[Senate Hearing 114-614]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 114-614

                  EXAMINING THE BETTER ONLINE TICKET 
                           SALES ACT OF 2016

=======================================================================

                                 HEARING

                               BEFORE THE

                  SUBCOMMITTEE ON CONSUMER PROTECTION,
                       PRODUCT SAFETY, INSURANCE,
                           AND DATA SECURITY

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 13, 2016

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation
                             
                             
                             
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                   JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi         BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas                  EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
DEAN HELLER, Nevada                  JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               GARY PETERS, Michigan
STEVE DAINES, Montana
                       Nick Rossi, Staff Director
                 Adrian Arnakis, Deputy Staff Director
                    Jason Van Beek, General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
       Clint Odom, Democratic General Counsel and Policy Director
                                 ------                                

  SUBCOMMITTEE ON CONSUMER PROTECTION, PRODUCT SAFETY, INSURANCE, AND 
                             DATA SECURITY

JERRY MORAN, Kansas, Chairman        RICHARD BLUMENTHAL, Connecticut, 
ROY BLUNT, Missouri                      Ranking
TED CRUZ, Texas                      CLAIRE McCASKILL, Missouri
DEB FISCHER, Nebraska                AMY KLOBUCHAR, Minnesota
DEAN HELLER, Nevada                  EDWARD MARKEY, Massachusetts
CORY GARDNER, Colorado               CORY BOOKER, New Jersey
STEVE DAINES, Montana                TOM UDALL, New Mexico
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 13, 2016...............................     1
Statement of Senator Moran.......................................     1
Statement of Senator Blumenthal..................................     3
    Prepared statement of Eric T. Schneiderman, Attorney General, 
      State of New York..........................................     3
    Constituent mail.............................................    29
Statement of Senator Nelson......................................     6
Statement of Senator Booker......................................    23
Statement of Senator McCaskill...................................    24
Statement of Senator Thune.......................................    37

                               Witnesses

Bob Bowlsby, Commissioner, Big 12 Conference.....................     7
    Prepared statement...........................................     8
Jeffrey Seller, Producer, ``Hamilton''...........................    10
    Prepared statement...........................................    11
Tod Cohen, General Counsel, StubHub..............................    13
    Prepared statement...........................................    14
Jeremy Liegl, Associate General Counsel, Pandora Media, Inc. and 
  Ticketfly, LLC.................................................    16
    Prepared statement...........................................    17

                                Appendix

Letter dated September 12, 2016 to Senator Jerry Moran, Chairman 
  and Senator Bill Nelson, Ranking Member from Steve DelBianco, 
  Executive Director, NetChoice..................................    41
Andrew M. Shore, Executive Director, Owners' Rights Initiative, 
  prepared statement.............................................    43
Gary Adler, Executive Director and General Counsel, National 
  Association of Ticket Brokers, prepared statement..............    44
Response to written questions submitted to Bob Bowlsby by:
    Hon. Deb Fischer.............................................    47
    Hon. Bill Nelson.............................................    48
    Hon. Amy Klobuchar...........................................    48
Response to written questions submitted to Jeffrey Seller by:
    Hon. Bill Nelson.............................................    48
    Hon. Amy Klobuchar...........................................    49
Response to written questions submitted to Tod Cohen by:
    Hon. Deb Fischer.............................................    49
    Hon. Bill Nelson.............................................    50
Response to written questions submitted to Jeremy Liegl by:
    Hon. Deb Fischer.............................................    51
    Hon. Bill Nelson.............................................    51
    Hon. Amy Klobuchar...........................................    52

 
          EXAMINING THE BETTER ONLINE TICKET SALES ACT OF 2016

                              ----------                              


                      TUESDAY, SEPTEMBER 13, 2016

                               U.S. Senate,
      Subcommittee on Consumer Protection, Product 
              Safety, Insurance, and Data Security,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:35 p.m. in 
room SR-253, Russell Senate Office Building, Hon. Jerry Moran, 
Chairman of the Subcommittee, presiding.
    Present: Senators Moran [presiding], Thune, Fischer, 
Heller, Gardner, Blumenthal, Nelson, McCaskill, Klobuchar, and 
Booker.

            OPENING STATEMENT OF HON. JERRY MORAN, 
                    U.S. SENATOR FROM KANSAS

    Senator Moran. The hearing of the Consumer Protection, 
Product Safety, Insurance, and Data Security Subcommittee will 
come to order. We're pleased to have our witnesses here on a 
topic that I think is of value and has some opportunity for us 
to make a difference.
    Whether it's a Garth Brooks concert at Wichita, a KU 
basketball game in Lawrence, or the most hyped and prestigious 
Broadway show of all time, Hamilton, the digital age has made 
acquiring tickets easier than ever. But an age-old issue of 
ticket scalping has been made even more prevalent by advances 
in technology.
    When you're trying to pick up tickets for the next big 
event, you're no longer only competing against other eager fans 
when the tickets are released. You are now forced to compete 
against an army of sophisticated ticket bots that overwhelm the 
ticketing website through brute force, scoop up as many tickets 
as possible, and then resell them on a secondary market at a 
significant markup.
    So what is a ticket bot? Here's my quick example. A live 
performance is happening, say, a Garth Brooks concert in 
Wichita. You know lots of people want to be there, and there 
are only so many tickets that are available. People who use 
bots first overwhelm the primary ticket issuer's website by 
cutting in line ahead of regular fans. While those tickets are 
taken out of circulation, they quickly use human operators to 
enter distinct names, credit cards and addresses, and 
circumvent other security measures.
    The software is easy to find, and you don't even have to be 
a technology genius to use it. I don't want to direct anyone to 
a website, but a quick Google search for ticket bots will lead 
you to a different kind of marketplace, one where you can 
purchase the software we're talking about today. The bots are 
advertised as specific applications for websites such as 
Ticketmaster or StubHub, and they even offer to make custom 
products.
    Bots harm everyone in the live entertainment ecosystem, 
from performers to fans. Ticket issuers, like Ticketfly, have 
to invest heavily in server capacity and extra security 
measures to deal with the artificially generated stress that 
the bots produce. And when the site doesn't seem to work 
properly, or the event is listed as sold out seconds after 
tickets go on sale, consumers get frustrated with the ticket 
issuer or the venue. The secondary market is also impacted by 
this practice. For their part, eBay/StubHub supports BOTS 
legislation and believes that misuse of ticket bots ``harms all 
parts of the ticket industry.'' Of course, perhaps the biggest 
impact is on the fans. A report by the New York Attorney 
General suggests that at least tens of thousands of tickets per 
year are being acquired using ticket bots.
    I certainly believe that a vibrant secondary ticket 
marketplace is nothing but good for consumers. People can and 
should be able to sell their tickets in the marketplace, and if 
people are willing to pay extra for certain performances, that 
is their right. StubHub estimates that half the tickets sold on 
their platform are below face value, so the value prospect cuts 
both ways for consumers.
    What I take issue with, and what this legislation that I 
and others have introduced seeks to address, is the practice of 
cutting in line when tickets are offered so that regular 
consumers don't even have a chance to pay face value for the 
tickets. Some have also raised ticketing concerns outside the 
scope of this legislation. We do not claim that this 
legislation will be a silver bullet for all that ails us or can 
solve every consumer problem, but I look forward to a robust 
discussion today about many of these proposals.
    Many groups, including StubHub, in their testimony today 
have advocated additional provisions that they believe would be 
beneficial to consumers. But our legislation has been narrowly 
tailored to address a real and significant problem that impacts 
peoples' lives, and there is strong bipartisan and bicameral 
support for this legislation.
    It is my expectation that this committee, the Commerce 
Committee, will consider BOTS at its next markup. I believe 
that's next week. I would encourage all of my colleagues to 
cosponsor and support this bill. I would like to specifically 
thank my Commerce colleagues for their interest and support in 
this issue.
    Ranking Member Blumenthal, thank you for your support in 
advancing this legislation and for putting together today's 
hearing.
    Senator Fischer, thank you for your support as well, and 
I'm sorry that the Big 12 has trumped the Big 10 once again and 
our testifying witnesses here today.
    [Laughter.]
    Senator Moran. Yesterday, the House of Representatives 
passed on suspension a very similar version of the BOTS Act. 
I'd like to thank Congresswoman Blackburn for her work on this 
issue, and I look forward to continuing to work with her to 
make this bill a law.
    I would now like to recognize the Subcommittee's Ranking 
Member, Senator Blumenthal, for his opening statement.

             STATEMENT OF HON. RICHARD BLUMENTHAL, 
                 U.S. SENATOR FROM CONNECTICUT

    Senator Blumenthal. Thank you, Mr. Chairman, for your 
leadership in bringing us together today for this hearing, and 
to you and our other colleagues for supporting the Better 
Online Ticket Sales Act of 2016, a good step, if only a modest 
step, toward stopping ticket scalping in this country.
    In one of my favorite shows of all time, Hamilton, and in 
one of my favorite numbers in that show, one of the show-
stopping songs, is ``The Room Where It Happened.'' The room 
where it happens--that's all fans want to do, to be in the room 
where it happens, and what this bill does is give them fair 
access to be in that room. It may be a sports stadium or a 
music venue or a show like Hamilton.
    Anybody who says that these are victimless abuses is 
kidding themselves. This kind of abuse affects boys and girls 
who want to celebrate birthdays and who are denied that 
opportunity at the show that they have waited an eternity, it 
may seem to them, to see. It affects the music fans who want to 
go to the concert that they cannot access. It affects the 
sports fans who can't see their teams in victory or defeat.
    I spent many years as Attorney General of the state of 
Connecticut fighting to protect consumers from ticket scalpers 
making unseemly profits from unscrupulous and illegal 
practices. Ticket scalping is not a victimless abuse. It is not 
a victimless crime. It affects ordinary Americans in their 
pocketbooks, in their hopes and aspirations, and it affects 
respect for the rule of law and fairness in our society and 
appreciation of the great cultural richness of this Nation.
    My former colleague as attorney general, or one who 
followed as attorney general after I left, Attorney General 
Eric Schneiderman, has done an investigation and produced a 
report back in January. I ask, Mr. Chairman, that his prepared 
statement be submitted for the record.
    Senator Moran. If there's no objection, so ordered.
    [The information referred to follows:]

     Prepared Statement of Eric T. Schneiderman, Attorney General, 
                           State of New York
    Mr. Chairman, Mr. Ranking Member, and other distinguished Members 
of the Subcommittee: I am pleased to present this prepared testimony 
regarding the problem of ticket purchasing software, commonly known as 
``ticket bots.''
    As the Attorney General for the State of New York, my 
responsibilities include enforcing New York law governing the market 
for tickets to concerts, sports games, and other live events. For more 
than three years my office has led a wide-ranging investigation into 
this market, and the facts we uncovered all lead to one conclusion: 
Ticketing is a fixed game. Fans are shut out of buying tickets from 
primary sellers such as Ticketmaster and are then forced either to pay 
exorbitant markups on the secondary market, at resale sites such as 
StubHub or Ticketmaster's Tickets Now, or else miss out on vital 
cultural events altogether.
    Through our investigation, my office has gained in-depth, first-
hand knowledge of ticket bots. We subpoenaed documents and data, 
performed analyses, and took testimony. We presented our findings in 
January 2016 in a detailed report entitled ``Obstructed View: What's 
Blocking New Yorkers from Getting Tickets,'' which accompanies my 
testimony. The report described myriad ways in which the ticket 
industry is broken, with bots as a particular focus. Bots are a 
particularly pernicious force in the ticketing industry. By automating 
the ticket-buying process, bots have two huge advantages over human 
buyers: (1) they perform each transaction at lightning speed, and (2) 
they can perform thousands of transactions simultaneously. As a result, 
they crowd out human purchasers and snap up most good seats. My 
investigation found one bot that purchased more than 1,000 tickets to 
see U2 at Madison Square Garden within a single minute, and more than 
15,000 tickets to U2 shows nationwide within a single day. Three of the 
biggest bot users collectively bought more than 140,000 tickets to New 
York over three years. Multiply that by fifty states and you can see 
the enormity of this problem nationwide. Millions of fans are shut out 
from getting tickets at face value. Moreover, the integrity of the 
entire market for tickets is undermined by the fact that bot users have 
made the process so unfair.
    In addition to reporting on industry practices, my office also took 
enforcement actions against bot developers, users, and illegal 
resellers. My office has already reached settlements with some of the 
country's biggest bot-users, requiring them to abstain from using bots 
for events in New York and recouping millions in penalties. For 
example, one of those bot users scooped up 520 tickets to a Beyonce 
concert in Brooklyn in just three minutes, and was required to pay 
$600,000 in disgorged profits and penalties. Our investigations into 
even more bot-users are ongoing and we expect to announce additional 
significant enforcement actions.
    Our report and enforcement actions also helped spur a push in the 
New York State Legislature to take additional action to crack down on 
bot use. My office worked with leading State legislators from both 
parties on a bill that increased civil penalties, for the first time in 
New York imposed criminal penalties for bot use, and extended liability 
to those who may try to evade the law by outsourcing the bot use to a 
third party while reselling the tickets the bot obtained. That bill 
passed with unanimous support in both houses and awaits the Governor's 
signature.
    I applaud this committee's efforts to craft an anti-bot law at the 
Federal level, because while state laws like the one pending in New 
York will increase deterrence, I believe the bot problem could be much 
more effectively addressed with a Federal anti-bot law that complements 
existing state laws. Ticket reselling is enormously lucrative. My 
investigation found that reseller markups on tickets are 50 percent 
over face value on average, but sometimes reach more than 1,000 
percent. One bot user we investigated had more than $40 million in 
annual revenue, a large portion of which he split with his bot-
programmer partner. These riches create large incentives for resellers 
to use bots. Compare that with the resellers' view of current 
deterrence: First, states with anti-bot laws must discover the bot use 
(which may not happen considering sophisticated bots are very good at 
mimicking human behavior) and then bring an action. Second, even if the 
action results in disgorgement and penalties, the bot user has ample 
funds to pay those costs, not only from the illegal bot use in states 
with bans but also from the legal bot use in states lacking such bans. 
In short, the states without bans subsidize illegality in states with 
bans. A Federal prohibition could help change the incentives so it no 
longer pays to use bots.
    Outlawing bot use is not just logical, it is fair. Currently, the 
small-time scalper standing outside a venue selling a pair of tickets 
is far more likely to be subject to arrest and sanction, while the 
highly sophisticated and well-financed bot users who scalp tens of 
thousands of tickets gets off scot free. This is akin to punishing a 
three-card monte dealer for deception while giving a pass to a fund 
manager running a Ponzi scheme that affects thousands of people.
    For all of these reasons I strongly support the chief provisions in 
the proposed Federal BOTS Act of 2016, bill S. 3183, introduced July 
13, 2016, by Chair Moran and Sens. Schumer, Fischer, and Blumenthal. In 
particular, I support the bill's provisions in Sec. (a) that ban on the 
knowing use of bots and the resale of tickets knowingly obtained using 
bots. Indeed, the legislation I proposed and supported in New York 
similarly imposed liability on knowing resale to ensure that resellers 
cannot insulate themselves from liability by outsourcing bot use to 
third parties. I also support the provisions in Sec. Sec. (b) and (c) 
of the bill that grant authority to the FTC and state attorneys general 
to enforce the proposed law, while being careful not preempt existing 
state laws that my office and those of my fellow attorneys general may 
enforce against bot use in our own jurisdictions.
    Based on my experience enforcing bots laws in New York, I have a 
few suggestions for how the bill could be improved. I urge you to 
consider clarifying certain provisions of the bill to ensure that it 
provides the strongest deterrence possible against bot use and does not 
complicate the efforts of state attorneys general to police ticket 
scalping:

   First, Sec. (a)(1) prohibits bot use ``on an Internet 
        website of a ticket issuer.'' This provision should clarify 
        that the prohibition is not limited to sales on the Internet 
        and encompasses any technology platform, since Ticketmaster and 
        others already sell a large share of their tickets through 
        smartphone apps and may later develop as-yet-unknown platforms. 
        Moreover, it should clarify that the prohibition is not limited 
        to the issuer's own platform, since some issuers sell tickets 
        on third-party websites, such as Facebook.

   Second, Sec. (c)(1) of the current bill provides that states 
        may sue ``as parens patriae'' to obtain injunctive relief and 
        ``damages restitution or other compensation on behalf of . . . 
        residents'' of the state. This provision should clarify that 
        the bill does not limit state attorneys general to suits in 
        their parens patrriae capacity. My office currently may bring a 
        claim under state anti-deception laws, not as parens patriae, 
        for violations of Federal law, and I would not want a court to 
        construe this bill to preclude such an action. Further, 
        Sec. (c)(1) should expressly provide that state attorneys 
        general may obtain the same civil penalties the FTC may obtain. 
        These monetary penalties are critical to increasing deterrence, 
        and that is just as true in a case brought by a state attorney 
        general as in a case by the FTC. Additionally, this provision 
        of the bill should expressly state that disgorgement of profits 
        obtained illegally is also available, since that remedy is 
        useful where restitution is difficult or unwieldy to obtain. 
        This provision should also clarify that it is not restricted to 
        injuries facing ``residents of'' the state, to avoid limiting 
        my office's established authority under state law to obtain 
        relief for violations within New York's borders that other 
        states' citizens, for example bot use affecting New Jersey or 
        Connecticut fans seeking tickets to shows at nearby New York 
        venues.

   Third, Sec. (c)(3) of the current bill provides that 
        ``[n]othing in this subsection may be construed to prevent'' 
        states from exercising powers conferred on them by state law to 
        conduct investigations. This provision should clarify that, 
        beyond investigations, the bill also does not prevent states 
        from bringing any claims they are authorized to bring under 
        their own states' laws.

   Lastly, I urge you to consider following New York's lead in 
        imposing criminal sanctions in addition to civil ones. New York 
        imposed civil penalties for bot use in 2010, yet many resellers 
        still used them despite the risk of detection and litigation. 
        Indeed, my office's investigation turned up communications from 
        one bot user claiming that he would only refrain from bot use 
        if he risked criminal charges in addition to civil ones.

    In closing, I wish to stress that while strong anti-bot laws are a 
necessary step to address the fixed game in ticketing, more will be 
needed to improve fans' access to cultural events. My report showed 
that half of all tickets, on average, are held back for industry 
insiders, special groups, and holders of special credit cards. These 
set-asides are even larger for many events, such as two Justin Bieber 
concerts in 2012 where only 2,000 seats at an 18,000 seat arena in New 
York City were released during the sale to the general public. 
Promoters, venues, and ticketing agents such as Ticketmaster must level 
with fans by disclosing the allocations of tickets to the general 
public versus insiders and other preferred groups. Additionally, if a 
ticketing agent such as Ticketmaster claims that ticket limits are 
enforced, it should enforce those limits as a matter of course on a 
per-person basis or else disclose that such limits are not so enforced. 
Secondary sales platforms such as StubHub and TicketsNow must ensure 
brokers reselling tickets on their sites can comply with laws like 
those in place in New York that require resellers to post licensing 
information and ticket face values. These sites already make face 
values available in the United Kingdom and should do the same for U.S. 
fans.
    I will continue to work with New York's State Legislature to 
improve the ticketing industry in my state, and urge your Subcommittee 
to consider these issues at the Federal level as well.

    Senator Blumenthal. His report shows that tickets remain 
even more out of reach for consumers than ever before. And much 
of this denial of access is due to the illegal use of special 
software, known as ticket bots, that consume, literally devour, 
the best tickets at high speeds the moment they go on sale or 
before and make it impossible for ordinary consumers to 
purchase tickets at reasonable prices. The use of this 
technology basically deprives consumers of fair markets.
    If you believe in the markets, you should believe in this 
legislation. If you believe in fairness in the markets, you 
should support this legislation. Whether it's a mega hit like 
Hamilton or the football games that occur regularly in this 
country over the weekends coming this fall or the concerts that 
occur around the country regularly, the current epidemic of 
ticket bot software is blocking fair access to event tickets, 
and it is maddening and frustrating to consumers, no matter 
where they live or what their background, age, class, or race 
may be. It affects everyone.
    I believe that the current state of affairs is untenable 
and unacceptable, and that's why I am very strongly in favor of 
this first step. And I've heard from some of our community 
performing arts in Connecticut, like the Bushnell Theater in 
Hartford and the Eugene O'Neill Theater in Waterford, about how 
this practice makes their serving subscribers more difficult 
and how they are hampered in building relationships with future 
patrons of the arts. So the ripple effect is beyond Broadway. 
It is in every community theater, every community around the 
country.
    I want to thank the witnesses for being here today and 
contributing to our understanding of this issue.
    Thank you very much, Mr. Chairman.
    Senator Moran. Senator Blumenthal, thank you very much.
    We're honored to have with us the Ranking Member of the 
full committee, Senator Nelson.
    Senator, is there anything you would like to say as we 
begin this hearing?

