation of paperless ticketing to one of the most
anticipated West End productions).
275 T supra note 273 (outlining the paperless procedure for Miley Cyrus’ tour).
276 See Ofce of the N.Y. State Attorney Gen. Eric T. Schneiderman, Obstructed View:
What’s Blocking New Yorkers from Getting Tickets 36 (2016) https://ag.ny.gov/pdfs/
Ticket_Sales_Report.pdf [https://perma.cc/N9U4-3FE6] (arguing that the difculty in
transferring tickets hinders the resale of tickets for prot).
277 See id. (outlining the inconveniences paperless tickets can cause).
278 Id. (describing how non-transferrable paperless tickets function).
279 Id.
280 Id. (noting the ban is effective unless an opt-out provision exists).
34 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
implementation, which is to make tickets accessible directly to the general
public at reasonable prices, rather than through scalpers at inated prices.
281
With transferrable tickets, scalpers are able to operate as they always have by
continuing to purchase huge numbers of tickets at on-sale and then transfer-
ring them to consumers by resale at inated prices.
The use of non-transferrable paperless ticketing should be incentivized.
Detractors make the awed argument that non-transferrable paperless ticket-
ing undermines consumer choice, essential to the integrity of a free market. In
reality, it is the lack of regulation that allows scalpers to manipulate sales and
create a xed, rather than a free, market economy.
282
Until scalpers are prop-
erly regulated, non-transferrable paperless ticketing offers to consumers some
relief from ticket price ination.
283
Granted, non-transferrable paperless tick-
eting is not entirely unassailable.
284
Scalpers may use fake identication cards
or prepaid gift credit cards that are then physically mailed to the consumer for
presentation at the door.
285
The means by which live-event tickets are distributed to the public are
left to the discretion of the artist as well as the artist’s producers and venue
managers.
286
Therefore, artists, as inuencers in the ticketing game, must also
be encouraged to ght scalpers.
287
If industry leaders change their practices,
more genuine fans will have access to tickets at fair prices.
288
The secondary
market is distinctive in that the problems of ticket access and price ination
only swell when artists or the live event itself becomes so popular that the
demand enormously exceeds the supply.
289
Non-transferrable paperless tick-
ets for high-demand shows would ensure that the widest possible audience has
281 Id. (showing the ineffectiveness of the opt-out provision).
282 Alfred Branch Jr., Gov. Cuomo Signs New York Paperless Ticket Bill into Law, T-
N (2011) archived at http://www.ticketnews.com/gov-cuomo-signs-new-york-paper-
less-ticket-bill-into-law [https://perma.cc/KF8N-R9PN] (presenting a awed argument
on the part of the bill’s supporters).
283 Ofce of the N.Y. State Attorney Gen. Eric T. Schneiderman, Obstructed View: What’s
Blocking New Yorkers from Getting Tickets 36 (2016) https://ag.ny.gov/pdfs/Ticket_
Sales_Report.pdf [https://perma.cc/N9U4-3FE6].
284 Id. at 36–37.
285 Id. (describing the ways in which scalpers may also defeat this deterrent).
286 Id. at 36–37 (highlighting the parties who determine where and by whom tickets are
sold).
287 Eliot Van Buskirk, Artists, Venues, and Fans Are Responsible for Inating Ticket Pric-
es, Not Scalpers, B I (Apr. 5, 2011, 9:01 AM), http://www.businessinsider.
com/stubhub-says-artists-venues-fans-not-scalpers-inate-ticket-prices-2011-4 [https://
perma.cc/LZH9-UDZW] (describing the importance of artist advocacy).
288 Id. (portraying artists as responsible for the secondary market).
289 See Telephone Interview with Luis A. Miranda, Jr., Founding Partner, MirRam Grp.
(Nov. 16, 2016) (indicating that the demand for Hamilton far exceeded the theater’s
capacity).
2018] BEYOND THE BOTS 35
access to tickets at face value, as opposed to only those who can afford tickets
at exorbitant scalper-inated prices.
290
A common contention against the use of non-transferrable paper-
less ticketing is that it grants a de facto monopoly to primary vendors like
Ticketmaster.
291
In a compromise with the public, Ticketmaster has made
non-transferrable tickets transferrable on the condition that they be resold
through Ticketmaster’s own resale and exchange platform.
