Ticketmaster has agreed to pay a $10 million fine to resolve charges that it intruded into the computer system of one of its competitors, prosecutors said on Wednesday, ending a yearslong legal battle over claims that the company illegally interfered in the business of a ticketing start-up called Songkick.
More than two years ago, Ticketmaster reached a settlement with Songkick in response to a lawsuit that accused the concert giant of abusing its market power to control the sales of tickets. In addition to settling for $110 million, Ticketmaster acquired some of Songkick’s remaining technology assets and patents for an undisclosed sum.
The court battle also involved accusations of corporate espionage that led to an investigation by federal prosecutors in New York.
Prosecutors for the U.S. attorney’s office for the Eastern District of New York said in court documents that the computer intrusions were spearheaded by a former Songkick employee who left the start-up in 2012 and later started working for Ticketmaster, which is owned by Live Nation. The employee was said to have disseminated Songkick’s login information to other Ticketmaster employees so they could access an app called an artist toolbox, which provided data on purchases of presale tickets through Songkick, the documents said.
The employee also was accused of sharing URLs that led to drafts of Songkick’s ticketing web pages. In response to that information, prosecutors said, a Ticketmaster executive wrote that the goal was to “choke off” their competitor and “steal back” one of Songkick’s key clients.
The details of the criminal investigation came to light in a federal court in Brooklyn, where Ticketmaster formally agreed on Wednesday to pay the fine as part of a deferred prosecution agreement, according to a news release from the U.S. attorney’s office.
In a statement on Wednesday, Ticketmaster said that in 2017, it had terminated the employee who provided the login information, as well as another Ticketmaster employee, Zeeshan Zaidi, who also accessed the computer systems and faced separate charges.
“Their actions violated our corporate policies and were inconsistent with our values,” the statement said. “We are pleased that this matter is now resolved.”
Last year, Mr. Zaidi, who was formerly the head of Ticketmaster’s artist services division, pleaded guilty to conspiring to commit computer intrusions and wire fraud in relation to the case. Court filings from the U.S. attorney’s office said that Mr. Zaidi accessed Songkick’s computer systems on “numerous occasions” between 2013 and 2015. Mr. Zaidi also included screenshots of Songkick’s toolbox for artists in a presentation for executives and solicited “confidential proprietary information” about Songkick from the employee who had worked there, the documents said.
A lawyer for Mr. Zaidi, who is awaiting sentencing, did not immediately respond to a request for comment.
The criminal charges against Ticketmaster, filed on Wednesday, include one count of computer intrusion for commercial advantage and one count of wire fraud. To comply with the deferred prosecution agreement, Ticketmaster must maintain an ethics program intended to prevent similar infractions in the future.
The $10 million fine is not a huge sum for a multibillion-dollar company, but the pandemic has already put significant financial pressure on Live Nation, which had to cancel concerts en masse and respond to a flood of demands for refunds.