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Nelson. Thank you, Mr. Chairman. Just to say to my 
colleague here, I did not get to go see Hamilton because----
    Senator Blumenthal. I'll go a second time if you'll go with 
me.
    Senator Nelson. Well, not at the price, because the reason 
I didn't go was I did not want to pay $800 a ticket, and it--
well, at the time that I tried, indeed, all the tickets had 
been bought up, just about what we've been talking about.
    Now, you put it in everyday folks' lives, the retirees, who 
want to go to mark their anniversary at the theater, or you 
talk about the folks who want to get a ticket for their child 
on their birthday to go see their favorite singer, or what 
about the college football fans that want to go to the ball 
games, and they are denied because of what we see going on. 
This is not capitalism. This is not the free market. This is a 
rigged market benefiting some greedy speculators, and it's not 
right, and I appreciate what you all are doing.
    Senator Moran. Well, Mr. Ranking Member, in just a moment, 
I'm going to introduce you to the producer of Hamilton, and 
perhaps you two can get acquainted today, and perhaps you can 
see the show.
    [Laughter.]
    Senator Booker. Mr. Chairman, can I request for the record 
that Senator Blumenthal does his opening statement again, but 
this time sings ``The Room Where It Happens?'' I would greatly 
appreciate that.
    Senator Moran. I hear objection.
    [Laughter.]
    Senator Moran. Again, we're delighted to have our Committee 
members here, but especially appreciative of those who have 
come here to testify on this topic, and I would introduce them.
    We have as witnesses today Mr. Tod Cohen, who is the 
General Counsel of StubHub. We have Mr. Jeremy Liegl, the 
Associate General Counsel for Pandora and Ticketfly; Mr. 
Jeffrey Seller, the Producer of Hamilton, an American musical; 
and Mr. Bob Bowlsby, the Commissioner of the Big 12 Conference.
    Commissioner, we would start with you and work our way 
across the panel. Commissioner, welcome.

            STATEMENT OF BOB BOWLSBY, COMMISSIONER, 
                       BIG 12 CONFERENCE

    Mr. Bowlsby. Thank you, Chairman Moran, Ranking Member 
Blumenthal, Senator Nelson. I appreciate the opportunity to be 
here and thank all of the distinguished members for taking the 
time to hear from the witnesses.
    This is a terrific opportunity to talk about a vexing 
situation that brings all of us with relatively diverse 
backgrounds together to talk about a common challenge. I'll let 
the first three paragraphs of my statement stand for 
themselves, but I think it's self-evident that some of our 
sports produce revenue from tickets, from merchandise 
licensing, and from television contracts. This revenue is vital 
to the operation of intercollegiate athletics programs, 
particularly at the highest level where we operate in a fairly 
autonomous manner and mostly through self-funded resources.
    There is a unique relationship between an institution and 
its fans. It is not uncommon for our programs to have families 
that have been season ticket holders across multiple 
generations. Because of these special relationships, we try and 
keep the value and cost of college tickets at a reasonable 
level. Because of the reasonable level of this pricing, we make 
ourselves an obvious target in some cases. This is particularly 
true of big regular season contests in football and men's 
basketball, as well as many of our post-season games, for which 
there are already a very limited number of tickets.
    I'm convinced that for certain games, we could charge an 
awful lot more than we do. And yet our traditional 
relationships and our loyalty to our fans presents a maximum 
pricing when we know that the supply is fixed.
    The demand to see live events may overwhelm the supply in 
virtually every one of our environments. A school could 
substantially raise prices for that one big game or for a group 
of big games. It could also bundle tickets together so that 
less advantageous contests are bundled up with very highly 
advantageous activities. Accordingly, in a scenario where 
individuals are willing to pay a great deal more for a ticket 
than its stated face value, some unscrupulous actors will 
exploit that situation.
    While many of the tickets to our athletic events are held 
by season ticket holders, individual game tickets are also 
sold. I fully support a free market and a capitalist economy 
and the ability of individual ticket holders to profit from the 
sale and of market forces on their tickets. However, with 
respect to many games, scalpers will use computer programs to 
pick up and buy more tickets than individuals are allowed to 
buy on an individual basis.
    Whether it's an individual lurking outside the perimeter of 
an arena or a sophisticated computer operator unleashing a 
torrent of bots, the bottom line is this: the hard-earned money 
of our fans spent on tickets to our sporting events should 
benefit our schools and our student athletes, not third parties 
who seek to make a quick buck off our most passionate 
supporters.
    Our conference has some of the best college sports fans in 
the country. The bad actors that use the bots to buy up and 
create unnecessarily inflated markets are essentially cutting 
in line in front of the real fans in order to profit off 
something they did nothing to create.
    I'm aware that some of the naysayers and pundits question 
whether there is anything that Congress can or should do about 
this situation. There are 21st century scalpers that are still 
going to find a way to do whatever they can to game the system. 
Well, I disagree. I think this is a logical step in the right 
direction. I also applaud allowing the Federal Trade Commission 
and the State Attorneys General to take civil enforcement 
actions against individuals who employ deceptive practices to 
thwart and challenge the lack of integrity of online purchasers 
in volume.
    We support this legislation as a necessary measure to 
ensure that our universities' fans have access to good tickets 
at face value. My professional career has been spent around 
students, fans, and college sports as an athletic director and 
now as a commissioner of a high visibility sport. We should 
celebrate and encourage healthy competition on the field of 
play between student athletes, coaches, and their respective 
teams. But we should denounce, however, forced competition on 
Internet ticket sites between ardent fans and faceless scalpers 
who seek to profit from those fans who are passionate about 
college athletics.
    Thank you again for your invitation to testify, and I look 
forward to your questions.
    [The prepared statement of Mr. Bowlsby follows:]

   Prepared Statement of Bob Bowlsby, Commissioner, Big 12 Conference
    Chairman Moran, Ranking Member Blumenthal, and distinguished 
members of the Subcommittee, on behalf of the Big 12 Conference and its 
member-institutions, thank you for holding this hearing and providing 
me an opportunity to testify. I have personally been here in 
Washington, D.C., many times to socialize issues affecting 
intercollegiate athletics. We have many challenges--the welfare of our 
student-athletes, too many victims of sexual assaults on our campuses, 
multiple class action lawsuits, rules enforcement and violation 
investigations--the list is long and ever-evolving.
    That said, there is a lot going right with college athletics. Over 
$2.7 billion dollars annually goes to scholarships for student-
athletes, which is the second largest scholarship program in the 
country behind the GI Bill as far as effectiveness in providing a 
college education for our citizens. One in six student-athletes is a 
first-generation college student. More than eight out of 10 student-
athletes at Division I schools will earn bachelor's degrees, a higher 
percentage than the rest of the student population.
    Intercollegiate athletics are an integral part of the college 
experience. The 150,000 student-athletes that compete at the NCAA level 
and the teams on which they play are the source of pride among student 
bodies, faculty, alumni and the communities where they reside. This was 
demonstrated yet again during the recently-concluded Olympic Games in 
Rio. The Big 12 Conference had 87 current or former student-athletes 
who participated in the Games, representing their countries and--
indirectly--the schools from which they came.
    Some of our sports produce revenue from ticket sales, merchandise 
licensing and television contracts. This revenue is vital to an 
athletic department's autonomous budget and is used to enhance the 
educational mission of our universities.
    There is a unique relationship between a school and its fans. It is 
not uncommon for our programs to have families that are season ticket 
holders across multiple generations. Because of these special 
relationships, tickets to college sporting events are often priced 
below fair market value, in order to appeal to a wide variety of 
supporters--boosters, alumni, young professionals, and students, to 
name a few. We are constantly looking for ways to enhance the fan 
experience and hopefully encourage them not to succumb to the 
temptations of the couch.
    I am convinced that for certain games in a given season our 
universities could charge more than they do for tickets. After all, 
there are a finite number of seats to an athletic contest in any venue, 
so supply is fixed. The demand to see that live event may overwhelm the 
supply of available tickets. Schools could substantially raise ticket 
prices for that big game. However, doing so would not be in the 
interest of that school's long term relationship with its fan base. 
Accordingly, in a scenario where individuals are willing to pay a great 
deal more for a ticket than its stated face value, some unscrupulous 
actors will exploit that situation.
    While many of the tickets to our athletic events are held by season 
ticket holders, individual game tickets are also sold. I fully support 
free-market, capitalist economics and the ability of individual ticket 
holders to profit from market forces if they so choose. However, with 
respect to certain games, scalpers will use computer programs to buy up 
more tickets than individuals are allowed to buy just so they can re-
sell them on secondary ticketing sites. For the record, the Big 12 
Conference's member-institutions strongly oppose this type of ticket-
scalping. Whether it is an individual lurking outside the perimeter of 
an arena or a sophisticated computer operator unleashing a torrent of 
bots, the bottom line is this: The hard-earned money our fans spend on 
tickets to our sporting events should benefit our schools and student-
athletes; not third parties who seek to make a quick buck off of our 
most passionate supporters. Our conference has some of the best college 
sports fans in the country. The bad actors that use bots to buy up 
large blocks of tickets are essentially cutting in line in front of 
real fans in order to profit off of something they did nothing to 
create.
    I know that individual states are attempting to address the issue 
of bulk purchasing by banning ticket bots. However, this is an issue 
that goes beyond a State's geographical borders and I believe a Federal 
solution is in order. I fully support S. 3183, The Better On-line 
Ticket Sales (BOTS) Act, and I commend the bipartisan approach by the 
bill's sponsors and those taking a leadership role in this matter.
    I am aware that some naysayers and pundits have questioned whether 
there is anything that Congress can or, should, do on this issue and 
that 21st-century ticket scalpers will still find a way to game 
whatever system is in place. I disagree. I believe it is appropriate to 
make the use of bots an unfair and deceptive practice if used to 
circumvent an Internet website's ticket access control measures. I also 
applaud allowing the Federal Trade Commission or state attorneys 
general to take civil enforcement actions against individuals who 
employ deceptive practices to thwart the integrity of online ticket 
purchases. We support this legislation as a necessary measure to ensure 
that our universities' fans have access to good tickets at face value.
    I attended college on an athletic scholarship as a wrestler. My 
professional career has been spent around students, fans, and college 
sports as an athletic director and now as Commissioner of a high-
visibility conference. We should celebrate and encourage healthy 
competition on the field of play between student-athletes and their 
respective teams; we should denounce, however, forced competition on 
Internet ticket sites between ardent fans and faceless scalpers who 
seek to profit from those fans' passion for college athletics.
    Thanks, again, for your invitation to testify and I look forward to 
your questions.

    Senator Moran. Commissioner, thank you very much. When it 
comes time for questioning, I would admonish my colleagues from 
Nebraska and Missouri to treat you respectfully. And we may get 
some questions----
    Senator McCaskill. It's KU we won't treat respectfully.
    Senator Moran. I've noticed that, Senator from Missouri.
    [Laughter.]
    Senator Moran. Let's now turn to Mr. Seller.
    Mr. Seller, congratulations. Thank you for being here. 
Congratulations on being a producer of a show that actually can 
make political figures interesting and entertaining to the 
general public. We'd be delighted to learn from you.

      STATEMENT OF JEFFREY SELLER, PRODUCER, ``HAMILTON''

    Mr. Seller. Thank you, Chairman Moran. I have to tell you 
that being in your presence, being in the presence of Senator 
Blumenthal, Senator Nelson, Senator Booker, I am honored to be 
in this room where it happens today, to watch and participate 
in the American democratic process.
    Yes, I'm the proud producer of Hamilton. By way of 
introduction, my career has been defined by my passion for the 
American musical. In addition to Hamilton, I produced Rent, 
Avenue Q, In the Heights, and the 2009 Broadway revival of West 
Side Story, and I'm the fortunate winner of four Tony Awards 
for Best Musical.
    I started attending Broadway shows in my hometown of 
Detroit, Michigan, in 1978. I was 13 years old. My family was 
lower-middle class. My father was a process server. My mother 
was a clerk at a local drugstore. Though we had little money 
available for entertainment, my passion for musicals motivated 
my parents to scrape together whatever funds they could so that 
I could see shows at The Fisher Theater.
    Mezzanine seats were $10 and we couldn't afford seats for 
the entire family. My father and I alone went to musicals like 
Shenandoah with John Raitt, A Chorus Line, and Pippin. When 
Annie came to town in 1979, we all wanted to go, so my father 
stood in line for 4 hours at the Fisher Theater so that we 
could get tickets and have that gift for the holidays for the 
entire family.
    I would not be sitting here today were it not for the 
determination of my parents to give me the unforgettable, 
inspirational, and educational experiences I was able to have 
seeing the great American musicals of my childhood. But my 
reason for being here today, my mission, is to ensure that 
young people and, in fact, people of all ages--Senator Nelson, 
for example--have the same opportunity to see live performances 
of whatever interests them, musicals, plays, or, in fact, Big 
12 or Big 10 Conference sporting events.
    I have received numerous letters from children and parents 
appealing to me to help them get tickets to Hamilton. They have 
simply been unable to obtain tickets at regular prices, because 
every time we put a new block of tickets on sale, the ``bots'' 
or ``robots'' have invaded the Ticketmaster system the second 
they went on sale and then electronically purchased almost all 
of the available inventory. Then they have reposted the tickets 
on multiple secondary ticketing sites at prices that are up to 
10 times their face value. Hamilton tickets have regularly been 
sold in excess of $1,000. In essence, these bots cut the line 
and buy up all the available product before anyone has a 
chance.
    You might ask why should I care. I have succeeded in my 
goal, which is to sell out all of my available tickets. The 
forces of free trade and capitalism that in some ways were 
created by Alexander Hamilton himself took care of the rest, 
right? Wrong. Bots are computerized cheaters.
    The people who employ bots use sophisticated software that 
cuts the line, paralyzes the system, and holds and purchases 
every available seat before a consumer has a chance. They 
remove the notion of a level playing field from the very system 
that was designed to make it easy for consumers to buy tickets, 
no matter where they live.
    The secondary market was introduced into show business in 
the United States around 1850. The politically offensive slang 
word, ``scalping,'' came from the notion that those reselling 
tickets were, in fact, taking the skin off the back of the 
general public.
    I'm not here to make any recommendations regarding the 
function or existence of the secondary market. In many 
instances, it's a useful tool for buyer and seller. And though 
I must confess I am a graduate of a Big 10 school, the 
University of Michigan, I will also confess today that maybe 
once or twice I took my football tickets and resold them at the 
Michigan Union so I could buy a pizza after. But I am here to 
argue for fairness, for the ability of consumers to have a fair 
shot at purchasing tickets at the price set by the producer of 
the event. I'm advocating for a level playing field.
    The business of Broadway is a unique one that offers a 
living wage to thousands of talented and skilled artists, 
craftsmen, and technicians. For many structural reasons, 
beginning with the labor intensive nature of theater, I 
acknowledge that tickets are expensive and sometimes 
prohibitively so. We at Hamilton have put in place two powerful 
tools to make affordable tickets available to all.
    First, our groundbreaking educational initiative supported 
by the Rockefeller Foundation will make 20,000 $10 tickets 
available each year to high school juniors who would not 
otherwise be able to afford to see the play. In addition, we 
make over 40 tickets a performance available to the general 
public by digital lottery with seats in the front of the 
orchestra section. That's every single day, $10 for the first 
25 seats.
    We aim to serve as many constituencies as possible. But in 
order for this to work, we need fairness in ticketing. We need 
a level playing field. We need to prevent bots from tampering 
with a system that is designed to allow all consumers access to 
tickets at face value. This is why I wholeheartedly support the 
BOTS Act.
    Thank you, Senator Moran, Senator Schumer from New York, 
Senators Blumenthal and Fischer, for taking leadership roles on 
this issue.
    I thank you for your time, and I am happy to be with you 
this afternoon.
    [The prepared statement of Mr. Seller follows:]

      Prepared Statement of Jeffrey Seller, Producer, ``Hamilton''
    Good afternoon,

    My name is Jeffrey Seller and I am the proud producer of Hamilton, 
an American Musical. By way of introduction, my career has been defined 
by my passion for American musicals. In addition to Hamilton, I 
produced Rent, Avenue Q, In the Heights and the 2009 Broadway revival 
of West Side Story, which incidentally, opened here in Washington at 
the National Theatre in December 2008. I am the fortunate winner of 
four Tony Awards for Best Musical.
    Chairman Moran, Ranking Member Blumenthal and members of the 
Subcommittee, I would like to thank you for holding this hearing and 
for providing me the opportunity to testify about my passion for 
Broadway and live performance.
    I started attending Broadway shows in my hometown of Detroit, in 
1978, when I was 13 years old. My family was lower-middle class. My 
father was a process server and my mother was a clerk at a local 
drugstore. Though we had little money available for entertainment, my 
passion for musicals motivated my parents to scrape together whatever 
funds they could so I could see shows at The Fisher Theatre. Tickets 
for mezzanine seats were $10 and we couldn't afford tickets for the 
whole family. My father and I saw musicals like Shenandoah with John 
Raitt, A Chorus Line, and Pippin. When Annie finally came to Detroit in 
1979 we all wanted to go, so my father stood in line at the Fisher 
Theatre for over four hours to buy tickets--it was a huge splurge and a 
holiday gift for the entire family.
    I would not be sitting here today were it not for the determination 
of my parents to give me the unforgettable, inspirational and 
educational experiences I was able to have, seeing the great American 
musicals of my childhood on national tour.
    My reason for being here today--I would even go so far as to call 
it my mission--is to insure that young people, and people of all ages, 
for that matter, have the same opportunity to see live performances of 
whatever interests them--musicals, plays and concerts.
    I have received countless letters from children and parents 
appealing to me to help them access tickets to Hamilton. They have 
simply been unable to obtain tickets at our regular prices. Why? 
Because every time we put a new block of tickets on sale, the 
``robots'' or ``bots'' have invaded the Ticketmaster system the second 
they went on sale, and then electronically purchased almost all of the 
available inventory. Then they re-post the tickets on multiple 
secondary ticketing sites or fan exchanges at prices that are up to ten 
times their face value. Hamilton tickets have regularly been sold in 
excess of $1,000. In essence, these BOTS cut the line and buy up all 
the available product before anyone else has a chance.
    Why should I care? I succeeded in my goal to sell out all my 
available tickets. The forces of free trade and capitalism that were in 
some ways created by Alexander Hamilton himself, took care of the rest, 
right?
    Wrong.
    BOTS are computerized cheaters. The people who employ BOTS use 
sophisticated software that cuts the line, paralyzes the system, and 
holds and purchases every available seat before a human consumer has a 
chance. They remove the notion of a level playing field from the 
electronic system, which was designed to help consumers purchase 
tickets with ease.
    Throughout the Hamilton run, I've been working with Ticketmaster to 
mitigate the effectiveness of BOTS by cancelling tickets of those we 
suspect are using BOTS, and getting them into the hands of real fans. 
Ticketmaster is spending millions of dollars in software and labor to 
stop BOTS, but we are here together to ask for your help in passing the 
BOTS Act to punish abusers of a system designed for consumers and fans, 
not just for those looking to ``game the system'' and make a quick 
buck.
    The secondary market was introduced into show business in the 
United States around 1850. The politically offensive slang word 
``scalping'' came about from the notion that those re-selling tickets 
were taking the skin off the backs of the general public.
    I am not here to make any specific recommendations regarding the 
function or existence of the secondary market. In many instances it's a 
useful tool for both buyer and seller. I confess that when I was a 
student at The University of Michigan I sometimes re-sold my student 
football tickets and used the profits to buy a pizza at The Cottage 
Inn.
    I am here, however, to argue for fairness. I am here to fight for 
the ability of consumers to have a fair shot at purchasing tickets at 
the price set by the producer of the event. I am advocating a level 
playing field.
    The business of Broadway is a unique one that offers a living wage 
to thousands upon thousands of talented and skilled artists, craftsmen 
and technicians. I acknowledge that, for many structural reasons 
beginning with the labor intensive nature of theater, tickets are 
expensive, and sometimes prohibitively so. We at Hamilton have put in 
place two powerful tools to make affordable tickets available: First, 
through our groundbreaking educational initiative supported by The 
Rockefeller Foundation, we will make 20,000 $10 tickets available each 
year to high school juniors who would not otherwise be able to afford 
the show. In addition, we make over 40 tickets a performance available 
to the public by digital lottery, with seats in the front of the 
orchestra for 10 dollars each.
    We aim to serve as many constituencies as possible. But, in order 
for this to work, we need fairness in ticketing. We need a level 
playing field. And we need to prevent BOTS from tampering with a system 
that is designed to allow all consumers access to tickets at face 
value. This is why I wholeheartedly support the BOTS Act.
    I would like to thank Senators Moran, Schumer, Blumenthal, and 
Fischer for taking a leadership role on this issue. Thanks so much for 
your time today.

    Senator Moran. Thank you very much.
    Mr. Cohen?