292
Essentially,
Ticketmaster could leverage its domination in both primary and secondary
ticket sales for live events.
293
If Congress were to incentivize non-transferrable
paperless ticketing, it might consider adding competition-friendly safeguards
to the resale and exchange policies of primary vendors.
294
Such safeguards
might require the issuance of a full refund for a scheduling conict, such that
Ticketmaster would then put the returned ticket back into the general on-sale
market as opposed to its resale platform.
295
With a model like this, consumers
would be paying a fair face value price and vendors would not be perceived as
monopolizing the secondary market through their own resale platforms.
C. Marketplace Restructuring With Dynamic Pricing
It is undeniable that cheaper tickets benet consumers. This is true
so long as it is the consumers, not the scalpers, who have access to them.
296
Scalpers, acting as middlemen between primary vendors and genuine fans,
take for themselves the benets of affordable ticket prices intended for the
general consuming public.
297
Nevertheless, those in support of the second-
ary market often cite scalpers as essential to preventing monopolies for the
benet of primary ticket vendors like Ticketmaster and encouraging effec-
tive competition that promotes consumer choice and a free market.
298
Such an
290 See Ticketmaster UK, Hamilton Utilise Paperless Ticket System, T (Dec. 1,
2017), http://getstarted.ticketmaster.co.uk/news/hamilton-utilise-paperless-ticket-sys-
tem [https://perma.cc/3XK3-43CA] (showing how the upcoming production will ensure
face-value prices and accessibility to the public).
291 See Ofce of the New York State Attorney General Eric T. Schneiderman, Obstructive
View: What’s Blocking New Yorkers from Getting Tickets, 36–37 (2016) https://ag.ny.gov/
pdfs/Ticket_Sales_Report.pdf [https://perma.cc?N9U4-3FE6] (describing the reasoning
behind New York’s ban on non-transferrable paperless ticketing).
292 Id. at 37 (pointing to the dangers in primary vendors monopolizing the resale market).
293 See id. at 36–37 (outlining advantages that might be taken by primary vendors).
294 See id. at 37 (arguing that the potential abuses by primary vendors do not outweigh the
deterrent effects).
295 Id. (reasoning that the legislature may implement safeguards to alleviate competitive
concerns).
296 See id. at 27 (criticizing the current market structure).
297 See id. (citing scalpers as the main interference in the alleged free market economy).
The scalper’s ability to purchase tickets in bulk before the public gets a chance leaves
the consumer with a much higher price and the scalper pocketing more money. Id.
298 Alfred Branch Jr., Gov. Cuomo Signs New York Paperless Ticket Bill Into Law,
36 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
argument is unfounded because ticket resale services simply take the monop-
oly from primary vendors and hand it over to scalpers who engage in illegal,
black-market practices.
299
Scalpers instead reign supreme because of the speed
at which they are able to purchase tickets in bulk from primary vendors and
post the marked-up product onto resale sites.
300
Indeed, the practices engaged
in by scalpers have prompted primary vendors to increase initial on-sale
ticket prices to better reect the value consumers place on experiencing live
entertainment.
301
This trend in selling tickets at higher prices to better match higher
demand demonstrates dynamic pricing at work. Dynamic pricing is the prac-
tice of pricing items at a level determined by a consumer’s perceived ability
and willingness to pay.
302
Pursuant to current pricing practices, scalpers enjoy
markups on the secondary market while consumers are forced to engage in
questionable, potentially sham transactions.
303
The prots artists and venues
TicketNews (2011) http://www.ticketnews.com/gov-cuomo-signs-new-york-paperless-
ticket-bill-into-law [https://perma.cc/KF8N-R9PN] (characterizing the secondary mar-
ket as essential to preventing primary vendors’ monopolistic tendencies).
299 See H B R, Pricing Secrets Of Ticket Scalpers, HBR Idea Cast,
https://hbr.org/2011/07/pricing-secrets-of-ticket-scal [https://perma.cc/NLZ5-M3GK]
(July, 2011).
