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Scalpers Earned $25M Gaming Online Ticket Sellers
SeattleGameboy writes "An indictment has been issued for online ticket brokers known as 'Wiseguy Tickets and Seats of San Francisco.' From 2002 to 2009, they used bots, server farms, and CAPTCHA hacking to buy vast number of premium tickets (Springsteen, Miley Cyrus, NFL, MLB playoffs, etc.) and made $25 million in profits. 'They wrote a script that impersonated users trying to access Facebook, and downloaded hundreds of thousands of possible CAPTCHA challenges from reCAPTCHA. They identified the file ID of each CAPTCHA challenge and created a database of CAPTCHA "answers" to correspond to each ID. The bot would then identify the file ID of a challenge at Ticketmaster and feed back the corresponding answer. The bot also mimicked human behavior by occasionally making mistakes in typing the answer, the authorities said.' I guess you can break any system like CAPTCHA if you want it badly enough."
Yes, 25 million USD is easy to make legitimately, that's why everyone is doing it!
They didn't rob the bank.
They didn't print fake dollar bill.
Every single dollar that they paid good money for purchasing the tickets are REAL money.
What's illegal about what they have done??
Muchas Gracias, Señor Edward Snowden !
Between WiseGuy's and Goldman Sachs? Both use computers to game their respective markets.
It's not illegal to resell tickets above face value in most states (check out stub hub for TicketMaster's very own foray into person-to-person ticket sales), and business can be conducted in alternate states with more lax restrictions on ticket resale.
Beyond that, smoking a CAPTCHA system with a bit of cleverness is not hacking or unauthorized access in any reasonable way. This is just a ridiculous attempt to criminalize scuzzy, crappy, opportunistic behavior on the part of one party (scalpers) at the expense of another scuzzy, crappy, opportunistic party (TicketMaster). This strikes me as another case of people trying to misuse the law to remedy the unexpected (only by idiots) defeat of a faulty system. If one reads the article, it seems like Wiseguys (seriously? That's your name?) made purchases on behalf of ticket brokers (ticket-broker is to scalper as escort is to hooker) with detection-avoiding measures in place to keep TicketMaster from blocking the regulars.
It's an attempt by TicketMaster to wipe the egg off of their face, a face that most of America hates with a passion. Perhaps they should find a better way (reverse auction, anyone?) to find the natural market price instead of using time-release scarcity to spur impulse-buys that inevitably result in person-to-person ticket resale later on stub hub where they get to come back for a second skim off the top...
Oh.. right...
The indictment actually states that, ". . .Wiseguys and its owners made more than $20 million in profits. . ." (p. 2 of the indictment), so let's start with the $20 million number.
Keep in mind that:
(a) The $20 million was made over an eight-year period, 2002-2009, so the average was $2.5 million/year;
(b) The profit of the enterprise was split among the two principals (the CFO received $165,000 and the programmer received $150,000, natch...), so that brings it down to an average of $1.25 million/year for the two principals (I think we can agree that the salaried guys did not do well in their risk/reward ratio calculations); and
(c) The "profit" figure used in indictments is nearly always what a legitimate businessperson would call "gross profit," meaning, to quote Wikipedia, "the difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments." As a criminal enterprise, these guys didn't have to worry about taxation (at least, the correct amount of taxation), but they did have to pay the salaries of the other 10-15 people working for Wiseguys Tickets, Inc., and all the other expenses associated with running the enterprise (computers ... ). All of that would have to come out that $1.25 million/year/indictable person. A quick look through the indictment shows the several persons on staff in the US being paid from $55k to $142k/year each, and the ones in Bulgaria being paid from $1 to $1.5k/month each, so you do the math.
The point being, the retirement plan associated with these types of schemes is typically poor, as it's usually at a federally-funded establishment. These guys ran a small tech company with overseas offices, and could have done the same legitimately at a salary of probably $150k/year which, once benefits were included, would be equivalent to $250k/year in cash (to make a direct comparison to their criminal enterprise). In a legitimate business, the CEO also would have had significant stock options and other perks given to him by the company's board to motivate him to grow the company. With even moderate growth over that period, the CEO could be very well-off. As I say, it's easier to make money legitimately.
And you sleep better.
Wow ,,,,
How about a dutch auction?
