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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!
Impersonating a person, resale of tickets where (commercial) resale is illegal, fraud, illegal use of computer resources (botnets) and pissed of alot of people who actually wanted to buy tickets but were unable to.
When AC/DC toured last year these asses their botnets overloaded the official ticketsale sites preventing any real customer to even access them, in Belgium the sites were unreachable 2 days before the sale even started.
If i had my way, ticket scalpers would be scalped for real.
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...
that Stubhub is owned by Ticketmaster? I can't believe this. The last two times I tried to get into concerts at the Rochester Auditorium Theater and the War Memorial (Blue Cross Arena), it was difficult. Somehow all the good seats vanished almost immediately. But no, there are seats that magically appear on Stubhub. All you have to do is pay $300 for a $75 seat. Infuriated, I refused (obviously, I've been out of the loop for a while). So for one concert I bought tickets from someone on eBay (double the face value!) and for the other I just got cheap tickets in a poor location. Apparently this kind of poor service has no effect since the venues are sold out anyway. This makes me not want to go to events like this and just buy the DVD! Maybe you have to be a teenager to put up with this BS. I still have the antiquated belief that ticket resellers should not make more money than the artists or promoters. You don't see Wallstreet brokers doing this. Oh, wait...
Sorry, but gray text on gray background is making my eyes bleed.
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.
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.