300 See Eriq Gardner, Ticket Broker Claims Hollywood’s Gated Events Amount to
an Antitrust Conspiracy, T H R (Feb. 28, 2017, 11:35 AM),
https://www.hollywoodreporter.com/thr-esq/ticket-broker-claims-hollywoods-gat-
ed-events-amount-an-antitrust-conspiracy-981541 [https://perma.cc/WL2M-FG2A]
(indicating that ticket brokers argue laws limiting the secondary market place unrea-
sonable restraints on trade). Craig Banaszewski, the infamous ticket broker who of-
fers access to Hollywood’s most exclusive events such as The Oscars alleges that stu-
dios have done nothing to prevent insiders from engaging in the same sort of scalping
practices. Id. In his response to studios monopolizing high-prole events Banaszewski
alleges:
(a) Competition in the relevant product and geographic markets will be elim-
inated or substantially lessened. (b) Actual and future competition between
Counter-Claimants and Counter-Defendants and between these companies in
the sale and support in the relevant geographic markets will be eliminated or
substantially lessened. (c) Prices for the relevant product in the relevant mar-
kets will likely increase to levels above those that would prevail absent Count-
er-Defendants’ commercially restraining active, attempt to monopolize the
market. (d) Consumers will continue to pay taxes on overinated sweepstakes
values or will overpay in an auction to attend the events.
Id.
301 See H B R, Pricing Secrets Of Ticket Scalpers, HBR Idea Cast,
https://hbr.org/2011/07/pricing-secrets-of-ticket-scal [https://perma.cc/NLZ5-M3GK]
(July, 2011) (explaining why the secondary market exists).
302 Id.
303 See Milgram v. Orbitz, 16 A.3d 1113, 1119-20 (N.J. Super. Ct. Law Div. 2010) (noting
a strong interest in maintaining a competitive free market) (noting the drastic price
change by the time the product reaches the end-user).
2018] BEYOND THE BOTS 37
lose to scalpers indicate that consumers value ticket prices higher than those at
which the tickets are offered upon initial on-sale.
304
Dynamic pricing accounts
for the fact that some consumers may be willing to pay higher ticket prices
to ensure that they get to enjoy seeing their favorite team, artists, or musi-
cal,
305
while others are willing to sacrice that certainty, waiting it out in hopes
of getting tickets at lower prices.
306
Dynamic pricing essentially squeezes out
the ticket scalper: When tickets are priced to match actual consumer demand,
scalpers no longer nd it a worthwhile enterprise to sell tickets on the second-
ary market because there is no prot to be made.
D. The Promises of Blockchain
While a new approach to the ticket pricing model would help deter
cyber-scalping, blockchain has already proven itself to be a viable deterrence
as well.
307
An alternative to dynamic pricing’s wielding of economic forces,
blockchain recongures the electronic infrastructure by which tickets are dis-
tributed and ticketing transactions are recorded.
308
In 2017, Citizen Ticket
309
launched a blockchain ticketing delivery system with BitTicket.
310
Any event
organizer can create a BitTicket smart contract that encodes certain rules right
into the tickets’ electronic DNA.
311
For example, such a rule could limit the
number of tickets any one customer may purchase or restrict the ticket from
being resold after three days of the on-sale.
312
Once the event organizer, pro-
moter, or artist decides on the rules, the smart contract is signed and deployed
onto the blockchain.
313
Blockchain operates against scalpers in that once a rule is set it cannot be
changed, and BitTickets can only be resold or traded on the blockchain itself,
not any other third-party platform.
314
With every ticket publicly veriable, the
304 See H B R, supra note 301.
305 Id. (highlighting the importance of “certainty” in pricing tickets).
306 See id. (detailing the amount of exibility for which dynamic pricing allows).
307 Rebecca Campbell, Using Blockchain Tech to Keep Concert Tickets Honest, B
M (May 2017), https://bitcoinmagazine.com/articles/using-blockchain-tech-
keep-concert-ticket-prices-honest [https://perma.cc/DEJ7-UZ6Y] (discussing Citizen
Ticket’s success in using blockchain for concerts).
308 Id.
309 See Citizen Ticket, https://www.citizenticket.co.uk/bitticket (last visited Aug. 17, 2017)
[https://perma.cc/96DS-2B79] (describing the ticket delivery on a blockchain using Bit-
Ticket technology).