Start the price offensively high, and drop it as the concert date approaches. The organiser gets paid the price the market will bear, the scalpers are out of the loop - because by definition, anyone willing to pay a stupid price for a guaranteed ticket will already have paid it.
You still get the same effective problem - that rich fans are prioritised over poor fans, but more money goes to the artist and the organiser, so they could throw a few benefit concerts or something to sweeten the deal.
The problem is promoters and talent want two things - sold out venues and maximum price per ticket. Scalpers act as a hedge against lost sales and inaccurate demand / pricing - they take the risk of getting stuck with tickets or losing money; something promoters don't want to accept themselves. Dutch auctions would probably condition people to wait because they learn prices will fill - which causes prices to fall - and promoters have no idea how much money they make nad when. They hate scalpers because, in their mind, they are taking "their" money; and convenientlyignore the risk mitigation role.
Laws barring reselling of tickets, IMHO, merely serve to restrict the market and raise ticket prices overall so promoters can make more money. There is no rational reason to bar ticket reselling anymore than to bar reselling of any other good.
I'm a consultant - I convert gibberish into cash-flow.
So, when we're talking about people already doing stuff that's immoral and often illegal, if the only barrier the captcha offers is "Sure, if you've no moral qualms about what you're doing"... then it seems to me like the most useless gimmick ever. Does anyone actually think that the kind of people we needed captchas against would go, "man, I only wanted to cheat, scam and pollute with email and link spam, but OMG breaking a captcha would be just morally _wrong_. I just can't do _that_."?
Plus, that was not the argument made back then for this crap. Everyone was ranting about how it's such a great defense. If you just tried to point out the ways it can be circumvented, everyone would treat you like you're some kind of a crazy conspiracy theorist.
Well, now it's been officially done, and it's been done for almost a decade, judging by how long these guys operated. Now what?
I'm not saying this as schadenfreude, but I find it genuinely sad that for so long millions of users have been outright excluded from some services, in the name of a solution which just simply doesn't work.
Some captchas are getting so obnoxious, that even I have trouble with some two times out of three, and God help you if you have eyesight problems. And most audio versions I never could decode in the first place. I guess the garbled, low signal to noise thing might not be that bad if you're a native English speaker, but God help you if you aren't.
And for what? For a stupid solution that only works if you have a moral problem with breaking it?
A polar bear is a cartesian bear after a coordinate transform.
Nice work. You forgot one thing when discussing what "easier" means -- entry into market.
Let's use porn as an example. Legitimate media is extremely competitive. Want to start a TV station? A Newspaper? Put out a movie? Music? Those things are dominated by incumbent players who do not like new competition. On the other hand, porn is forced into a low profile, so even though there are big players in the industry, brand names and other matters of high public notice barely even exist. So nearly anyone can make porn.
And since we are talking about event tickets, we are also talking about a pretty well limited and controlled market. It would be unthinkable for someone to just appear out of thin air and start making that kind of money legitimately. Scalpers, on the other hand, are delivering the premium goods with no need of marketing, reputation or other complications required for legitimate business.
So when you are talking about "easy" there are other aspects to consider.
How about an auction? The first tickets released would get bid up to insane levels by superfans/rich a-holes who want to guarantee they get a seat. Once that high demand level is filled, the medium demand audience bids up tickets to medium prices, then whatever is left over purchased at lower prices by the low demand audience. This type of price discrimination allows multiple price points for otherwise identical products without having a middleman (i.e. the scalper) cutting into the profits of the artists/promoters/venues.
Support Right To Repair Legislation.
understand the illegality yet?
Nope.. if the townspeople simply refuse to buy the flour at that price (either doing without flour for the week or buying from a different location), the asshole is down $40. If people know that most of what they're paying is pure profit and yet still pay the price, they're simply idiots. This is exactly how a free market is supposed to work.
which is totally what she said
I'm still trying to figure out how what these guys did was wrong.
The real criminals are the monopolists at Live Nation and Ticketmaster, whose merger will create an entity that controls over eighty percent of the live concert promotions business, and who already demand a $12.50 "service" charge for the privilege of being able to buy a ticket online and another $2.50 just so you can print the ticket out on your own printer. (I guess that last fee is just a penalty they make you pay because you are saving them the cost of having to print and ship a ticket. No good deed goes unpunished, you know.)