        STATEMENT OF TOD COHEN, GENERAL COUNSEL, STUBHUB

    Mr. Cohen. Chairman Moran, Ranking Member Blumenthal, 
Ranking Member Nelson, and members of the Subcommittee, thank 
you for inviting me to participate in this important hearing 
today. My name is Tod Cohen, and I'm the General Counsel for 
StubHub.
    StubHub, owned by eBay, is a global online marketplace for 
event tickets. As the world's largest online ticket 
marketplace, StubHub offers fans a safe and convenient place to 
get tickets to the games, concerts, and theater performances 
they want to see and an easy way to sell their tickets when 
they can't go.
    Today, some fans are rightly frustrated with how tickets 
are sold and distributed. They often face unreasonable 
technological, licensing, and legislative restrictions when 
they attempt to buy or sell tickets. The rules and processes 
are too often unfair for fans and inconsistent with free market 
principles. Like nearly every other industry, a more open and 
transparent ticket marketplace would mean lower prices, broader 
availability and access, as well as greater safety and security 
for people like each of us, like me, especially, who crave and 
want to attend live events.
    But the ticket marketplace is not transparent. The main 
focus today is rightly on ticket bots, the software programs 
designed to bypass ticket purchasing limits or skip ahead in 
virtual ticket queues. StubHub believes that misuse of these 
programs harms all parts of the ticket industry, including 
consumers. That is why we have consistently supported anti-bots 
legislation at the U.S. state level, and we commend Senators 
Moran, Schumer, and Representative Blackburn on their efforts 
to enact a Federal anti-bot bill.
    Still, not all bots are malicious. Overwhelmingly, most 
bots perform a number of functions that are critical to the 
Internet. Bots are used by nearly every portion of the 
Internet, including search engines, e-commerce sites, news and 
weather services, as well as nearly every other Internet 
functionality. As the Committee considers this bill, I 
encourage you to avoid any technological mandates that 
needlessly undermine innovation or provide certain private 
actors unfair competitive anti-consumer protections.
    Ticket bots are just one component in a suite of anti-
competitive and anti-consumer ticketing practices that operate 
as restraints of trade in the ticketing market. Rather than 
focus exclusively on bots, I hope for the fans' sake that we 
have a more comprehensive dialog today and going forward.
    For most fans, a fundamental question is: Why can't I get 
tickets when they go on sale? Ticket bots are only part of the 
answer. A lack of transparency, principally with the practice 
called ticket holdbacks, are also largely to blame. In a report 
on ticket sales released earlier this year, the New York 
Attorney General found that, on average, less than half, 46 
percent, of concert tickets are actually made available for 
purchase to the general public. In some cases, these holdbacks 
are more extreme, with reports of major headliners releasing as 
little as 12 percent of tickets to the public for sale.
    The held back tickets are generally reserved for presales 
and for industry insiders, including artists, agents, venues, 
brokers, and promoters. Understanding the primary market's 
allocation practices would be a helpful development, and I hope 
that we can explore the issue going forward.
    Even for the lucky few who are able to buy tickets at the 
initial on-sale, there are often downstream restrictions 
imposed by primary ticketing providers, teams, venues, and 
artists as a condition of the sale. I want to highlight a 
couple of those restrictions today.
    There are some ticketing practices that are intended to 
make it more difficult, if not impossible, for the original 
purchaser to transfer freely the ticket. These restrictions, 
imposed technologically or through onerous licensing terms, are 
an inconvenient limitation on fans' ownership rights. They 
prohibit fans from buying tickets as a gift, giving away 
tickets to friends or family, or even used as donations. And if 
a ticket buyer cannot attend the event, the intended purpose is 
to block easy resale, which sticks that fan with tickets they 
cannot use.
    Restrictions are utilized in ways that ticket resales can 
only occur on specific platforms approved by primary ticket 
providers. These also harm consumers.
    Ultimately, we encourage Congress to assist in a 
comprehensive dialog around the ticket industry. It is worth 
noting that there is no independent Federal legislation 
regarding the ticket industry. Regulation of the ticket 
industry has always been at the state, local, and municipal 
levels. We hope that Congress will engage in a broad, in-depth 
examination of the ticket industry and require all elements and 
stakeholders to participate in the examination or study. 
StubHub believes that a fair, secure, and competitive ticket 
marketplace unequivocally supports fans.
    Thank you again for the opportunity to testify. I look 
forward to answering any questions that you may have.
    [The prepared statement of Mr. Cohen follows:]

       Prepared Statement of Tod Cohen, General Counsel, StubHub
    Chairman Moran, Ranking Member Blumenthal, and Members of the 
Subcommittee,

    Thank you for inviting me to participate in this important hearing 
today. My name is Tod Cohen, and I am the General Counsel for StubHub. 
StubHub, owned by eBay, is a global online marketplace for event 
tickets. As the world's largest online ticket marketplace, StubHub 
offers fans a safe and convenient place to get tickets to the games, 
concerts, and theater performances they want to see--and an easy way to 
sell their tickets when they can't go.
    Today, some fans are--rightly--frustrated with how tickets are 
sold. They often face unreasonable technological, licensing and 
legislative restrictions when they buy or sell tickets. The rules and 
processes are too often unfair for fans and inconsistent with free 
market principles. Like nearly every other industry, a more open and 
transparent ticket marketplace means lower prices, broader availability 
and access as well as greater safety and security for people like each 
of us who crave and want to attend live events. But, the ticket 
marketplace is not transparent.
    The main focus today will be on ticket bots, the software programs 
designed to bypass ticket purchasing limits or skip ahead in a virtual 
ticket queue. StubHub believes that misuse of these programs harm all 
parts of the ticket industry, including consumers. This is why we 
consistently support anti-bots legislation at the U.S. state level, and 
we commend Senator Moran, Senator Schumer, and Representative Blackburn 
on their efforts to enact a Federal anti-bot bill. Still, not all bots 
are malicious. Overwhelmingly, most bots perform a number of functions 
that are critical to the Internet. Bots are used by nearly every 
portion of the Internet, including search engines, e-commerce sites, 
news and weather services as well as nearly every other Internet 
functionality. As the Committee considers this bill, I encourage you to 
avoid any technological mandates that needlessly undermine innovation 
or provide certain private actors unfair competitive anti-consumer 
protections. Ticket bots are just one component in a suite of 
anticompetitive and anti-consumer ticketing practices that operate as 
restraints of trade in the ticketing market. Rather than focus 
exclusively on bots, I hope for the fans' sake that we have a more 
comprehensive dialogue today and going forward.
    For most fans, a fundamental question is: Why can't I get tickets 
when they go on sale? Ticket bots only partially answer this question. 
A lack of transparency, principally with respect to the practice called 
ticket ``holdbacks'', are also largely to blame. In a report on ticket 
sales released earlier this year, the New York Attorney General found 
that--on average--less than half (forty-six percent) of concert tickets 
are actually made available for purchase to the general public. In some 
cases, these holdbacks are more extreme, with reports of major 
headliners releasing as little as twelve percent of tickets to the 
public for sale. The held back tickets are generally reserved for 
presales and for industry insiders, including artists, agents, venues, 
and promoters. Understanding the primary market's allocation practices 
would be a helpful development, and I hope that we can explore that 
issue today.
    Even for the lucky few who are able to buy tickets at the initial 
on sale, there are often downstream restrictions imposed by primary 
ticketing providers, teams, venues, and artists as a condition of the 
sale. I want to highlight a couple of those restrictions today.
    There are some ticketing practices that are intended to make it 
difficult, if not impossible, for the original purchaser to transfer 
freely the ticket. These restrictions--imposed technologically or 
through onerous licensing terms--are an inconvenient limitation on 
fans' ownership rights. They prohibit fans from buying tickets as a 
gift, giving tickets away to friends or family, or as donations. And if 
a ticket buyer cannot attend the event, the intended purpose is to 
block easy resale, which sticks that fan with tickets they cannot use.
    Additionally, some primary ticket providers, venues, and teams will 
cancel--or threaten to cancel--tickets that are sold outside of their 
preferred or affiliated secondary platforms. Restrictions that are 
utilized to ensure that ticket resales can only occur on the platform 
approved by the primary ticket provider locks consumers into a single 
ecosystem, which discourages competition among secondary ticketing 
exchanges and prohibits consumers from shopping around for lower fees 
and better service.
    One common justification for these restrictions is to reduce fraud. 
Count us as highly skeptical of this argument. The incidence of fraud 
on the StubHub platform is less than 0.01 percent, and in those very 
rare instances of fraud, we offer a robust FanProtect Guarantee to 
protect our buyers by providing a full refund or, more importantly, 
access to the event in question whenever possible. Our evidence shows 
that there is no link between reducing fraud and adopting restrictions. 
Instead, when restrictions are imposed fans lose out with higher 
prices, less availability, increased uncertainty and unnecessary 
stress.
    Primary ticket providers, venues, and artists will also point to 
brokers and the above-face value prices on secondary ticket sites when 
defending these practices. However, this is a selective argument. 
StubHub estimates that approximately fifty percent of the tickets on 
our site are sold below the ``face value'' set by the ticket issuer. 
Although there are tickets listed on StubHub at above face value, those 
are set by market forces and a healthy competitive broad trading market 
is created by allowing prices to be set by the market as opposed to 
artificial restrictions. Many artists, promoters, teams and content 
creators use broad online markets to their advantage by monitoring the 
market value and releasing new blocks of tickets at whichever price the 
market will bear.
    Ultimately, we encourage Congress to assist in a comprehensive 
dialogue around the ticket industry and whether Federal legislation is 
necessary. It is worth noting that there is no independent Federal 
legislation regarding the ticket industry. Regulation of the ticket 
industry has always been at state, local and municipal levels. We hope 
that Congress will engage in a broad in-depth examination of the ticket 
industry and require all elements and stakeholders participate in such 
an examination or study.
    StubHub believes that a fair, secure, and competitive ticket 
marketplace unequivocally supports fans. We think that fans have the 
right to decide how--and for how much--tickets will be bought and sold 
after the initial purchase. We are strongly committed to partnering 
with industry, public policy and other leaders to achieve this goal. 
Public education is essential to the effort, and this hearing is a 
great start. For our part, StubHub earlier this year launched StubHub 
Concourse, a public policy informational and engagement tool for fans. 
For those in the room or watching via webcast that are interested in 
these issues, I encourage you to sign up at stubhubconcourse.com.
    Thank you again for the opportunity to testify today. I look 
forward to answering any questions you may have.

    Senator Moran. Mr. Cohen, thank you very much.
    Mr. Liegl?

 STATEMENT OF JEREMY LIEGL, ASSOCIATE GENERAL COUNSEL, PANDORA 
                 MEDIA, INC. AND TICKETFLY, LLC

    Mr. Liegl. Chairman Moran and Ranking Member Blumenthal and 
members of the Subcommittee, I want to thank you for holding a 
hearing on the harmful effects that bots have on the live 
events industry. Your efforts are very much appreciated by 
people across the industry's ecosystem, from fans and artists 
to venues and promoters.
    My name is Jeremy Liegl, and I'm Associate General Counsel 
for Pandora and Ticketfly. At Pandora, our mission is to 
connect fans with the music they love and to connect artists 
with their audience. This is why it was a natural fit when we 
acquired Ticketfly, a live event technology provider, last 
year. Since its founding in 2008, Ticketfly has partnered with 
more than 1,600 leading event venues and promoters, including 
Cotillion Ballroom in Wichita and StageOne in Fairfield, 
Connecticut, helping them sell more tickets and bring more fans 
out to see live shows.
    Ticketfly's integrated software powers talent booking, 
ticketing, digital marketing, and analytics for live event 
promoters, while its consumer tools help fans discover and 
purchase tickets to great events in just a few taps. Since 
selling its first ticket in 2009, the company has processed 
more than $1 billion in transactions. And in the second quarter 
of this year alone, we processed 3.7 million tickets to over 
38,000 live events.
    The value of live events cannot be overstated. Concerts, 
live theater, comedy, and sports bring people together and 
create tangible economic benefits that can make a real 
difference in a community. Local bars, restaurants, taxi 
drivers, hotels, gas stations, and retail stores all see a 
direct benefit from live events.
    At Ticketfly and Pandora, we've seen the transformative 
nature of live music events firsthand. Take the annual Memphis 
in May International Festival. The month-long celebration 
features the famous Beale Street Music Festival, ticketed by 
Ticketfly. In addition to being a source of pride for the 
people of Memphis, the economic impacts of the festival's 
music, barbeque, and international celebration are astounding. 
This year, Memphis in May supported more than 1,000 total local 
jobs, attracted more than 93,000 visitors, and generated nearly 
$72 million for the city of Memphis.
    So what's the problem? Profit-hungry bot operators on the 
web are exploiting the livelihood and creativity of working 
artists and robbing the fans and venues that support them. A 
growing body of research shows how pernicious use of automated 
software, or bots, is keeping tickets out of the hands of fans, 
siphoning money from artists and venues.
    These computer programs pose as real fans, bombarding 
ticket sites with requests in order to circumvent ticket 
purchase limits and security measures. They can seize large 
chunks of the available tickets within seconds of when the sale 
goes live, far faster than any human being could ever type and 
click. The end result: real fans are unable to get good tickets 
at face value.
    There are other costs to this practice. A common issue with 
ticket bots is that the same ticket can be resold into the 
market more than once. This can lead to longer lines and added 
confusion at the box office and even denial of entry at the 
door. It also unfairly tarnishes the reputation of artists and 
venues who often shoulder the blame for miscues and problems 
created by bot operators.
    Thankfully, there are steps that can be taken by lawmakers 
at both the state and Federal level that strike the right 
balance for fans, artists, and venues alike. Ensuring consumers 
can access tickets in an easy way and at fair prices is a win-
win for all, boosting attendance at events, encouraging greater 
spending by consumers on concessions and merchandise, and 
resulting in increased revenue for artists, venues, promoters, 
and the unsung staff who work hard every night putting on 
shows.
    With that in mind, we are encouraged by and strongly 
welcome the introduction of the Better Online Ticket Sales Act 
of 2016, or BOTS Act, in order to increase fairness in the 
ticket purchasing industry. We want to thank Senators Moran, 
Schumer, Fischer, and Blumenthal for introducing this 
legislation to benefit fans, artists, and live event venues 
alike.
    As I said at the beginning of my testimony, at Pandora and 
Ticketfly, our goal is to connect fans with the artists they 
love, whether it's live at a concert, at the gym, or even 
driving to work. That's why we support a music economy that 
works for everyone, artists and fans, music venues, and 
promoters, and why we urge the Senate to take action to stop 
the insidious practice of ticket bots depriving your 
constituents of fair access to tickets.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Liegl follows:]

    Prepared Statement of Jeremy Liegl, Associate General Counsel, 
                 Pandora Media, Inc. and Ticketfly, LLC
    Chairman Moran, Ranking Member Blumenthal, and distinguished 
members of the Subcommittee.

    My name is Jeremy Liegl, and I am the Associate General Counsel at 
Pandora Media, Inc., and Ticketfly, LLC. I want to begin by thanking 
the Subcommittee for taking the time to hold this hearing to understand 
the marketplace for the sale of tickets to live events and the role of 
concert ticketing in the broader music market. I am grateful for the 
opportunity to testify and offer the Pandora-Ticketfly perspective on 
these issues.
    Pandora, the popular Internet radio service, launched in 2005 and 
has become the world's most powerful music discovery platform. Pandora 
introduces listeners to new music based upon our proprietary Music 
Genome and also connects fans with the artists they enjoy, in part by 
informing them of upcoming concert events and providing a vehicle for 
purchasing tickets to those events. Pandora (assisted by its recent 
integration with Ticketfly) also provides artists with tools to connect 
with their audiences, including the opportunity to connect through live 
music events.
    In late 2015, Pandora acquired Ticketfly, a live events technology 
company that powers the entire event lifecycle for venues and 
promoters. Ticketfly was founded in 2008, and since its inception, has 
processed over $1 billion in gross ticket sales. In 2015 alone, 
Ticketfly sold 12.5 million tickets to 90,000 different events, and 
worked with over 1,200 venue and promoter partners. The Ticketfly 
platform does not stop at ticket sales, however. Venues and promoters 
come to Ticketfly for talent booking, ticketing, and marketing, mobile 
analytics, and through its partnership with Pandora, the ability to 
match online music listeners with live event information. Just this 
past July, Pandora launched a feature to notify users who like a 
particular artist when that artist will be playing nearby. Pandora-
Ticketfly connects artists and promoters with America's largest and 
most engaged music audience--over 78 million listeners on Pandora every 
month.
    Given this deep engagement with the live events space, Pandora-
Ticketfly strongly supports the Better Online Ticket Sales Act of 2016, 
S. 3183 (the ``BOTS Act''). We believe that fans--our core user base--
deserve a fair and reasonable opportunity to support their favorite 
music artists by buying tickets at the face value set by those artists 
and the venues, not by online bot operators employing software tools 
that disadvantage the general public and circumvent technical measures 
designed specifically to defeat the use of bots. Since the misuse of 
bots to subvert the security mechanisms and terms of service ticketing 
platforms put in place is fundamentally unfair to platform operators, 
the public, and the broader music industry, the BOTS Act provides an 
especially appropriate solution to this problem by making the use of 
bots subject to the prohibition of ``unfair or deceptive acts or 
practices'' in Section 5 of the Federal Trade Commission Act.
    Attending a show to see a favorite performer is a special moment 
for a music fan--a moment that can be recalled weeks, years or even 
decades later--and that makes live events a critical part of the music 
industry's success. Even in an age of social media, when fans and 
artists are more connected than ever, there is no substitute for seeing 
a live performance by one of your favorite artists. For some fans, this 
means singing along to Taylor Swift at the height of her latest stadium 
tour; for others, it's seeing that indie band that Pandora introduced 
you to along with 100 other committed fans in a tiny venue. Every 
concert-goer has a story they will share with friends and fellow fans.
    Those stories help create and expand the fan base for each artist, 
and therefore help to drive the success of all the individuals and 
companies who participate in the music industry. When fans are 
precluded from purchasing tickets at face value due to the use of 
automated ticket-purchasing programs called ``bots,'' the entire music 
ecosystem suffers because fans miss out on opportunities to create the 
memories that build the bonds between artists and their fans. These 
bonds are critical for artists looking to sustain a multi-decade music 
career. Fans may also be priced out of a concert entirely, and even if 
they get to attend by purchasing on the resale market, the markups they 
pay mean they have less money to attend other events or to purchase 
merchandise and concessions, which also directly benefits artists and 
venues.
    Tens of thousands of tickets each year are acquired using bots \1\ 
that violate ticketing platforms' terms of use, and circumvent measures 
designed to ensure that the average fan has a fair and equal 
opportunity to buy a ticket to a live event. Bots facilitate the 
purchase of hundreds or even thousands of face-value tickets in a 
matter of seconds (typically, as soon as the tickets become available 
to the general public), dramatically decreasing the number of tickets 
available to fans seeking to support their favorite artists. Bot 
operators can then demand extraordinarily high prices in the secondary 
sale market--essentially extorting additional payments from fans that 
should have the ability to purchase tickets at face value.
---------------------------------------------------------------------------
    \1\ Obstructed View: What's Blocking New Yorkers from Getting 
Tickets, the Office of New York State Attorney General Eric T. 
Schneiderman, available at https://consumermediallc.files.word
press.com/2016/01/ticket_sales_report.pdf.
---------------------------------------------------------------------------
    The presence of bots harms everyone in the music industry save only 
for the operators of the bots. The ticket price for a face-value ticket 
gets distributed to numerous participants in the music ecosystem, 
including performers, authors, promoters, venue staff, and numerous 
other stakeholders. But the markup that fans pay on resale tickets, 
which can be in the hundreds and occasionally thousands of dollars per 
ticket for high-profile events, is retained solely by the bot operator.
    Music industry economics are undoubtedly unique. There are often 
multiple rights holders for each musical work, a separate rights holder 
for the sound recording, and rights may be managed, administered and 
licensed by various stakeholders. One of the benefits of this unique 
system, however, is that profits are typically reinvested in the 
creation, promotion, marketing, and distribution of more music and 
prosperity of the industry. For example:

   Online music distribution services, such as Pandora, 
        generate advertising and subscription income from music users, 
        much of which is paid out to rights holders and creators so 
        that there are continued incentives for creations of new works 
        of authorship.

   Artists contract with promoters to set up tours, so that 
        they can make money off ticket sales and merchandise. These 
        promoters keep a portion of ticket sales so that they can 
        continue to plan tours, including finding the right venues and 
        sponsors.

   Internet services and applications, such as BandPage, offer 
        artists a platform, at a low cost, to provide concert listings 
        and sell merchandise, so that they can connect with their fans 
        without having to create its own platform.

   Ticket fees collected by ticket platforms are primarily 
        passed on to venues and promoters. Venues and promoters can 
        then pass on nearly the entire face value of the ticket 
        directly to the artists. This allows venues to keep the lights 
        on and host more acts, and allows artists to continue to tour 
        and provide fans with opportunities to see them live.

   Venues charge ticket prices so that they can pay the artist 
        for performing, compensate songwriters for public performance 
        rights, and generate revenue to keep the doors open, ensuring 
        that more live events can be enjoyed at an affordable price to 
        fans.