310 Campbell, supra note (describing Citizen Ticket’s use of the Ethereum blockchain
to launch its delivery system).
311 Id. (explaining how BitTicket works by utilizing smart contracts enabled by the Ethere-
um blockchain).
312 Id. (detailing the types of rules an event organizer can encode into tickets on a
blockchain).
313 Id.
314 Id.
38 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
blockchain preserves and guarantees the price of the ticket in a way that is cur-
rently unmatched by private databases such as Ticketmaster.
315
BitTicket, for
example, has anti-fraud rules embedded into its system to ensure that no sec-
ondary ticket bots or scalpers can purchase mass numbers of tickets by which
to control ticket supply and resale at inated prices.
316
If the encoded resale
rule is broken by a secondary ticket website or a scalper, that party’s BitTicket
account is frozen immediately and the tickets purchased are invalidated.
317
The rst live event to use BitTicket was the Scottish Street Food Awards,
and it proved to be a success.
318
Citizen Ticket Chief Operating Ofcer Philip
Shaw-Stewart, said that BitTicket did not at all impair the consumer ticket-pur-
chasing experience: “They purchased and presented their ticket like any other
digital ticket. They were asked for ID at the door to conrm ownership of their
ticket and that’s it, they were in.”
319
Blockchain not only fosters transparency and trust in conducting trans-
actions, but also ensures that prots are received by those entitled to them.
320
BitTicket shows the benets that come from removing the third party, namely
ticket vendors that can be easily inltrated by scalpers, from ticketing distri-
bution.
321
Blockchain renders middlemen—Ticketmaster, StubHub, Wiseguys
and others—superuous, allowing event organizers and artists to work directly
with the customer on predened terms and in a secure manner.
322
Bryce Weiner,
founder of the Tao Network blockchain for the music industry, has stated,
The issue has always been that when 10,000 tickets go on sale, 9,000 of
them disappear in the rst few seconds because of automated systems.
Converting ticket sales to a blockchain would solve that problem from the
start simply because there is no way to resolve all 10,000 of those transac-
tions within ve seconds.
323
315 Id.
316 Id.
317 Id.
318 Id.
319 Id. (quoting Philip Shaw-Stewart).
320 Kyle Torpey, Bitcoin Could Put Ticket Scalpers Out of Business, I B (Oct.
16, 2014), https://insidebitcoins.com/news/bitcoin-could-put-ticket-scalpers-out-of-busi-
ness/25498 [https://perma.cc/E8ZB-2S9R] (describing blockchain as the solution to lev-
eling the playing eld for ticket outlets).
321 Id.
322 D T A T, B R 4 (2016) (characterizing the
removal of the middleman).
323 TheTicketingBusiness, Blockchain Could Beat the Bots Say Tao Chief, T B-
N (July 11, 2016), http://www.theticketingbusiness.com/2016/07/11/blockchain-
could-beat-the-bots-says-tao-chief [https://perma.cc/6J3G-YFXW] (quoting Weiner in
explaining the value of the blockchain).
2018] BEYOND THE BOTS 39
What Weiner is referring to is the network of blockchain participants called
“miners.”
324
Miners run nodes
325
to gather transactions, solve the algorithm in
the form of a block of data, and repeat the process every ten minutes.
326
On
many blockchain platforms such as Ethereum, the miners timestamp the rst
transaction and reject any subsequent attempts to effect the transaction, thus
eliminating the double spend or resale problem.
327
The key is that each block
must refer to the preceding block to be valid, in other words the blocks must
connect to each other through successive continuation of the algorithm.
328
Weiner believes that it would be impossible for scalpers to inltrate the block-
chain and override its algorithms to buy more tickets at once.
329
Currently, ticketing contracts for events are largely structured such that
there is no single issuer for tickets.
330
A percentage of tickets will be given to a
primary vendor such as Ticketmaster, while the remaining tickets are divided
among artists, management, and promoters.
331
For blockchain to be a success-
ful ticket distributing technology, it would need to be the sole issuer of tickets
to consumers.
332
Still, blockchain’s ability to eliminate fraud and provide ticket
security from creation to redemption should prove compelling to artists and
event management to consider using the blockchain for ticket sales.
