(CelebrityAccess) — Live Nation’s Ticketmaster subsidiary agreed to pay a $10 million fine to settle federal charges that it illicitly accessed Songkick’s computer system repeatedly over a two-year period in an attempt to gain a business advantage.
According to Ticketmaster’s admissions and publicly filed court documents, Ticketmaster gained access to Songkick’s systems when a former Songkick senior employee joined Ticketmaster in 2013 and shared private URLs for Songkick presale websites.
“Ticketmaster employees repeatedly – and illegally – accessed a competitor’s computers without authorization using stolen passwords to unlawfully collect business intelligence,” said Acting U.S. Attorney Seth DuCharme.
According to Federal prosecutors, a senior Live Nation executive also requested a “screenshare/demo” session to review Songkick’s Toolbox service during an Artist Services Summit.
During the session, which was conducted in front of at least 14 Ticketmaster employees, the former Songkick employee used a username and password he had retained from his time at the company to log into the Songkick service to provide insights into the company’s capabilities.
The former employee also provided Ticketmaster executives with internal and confidential financial documents he had retained from his employment at the victim company, Federal prosecutors said.
A Ticketmaster executive explained that the goal was to “choke off [victim company]” and “steal back one of [victim company]’s signature clients,” allowing Ticketmaster to cut Songkick “off at the knees,” Federal prosecutors alleged.
The charges follow a 2018 guilty plea by Zeeshan Zaidi, formerly head of Ticketmaster’s Artist Services division, who faced charges of conspiring to commit computer intrusions and wire fraud based on his participation in the same scheme.
“Ticketmaster employees repeatedly – and illegally – accessed a competitor’s computers without authorization using stolen passwords to unlawfully collect business intelligence,” stated Acting U.S. Attorney DuCharme. “Further, Ticketmaster’s employees brazenly held a division-wide ‘summit’ at which the stolen passwords were used to access the victim company’s computers, as if that were an appropriate business tactic. Today’s resolution demonstrates that any company that obtains a competitor’s confidential information for commercial advantage, without authority or permission, should expect to be held accountable in federal court.”
“When employees walk out of one company and into another, it’s illegal for them to take proprietary information with them. Ticketmaster used stolen information to gain an advantage over its competition, and then promoted the employees who broke the law. This investigation is a perfect example of why these laws exist – to protect consumers from being cheated in what should be a fair market place,” stated FBI Assistant Director-in-Charge Sweeney.
The fine was part of a deferred prosecution agreement that Ticketmaster reached with federal prosecutors to resolve the matter. Under the terms of the agreement, Ticketmaster will also maintain a compliance and ethics program intended to prevent such incidents in the future and will provide an annual report to United States Attorney’s Office annually over the next three years about the program.
In a statement provided to CelebrityAccess, a representative for Ticketmaster said: “Ticketmaster terminated both Zaidi and Mead in 2017, after their conduct came to light. Their actions violated our corporate policies and were inconsistent with our values. We are pleased that this matter is now resolved.”