    The list could go on. These different industry participants depend 
on each other's success, and music industry stakeholders are strongly 
committed to reinvesting money from their various revenue streams to 
foster further creativity and ensure that fans have access to live 
music. When third parties subvert the cyclical nature of this ecosystem 
through the use of bots in violation of ticket purchasing agreements, 
everyone else suffers. Demand for tickets declines, making live 
concerts less attractive to artists and venues. Songwriters and 
composers receive less for the performances of their songs, reducing 
their motivation to create new music.
    All the while bot operators line their pockets with ill-gotten 
gains. As Adam Tudhope, a tour manager for Mumford & Sons, recently 
observed, ``On Mumford & Sons last 16-date arena tour of the U.S. in 
April 2016 we estimate that $3m went into the pockets of scalpers and 
secondary sites[.]'' \2\ Ultimately, the use of bots to make mass 
purchases of tickets in seconds and then resell those tickets at 
premiums on the secondary market extracts value out of the ticket 
without contributing to the development of more creative works, meaning 
it arguably has no positive social value.
---------------------------------------------------------------------------
    \2\ Ticket Touts Made $3M From the Last Mumford & Sons Tour. $0 
Went Back to the Music Industry, Adam Tudhope, Music Business 
Worldwide, Sept. 6, 2016, available at http://www
.musicbusinessworldwide.com/ticket-touts-made-3m-from-the-last-mumford-
sons-tour-0-went-back-to-the-music-industry/.
---------------------------------------------------------------------------
    It is also important to recognize that live event pricing is not 
always focused on short-run profits. For example, promoters seek to 
sell out venues and do not necessarily want to do so at the expense of 
discriminating amongst fans. Artists also want a broad swathe of their 
fans to have access to concerts in order to build deeper ties with 
their fan bases. So ticket prices are often deliberately set below the 
short-run, profit-maximizing price for the ticket because the performer 
wants to ensure that fans of all economic means have access to the 
event, and promoters want to show that they can deliver full houses for 
performances.
    For example, in 2011, during a multi-city, multi-night tour, Prince 
made ``approximately 85 percent'' of tickets available for $25 each, 
``in an effort to make the show affordable for all of his fans.'' \3\ 
Prince clearly wanted a wide range of fans to attend his shows and 
intentionally priced them below market as a means to that end. Two 
years later, Kid Rock priced most of the tickets for his summer concert 
tour at $20, protesting high resale prices, he said ``[s]omeone has to 
go out there and fight these high prices and change things up, and I'm 
lucky enough that I can afford to take a pay cut.'' \4\ Pearl Jam took 
similar action in the mid-1990s, when it sought to keep prices under 
$20 because the band ``remember[ed] what it was like to have little 
money for concert tickets.'' \5\ Artists like these intentionally 
choose lower prices for live concert tickets because having the long-
term commitment of an excited fan base benefits them more over the 
course of their careers than simply maximizing revenues they can 
generate on a single concert or tour.
---------------------------------------------------------------------------
    \3\ Prince Shows Announced: `21 Nite Stand' In Los Angeles Starts 
This Week, Most Tickets $25, Lisa Brenner, LAist, April 11, 2011, 
available at http://laist.com/2011/04/11/
prince_announces_first_three_shows.php
    \4\ Kid Rocks' $20 Concert Ticket Plan: Good for Fans, Bad for 
Scalpers, Time, June 26, 2013, available at http://business.time.com/
2013/06/26/kid-rocks-20-concert-ticket-plan-good-for-fans-bad-for-
scalpers/.
    \5\ Pearl Jam Musicians Testify on Ticketmaster's Prices, Reuters, 
Los Angeles Times, July 1, 1994, available at http://www.nytimes.com/
1994/07/01/arts/pearl-jam-musicians-testify-on-ticketmaster-s-
prices.html.
---------------------------------------------------------------------------
    When an artist intentionally keeps ticket prices affordable but 
bots are utilized to improperly purchase a large percentage of the 
available tickets at that affordable price, this strategy for building 
the artist's fan base (and the loyalty of that fan base) is undermined. 
The true fan--who is more likely to spend money on merchandise, 
additional concerts, and future albums--has no opportunity to buy a 
ticket at a fair and reasonable price. The bot operator is therefore 
inappropriately extracting money from the system and investing those 
funds into the development of more sophisticated bots rather than 
contributing to the creative economy.
    When the upside from the resale price is not shared, livelihoods of 
artists, venues, and promoters are diminished. Fans are harmed through 
above-market prices, and subsequently become discouraged from even 
trying to obtain tickets to shows because they are rightly skeptical 
when there are no tickets available on the primary ticketing platform 
seconds after tickets go on sale, but hundreds are available on the 
secondary market for a significant mark-up. When consumers believe the 
system is rigged against them, their willingness to engage in 
supporting an artist by attending an event, buying a t-shirt, or 
purchasing the artist's music could be significantly undermined.
    While Pandora-Ticketfly and other primary ticketing platforms will 
get paid the same fee regardless of whether a diehard fan or a bot 
operator purchases the ticket, when the bot wins out over the diehard 
fan, that fan may not come back in the future to purchase tickets for 
another show. This undermines the integrity of the ecosystem and 
jeopardizes the long-term health of the live music industry.
    Artists go to great lengths to build relationships with fans and 
encourage them to attend shows and experience the live event. For a 
number of artists, touring is their primary source of income--they make 
money not just on ticket sales, but also on merchandise sold at the 
venue. If a fan has spent two or three times the face value of a ticket 
to get in the door, it is unsurprising that they are less likely to 
purchase merchandise or download songs, for which the artist is 
directly compensated.
    Our goal and hope is that the over 78 million music fans on 
Pandora, who listen to over 130,000 unique artists each month and who 
learn about their favorite artists touring via Pandora-Ticketfly have a 
fair and reasonable chance to buy tickets to see the artists they want 
to support. When illegal bot operators usurp the market--violating our 
terms of use and driving up costs to consumers--the ecosystem is 
jeopardized: the fan becomes discouraged, cynical, and is likely to 
spend less money to support music.
    Pandora-Ticketfly therefore believes that the use of bots in 
interstate commerce to purchase tickets in violation of control 
measures used to prohibit their use warrants Congressional action. We 
greatly appreciate this Committee's attention to this important issue 
for the benefit of all stakeholders--most importantly touring musicians 
and their fans. Pandora-Ticketfly strongly supports the passage of the 
BOTS Act as an important step toward ensuring that fans have fair 
access to tickets at the prices chosen by artists and venues, not by 
bot operators.
    I would like to close by thanking you again for your careful 
consideration of this important issue. Pandora-Ticketfly is ready to 
provide any information the Committee may need in its deliberation, and 
I look forward to answering your questions.

    Senator Moran. Thank you all very much.
    Let me begin my questioning by making sure I have an 
understanding of what's legal and what's illegal. So in today's 
world, is it satisfactory to, quote, ``scalp a ticket,'' sell 
it for more than what you paid for it, more than what the price 
is on the ticket? And I assume that there's an answer to that 
question.
    Maybe, Commissioner Bowlsby, is there something in the 
Conference that prohibits that from happening? Is it illegal to 
sell or to buy that ticket? And my guess is that this has a lot 
to do with state law or perhaps municipal ordinance.
    Mr. Bowlsby. It does. It's almost entirely governed by 
state, county, city ordinance, and in some cases university 
policy. It sometimes limits not whether they can be resold, but 
where they can be resold. You'll frequently see scalpers across 
the street from a stadium on private property rather than on 
state property or private property. So it is governed in some 
cases, but not well enforced.
    That kind of a robust secondary market is really not my 
concern in this. It has been there for a long time. The market 
tends to--there tends to be a leavening effect in the 
marketplace, and I think the creation of an artificial 
marketplace by purchase of an exorbitant number of tickets is 
really a different matter that does rise to the level of 
importance for us, because we have a number of very large 
events where the participating teams logically get a fairly 
large number of the tickets, and then the remaining tickets, if 
bought up by bots, are next to impossible to get at anything 
close to face value.
    Senator Moran. Let me ask the other witnesses. Does anybody 
want to add anything to what the Commissioner had to say?
    Mr. Cohen. I would just mention that there are a few states 
that still prohibit ticket resale above face value. The 
enforcement is very spotty, but there are a few states that 
still do it, and the location restrictions that the 
commissioner has mentioned are also in existence.
    Senator Moran. So this legislation is not designed and 
wouldn't get to anyone who considers that a problem. We're not 
dealing with that issue. The goal here is to create the 
circumstance in which you can't acquire a huge magnitude of the 
tickets that are available and, therefore, control or corner 
the market with your resale of those tickets.
    Does that make sense, Mr. Seller?
    Mr. Seller. It makes exact sense. I'm not here to prevent 
buying and selling. I'm here to make a level playing field so 
everybody has the same shot at that ticket.
    Senator Moran. Mr. Seller, you heard Mr. Cohen talk about 
holdbacks. Maybe you can describe how the tickets for Hamilton 
or one of your other musicals become available. In the venue, 
there are approximately how many tickets for seats, and what 
happens?
    Mr. Seller. First, I want to define that I think the issue 
he is speaking to with holdbacks has more to do with the 
concert industry than the theater industry.
    Senator Moran. OK.
    Mr. Seller. They're really not the same, and that issue is 
not an issue in our industry. To put it in perspective, if I 
have 2,000 seats on sale at the PrivateBank Theater in Chicago 
where we start previews in two weeks, I might have 130 tickets 
that are what we call house seats, and those are the tickets 
that are controlled by the writer of the show, the director, 
the actors, for their personal use, and those tickets, of 
course, are sold at face value. So it's less than 10 percent of 
the house. It's a non-issue in the theater.
    Senator Moran. In your testimony, you indicated that--I 
don't know if the word, hold-back, applies to this--but you 
have tickets available for $10 for students and others, which, 
in a sense, is----
    Mr. Seller. Well, I guess that would be a hold-back, and I 
think that hold-back goes with God.
    Senator Moran. Mr. Cohen, before my time expires, you 
indicated that there ought to be a broader discussion. Who is 
not at the table? If there was a broader discussion to occur, 
who needs to be involved in that conversation?
    Mr. Cohen. A couple of different people are missing from 
the table. Our friends at Ticketmaster actually need to be at 
the table, and I know that they have very strong opinions and 
are subject to a lot of attacks by bots and would add a lot to 
the debate, and it would be helpful to have them at the table 
today, as well as other parts of the industry. The brokers have 
an absolute need and desire to be at the table to help work 
this issue out and to be part of the discussion.
    Senator Moran. Mr. Liegl, do you have anything to add or 
subtract to what Mr. Cohen was indicating about a broader 
discussion and the broader range of problems with ticket 
purchases?
    Mr. Liegl. Similar to what Mr. Seller said, our experience 
at Ticketfly is very different than the New York AG's report, 
in that total holdbacks tend to total an average of less than 
10 percent. So the numbers that we read in the New York AG's 
report just tend not to be very reflective of our experience 
with predominantly smaller and medium sized venues.
    Senator Moran. Thank you.
    Mr. Seller. If I may add something, Senator.
    Senator Moran. Please.
    Mr. Seller. Ticketmaster is the vehicle through which we 
sell all of our Hamilton tickets. We have worked very closely 
on the bots issue over the last 6 months--Ticketmaster and 
Hamilton--and, in fact, we had a huge tranche of tickets that 
we put on sale February 1. We know that bots purchased over 70 
percent of those tickets. And working with Ticketmaster by 
identifying people that--bad actors that they were able to 
identify, and, principally, through identifying those actors 
according to them exceeding the ticket limit, we were able to, 
in fact, refund over $5 million of bot-purchased tickets in the 
month of April.
    So we refunded those tickets. We put--or I should say to my 
friends at Ticketmaster--they put much, much more advanced 
anti-bot software into their system. We put those tickets back 
on sale through our system and getting the message out to our 
fans to try again, and we got our success rate closer to 70 
percent in terms of tickets getting into the hands of regular 
consumers. So Ticketmaster has worked relentlessly to try to 
combat the bots.
    Senator Moran. Who are the--if you can just sort of--a 
standard description of the individuals or businesses that are 
using bots to acquire tickets. Who's the culprit here? How 
would you describe those people or entities?
    Mr. Seller. I think that there----
    Senator Moran. How many of them are there?
    Mr. Seller. I'm sorry?
    Senator Moran. How many people participate in this kind of 
market?
    Mr. Seller. Oh, we don't know how many, but some of them 
are overseas, some of them are in Connecticut, some of them are 
in Florida. But we certainly know that there are a variety of 
companies that each have the software and then give the 
software away or sell the software to other bad actors who are 
buying up these tickets. They're like stock brokers. And, by 
the way, I'm not saying that in a pejorative way. I'm saying 
they're using, as their form of making a living, the buying and 
selling of tickets just to try to make a buck.
    Senator Moran. Thank you.
    Senator Blumenthal?
    Senator Blumenthal. Thanks, Mr. Chairman. With your 
permission, I'm going to yield to my friend and colleague, 
Senator Booker, who I understand has a scheduling conflict. He 
has assured me that he's going to sing his questions.
    [Laughter.]

                STATEMENT OF HON. CORY BOOKER, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Booker. I feel suddenly silenced. Thank you very 
much, Senator, for your graciousness. I'm really grateful, and 
to the Chair and Ranking Member, again, for holding this very 
important session.
    I'm from New Jersey, and there's a champion on this issue, 
Congressman Bill Pascrell, who has been--for years and years 
and years before I came to the United States Senate, this is 
something he was very upset about, often seen with one of New 
Jersey's patron saints and sons, Bruce Springsteen. So he has a 
bill in the House that I think some of you are familiar with.
    Mr. Cohen, are you familiar with that bill?
    Mr. Cohen. Yes.
    Senator Booker. I think he talks a lot--he really focuses a 
lot on the issue of holdbacks, and I just want to invoke 
Congressman Pascrell for a moment and just really press on some 
of the issues he is concerned with and has enlightened me on. A 
lot of it has to do with transparency requirements, and I'm 
curious, Mr. Cohen--these are some of the things that the BOTS 
Act does not have. Are these important to mitigate the harms 
that happen to the consumer? Other elements of transparency--
can they be helpful?
    Mr. Cohen. We think it would be. We absolutely think that 
the ability to be more transparent in the market would have the 
greatest impact. We actually don't know how many tickets are 
held back, and that is one of the things that consumers would 
actually benefit from knowing. When there is an on-sale, how 
many tickets have been placed on sale and at what prices? We've 
worked with Congressman Pascrell for years to try to come up 
with some solutions and are ready and willing to continue to 
work on that.
    Senator Booker. And there's also an element of which--it's 
embarrassing to folks if they're only putting 10 percent of 
their tickets on sale. But it actually has a self-correcting 
behavior--the transparency would.
    Mr. Cohen. Well, we have examples of that being true. In 
Australia, the State of Victoria, Melbourne has a ticket law 
under which they will only restrict resale if the promoter 
provides the ticket manifest to the government, and that is 
then distributed publicly. There are only six events a year in 
a sports-crazy place and a concert-crazy place that use the law 
to do stop or limit resale.
    Senator Booker. What about the argument against? I mean, 
shouldn't somebody be able to obscure their behavior when it 
comes to holdbacks or obscure their behavior in terms of how 
many tickets they're putting on sale? How do you feel about 
that argument of just--you know, this is my private venue. If I 
was performing and singing and rapping, as was indicated as my 
skill, why couldn't I just hold back those tickets?
    Mr. Cohen. And there are ways in which you can do that. 
That is perfectly fine and doable as we speak today. So the 
9:30 Club here in Washington, D.C., uses a credit card entry 
system for Green Day tickets, and the only people that will get 
into those shows will be the people that bring their credit 
card used to purchase the ticket to that show.
    Senator Booker. Any other elements that Congressman 
Pascrell is talking about that you think are critical that are 
not in this bill that you might want to mention?
    Mr. Cohen. There's a variety. It's not in my statement, but 
I'm happy to provide that to the Committee.
    Senator Booker. OK. Thank you very much.
    Mr. Chairman, I'm grateful for the time and allowing me 
to--especially the Ranking Member allowing me to slip ahead.
    Senator Moran. We appreciate your questioning, and I now 
call on the Senator from Missouri.