333
In Wein-
er’s words, “You can’t fake it, you can’t spoof the data, [e]verybody is going to
see that you’re a ticket scalper and we’re going to build all these mathematical
metrics in order to determine who is and who is not a ticket scalper and then
address the problem from where it stands.”
334
324 Id.
325 See What Is Blockchain Technology? A Step-by-Step Guide for Beginners, BG
(2017) https://blockgeeks.com/guides/what-is-blockchain-technology (last visited Mar.
23, 2018) [https://perma.cc/9B84-PBJB] (dening a “node” as a computer connected to
a blockchain network using a client that validates and relays transactions).
326 T, supra note 322, at 30 (describing the way in which transactions are validated,
and subsequent attempts at the same transaction are rejected).
327 Id.
328 Id.
329 TheTicketingBusiness, supra note 323 (showing a scalper’s inability at solving block-
chain algorithms to purchase stockpiles of event tickets).
330 Jonathan Keane, Blockchain Startups Take On Ticket Touting, But Will They Gain Trac-
tion? C (July 30, 2017), https://www.coindesk.com/blockchain-startups-take-
ticket-touting-will-gain-traction [https://perma.cc/8QK4-9P9R] (discussing the con-
tracting agreements for live event tickets).
331 Id.
332 Id.
333 Id.
334 TheTicketingBusiness, Blockchain Could Beat the Bots Say Tao Chief, T B-
N (July 11, 2016), http://www.theticketingbusiness.com/2016/07/11/blockchain-
could-beat-the-bots-says-tao-chief [https://perma.cc/6J3G-YFXW].
40 UCLA ENTERTAINMENT LAW REVIEW [VOL. 25:1
C
The BOTS Act is an important, albeit miniscule, step in rectifying the
cyber-scalping epidemic. Both industry insiders and government ofcials must
work together to protect consumers. If Ken Lowson can begin anew, so too
can the rest of the industry. The NYAG and other researchers have found that
there are effective ways to prevent scalpers. The nontransferable paperless
ticketing system and dynamic pricing model have been proven as most effec-
tive within live concert and sports ticketing. Blockchain technology, such as
BitTicket, although in its infancy, has begun to prove itself as a strong and max-
imally viable solution to beat scalpers. The legislature and industry insiders can
work together to regain control of the ticketing industry in the service of fans.
Until proposed solutions are implemented and enforced, fans will continue to
turn to secondary vendors; artists and venues will lose out on prots; and cyber
ticket scalpers will remain a terrorizing monopoly force within the industry.
In July 2017, Ed Sheeran cancelled 10,000 of his concert tickets that were
being sold at inated prices on resale websites. Sheeran’s management team
decided to resell those tickets at face value on ofcial channels, which still
allows scalpers to purchase mass blocks of tickets and resell tickets on differ-
ent secondary platforms. Ticketmaster just debuted a new technology called
“Veried Fan” that examines purchase histories of ticket buyers to track ticket
bots and high-volume resellers. Hamilton is one of few Broadway shows that
has employed technology that sets a time limit for potential purchasers to be
veried and qualify for exclusive access to a one-day pre-sale. Lead producer
Jeffrey Seller stated, “This is a new effort to put tickets into the hands of the-
atergoers at regular prices. We’ll always be ghting the resellers because their
incentive to keep trying is so powerful. Are we making progress? Yes. But is
it foolproof? Not at all.”
Seller’s statement makes clear that it is of utmost importance that cur-
rent federal legislation be amended to hold industry leaders and artists just as
accountable as cyber ticket scalpers. By requiring them to be more transparent
about the number of tickets made available to the public, industry insiders will
be compelled to do away with their holdback practices in order to maintain
goodwill among audiences. If not by passing an amendment or a new law, then
perhaps artists and their teams should follow on the heels of Imogen Heap
who took it upon herself to begin selling her music on a blockchain, gaining
total control over the money and data produced by the work she creates. Inso-
far as BitTicket has proven the effectiveness of blockchain in accommodating
ticket distribution on a decentralized peer-to-peer network, those relying on
the support of fans should invest in its continued development and use. What
is clear is that a theatrical event, concert, or sporting match is nothing without
loyal fans who devotedly drive its success. To the extent it has not already, a
scalper-driven ticket market could very well compromise that loyalty.