The question now, is "just how high can ticket prices go?".
There used to be mom-and-pop music promoters in just about every town in America, putting on live music in bars, parks, gymnasiums and VFW halls. They've created musical venues that allow musicians of all types to ply their wares and make a living. That's going to end now that Live Nation/Ticketmaster are going to create a $4.4 billion behemoth that's going to put the small promoters out of business and control nearly every single live venue.
You know what? These scalpers aren't the problem here. When a system sucks this bad, why shouldn't scalpers game it? You want a "free market" system? Welcome to life.
Personally, I stopped going to the "big" concerts some years ago specifically because of the Ticketmasters and Live Nations (now one entity), and I go to see music in much smaller venues as often as I can, hoping to support the music and not put money in a monopoly. Now, that's going to be harder because at some level almost every dollar spent on live music will be going to these bastards. Maybe I'll just start putting all my entertainment dollars into the hats and guitar cases of the many excellent buskers that inhabit the streets of my city (at least once winter ends).
You are welcome on my lawn.
monopolies, cartels, price gouging, barriers to entry, price fixing, etc...
these are the enemy of capitalism, not a part of capitalism. capitalism is the refinement of competition to achieve a maximum of efficiency. anticompetitive practices therefore have no place in natural capitalism. anticompetitive practices therefore are a greater threat to capitalism than communism
its illegal most everywhere robbery is also illegal, because its the same thing as robbery, but diffuse rather than specific
please educate yourself
http://en.wikipedia.org/wiki/Anticompetitive
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
It's not a form of robbery, it's what happens in a free market, and if people don't buy the food (seriously, you think they'll starve after a week? I don't know how long flour lasts though). Unless it's happening all over the board then they can get other forms of food. If they all die then the scalpers would lose all their customers anyway, so they'll bring their prices down until most people can actually afford it. Yes, some people will still not be able to afford it, but that's how these things work in non socialist countries. Otherwise by your reasoning anyone that ever makes a profit is simply a robber and a parasite. In this case the scalper doesn't really add any value, but what he is doing is not illegal, and the townsfolk can also go to a different source, unless they guy has some kind of monopoly (which is in fact illegal).
which is totally what she said
You really have no idea how venues work do you? You can't just say "Oh, I need another week worth of shows" once the tickets start to go on sale. The Venues have been booked up for months by that point. You also have appointments in neighboring cities a couple of days later. Artists don't just show up at the Pepsi center and go "I'd like to have a concert on Wednesday."
I read the internet for the articles.
Sounds like capitalism to me. He's taking a risk by buying up all the flour. If he prices it over what people are willing to pay they won't buy it and he'll lose money. Some other smart business man will call his contact in the town over, buy up a bunch of flour there and sell it in this town for a 200% markup. He'll make a profit, undercut the 400% profit guy and put him out of business if he doesn't lower his prices. Some other smart business man will see the demand for flour booming and will buy up some high quality flour and sell it at an even higher price to folks who can afford, and desire, higher quality.
The original 2 guys make money, the 3 new guys make money. 4-5 other guys get jobs hauling flour. The other towns that make flour increase their sales. I like it.
MG
It did mention they may have hacked into Ticketmasters systems, and if they did break in, ok, I can see that.
However, using scripts/applications to log into a site and buy tickets, I don't see how that is illegal? They are just using a program to mimic what human could do on a website that only reacts to input and doesn't care itself if a human or a scripts is behind the computer connection being made.
Is it against the law to study and make a database of captcha's?
Like I said..I hate scalpers, they grab all the best tickets for places that allow scalping, and even in states where you can't scalp, they grab the tickets and sell to people outside the state keeping locals from getting tix (since they can't by law pay more than face value).
But, I have a hard time viewing the mere fact that someone devised and used a program to auto-purchase tickets as being something illegal? What if an enterprising person that really loved going to shows did the same type thing to ensure that he could buy the best seats for a show that went on sale for himself and his friends? Same principal? In the old days when you had to call in for tix, would they have arrested people for having speed dial (new at the time) and using it to an advantage over people dialing by hand? Hmmm....
Light travels faster than sound. This is why some people appear bright until you hear them speak.........