              STATEMENT OF HON. CLAIRE McCASKILL, 
                   U.S. SENATOR FROM MISSOURI

    Senator McCaskill. Thank you. I want to talk a little bit 
about prosecution. I think the bill that we're talking about is 
just civil penalties, and as an old prosecutor, I believe in 
the deterrent effect of the potential of jail time, especially 
for people who are committing a crime that is just making them 
money. At the end of the day, what's motivating people to use 
bots is just money. They're making a lot of money. In fact, 
they are stealing money from legitimate customers who want to 
buy tickets to events.
    Since we started this hearing with a quote from Hamilton, I 
will quote the King and say, ``And when push comes to shove, I 
will send a fully armed battalion to remind you of my love.'' 
It seems to me a fully armed battalion in this case is one that 
would include the threat of criminal prosecution.
    Are any of you aware of any criminal prosecution that has 
occurred in any of the 13 states that have laws that could go 
after bots?
    Mr. Cohen. To my understanding, Senator, there are no 
states until New York in June changed their law to criminalize 
the use of bots, and there have been no prosecutions yet in New 
York. We are working with the New York Attorney General, as I 
know many others in the industry are, to see if there are some 
that actually can be criminally prosecuted.
    I agree with you. I actually think that criminal 
prosecution is the easiest and most effective way to do it. 
We'll see it at the state level, and then there's a question as 
to whether it's appropriate at the Federal level. And in the 
other 12 states, I know of no cases that are current or past, 
but I can't state unequivocally that there are not criminal 
provisions.
    Senator McCaskill. Are you aware of any model legislation 
that has been drafted for states, since--I do have a hard time 
imagining that U.S. Attorney's offices are going to prioritize 
prosecuting bots, because, knowing the nature of where crime is 
prosecuted in this country, typically, crimes like that are not 
prosecuted at the Federal level. They're more likely prosecuted 
at the state level. Are you aware of any model state 
legislation that has been drafted that might assist states in 
putting these laws on their books?
    Mr. Cohen. I do know there has been model legislation 
drafted. We've participated in drafting model legislation, both 
specifically narrowly limited to bots and a broader examination 
of the ticket industry. So we have both forms of model 
legislation.
    Senator McCaskill. I don't mean to pick on someone who's 
not here, but let's talk about the ticket services that are 
making money coming and going. Let's see if I have this right. 
Live Nation owns Ticketmaster, correct?
    Mr. Cohen. Yes.
    Senator McCaskill. And they also own TicketNow, correct?
    Mr. Cohen. They do.
    Senator McCaskill. So someone can use a bot and buy a large 
inventory of tickets to a concert, and then they can turn 
around and place those tickets for sale on TicketNow, correct?
    Mr. Cohen. Yes, and in all fairness, they could place them 
for sale on our platform as well as other competitors.
    Senator McCaskill. Correct. I was trying to pick on 
somebody who wasn't here.
    Mr. Cohen. I appreciate that.
    [Laughter.]
    Senator McCaskill. So Live Nation is making money coming 
and going, correct? They're making money--they're making the 
fees on the first sale, and then they're turning around and 
making a fee on the second sale also.
    Mr. Cohen. That is true.
    Senator McCaskill. So why can't you all put in something on 
your resale that would limit the number of tickets that could 
be placed for sale?
    Mr. Cohen. You can adopt limits, and there are examples in 
which we have done that. You could run a lottery system to do 
the original ticket distribution to reduce prices. There are 
ways in which the bots have been drastically reduced through 
some technology. What I'm saying is that you could actually do 
a lot of these things under current law, and that steps are 
being taken. This is another step that could be useful, but it 
certainly won't fix the problem.
    Senator McCaskill. I'm just thinking that there might be 
ways to fix this problem without government. But there seems to 
be a financial incentive to sell the tickets twice because the 
money that your sites make, or that Ticketmaster makes, is, in 
fact, the fees that they are charging on every ticket they 
sell, correct?
    Mr. Cohen. Well, to be fair, Senator, there's also 
something to be said for open markets that allow for multiple 
resales. That's not necessarily a bad thing at all. It's quite 
common that you may buy a ticket, not need it, sell it, and 
then need to go back into the market.
    Senator McCaskill. No, I've had to do that. I completely 
understand that. But it also reduces the incentive for the 
businesses that are making money on the same ticket again to 
want to be part of solving the problem.
    Mr. Cohen. That is true. You could separate out that. We 
would not advocate that. We advocate that tickets are tickets 
are tickets, that the market would be much healthier with open 
and free resale in any platform, and then let the market handle 
it.
    Senator McCaskill. My time is up, and I don't want to take 
anybody else's time. I hope somebody asks why are so many--what 
are all the holdbacks for in the concert industry? Where are 
they going? I hope somebody answers that before this is over.
    Senator Moran. Does someone want to answer it now?
    Senator Blumenthal. I'll ask it since I'm up next. What are 
all the holdbacks for in the concert industry?
    Mr. Cohen. We know that they go to promoters. The ticket 
manifest determines what percentage will go to the artist, what 
percentage will go to the promoters, what percentage will go to 
different sponsors, the arenas, the season ticket holders of 
the arena, as well as the American Express ticket system Gold 
Card holders, and presales, and fan clubs.
    Senator Blumenthal. Is it fair to say, Mr. Cohen, as your 
answer, I think, implies, that there may be elements of the 
industry that are complicit in these kinds of unfair markups 
and denial of access?
    Mr. Cohen. I think that there's a lot more knowledge in the 
industry that's kept from the general public.
    Senator Blumenthal. I take it that's a yes.
    Mr. Cohen. That's a yes.
    Senator Blumenthal. Thank you. I want to thank you for your 
candor and thank both you and Mr. Liegl for being here today, 
as well as the other panelists, and particularly say to Mr. 
Seller that I think your life story shows us why there is a 
larger value here in permitting ordinary Americans to come to 
the theater, to watch football games, to go to the concerts and 
sporting events. It's the place where the dreams begin and 
where future stars are inspired to devote not only the 
inspiration but the perspiration that it takes to get to where 
you have gone.
    Your story also reminds us--and you may not have mentioned 
it here--but folks who do what you do also have to be ready for 
failure. You put skin in the game. You take the risk. These 
folks who prey upon American entertainment and sports are 
parasites. They have no skin in the game. They simply exploit 
other people's creativity and hard work, not to mention denying 
access to the future stars. So I think it makes us passionate 
about this cause, because it has such wide-ranging 
ramifications.
    So let me begin by asking you about the digital lottery. 
How does that work? Has it been successful? Are people happy 
with it?
    Mr. Seller. Excellent. Thank you, Senator, for those kind 
words. The digital lottery actually started 20 years ago when I 
produced Rent in 1996. I was only 31 years old, and doing my 
first Broadway show at 31, I could remember very clearly that 
only maybe 6 years before that, I couldn't afford a ticket to a 
Broadway show.
    So when my then business partner and I were getting ready 
to put Rent on sale, we thought, ``We have to make tickets 
cheap for people who can't afford it,'' and we thought, ``We'll 
do a 20-dollar ticket,'' and then we thought, ``Let's do 
something even better. We'll put those 20-dollar tickets in the 
first two rows of the orchestra section.'' And it was first 
come, first serve, and you just showed up at the theater. But 
then the lines became so long that we literally had kids on 
41st Street sleeping over every night to try to get those 
tickets.
    Then we went to a live lottery where you came and put your 
name in a hat, and we would do the live lottery every day at 6 
o'clock, 2 hours before the show, and that was wildly 
successful from 1997 all the way through until basically last 
summer when we opened Hamilton. Our live lotteries on 46th 
Street were basically closing down 46th Street every single 
day, and it became a nuisance to the New York City Police, and 
it became a traffic hazard.
    So out of that, last winter, we then reverted to a digital 
lottery in which anybody can go to our lottery place--I'm sorry 
I don't remember what it's called. You can all find it if you 
want to enter for tonight--and the person enters the lottery. 
They enter their credit card. If they win, the credit card will 
go through, but they can't show up and pick it up until late 
afternoon.
    So using that system, the bots don't invade that system, 
because it's a $10 lottery, and the turnover time is so short 
in between when you get your ticket and the show that they 
would never have enough time to go out and resell that ticket.
    Senator Blumenthal. So it's basically immune to the kind 
of----
    Mr. Seller. It has so far been immune to that, because--and 
there's no time--you know, it happens every day for that day, 
and that's why that has been effective.
    Senator Blumenthal. Let me say to Mr. Cohen that I actually 
prosecuted these cases when I was Attorney General of the State 
of Connecticut, and I agree with my colleague, Claire 
McCaskill, that the U.S. Attorney's Office is not going to 
undertake them. And I also served as U.S. Attorney in 
Connecticut, and I think these kinds of laws are very, very 
important, and may I suggest that your advocacy of them would 
be important in places like Connecticut, where we had a ticket 
scalping law which was repealed over my protest in 2007.
    So there are interests on the other side here that are 
immensely powerful politically, because they command a lot of 
bucks. So the good guys like yourselves should be on the side 
of laws at the state level, not just here, but at the state 
level, and I think that is tremendously important.
    Let me ask you, Mr. Liegl--I understand that there are 
limits that are imposed per transaction. Would it be more 
effective to impose per person limits so that the bot system 
might be frustrated or impeded?
    Mr. Liegl. That's a great question, Senator. My 
understanding is that the number of IP addresses that the 
attacks come in from and just the vast array of credit cards 
that they have at their disposal--I'm not entirely sure that 
setting it at the per customer level would make a huge 
difference in frustrating the bot operators' efforts.
    Senator Blumenthal. Why is that?
    Mr. Liegl. My expectation is that they could appear to be 
multiple different people coming to our site at the same time 
using different IP addresses, different credit card numbers, or 
combinations thereof.
    Senator Blumenthal. Mr. Cohen, you indicated--and this will 
be my final question.
    Senator Moran. Take your time.
    Senator Blumenthal. You indicated that the change in 
StubHub's policy with respect to speculative tickets has had an 
effect. Do you think all speculative tickets should be banned? 
In other words, should there be disclosure by someone who is 
selling a ticket without actually having bought it, which now 
happens--should there be a required disclosure that that seller 
does not actually have the ticket?
    Mr. Cohen. We have found that the law is helpful, but this 
has been much more of a policy change that is based on the 
market itself. Under our Fan Protect Guarantee, if you're not 
able to get into the show, if there's a problem with the 
ticket, we're going to do everything we can to get you in the 
show. So we will buy up extra tickets, if necessary, for a 
high-demand event, where we want to make sure all of our 
customers get in the show. It doesn't always work. We have to 
refund in some instances. But the vast majority of time, 
because of that, our systems are built to prohibit speculative 
ticketing because they can't be delivered. So if somebody says 
they are selling a ticket, and we have the information that 
they have not delivered historically, they're not going to be 
selling the ticket again.
    So it's a very rare instance in which a customer ends up 
with, quote, ``a speculative ticket.'' We do know it occurs. 
Bruce Springsteen is a classic example. There are no presales. 
There's no fan club. When tickets go on sale at 10 a.m. on 
Friday, they go on sale, the entire house. Now, Bruce 
Springsteen does structure and have some credit card only entry 
to restrict resale also. But, in general, all the tickets go on 
sale at the same time, same price.
    So, therefore, if somebody is listing tickets ahead of 
time, we'll know that those are speculative. But because we 
don't know how the market is structured, where people release 
tickets at different times, and people have different rights to 
tickets in the arenas--season ticket holders have different 
rights than club seat owners--that information only becomes 
apparent to us when it's brought to our attention.
    Senator Blumenthal. Thank you.
    Mr. Chairman, I want to thank you again for having this 
hearing. I would like to put in the record a number of letters 
that I received from my constituents about this practice.
    Senator Moran. Without objection, so ordered.
    [The information referred to follows:]

                            Constituent Mail
                                                   February 8, 2016
Dear Senator Blumenthal,

    I am a frequent concertgoer, and I am very frustrated by the fact 
that ticket resalers always have the best tickets, but even more 
aggravating, they have tickets on sale, at exaggerated prices, even 
before the original tickets go on sale! This has to be illegal! As an 
example, I was trying to purchase tickets to see Ringo Starr at the 
Bergen PAC in Englewood, NJ on June 7. If you do a Google search for 
the box office, dozens of sites come up, each with tickets already 
available for hundreds of dollars. But on the official site of the 
venue, the concert isn't even listed yet! There are no ``official'' 
tickets on sale at this time. And this is happening every time I try to 
purchase any tickets at any venue! I know many of my friends have been 
confused by this, and think that they must either pay the higher prices 
in order to attend a show, or miss the event.
    Can you please look into this matter? I know you have much more 
important problems to deal with, but this means a lot to me.
    Thank you so much for your consideration, and thank you for the 
fantastic job you are doing in the Senate (although I miss you as 
Attorney General). With best wishes,
                                 ______
                                 
                                                   January 29, 2016
Subject: Concert tickets

    My wife is a big fan of Bruce Springsteen. He is currently on tour. 
When tickets went on sale in December, I went online to purchase 
tickets to several of the venues in the Northeast that he is appearing 
at in Jan. and Feb. I went online at 10am, the time the tickets were 
going on sale. I could not purchase tickets. on every venue I went the 
tickets were sold out. How is that possible? Now my wife is able to buy 
tickets on the secondary market, StubHub, Vivid etc. However the prices 
are 250 percent or higher. How can this be legal for a $150 face value 
ticket be sold for $450 or more? I can understand a ticket broker 
making an honest fee. However, the general public is being taking 
advantage of. Can there be some legislation to stop these companies 
from making such large profits and hurting the average consumer?
                                 ______
                                 
                                                   December 6, 2015
Subject: Stub Hub Unfair Trade Practices

    How is it possible that Stub Hub is able to advertise the sale of 
tickets with specific locations for Springsteen's recently announced 
concerts when sale of tickets to the general public is scheduled for 
next Friday. Very unfair and will likely result in getting tickets that 
are above face value if I ultimately choose to go to his shows.
                                 ______
                                 
                                                    January 6, 2016
Subject: StubHub

Senator Blumenthal,

    I am a musician and I would like to share a view about the scalping 
site StubHub.
    The music industry has been in a free fall. Arguments over 
streaming royalties are a hot topic.
    The one place I see as the most egregious devaluation of music in 
on StubHub. Why should someone who buys 5 tickets to an event they 
don't plan on going to make $500 because they have an Amex card and an 
Internet connection? They don't work their whole lives to learn music, 
write music and get an audience. They are sitting at home collecting 
money for something they did nothing for.
    A concert goer who spends way over the face value of the ticket 
then has less money to buy merchandise and spend on concessions at a 
concert. StubHub makes money, the scalper makes money and the artist 
suffers.
    I propose either a shutdown of this service, especially in states 
where there are scalping laws. Or a percentage of sale that must go to 
the artist. Or a cap on the percent that a person can charge, perhaps 
10 percent.
    These people didn't take risks with their lives to make it in an 
extremely competitive industry, they simply have a computer and an 
Internet connection. It's not right and it's devaluing a vital art that 
every single person on the planet enjoys and needs.
    Thank you,
                                 ______
                                 
Mr. Blumenthal,

    I'm writing to you today as a frustrated constituent. As I'm sure 
you are aware, access to event tickets via websites like Ticketmaster 
and Live Nation, are becoming increasingly difficult for people to 
obtain. The reason for this is due to the ``ticket bot'' and scalping 
industry. I have seen news of your colleague, NY Senator Chuck Schumer, 
trying to address this issue, and I'm hoping that you can help address 
this issue as well. How is it that these ``ticket bots'' are allowed to 
exist, and why is it that Ticketmaster and Live Nation are not held 
accountable for this activity. Not only that, but if you are unable to 
acquire said tickets, you have the option of buying from Ticketmaster's 
very own scalping ``resale'' website. The whole situation is very 
suspicious, and I'm interested in knowing if any investigation has been 
put in place on this practice. I do see that while at one time ticket 
scalping was illegal in CT, as of 2007, that changed due to the 
incompetence of former Gov. Jodi Rell. I feel that something needs to 
be done in regards to this issue. It's not fair for consumers to not 
have an equal chance to obtain tickets to an event. I would be 
interested in knowing your stance on this, and if there are any plans 
in Washington to further Senator Chuck Schumer's proposed legislation. 
Thank you for your time.
                                 ______
                                 
                                                     March 26, 2014
Subject: UCONN NCAA Tickets--MSG

Sen. Blumenthal, When you were our AG, didn't you take action against 
ticket agencies (i.e., StubHub, TicketWorld, etc) for gross increases 
in originally-priced tickets??? I am sure that you are aware that the 
UCONN NCAA tickets for MSG are priced from $489.00 up to $3,000.00 per 
ticket. How can the ticket agencies increase the price of these tickets 
so much?? Why can't we have a law stating that ticket agencies cannot 
increase the price of a ticket for more than five or ten percent of the 
value of the ticket? Thank you.
                                              Rita Sheridan
                                 ______
                                 
                                                 September 19, 2014
Hello,

    I am 32 years old, married and have 3 children. I have been working 
full time since I was 16 years old. I have been at my current job for 
over 14 years. I work from 6 am-5pm, Monday-Friday. This gives me 2 1/2 
hours per night that I can see my kids before they go to bed, and 2 
days on the weekend to spend with my family. I have always paid my 
bills, mortgage and taxes on time. After paying all of this, it leaves 
us with $200 per week for gas in 2 vehicles and groceries. My 10 year 
old daughters birthday is in January. All she wants to do is see Ariana 
Grande in concert, which is at Mohegan Sun in March. I don't know much 
about her, but I guess she was on Nickelodeon. We have been saving up 
to purchase a ticket for my wife and daughter. The tickets said they 
range from $39.70-$85.40. I went on Ticketmaster today for a presale 
that has been going on. Of course it was sold out. Another presale went 
on at 10am, and that sold out within a minute. I understand these 
tickets are in high demand. I was looking around online for others and 
came across StubHub.com. Its a resale ticket site. The tickets now 
range on their site, from the lowest price of $233.00-$938.90. Like I 
said earlier, I work full time and have always provided for my family 
with no state assistance, and I rarely spend time with them because I 
need to work to afford to live in CT. Now because of all these 
scalpers, I can not get my daughter the birthday present she wants. 
There is no way I can afford to buy these tickets. This is price 
gouging and has to be illegal. All these scalpers are purchasing high 
demand tickets, who have no interest in going to these concerts, just 
so they can take other peoples hard earned money. This has to be 
illegal. Something needs to be done.
    Thank You,
                                 ______
                                 
                                                       July 9, 2014
Sir:

    I contacted you earlier this year to request that you begin an 
investigation into TicketMaster's business practices and its 
monopolistic control of the entertainment ticket industry. I've pasted 
the full text of my original e-mail below.
    I hereby request a response to my concerns. Thank you for your 
immediate attention to this matter.
            Sincerely,

My original e-mail:

    I'm writing to you to express my displeasure with Ticketmaster and 
to strongly request that you open an investigation into their business 
practices and monopolistic hold on concert venues across the country.
    There's no question that Ticketmaster engages in monopolistic 
behavior. Its take-it-or-leave-it ``convenience charges'' and ``order 
processing fees'' are nothing more than scalping. Most tickets are 
delivered electronically these days, and the idea that it costs 
Ticketmaster $17.25 to e-mail a $98 ticket (the prices and fees 
Ticketmaster charged today for a ticket to a Bruce Springsteen show in 
Uncasville, CT, this May) is beyond belief. I could set up a secure 
website, sell electronic widgets at $10,000 a pop, and deliver orders 
safely to my customers for a fraction of their ``convenience'' and 
``processing'' costs, and I'm not even an IT expert.
    More importantly, I don't understand why so many venues don't offer 
tickets through any outlet other than Ticketmaster. I don't know what 
Ticketmaster promises them (or perhaps what the company threatens them 
with), but the fact that there's no legitimate competition for selling 
face-value tickets to events at so many venues nationwide is prima 
facie evidence that a monopoly exists. (Seriously: Name one competitor 
to Ticketmaster. As a result of its merger with Live Nation, it now 
controls ticket distribution and pricing across the country.)
    Beyond that, Ticketmaster's sales process is horrendous. I tried to 
purchase two tickets to one of the Springsteen shows this morning. I 
followed the website's ridiculously ironic ``non-scalping'' policy 
(i.e., proving I'm a live person simply by typing proscribed letters 
into a field), was redirected to the site's ``search'' page, then kept 
seeing messages that claimed I was ``approximately X minutes'' from 
gaining access to a purchase. The ``X minutes'' kept changing; it 
dropped to as low as one minute but more frequently and inexplicably 
rose from, say, four minutes to seven or eight minutes--without me 
doing a thing. I have no idea what I could have possibly done to lose 
my place ``in line,'' but as the minutes ticked by, tickets were 
gobbled up, and I have to believe that some tickets were sold to people 
(or, more likely, favored entities) that got ``in line'' after I did.
    (I don't believe every ticket was sold to a person; professional 
scalpers have ways around Ticketmaster's prehistoric anti-scalping 
measures, not to mention high-speed computer programs that can 
apparently cut in front of those of us who might have been ``in line'' 
before them. It's now six hours and fifteen minutes after tickets to 
Springsteen's May 17 show went on sale, and I've found 30 tickets 
available on ConcertTicketCenter.com, over 200 tickets on 
VividSeats.com, and 749 tickets available on StubHub.com--all of them 
at prices considerably higher than face value, even if you factor in 
Ticketmaster's usurious extra fees. There's no way in hell that every 
one--or even the majority--of those tickets were bought by individuals 
who suddenly realized that they aren't actually available to see a show 
at Mohegan Sun that night.)
    As I said, I'm no IT expert, but even I know that it's possible--
and easy--to write a code that would allot a certain number of spots to 
people who could then buy tickets, and at the same time simply inform 
the rest of the potential buyers that they didn't make the cutoff and 
to try again later, just in case. Ticketmaster's lies kept me on their 
site, trying again and again, for an hour, and I doubt I was the only 
person thus abused. We have ``truth in advertising'' laws; how about a 
``truth in selling'' law that would protect consumers from this sort of 
fake teasing? I'm fortunate in that I work from home and could get away 
with wasting that amount of time (mostly because I'm an exceedingly 
efficient worker), but I can only imagine how many hours are wasted 
every day in offices around the country because Ticketmaster refuses to 
treat its customers with dignity and respect by telling them the truth.
    I play by the rules, and so do most people in this country, but too 
many people--and way too many corporations--don't. As an elected 
representative, your job is to act in the best interests of your 
constituents, regardless of whether that might adversely affect any 
corporation. One surefire way to do that--and to gain and/or boost 
populist street cred--is to investigate and punish monopolistic, anti-
consumer behavior by corporations, and I can think of few corporations 
that profit from abusing a wide range of consumers as much as 
Ticketmaster does.
    As your constituent (and therefore your de facto employer), I 
demand in no uncertain terms that you investigate Ticketmaster. Please 
let me know what you plan to do about their consumer abuses.
    Thank you for your attention to this matter.
                                 ______
                                 
                                                      April 1, 2014
Subject: NCAA and UCONN ticket Scam

    Your CT constituents need you to look into the ticket scam 
perpetrated by the NCAA and UConn regarding the Final Four for both 
Basketball teams. Reasonable pricing for tickets from the NCAA are sold 
to secondary venues who then charge an astronomical amount--season 
ticket holders at UConn have been dispatched without having any tickets 
available after making donations and attending games all season. This 
is a scam being promoted by both parties and I believe that the general 
public should have your attention in this matter!!!
                                 ______
                                 
                                                  December 26, 2012
Subject: On line ticket resellers

Hello,

    On line ticket resellers allow speculators to buy season tickets 
for major sporting events and sell them on these secondary sites such 
as Stub Hub for 4-5 times (and more) the face value.
    I always understood this to be ticket scalping but apparently it's 
not.
    In addition to driving up the prices, these speculators eliminate 
all availability for these events so one is forced to buy from these 
scalping websites at exorbitant prices.
    Just seems wrong.
                                 ______
                                 
                                                     April 10, 2012
Subject: Fraudulent ticket sales

Dear Senator Blumenthal:

    My wife mentioned that she would like to go see Fiddler on the Roof 
at the Bushnell. I went online and thought that I was on the Bushnell's 
website, but I was on the ``Tickets in Time'' site. I purchased two 
tickets and my credit card was charged $700. The tickets have a price 
of $65.00 each. Why is this company allowed to stay in business? If you 
go on the Internet and read some of the comments about Tickets in Time, 
they all claim that the company is a fraud and that the people were 
deceived. There is no good reason why a company should be able to 
charge $700 for $130 worth of tickets when they are not providing any 
service. This company is stealing money that would be spent in 
restaurants and other businesses and sending it to their headquarters 
in Nebraska.
    Please introduce legislation making it illegal to sell tickets for 
more than face value, then stop Tickets in Time from operating in 
Connecticut. Let's keep the money in Connecticut!
                                 ______
                                 
                                                      April 5, 2012
Subject: Event Ticket Fees

Dear Senator Blumenthal,

    I write to ask for your consideration in developing and moving 
forward legislation which requires event ticket vendors (ticketmaster, 
livenation, and venues) to disclose the FULL ticket price, inclusive of 
ludicrous fees that are applied to ticket orders only after consumers 
near the end of a purchase transaction.
    Tickets advertised as $32.50 each nearly double after a $11.00 per 
ticket processing fee, $4.00 per ticket processing fee, and $5.95 
shipping and handling fee.
    I strongly believe that advertising a ticket price as $32.50 which 
actually ends up costing the consumer $47.50 is deceptive.
    Thank you for your consideration.
                                 ______
                                 
                                                  February 12, 2012
Dear Senator Blumenthal,

    I am on the Democratic Town Committee in XXXXX and have had the 
pleasure of meeting you on a few occasions over the last 5 years. As 
AG, you did an outstanding job protecting consumers--something that we 
in CT all appreciated.
    I have a question about the legality of ``ticket brokers.'' I am 
referring to companies that buy up event tickets and then sell them at 
a profit on the internet.
    Case in point, the Beach Boys at the Mohegan Sun Arena in May. I 
wanted to bring my 10 year old son to his first concert and looked for 
tickets this morning. The lowest priced seats are no longer available 
on Ticketmaster. When I Google searched these tickets-various 
companies-like StubHub-were selling tickets for this event with as high 
as a 600 percent mark up on them.
    How is this legal? If I were to buy up tickets in bunches and then 
stand out in front of the venue, that would be illegal and I would be 
called a 'scalper'. Why do these companies have these privileges? The 
cheapest tickets for the event were $55 + service charges--none of 
which are available through the box office. If I go on StubHub--I can 
buy them for $107.
    This seems to be taking advantage of consumers at a profit-
especially when the tickets for the event only went on sale this past 
Friday.
    Thanks for working hard for the folks in Connecticut--I look 
forward to your response.
    Thanks,
                                 ______
                                 
                                                      June 17, 2011
Dear Senator Blumenthal,

    As a longtime concertgoer, I am frustrated by the current practices 
of ticket agencies like Ticketmaster. Today, for example, I went online 
at 10:00, the time tickets went on sale, to purchase tickets for Katy 
Perry at the XL Center. I checked back several hours later, only to 
find tickets in a section closer to the stage than the ones I 
purchased. This calls into question whether ticket agencies like 
Ticketmaster really are providing the ``best available'' seats to 
customers, or more likely are trying to sell their less desirable 
tickets first. This is a very deceptive practice which should be looked 
into.
    Thank you for your time.
                                 ______
                                 
                                                     April 15, 2011
Subject: Getting paid twice

    Why is it that if I buy a concert or sports ticket, and find I have 
an extra and try to sell it for face value outside the venue I can have 
my ticket confiscated or voided or even be fined.
    However, if I take that same ticket I can sell it for 5 times face 
value through StubHub or TicketExchange and that is perfectly legal? I 
assume it's because the sports team/venue gets a cut of the sale and 
therefore is being paid twice for the same seat.
    I am simply trying to not lose money and let someone else enjoy the 
seat. People selling on the secondary websites are trying to make 
money, encouraged of course by the teams & venues that profit twice. 
That has always bothered me. Doesn't that bother you?
            Sincerely,

    Senator Blumenthal. And to say on behalf of Senator 
Klobuchar that she had to leave, but she's going to submit 
questions for the record, including one to Mr. Seller.
    I understand she's going to submit a question to you, sir, 
asking when you are going to bring Hamilton to Minnesota.
    [Laughter.]
    Senator Blumenthal. And while she's at it, I'll ask the 
same about Hartford, Connecticut. When is Hamilton coming to 
Hartford? And I hope that when it does, you will have a digital 
lottery and enable some of our high school students in 
Connecticut to come see Hamilton because I think they will be 
inspired to pursue careers such as yours and the great director 
and writer and cast that has so inspired many Americans.
    So thank you very much, Mr. Chairman.
    Senator Moran. You're welcome, Senator Blumenthal. Maybe 
somebody is sitting in the audience today being inspired by you 
with the desire to pursue a career of public service.
    Senator Blumenthal. Well, they don't have to buy any 
tickets at scalper prices to be here, to do that. But as 
flattered as I am, I tend to doubt it, but thank you.
    [Laughter.]
    Senator Moran. Let me ask a couple of questions. And, 
Senator Blumenthal, if you want to follow up with anything 
else, we're just about ready to conclude this hearing.
    But tell me, Mr. Liegl, about technologies existing or 
those that you think are out there that may address this issue. 
I understand that CAPTCHA can be circumvented. Is there a 
technological way of addressing this issue? And, if so, why is 
it not being implemented?
    Mr. Liegl. That's a great question, Senator. My 
understanding is that--and our experience has been that any 
technological measure that has been put in place to date, if it 
is even successful in the short term, it's not successful in 
the long term, because the ill-gotten gains that the bot 
operators derive from their practices get plowed back into 
investing in new software and technologies that can just 
circumvent those protections the next time around.
    Senator Moran. The testimony earlier was about IP numbers 
and credit cards. How are those acquired, and do they belong to 
somebody? Is there a benefit that accrues to the person who has 
that identification and credit card, or it's just fraud?
    Mr. Liegl. I think it's the latter, exactly. I think it's 
just the means through which they keep the shell game going.
    Senator Moran. So this is a result of stolen identity? 
Information stolen about people can become acquired by those 
who use bots to acquire tickets?
    Mr. Liegl. I don't know that they're stolen credit cards. I 
didn't mean to imply that. I think that they may just be--that 
these bot operators have whatever means at their disposal to 
amass as many credit cards as possible so that they can keep 
appearing to be different people.
    Mr. Sellers. If I could add something to that, Senator.
    Senator Moran. Please.
    Mr. Sellers. The bots frequently employ gift cards. So they 
can go out and get thousands and thousands of gift cards and 
use those to buy tickets. In our anti-bot movement between 
Hamilton and Ticketmaster, they have identified through 
software, the behavior of bots so that they can identify them. 
That is what has proved to be somewhat successful in curbing 
their behavior.
    The problem is that it's an arms race. When the bot actor 
is making millions and millions of dollars a year by turning 
over tickets, it is worth his time to continue to employ 
engineers to create better and better software. So whereas if 
you went to Ticketmaster a year ago, you saw that in order to 
try to overcome bots, you would see the cursive letters that 
you had to enter into that little box. So you'd see an L and, 
you know, an H, a P, a Q, and then you'd see a 4, 6, and an 8 
or something, and then you'd have to write that in. That was an 
anti-bot measure. They overcame that very quickly.
    Now they're giving you pictures, and they'll show you six 
pictures and they'll say, ``Identify which picture doesn't have 
a wheel in it'' to try to overcome the bot. So they keep 
employing new systems and then the bots up their game as well. 
And, frankly, they're just as good at it, so that's why we need 
the legislation, because the arms race is unending.
    Senator Moran. Thank you.
    On the topic of holdbacks, it occurs to me that there may 
be a consequence of bots actors' behavior that actually 
encourages the hold-back. Would not those in the performance 
industry have holdbacks for their fans to try to better ensure 
that their fans get tickets--their fan club? Is that 
potentially just a response to the fact that the tickets are 
being acquired so quickly in such a prevalent manner?
    Mr. Cohen. Yes.
    Senator Moran. I mean, my point is that while we talked 
about--Mr. Cohen, you, in particular, talked about the 
disadvantages, the wrongness of holdbacks, their consequences. 
Hold-backs actually may be a result of what we're trying to 
eliminate here.
    Mr. Cohen. Absolutely. And I don't mean to imply that 
there's anything negative about a hold-back in and of itself. 
It's much closer to the question of transparency.
    Senator Moran. I guess your point was really about knowing 
the market----
    Mr. Cohen. Right. Is there distribution in which there was 
actual transparency of where the tickets were going.
    Senator Moran. You indicated, Mr. Cohen, in your testimony 
about the potential positive uses for bots and to make certain 
that we didn't sweep away any technology that can play a 
positive role in the ticketing ecosystem or elsewhere. That's 
why we went to significant efforts to narrowly draft this 
legislation so that we didn't get outside the scope and enter 
into an arena that I'd be very reluctant to go. But are there 
examples of bots technology that would be advantageous for 
consumers?
    Mr. Cohen. No, we don't see anything in this legislation 
that would be harmful.
    Senator Moran. But if this legislation was broader, what 
ought we to be fearful of? What positive benefit to consumers 
might be eliminated by a broader definition of----
    Mr. Cohen. So a classic example would be----
    Senator Moran. What are you worried about?
    Mr. Cohen.--if you said it was applicable to all automated 
systems. There are a lot of bots that--the whole point is the 
automated system, and human intervention will always overcome 
it. It's a problem with the CAPTCHA systems. A problem with 
almost all bots is that humans--it's worth it--there's still 
going to be people that do 40 people in line. It's not going to 
go away.
    If you force everybody to identify every ticket at the 
moment of purchase, you have the airline ticket model, where 
you know who the person is, and that's the only person who can 
use that ticket. You can restrict. That means that you will 
have a different ticket allocation system.
    In this instance, we don't think there's any problem as 
you've drafted the legislation. It works fine for technological 
mandates. Our concern is much more of an issue, as when you 
merge it with this House bill, and whether there are criminal 
provisions in it or not and whether it's narrowly and only 
limited to ticket bots.
    Senator Moran. Thank you.
    Senator Blumenthal?
    Senator Blumenthal. I have just another couple of quick 
questions.
    Mr. Cohen, when I was Attorney General, one of the measures 
that I sought, in the interest of transparency, required the 
disclosure of the face value of the ticket. What do you think 
about that idea?
    Mr. Cohen. So face value is an important indicator, but 
it's also one that requires--if you're going to make that a 
condition of legislation--that you understand and define what 
face value is. So a convenience fee on every ticket is not 
considered part of face value, so, therefore, a consumer, in 
some way, is misled.
    In many instances, some of the holdbacks will result in 
tickets that are priced below the face value and sold to 
people, and then are resold to them allegedly below face value 
and are not technically below face value. It's just an 
imprecise term that requires legislation around it before it 
becomes part of a statute.
    Senator Blumenthal. It may be imprecise, but it is 
definable.
    Mr. Cohen. And that's the key piece. So the statute where 
it's defined--it's not that difficult to do it. It does require 
a technological mandate because you're then requiring 
everybody's systems to display it, and our experience has been 
it's almost an irrelevant piece of information, in particular, 
with the advent of dynamic pricing.
    So as ticket demand increases or decreases, the classic 
example being an announcement of the retirement of a player 
and, therefore, demand for the ticket will go way up, the 
pricing systems will allow for people to set those prices at 
different times, so we don't know what the face value is, 
because it changes. And it will change throughout the seasons 
in sports. As tickets become more valuable, as we get closer to 
a pennant race, you'll see ticket prices increase. So face 
value at a point in time is not necessarily representative. 
It's not a defined issue and it just needs more legislation 
around it.
    Senator Blumenthal. Mr. Bowlsby, speaking about sports, as 
I'm sure you know, a number of professional sports leagues have 
established exclusive deals with certain secondary ticket 
brokers, and they, in effect, force upon buyers nontransferable 
tickets that can be resold only on that exclusive resale 
platform. Just to give you an example, some NFL teams require 
ticket holders to use Ticketmaster's NFL ticket exchange 
platform, which imposes price floors on the resale of tickets, 
and that makes it more difficult for sellers to sell tickets to 
a game they can no longer attend, and for some fans, they are, 
in effect, prevented from seeing the game in person. I 
understand major baseball leagues have a similar kind of 
policy.
    You discuss in your testimony your interest in preserving a 
school's long-term relationship with its alumni and fans. I'm 
wondering if you have any observation about this practice as it 
is done by professional sports leagues.
    Mr. Bowlsby. Well, I think it certainly calls into question 
if you actually own the tickets once you purchase them if there 
are restrictions on where they can go and how you can dispose 
of them. It certainly calls into question as to whether those 
are yours or if they remain the prerogative of the ticket 
supplier.
    You know, as part of our research for this session, we 
called one of the venue operators in the Dallas-Fort Worth 
area, and he very quickly went online and identified a broker 
that had tickets on sale 2 weeks ahead of time for a show that 
they weren't going to put on sale for 2 weeks. And it really is 
illustrative of the extent to which there is great confidence 
in the systems. The bots can get as many tickets as they need 
to any event they have.
    I suppose that the NFL and major league baseball have done 
this for good and appropriate reasons. But the question I have 
is do you really own the tickets if you can't do with them what 
you want.
    Senator Blumenthal. Do you own the tickets, and what do 
fans think about their teams if they engage in these kinds of 
practices. Thank you.
    Again, thank you to our witnesses and thank you, Mr. 
Chairman.
    Senator Moran. Mr. Blumenthal, thank you very much. We are 
joined by the Full Committee Chairman, and we're honored by 
that. But if you hadn't asked that final question, we would 
have been done.
    [Laughter.]
    Senator Moran. But he has arrived, and I recognize my 
colleague from South Dakota.

                 STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    The Chairman. Darn. Just missed it by a minute. Well, thank 
you, Mr. Chairman.
    Senator Blumenthal. I withdraw my previous question.
    [Laughter.]
    The Chairman. I appreciate you holding this hearing on an 
important topic, and as an avid fan of live music events and 
sporting events, I certainly appreciate the frustration that 
many Americans experience when faced with having to spend an 
exorbitant amount of money on tickets to see their favorite 
artist live in concert or when they come to town on tour.
    We have a new venue in Sioux Falls, South Dakota, so all 
the big acts are coming through, and I've had a chance to see a 
lot of them and a lot of sporting events as well. So I 
appreciate how important this issue is to people all across 
this country. And I'm pleased, too, because one of the things I 
haven't seen yet is Hamilton, so I'm glad you were able to 
bring them to us with your gavel.
    But I would like to thank all the witnesses----
    Senator Blumenthal. There were tickets available here for 
$10 and you missed them. You were late.
    The Chairman. Really? Oh, my gosh. OK.
    Senator Moran. Excuse me just one moment. Mr. Seller is 
making a note. Now, when I complained that I was unable to see 
the show, nothing occurred between a pen and paper.
    Mr. Chairman, we're delighted you're here. But if you get 
more than one, please let me know.
    [Laughter.]
    The Chairman. I'm sure there's a gift violation in there 
somewhere, anyway. But I do want to thank all the witnesses for 
being here, and I really do welcome your views on the 
phenomenon of ticket bots, and more, I guess, broadly, the 
health of the live events industry, and would welcome your 
recommendations with respect to Federal legislation that would 
protect consumers in this marketplace who seek to purchase 
tickets.
    The bill Senator Moran is sponsoring along with many others 
is important bipartisan legislation, and I think it will ensure 
that everyone has a fair shot at seeing their favorite act or 
team without having to pay an arm and a leg to do so. So it's 
my hope that this hearing will provide the kind of feedback 
that will enable us to include this bill on the agenda for the 
Committee's upcoming markup.
    Just a couple of quick questions. Mr. Seller, can you give 
us an example of the face value of a Hamilton ticket as 
compared to a price on the secondary market?
    Mr. Seller. Yes, Senator. A face value for Hamilton is 
currently $199 in New York City. In Chicago, it's somewhat 
less. And if you go right now to StubHub and try to get a 
ticket for this coming weekend, you will see tickets ranging 
anywhere from $650 to $2,000 each.
    The Chairman. Commissioner, how do ticket bots affect fans' 
access to collegiate sporting events, and would you say that 
all sports are affected, or does the phenomena generally affect 
just basketball and football games?
    Mr. Bowlsby. I think, Senator, it's predominately 
basketball and football, although we see it somewhat in the 
college world series and other high-demand ticket situations. 
But it's primarily in football and men's basketball and to a 
lesser extent in some of the other sports where culminating 
activities at the end of the season are hard to get tickets to. 
And I think we also see it in our bowl environment and in the 
college football playoff.
    The Chairman. This would be for Mr. Cohen and Mr. Liegl. 
I'd like to explore the reasoning behind why companies like 
StubHub and Ticketfly oppose ticket bots. As leading companies 
in the live events industry representing primary and secondary 
ticket sellers respectively, it would seem that ticket bots 
might actually help your bottom lines. For primary ticket 
issues, for instance, bots move tickets quickly, and in the 
secondary market, they help create inventory. And, of course, 
in both cases, they do so at the expense of the ticket buying 
public, which, again, as we pointed out earlier, makes the 
consumer experience both more frustrating and expensive.
    But in an age where consumers have a variety of 
entertainment options, at what point does the expense and 
frustration that ticket bots cause drive consumers away from 
live entertainment?
    Mr. Liegl. That's a great question. I think that the 
connection between the fan and the artist--that the artist may 
be trying to price their tickets below that short-term price 
maximizing point to really create--establish a connection with 
their fans and turn them into avid fans of them as a live act.
    But I think as bots--as quickly as they might get tickets 
into certain people's hands, I do think that they frustrate the 
purpose that the artist might set the tickets below that profit 
maximizing point in order to really foster that relationship 
with the fan. That frustration, their inability to get tickets 
at a reasonable price, really puts at risk that relationship 
over time.
    The Chairman. Mr. Cohen?
    Mr. Cohen. There are two major concerns we have. One is 
we're in a market where tickets become more and more just 
tickets, rather than primary tickets or secondary tickets, and 
the ability for people to buy and sell tickets becomes more 
generic. And as such, we have more and more bots hitting our 
own sites and systems and costing us server space cost and it 
costs us extra funds that we don't need to spend.
    The second reason is that it does drive markets in a way in 
which you've described. Most of the time, nobody cares about 
bots because they sell through more tickets. One of the great 
concerns we have on the criminalization piece is the ability 
for a private actor to make a determination as to whether or 
not something crossed the line to criminal bot behavior versus 
just an automated system in which somebody was gathering up the 
tickets for them.
    So there's an identification and a determination made by a 
private actor that this is an illegal act by somebody else. 
That's a question as to--there are some actual 
constitutionality questions around whether you like having 
private actors make those calls. But, the Senate bill does not 
have criminalized measures in it, and, therefore, we don't 
think it would harm any of the potential good uses for bots in 
which one private actor made a determination that they didn't 
want to have any resale or any sale to a specific set of 
people. But, in general, we're for it.
    The Chairman. OK.
    Mr. Chairman, I think that covers it. My time has expired. 
But I appreciate your leadership on this issue, and, hopefully, 
we can get the bill moving.
    But thank you so much to the panel for your observations 
and insights today. It will be very helpful as we move forward.
    Senator Moran. Mr. Chairman, thank you very much for 
joining us. I think we really are now ready to conclude the 
hearing.
    Let me ask just briefly, Mr. Cohen--you implied, I think, 
that there's a difference between the House bill and the Senate 
bill, and you are satisfied with the Senate bill but not so 
with the House bill. Is that an accurate----
    Mr. Cohen. And I'm not certain of this, but I believe the 
House bill still has the criminal provision in there, and we 
would ask the Senate to look at that and make a determination 
as to whether that's appropriate.
    Senator Moran. Which the Senate bill does not have.
    Mr. Cohen. Does not have. Correct.
    Senator Moran. And that, to your knowledge, is the extent 
of your concerns between the two versions?
    Mr. Cohen. That's the primary reason--if there's addition, 
may I submit that to the record?
    Senator Moran. Please do, yes. Please let us know.
    Commissioner, my final question. What teams are you going 
to add to the Big 12, and I would keep it to myself.
    [Laughter.]
    Senator Blumenthal. You have a right to remain silent.
    Mr. Bowlsby. Do I cease to be under oath at this point?
    Senator Moran. I've detected that you have a great--I don't 
mean this in an offensive way--a great political skill, and I 
have no doubt that you will answer this question without 
providing me any information.
    [Laughter.]
    Mr. Bowlsby. Let me just say that we have the aircraft 
flying, and we're going to try and land it.
    Senator Moran. We're glad to hear that. Thank you very 
much. We would like the Big 12 to be the 12.
    We are now ready to conclude this hearing. Thank you very 
much to the panel for their testimony and to my colleagues for 
joining us.
    The hearing record will remain open for 2 weeks. During 
this time, the Senators are asked to submit any questions for 
the record. Upon receipt, the witnesses are requested to submit 
the written answers--you all are requested to submit your 
written answers to the Committee as soon as possible 
thereafter.
    We conclude this hearing and thank the witnesses. We are 
adjourned.
    [Whereupon, at 3:59 p.m., the hearing was adjourned.]

                            A P P E N D I X

                                                  NetChoice
                                 Washington, DC, September 12, 2016

Senator Jerry Moran, Chairman,
Senator Bill Nelson, Ranking Member,
U.S. Senate Committee on Commerce, Science, and Transportation,
Subcommittee on Consumer Protection, Product Safety, Insurance, and 
            Data 
            Security,
Washington, DC.

RE: Support for S. 3183--Better Online Ticket Sales Act of 2016 (BOTS 
Act of 2016)

Dear Chairman Moran, Ranking Member Nelson, and members of the 
Subcommittee:

    NetChoice enthusiastically supports S. 3183--Better Online Ticket 
Sales Act of 2016 (BOTS Act) which protects fans and primary and 
secondary ticket marketplaces from the scourge of unscrupulous ticket 
brokers using automated ticket buying programs.
    While more than a dozen states enacted laws similar to the BOTS Act 
\1\ now is the time for a national standard. The BOTS Act creates 
reasonable prohibitions that can stop unscrupulous ticket brokers from 
circumventing online security measures.
---------------------------------------------------------------------------
    \1\ For example, California, Florida, Indiana, Maryland, Minnesota, 
Oregon, Pennsylvania, New Jersey, New York, North Carolina, Tennessee, 
Vermont, Virginia, and Washington have all passed laws making illegal 
the practice of intentionally using or selling software to circumvent a 
security measure, access control system, or other control or measure on 
a ticket seller's Internet website that is used by the seller to ensure 
equitable consumer access to tickets for any given event.
---------------------------------------------------------------------------
The problem with bots
    Usually when a fan purchases a ticket through an online marketplace 
or primary ticket seller, those websites use access control systems to 
ensure that the purchaser is a ``human being'' and not a computer 
program. That is because these ``bots'' (a term for the algorithm used 
to automatically purchase tickets) have enabled unscrupulous ticket 
brokers to buy thousands of tickets and shutting fans out of shows and 
events.
    A report by the New York Attorney General \2\ found that these bots 
allowed brokers to grab hundreds of tickets in the first few seconds 
after tickets go on sale, as seen in the documented examples.
---------------------------------------------------------------------------
    \2\ New York Attorney General Eric T Schneiderman, Obstructed View: 
What's Blocking New Yorkers from Getting Tickets


    This has led to just twelve brokers capturing more than $60-million 
in tickets as seen in the NY AG report.
    This has led the New York AG to call for legislation similar to the 
BOTS Act.\3\
---------------------------------------------------------------------------
    \3\ Id. at p35.
---------------------------------------------------------------------------
    Washington Attorney General Bob Ferguson said, ``Outlawing ticket 
bots will keep more fans' hard-earned money in their pockets, instead 
of fattening the wallets of scalpers trying to game the system.'' \4\
---------------------------------------------------------------------------
    \4\ Press Statement from Washington Attorney General, Attorney 
General Seeks to Outlaw Malicious Ticket Bots (Ja. 23, 2015).
---------------------------------------------------------------------------
    The Washington AG's bill later passed both Washington houses 
unanimously and is now law.\5\
---------------------------------------------------------------------------
    \5\ Id.
---------------------------------------------------------------------------
    Clearly bots prevent consumers from having a fair chance to obtain 
tickets.
    By prohibiting these circumvention techniques, the BOTS Act helps 
ensure that unscrupulous brokers don't use ``bots'' to grab hundreds of 
tickets the minute they go on sale and help ensure fans have a fair 
chance to buy tickets.
    Fans also face challenges from ticket holdbacks and restricted 
tickets
    While bots are a problem, fans face other challenges when buying, 
giving-away, selling, and using their tickets.
    For example, the NY Attorney General report found that the nearly 
half of all tickets are never made available for public purchase. The 
report shows that around 54 percent of tickets are withheld from public 
purchase--with most going to VIPs and fan club insiders.\6\
---------------------------------------------------------------------------
    \6\ New York Attorney General Eric T Schneiderman, Obstructed View: 
What's Blocking New Yorkers from Getting Tickets
---------------------------------------------------------------------------
    This reality is often hidden from the public. The NY AG said, ``the 
industry must provide greater transparency into the allocation of 
tickets, to increase accountability and enable the public to make 
informed choices.'' \7\
---------------------------------------------------------------------------
    \7\ Id.
---------------------------------------------------------------------------
    Another challenge that fans face is the growing practice of 
restricting tickets to prevent fans from giving away or selling their 
tickets however they may want. Under TicketMaster's restricted ticket 
program, fans are required to present their driver's license and credit 
cards in order to use their ticket. Fans cannot simply hand a purchased 
ticket to a friend or family member. Likewise, parents are forced to 
accompany their teenagers to the event's doors to show identification 
of the ticket purchaser, rather than allowing the teen to hand their 
ticket to the usher.
    When forced to use a restricted ticket, fans lose the choice and 
convenience of easy ticket transferability. And fans can't use 
competing secondary markets to buy and sell tickets--sometimes being 
forced into just one platform for ticket exchange--when competition 
among exchanges is in the best interests of fans.
    We support passage of the BOTS Act. However, bots are just one part 
in a much larger conversation about ensuring that consumers enjoy the 
choice and convenience of an open tickets marketplace.
            Sincerely,
                                           Steve DelBianco,
                                                Executive Director,
                                                             NetChoice.
                                 ______
                                 
      Prepared Statement of Andrew M. Shore, Executive Director, 
                       Owners' Rights Initiative
The Owners' Rights Initiative (ORI) submits the following statement for 
        the record.

    ORI was founded in 2012 by over 20 companies and trade associations 
in the run-up to the Supreme Court's hearing of Wiley v. Kirstaeng 
(Kirtsaeng). Kirtsaeng was a foreign national studying in the United 
States. He began to import and resell legitimate graduate level 
textbooks to his peers. The First Sale Doctrine is an exception to the 
Copyright Act that allows the free alienability of goods that, as the 
title indicates, have gone through a legitimate first sale. It's what 
allows Goodwill to take donations and sell them in their stores. It 
enables the local library to lend books. It ensures that anyone can use 
an e-commerce platform to engage in the robust global free markets.
    Wiley sued Kirtsaeng arguing that the First Sale exception to the 
Copyright Act did not apply extraterritorially and that such goods 
should be subject to downstream control by the original rights holder, 
in this case the book's publisher. The Court held that such a rule 
would create a perverse incentive to produce even more goods overseas 
as these goods, and not U.S. made goods, would be exempted from the 
First Sale Doctrine.
    ORI supports the legislation before the Committee because it will 
enable more consumers to access tickets which are becoming more 
expensive and more difficult to obtain. The use of Bots to purchase 
tickets has reduced the market of available tickets to sporting events, 
concerts, and the theater for consumers across the board. Tickets to 
in-demand events are largely consumed and controlled by the venue, a 
promoter, the sports league or record label, or those who hold a credit 
card that provides advance purchase opportunities. For the average 
person with a few dollars to spare, who wants to take his or her family 
to an arena event, obtaining tickets is increasingly difficult. Bots 
make it that much harder.
    To be very clear the BOTS Act addresses a very small portion of the 
ticket ecosystem. It does not address the underlying issue of who owns 
the ticket and the right to resell it, give it to charity or simply 
pass it along to a friend. While many of these issues arguably reside 
in the jurisdiction of other committees, we believe that limiting 
access to e-commerce platforms alone is enough to bring it within your 
purview. We encourage the Committee to investigate this and other 
issues outlined below.
    ORI believes that a ticket should be treated like any other good 
under the First Sale Doctrine. However, ticket sellers insist that the 
consumer does not have ownership rights, but merely a license to a seat 
at the event. We find this to be abusive of the licensing exception to 
the First Sale Doctrine. The exception was designed to protect software 
where an unauthorized copy could easily be made to look authorized. The 
secondary buyer might have no knowledge that the software was an 
unauthorized copy. Tickets do not have that problem because only one 
person can occupy the seat connected to the ticket at a given event.
    There is no legitimate reason for a team, venue or promoter to 
limit the resale of a ticket. We've heard the argument that piratical 
tickets are a reason to limit the secondary markets because the 
purchaser of that ticket is defrauded. But piracy exists across the 
spectrum of goods and shutting down all secondary markets, libraries 
and charities would harm tens of millions of Americans who rely on 
channels that can result in lowers costs. Indeed, the secondary market 
for tickets can, in fact, result in lower costs. Anecdotally there are 
countless situations where a ticket holder is unable to attend an event 
at the last minute and may have to sell the ticket below the list 
price. Some venues actually have a prohibition on those types of sales. 
In our opinion there is no logic to support this policy. The team was 
paid precisely the price it demanded and the ticketholder may be unable 
to sell that ticket at the market price. How does the team benefit by 
having one less person in the stands, one fewer hot dog purchased, a t-
shirt that didn't get sold, parking that wasn't paid for and all of the 
other purchases a fan makes to support the team and its vast network of 
employees. We're confident that the hot dog vendor, who walks the 
aisles carrying a hot, heavy case, relies on full seats to maximize his 
selling opportunities.
    ORI is also concerned that there is limited access to resale 
platforms for consumers. When reselling tickets to some events there is 
a requirement that a single platform, such as Ticketmaster, must be 
used by the seller in order to affect a legitimate transfer. Because we 
believe that a ticket is ``owned'' and not ``licensed'' you should be 
able to resell that ticket on a platform of your choosing. As long as 
the ticket is real, it should make no difference what platform the 
seller uses. The only reason these companies will seek to limit resale 
to their platform is to capture even more fees from the seller.
    The trend towards electronic tickets (e-tickets) also lends itself 
towards making ticket holders captive of these entities. E-tickets can 
create convenience for event-goers. No more searching your pockets for 
a paper ticket. No more worries you left it at home. However, e-tickets 
whose resale is limited to the platform chosen by the promoter destroys 
this convenience for the consumer. Imagine a perfect storm where you've 
purchased expensive concert electronic tickets. Suddenly a child is 
sick and the babysitter has cancelled just hours before the start of 
the show. You're limited to resale on the platform where you made the 
original purchase but there's a glut of tickets waiting to be bought. 
You can't sell them at a loss and recoup some of your purchase price, 
nor can you look for another e-commerce platform. In short, because of 
the simple fact that a ticket is a license and not a good, you cannot 
avail yourself of the great American free market.
    ORI unequivocally supports the BOTS Act. We also believe that the 
Committee has an obligation to investigate the anti-competitive 
practices instituted by the various entities that promote events and 
sell tickets. The practices abuse the statutory term ``license'' to 
limit consumer choice and move ticketing completely outside the free 
market. We appreciate the opportunity to submit our statement for the 
record.
                                 ______
                                 
   Prepared Statement of Gary Adler, Executive, Director and General 
            Counsel, National Association of Ticket Brokers
    Senator Moran and other esteemed members of the Subcommittee, my 
name is Gary Adler and I am Executive Director and General Counsel of 
the National Association of Ticket Brokers (``NATB''). The NATB was 
formed in 1994 by a group of concerned ticket brokers who desired to 
establish an industry-wide standard of conduct and to create ethical 
rules and procedures to protect the public and foster a positive 
perception of the industry. NATB is comprised of over 200 member 
companies based primarily in the United States. I commend you for 
looking at ways to protect consumers, and I thank you for offering me 
this opportunity to present the NATB's views on the subject.
    The use of computer software commonly known as ``bots'' to rapidly 
buy up event tickets before fans have a fair chance to do so is 
detrimental to consumers and the overall ticketing industry. NATB 
members oppose the use of bots and support efforts to crack down on 
their use including the BOTS Act of 2016 (S. 3183).
    While the goals of the NATB are many, our primary objective is to 
represent the interests of legitimate ticket brokers by promoting 
consumer protection and educating the public about the secondary 
market. One of the foundations of the NATB is assuring the public that 
when dealing with an NATB member they are working with an honest, 
reliable broker that will deliver what is promised.
    Through self-governance, the NATB provides enhanced protections for 
ticket-buying consumers. The NATB forbids the use of automated devices 
that purchase large blocks of tickets and bump average consumers out of 
virtual waiting lines. Specifically, the NATB Code of Ethics, which is 
the foundation of the NATB's consumer protection measures and provides 
a 200 percent guarantee if tickets are not delivered, directly 
addresses this issue. It provides that each NATB Member shall: 
``Refrain from acting in a manner that is detrimental to the ticket 
brokerage industry or the NATB including the use of automated devices/
programs for the purchase of tickets or creating the false perception 
of an affiliation with any promoter, team, theater, venue or box 
office.'' A copy of the NATB Code of Ethics is attached hereto.
    Having said that, the NATB does not believe that the use of 
automatic devices can be solely blamed for limited public access to 
tickets. In fact, NATB launched Protect Ticket Rights initiative 
(www.ProtectTicketRights.org) in August 2016 to draw attention to 
efforts underway in many different forms that restrict the purchase, 
sale and transfer of tickets. For example, the primary seller's 
practice of holding back tickets is often the cause, or at very least 
exacerbates the problem. There exists within the entertainment industry 
a customary practice of withholding a percentage of tickets from public 
sale. Most of the public is unaware that this practice diminishes the 
likelihood of obtaining a ticket. A recent report by New York Attorney 
General Eric Schneiderman revealed only 46 percent of tickets become 
available when tickets go on sale, leaving less than half to meet 
demand--which is the reason events sell out too quickly and lead to 
frustration over supply and market price. (Source: Obstructed View: New 
York State)
    In other instances, some performers, promoters and venues use 
``paperless tickets.'' The implementers of this practice claim this is 
to reduce fraud, when in reality it simply restricts the ability for 
ticketholders to sell or transfer their tickets. In practice, paperless 
ticketing means showing up in person and waiting in line with the 
credit card and corresponding ID used to purchase the tickets. 
Meanwhile recent experience shows arenas are not equipped to handle 
paperless tickets resulting in fans being unable to enter events with 
their tickets only to seek refunds. This exact scenario played out in 
late July at the T-Mobile Arena in Las Vegas. USA Basketball is 
refunding some 500 tickets because the paperless system failed and so 
many fans were unable to get inside for the game. Clearly, this is not 
about convenience, nor is it about fraud prevention. Fans who do not 
have access to credit face another challenge altogether under this 
scheme.
    Some sports leagues, teams and primary ticket platforms are 
requiring ticket buyers to use a single designated resale ticket 
platform should they wish to resell their tickets with terms (such as 
minimum resale prices regardless of actual market value) set and 
controlled by the team. These price minimums regardless of actual 
market value and charge more fees despite fees already being paid in 
the initial sale.
    These practices serve only to prevent consumers from giving away or 
selling tickets as they wish, at the price or on the exchange website 
of their choosing.
    In yet another example, some sports teams are cancelling, 
threatening to cancel, or choosing not renew accounts of season ticket 
holders that they believe are reselling tickets, punishing the most 
vested fans in an effort to have even more control over the primary and 
secondary ticket markets. This should not be tolerated. Few season 
ticket holders can attend every game, so it's reasonable they may want 
to give away or sell some of their tickets. Others may need to resell a 
portion of their tickets as a means to afford their full ticket 
package. Whether it's one game's worth of tickets, or every game, the 
team was paid full price for the season ticket package. Imagine if car 
dealerships suddenly required car owners to only resell their cars back 
at the dealership and at minimum prices the dealer sets--it wouldn't 
take long for the public to demand change. The same goes for buying and 
reselling real estate. In an open market, if you purchase a ticket, you 
can do whatever you would like with it. It is the height of hypocrisy 
that these very teams play in publicly-financed arenas and stadiums yet 
restrict taxpayers' choice to buy, sell and transfer their tickets as 
they wish (the way it has always been and should continue to be). NATB 
believes such restrictions should not be permitted at venues financed 
in part or whole with public monies.
    Even if the primary seller's intent is well meaning, the simple 
truth is that allowing the primary seller to limit the transferability 
of tickets denies consumers of any choice, and competition for prices 
is stifled. If the issuer of a ticket stands in the way of the 
ticketholder reselling or transferring the ticket as he or she wishes, 
then perhaps the issuer should be required to offer a full, no strings 
attached, refund.
    In closing, when tickets go on sale, people should be competing 
with one another, and not ticket-hoarding software, to make a purchase. 
We commend Senator Moran and the Subcommittee for taking an interest in 
stopping practices that harm consumers and we hope today's hearing on 
bots is just the beginning of a broader effort to examine the full set 
of harmful, anticompetitive issues at play in the overall ticketing 
system. Bots have gained lots of attention and lawmakers should work to 
crack down on them. We support this action, but it is important to 
appreciate that bots are merely one part of a bigger set of problems 
that begin in the primary ticket market controlled by teams, artists, 
box offices, and large ticket issuers.
    To truly protect consumers, legislation should go beyond just 
addressing bots, and require greater transparency to protect the 
secondary resale system where ticketholders can buy, sell and transfer 
their tickets free of restrictions. The momentum behind the BOTS Act 
presents a unique opportunity for Congress to consider more fulsome and 
needed protections in the ticketing system, and we hope Congress does 
not limit this opportunity.
    Again, thank you for holding this hearing and allowing me to submit 
the NATB's views on these important issues.
                                 ______
                                 
                 NATIONAL ASSOCIATION OF TICKET BROKERS
                             CODE OF ETHICS

    WHEREAS, the NATIONAL ASSOCIATION OF TICKET BROKERS is a national 
organization representing firms engaged in the reselling of tickets to 
entertainment and sporting events;

    WHEREAS, the NATIONAL ASSOCIATION OF TICKET BROKERS requires its 
Members to maintain the highest level of ethics in the marketplace;

    WHEREAS, the NATIONAL ASSOCIATION OF TICKET BROKERS has adopted a 
set of standards and procedures that govern the conduct of Members; and

    WHEREAS, the NATIONAL ASSOCIATION OF TICKET BROKERS has 
memorialized those standards in this document.

    IT IS HEREBY AGREED that the following principles are adopted and 
shall be known as the NATIONAL ASSOCIATION OF TICKET BROKERS CODE OF 
ETHICS.

    EACH MEMBER OF THE NATIONAL ASSOCIATION OF TICKET BROKERS 
(``NATB'') SHALL:

   1.  Maintain regular business hours from a permanent business 
        address, excluding a post office box or similar address, within 
        the United States or Canada, at which site the resale of 
        tickets will be a principal business activity;

   2.  Maintain a business telephone, with a published number, at such 
        location;

   3.  Maintain good character and reputation in the community;

   4.  Disclose to the purchaser, prior to purchase, the location of 
        the seats represented by the tickets, either orally or by 
        reference to a seating chart; and, if the tickets are not 
        available for immediate access to the purchaser, disclose when 
        the tickets will ship or be available for pick up;

   5.  Not deceive, mislead, misinform or otherwise misrepresent any 
        information related to the location of the seats represented; 
        including offering or listing for sale any ticket by exact 
        section and row that the member does not have guaranteed 
        assurance of obtaining and delivering of that precise section 
        and row unless the customer agrees at the time of sale, after 
        full disclosure, that he or she will accept comparable or 
        better seats;

   6.  Not alter tickets sold in any detrimental way;

   7.  To the best of its ability, ensure the tickets with obstructed 
        or limited view are marked as such, and that purchasers are 
        advised of this fact prior to purchase;

   8.  Maintain complete and accurate records of all purchases, sales 
        and refunds;

   9.  At the time an order is taken, the customer must be informed if 
        the order is not guaranteed;

  10.  If a ticket is guaranteed, and the ticket is not delivered, the 
        Member shall provide a refund equal to 200 percent of the 
        contracted price for each guaranteed ticket not delivered, 
        unless non-delivery is due to causes beyond the reasonable 
        control of the Member including a shipping error, natural 
        disaster, Act of God, labor controversy, civil disturbance, or 
        armed conflict. If a problem occurs and delivery of an exact 
        ticket location becomes impossible, no penalty shall apply if 
        the Member offers the buyer a comparable ticket at the same or 
        lower price as the contracted ticket. In the rare instance that 
        a ticket purchased by a Member for a client is later found to 
        have been stolen, counterfeited or reported lost by the 
        original purchaser, and the Member purchased these tickets in 
        good faith, then the Member shall be responsible only to refund 
        the full contracted price;

  11.  Maintain a refund, rescheduling and cancellation policy which 
        shall be conspicuously posted at each location where the Member 
        does business;

  12.  Advise all purchasers of its refund, rescheduling and 
        cancellation policy upon request;

  13.  Include, at a minimum, the following conditions in its refund 
        and cancellation policy:

      i.  All deposits for tickets not delivered must be refunded 
            within 30 days of the event; and

      ii.  If an event is cancelled, the M ember will follow the refund 
            policy of the original seller. This refund may be monetary, 
            a store credit, or a mutually agreed upon ticket exchange.

  14.  Any refund or other provision set forth herein shall not limit 
        the right of the NATB to enforce any other sanction it deems 
        fit;

  15.  Conduct business professionally and ethically with customers in 
        compliance with the policies set out above;

  16.  Act honestly with all other members of the industry, and not 
        deceive, mislead, misinform or otherwise misrepresent to 
        another broker information concerning the availability of 
        tickets or the location of seats;

  17.  Refrain from acting in a manner that is detrimental to the 
        ticket brokerage industry or the NATB including the use of 
        automated devices/programs for the purchase of tickets or 
        creating the false perception of an affiliation with any 
        promoter, team, theater, venue or box office;

  18.  Display the logo of the NATB, if permitted, on all forms of 
        advertisements, including stationery, business cards, flyers, 
        whether buying or selling tickets;

  19.  Pay all undisputed invoices to fellow brokers in the agreed upon 
        time. If after 30 days from the date of the purchase, funds 
        have not been received by the seller, the total amount due must 
        be forwarded to the seller within five calendar days of written 
        notice (``Notice Period'') either by bank wire or any form of 
        shipping for which a tracking number for the package is given. 
        After the Notice Period has elapsed a request via telephone and 
        facsimile must be made from the seller to the buyer with a copy 
        to the NATB. At that time a call will be made and a facsimile 
        will be sent to the buyer by the NATB serving notification that 
        the outstanding undisputed invoice must be paid within five 
        days. If the five day period elapses without payment, the 
        Member who has not paid their outstanding invoice will be 
        warned and assessed a $100 penalty payable to the NATB. More 
        than one violation in any NATB Membership year and the Member 
        in question will be removed from Membership and lose all 
        privileges. If full payment has not been made within two months 
        the M ember in question will also by removed from Membership. A 
        one-year period must elapse before a M ember removed for 
        violating this policy can seek a new Membership; and

  20.  Disclose to the purchaser that the tickets are being purchased 
        in the secondary market and, unless accurate, the broker is not 
        affiliated with Ticketmaster, any promoter, team, theater, 
        venue or box office.

    This Code of Ethics for Members of the NATB has been adopted to 
promote and maintain the highest standards of conduct among its 
Members. Adherence to the standards cited herein is required for 
Membership in the NATB and serves to assure public confidence in the 
integrity and service of ticket brokers.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Deb Fischer to 
                              Bob Bowlsby
    Question. Mr. Bowlsby, what tools are currently available to 
universities to try and combat scalping conducted through bots? Have 
your member institutions been able to take any steps to curtail this 
activity?
    Answer. Senator Fischer, thank you for the question. Let me begin 
by stating the obvious--the issue of online scalping is notably 
different when discussing season ticket sales versus the sale of 
tickets to individual sporting events. Each member institution in the 
Big 12 Conference employs its own policy for the sale of season tickets 
and those ticket purchases are not as susceptible to online scalping 
through bots.
    That said, there is considerable interest in longstanding rivalry 
contests between schools in our conference and end-of-season 
championship games. The Big 12 Conference, in conjunction with its 
member institutions, local sports commissions and Convention and 
Visitors Bureaus, hosts 16 championship events each year. Tickets for 
most Big 12 Championships are available through the hosting school, 
with the exception of basketball, baseball and--commencing in 2017--
football.
    Universities currently have very few tools available to combat 
online ticket scalping through bots to these high profile games. Some 
member institutions attempt to curtail unauthorized online ticket sales 
by partnering with reputable secondary ticket sellers. Others attempt 
to protect legitimate fans by employing measures like CAPTCHA codes 
during the online purchase. But, as we have learned during this 
hearing, these technologies are easily thwarted by today's 
sophisticated online scalpers and our fans are the ones adversely 
affected.
    I am aware that individual states are attempting to address the 
issue of bulk purchasing by banning ticket bots. However, this is an 
issue that goes beyond a State's geographical borders and I believe a 
Federal solution is in order. I fully support S. 3183, The Better On-
line Ticket Sales (BOTS) Act, and I applaud those individuals--such as 
yourself, Senator Fischer--for taking a leadership role in this matter.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Bill Nelson to 
                              Bob Bowlsby
    Question 1. I know that there are a number of state laws already on 
the books that prohibit the use of ticket bots. Could you provide a 
sense of the efficacy of state laws and elaborate on why we also need a 
Federal law?
    Answer. Senator Nelson, I am aware that a number of individual 
states--including your home State of Florida--have enacted laws 
outlawing the use of computer bot software. I applaud each state's 
efforts to level the playing field for the sports fan or concertgoer. 
However, there are a number of challenges to this state-by-state effort 
as I see it:

  1.  Consistency in enactment--One state's laws prohibiting bots may 
        not be consistent with a similar law in a neighboring state. 
        For instance, it is my understanding that the law passed in 
        California authorizes criminal penalties, including possible 
        jail time, while a violator of the law in the State of 
        Washington can ``only'' face civil sanctions. There is a 
        further issue with states that have no statutes on the books 
        addressing online ticket scalping.

  2.  Consistency in enforcement--The effectiveness of each state's 
        laws depends upon aggressive, consistent enforcement by the 
        appropriate state agency.

  3.  Interstate commerce--Online ticket scalping is an issue that goes 
        beyond a state's geographical borders and I believe a Federal 
        solution is in order.

    Question 2. Are there other ticket-selling or -reselling practices 
that should be illegal, in addition to the use of ticket bots?
    Answer. I am not aware of other ticket-selling or reselling 
practices that should be addressed by Congress. As I mentioned in my 
oral testimony, I fully support a robust secondary market for the sale 
of tickets between willing buyers and sellers which includes the 
ability of individual ticket holders to profit from market forces if 
they so choose.
                                 ______
                                 
    Response to Written Question Submitted by Hon. Amy Klobuchar to 
                              Bob Bowlsby
    Question. In 2008, Minnesota passed one of the first anti-bot laws. 
This law takes important steps to restrict the use of ticket bots and 
several other states have since enacted similar legislation.
    Mr. Bowlsby, in your testimony you discuss the need for a Federal 
solution to address the ticket bot problem. How would the BOTS Act 
build upon existing state laws to combat ticket bots?
    Answer. Senator, the State of Minnesota is to be commended for its 
aggressive approach in dealing with the issue of bulk purchasing of 
tickets by computer bots. Online ticket scalping is an unsavory, 
lucrative business and our fans are the ones who are exploited.
    But I believe a Federal solution is needed to supplement the work 
of individual states. It is wholly appropriate to make the use of bots 
an unfair and deceptive practice if used to circumvent an Internet 
website's ticket access control measures. I also support the provision 
in the BOTS Act that allows the Federal Trade Commission or state 
attorneys general to take civil enforcement actions against individuals 
who employ deceptive practices to thwart the integrity of online ticket 
purchases. In summary, this legislation complements existing state laws 
and is a necessary measure to ensure that our country's college sports 
fans have access to good tickets at face value.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Bill Nelson to 
                             Jeffrey Seller
    Question 1. I know that there are a number of state laws already on 
the books that prohibit the use of ticket bots. Could you provide a 
sense of the efficacy of state laws and elaborate on why we also need a 
Federal law?
    Answer. State laws are helpful for highlighting the problem but 
enforcement remains problematic. A number of brokers who employ BOTS 
operate from states in which the practice is legal and state attorney 
generals have not yet been effective in prosecuting those breaking 
individual state laws. Because ticketing crosses so many state lines, a 
Federal law outlawing BOTS will make it harder for brokers to ``go 
around'' individual state laws.

    Question 2. Are there other ticket-selling or -reselling practices 
that should be illegal, in addition to the use of ticket bots?
    Answer. ``Ticket scalping,'' which now hides behind the more 
professional term, ``the secondary market,'' is a usurious practice 
that feeds off artists, producers and consumers. While I idealistically 
wish it would cease to exist, I don't think it's practical or doable 
through legislation.

    Question 3. At the time of the hearing, StubHub had side orchestra 
tickets for ``Hamilton'' for that coming Friday for $2,069 each. That 
would be a total of $4,138 for two tickets. Obviously, a main concern 
about ticket bots is that they squeeze out consumers from getting 
tickets directly from the primary issuer at face value. Could you 
describe how the use of ticket bots affects the rest of the 
``ecosystem''--the artists, the venues, producers, etc.?
    Answer. The ``ecosystem'' of theatre is harmed by usurious prices 
on the secondary market. First, the revenue above the face value of the 
ticket does not go to the artists who create the show, the employees 
who perform the show every night, or the producers and investors who 
raise the capital to mount the show. These constituencies have an 
ethical, moral and economic ``right'' to this revenue that would enable 
them to reap the rewards for their work. Second, consumers who are 
forced to buy tickets at such an inflated rate are diverting funds to 
the secondary market that they could perhaps employ buying tickets to 
other arts events. Thus, it's possible that the secondary market for 
``Hamilton'' has resulted in consumers buying fewer tickets to other 
Broadway shows, hurting the larger theatre business. Theatre profits 
help to finance more theatre. If those profits are diverted to 
parasitic brokers, then less dollars are available to producers for the 
creation of new shows.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Amy Klobuchar to 
                             Jeffrey Seller
    Question. 
    How does a Great-Laked, north state, home of a Prince and some

    Gophers, nice, in that we're always so

    Polite, the might of good Midwesterners, by watchfulness

    So populous with fanfare

    Get Hamilton the musical to tour there?

    Mr. Seller, do not throw away Minnesota's shot.

    Thank you. (Mic drop.)
    Answer.
    (To the tune of ``Alexander Hamilton'')

    ``Minneapolis-St. Paul.

    I sure love Minneapolis-St. Paul.

    There's a million fans who'll see the show.

    But you'll have to wait,

    Just you wait. . .''

    Or to quote one more Lin-Manuel Miranda song: ``Paciencia y Fe.''
    We have a plan for Minneapolis that we will be announcing in the 
coming months.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Deb Fischer to 
                               Tod Cohen
    Question. Mr. Cohen, in your written testimony you talk about the 
difference between bots that are ``critical to the Internet,'' and 
those that are used for anticompetitive behavior such as ticket bots.

    a. Can you elaborate on the difference between these types of 
bots--do they operate differently, or is the difference based on the 
operator's intent?
    Answer. An inherent characteristic of all bots--regardless of 
function--is automation; in that sense, they do not operate 
differently. Rather, the distinguishing characteristic is the function 
itself. For lack of more precise terminology, there are ``good'' bots 
and there are ``bad'' bots. The former perform functions that are 
critical to today's Internet infrastructure, including support for 
search engines, e-commerce, and news and weather; the latter are 
malicious and perform functions like steal data, produce spam, and, of 
course, circumvent ticket purchasing limits.

    b. Do you believe the BOTS Act addresses the problem of using bots 
in an anticompetitive way to purchase tickets, without negatively 
affecting other consumer-friendly functions of the internet?
    Answer. StubHub believes that ticket bots legislation should be 
highly targeted. We agree with the FTC that liability should only apply 
with respect to the use of specialized software designed specifically 
for circumventing ticket controls. Liability should not apply to the 
use of general purpose software or software that was not designed for 
such circumvention. We think the BOTS Act, as currently drafted, is 
sufficiently targeted.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Bill Nelson to 
                               Tod Cohen
    Question 1. I know that there are a number of state laws already on 
the books that prohibit the use of ticket bots. Could you provide a 
sense of the efficacy of state laws and elaborate on why we also need a 
Federal law?
    Answer. The use of bots provides an unfair advantage in securing 
tickets over the average fan. StubHub has supported, and will continue 
to support, legislation prohibiting the use of bots that is 
substantive, comprehensive, and inclusive of the range of issues 
impacting fans' access to tickets.
    In the jurisdictions where bots are prohibited (California, 
Florida, Indiana, Maryland, Minnesota, New York, North Carolina, 
Oregon, Pennsylvania, Tennessee, Vermont, Virginia and Washington), the 
laws should be strongly enforced by the appropriate agencies and 
entities who abuse the law should be penalized.

    Question 2. Are there other ticket-selling or -reselling practices 
that should be illegal, in addition to the use of ticket bots?
    Answer. As stated in my testimony, ticket bots are just a single 
component in a suite of anticompetitive and anti-consumer ticketing 
practices that operate as restraints of trade in the ticketing market. 
If Congress wants to fully address inequities in this market, it should 
do so comprehensively, which includes examining these other issues.
    To start, the lack of transparency in the market creates inventory 
problems, confusion, and frustration for consumers. Ticket holdbacks, 
which are generally reserved for presales and for industry insiders, 
mean that a substantial number of tickets are never even available for 
purchase by the general public. Understanding the primary market's 
allocation and distribution practices would be helpful.
    Second, ticket cancellations, whereby primary ticket providers, 
venues, and teams cancel--or threaten to cancel--tickets that are sold 
outside of their preferred or affiliated secondary market platform, are 
intended to stifle choice and lock consumers into a single ecosystem. 
This discourages competition in the secondary ticketing market and 
prohibits consumers from shopping around for lower fees and better 
service.
    Finally, primary ticketing partners will often impose conditions 
that make it difficult, if not impossible, for the original purchaser 
to easily transfer the ticket. These non-transferability restrictions 
are an inconvenience for fans. They prohibit fans from buying tickets 
as a gift, giving tickets away to friends, family or as donations, and 
from reselling those tickets on the platform of their choosing if they 
can no longer attend the event.

    Question 3. Given the relative lack of cases brought against ticket 
bots under existing state laws, I am curious about whether relevant law 
enforcement agencies aren't getting the information they need to 
prosecute cases. What are your company's policies for reporting 
potentially illegal activity? How proactively do you relay suspicious 
ticket bot activity to relevant law enforcement and state attorneys 
general?
    Answer. Our user agreement states: ``If we believe you are abusing 
StubHub in any way (including, by way of example only, suspected 
violations of the User Agreement or applicable law, and actions that 
fail to comply with the letter or spirit of our policies (e.g., by 
deliberately exploiting any policy loopholes)), we may investigate and 
you are obligated to cooperate. We may take any action that we deem 
appropriate in our sole discretion for such abuse. These actions may 
include, but are not limited to: temporarily or permanently suspending 
you from using or accessing the Site or Services, removing a listing, 
requiring you to edit a listing, cancelling a sale, requiring you to 
send the ticket(s) to the Buyer within a specified time, withholding a 
payment to you, or charging the payment method on file for amounts you 
owe us or costs we incur due to your misconduct (including, without 
limitation, any costs associated with collection of delinquent accounts 
or chargebacks and any replacement costs). We reserve the right to 
report any activity that we believe to be illegal and we will respond 
to all inquiries initiated by governmental agencies or as otherwise 
legally required. In addition, we reserve the right to refuse or 
terminate our Services to anyone for any reason at our discretion.''

    Question 4. What else can be done to ensure that all those 
involved--primary ticket sellers, secondary marketplaces, venues, 
artists, and sports teams--are more forthcoming with evidence of 
potentially illegal ticket bot usage?
    Answer. As a representative of the secondary market, I will limit 
my response to StubHub's policy above. If we believe that there is 
illegal activity on our site, we will fully cooperate with the relevant 
authorities.

    Question 5. At the time of the hearing, StubHub had side orchestra 
tickets for ``Hamilton'' for that coming Friday for $2,069 each. That 
would be a total of $4,138 for two tickets. Mr. Cohen, does StubHub do 
anything about this when you see these types of huge price mark-ups?
    Answer. StubHub believes that the market should control prices, 
without interference from any government-imposed restriction. Face 
value is an arbitrary price agreed upon by just a few parties, 
including the artist and venue; it typically does not reflect market 
value. Many entities use the market rate established on the secondary 
market to adjust prices on the primary market when new tickets are 
released. In fact, the producers of ``Hamilton'' have acknowledged 
market value by raising prices for some of their premium seating to 
$849 per ticket.
    Prices on StubHub are controlled by market forces and a competitive 
secondary market. Additionally, approximately half of the tickets on 
StubHub are sold below face value. Allowing the market to set prices 
benefits the widest range of consumers by expanding opportunities and 
options, whether to grab a late ticket to an entertainment option with 
lower demand at that moment, or pick exactly the right seats at exactly 
the right showing of exactly the right event, or anything in between.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Deb Fischer to 
                              Jeremy Liegl
    Question. Mr. Liegl, it appears that Ticketfly carries tickets for 
a lot of smaller venues and events that other platforms may not make 
available. In your experience, does the use of bots harm small venues 
and the performers who play there more than bigger artists or venues? 
Or are bots harmful across the board?
    Answer. Bots are harmful to venues across the board regardless of 
size. When bot operators target small and medium venues they can harm 
an artist's ability to build a fan base and harm a venue's ability to 
make a profit at that show and sell tickets for future shows. And as 
small and medium venues often serve as the gateway to larger venues, 
the harm caused early in an artist's career or to the venues that cater 
to up and coming artists can be significant.
    Artists go to great lengths to build relationships with fans and 
encourage them to attend shows and experience the live event. Bands 
will often choose to tour smaller venues and intentionally keep ticket 
prices affordable to build their fan bases. When bots are utilized to 
improperly purchase a large percentage of the available tickets at that 
affordable price, the strategy for building the artist's fan base (and 
the loyalty of that fan base) is undermined. If a fan has spent two or 
three times the face value of a ticket to get in the door, it is 
unsurprising that they are less likely to spend money on merchandise, 
additional concerts by the same or other artists, and song downloads, 
for which artists are directly compensated.
    Similarly, small and medium-size venues often operate on slim 
margins and the difference between operating in the red or the black is 
often dependent on the amount that fans spend at the venue (e.g., on 
alcohol, food, etc.). If fans are forced to spend multiples of face 
value to purchase a ticket, then many fans will likely have less 
disposable income for merchandise and concessions, directly impacting a 
venue's bottom line.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Bill Nelson to 
                              Jeremy Liegl
    Question 1. I know that there are a number of state laws already on 
the books that prohibit the use of ticket bots. Could you provide a 
sense of the efficacy of state laws and elaborate on why we also need a 
Federal law?
    Answer. While it is true that several states have passed laws 
making it a crime to use bots to hack ticketing sites, those laws are 
insufficient in that they only apply to individuals situated in those 
states or over whom those states may exercise jurisdiction. We are a 
company that operates in all 50 states and the District of Columbia and 
we have commercial relations with over 1,600 venues and rising. People 
from any state can buy tickets for any venue in any state. We believe 
bots are a unique issue because they can't be effectively handled at 
the state level--they are interstate in nature--and thus, in our view, 
are best addressed through Federal legislation.
    Since the misuse of bots to subvert the security mechanisms and 
terms of service ticketing platforms put in place is fundamentally 
unfair to platform operators, the public, and the broader music 
industry, the BOTS Act provides an especially appropriate solution to 
this problem by making the use of bots subject to the prohibition of 
``unfair or deceptive acts or practices'' in Section 5 of the Federal 
Trade Commission Act.

    Question 2. Are there other ticket-selling or -reselling practices 
that should be illegal, in addition to the use of ticket bots?
    Answer. There are other issues in the ticketing world that go 
beyond bots--many of those are made clear in the New York Attorney 
General's recent report on ticketing (available here: http://
www.ag.ny.gov/pdfs/Ticket_Sales_Report.pdf) or will certainly come up 
in a conversation with a venue owner. While there is no one legislative 
``silver bullet'' that will solve all problems in the live events space 
for consumers, we view the BOTS Act as an excellent first step in 
increasing the fairness in the ticket-purchasing industry and one we 
can hopefully all agree is a great start.

    Question 3. In your testimony, you explained that--even though 
Pandora-Ticketfly and other primary ticket sellers receive the same 
fee, regardless of whether a ticket is purchased by a fan or a ticket 
bot--bots that beat out actual consumers undermine the integrity and 
long-term health of the music and entertainment industry.
    However, given the relative lack of cases brought against ticket 
bots under existing state laws, I am curious about whether relevant law 
enforcement agencies aren't getting the information they need to 
prosecute cases.
    What are your company's policies for reporting potentially illegal 
activity? How proactively do you relay suspicious ticket bot activity 
to relevant law enforcement and state attorneys general?
    Answer. We do whatever we can to fight against bots with the 
resources available and if asked to report potentially illegal activity 
we would comply to the best of our ability. Efforts to prevent bot 
attacks are extremely manual and resource intensive, and we often may 
not know that we have been the subject of a bot attack at the time of 
the attack. Ticketfly is also a small company of around 200 employees--
only around 50 of whom are engineers. With engineer hours at a premium, 
making bot activities illegal under Federal law would make it easier 
for us to end their activities.

    Question 4. What else can be done to ensure that all those 
involved--primary ticket sellers, secondary marketplaces, venues, 
artists, and sports teams--are more forthcoming with evidence of 
potentially illegal ticket bot usage?
    Answer. If asked to report potentially illegal activity, we would 
be as forthcoming as we can and comply to the best of our ability and 
in compliance with applicable law.
                                 ______
                                 
    Response to Written Question Submitted by Hon. Amy Klobuchar to 
                              Jeremy Liegl
    Question. I am a cosponsor of the Better Online Tickets Sales 
(BOTS) Act because it protects consumers from the harmful effects of 
ticket bots which regularly prevent fans from seeing the teams they 
cheer for or the artists they love. In Minnesota, we have a strong 
network of smaller venues that offer an intimate experience and give 
up-and-coming artists a chance to showcase their acts.
    Mr. Liegl, we all know that ticket bots are a problem at major 
concerts and sporting events, but how do ticket bots make it harder for 
fans to get tickets to the small-and medium-sized venues that Ticketfly 
serves?
    Answer. Bots are harmful to venues across the board regardless of 
size. When bot operators target small and medium venues they can harm 
an artist's ability to build a fan base and harm a venue's ability to 
make a profit at that show and sell tickets for future shows. And as 
small and medium venues often serve as the gateway to larger venues, 
the harm caused early in an artist's career or to the venues that cater 
to up and coming artists can be significant.
    Artists go to great lengths to build relationships with fans and 
encourage them to attend shows and experience the live event. Bands 
will often choose to tour smaller venues and intentionally keep ticket 
prices affordable to build their fan bases. When bots are utilized to 
improperly purchase a large percentage of the available tickets at that 
affordable price, the strategy for building the artist's fan base (and 
the loyalty of that fan base) is undermined. If a fan has spent two or 
three times the face value of a ticket to get in the door, it is 
unsurprising that they are less likely to spend money on merchandise, 
additional concerts by the same or other artists, and song downloads, 
for which artists are directly compensated.
    Similarly, small and medium size venues operate on slim margins and 
the difference between operating in the red or the block is often 
dependent on the amount that fans spend at the venue (e.g., on alcohol, 
food, etc.). If fans are forced to spend multiples of face value to 
purchase a ticket, then many fans will likely have less disposable 
income for merchandise and concessions, directly impacting a venue's 
bottom line.

                                 [all]