(Bloomberg) -- Ticketmaster LLC agreed to pay $10 million to settle U.S. allegations that it hacked a competitor's computer system to get information about its business.
Federal prosecutors accused the company Wednesday of wire fraud, computer intrusion and other crimes dating back to 2013. Prosecutors agreed to dismiss the charges in three years if Ticketmaster stays out of trouble as part of a deferred prosecution deal.
The investigation focused on Ticketmaster's efforts to get information, particularly about pre-sale tickets to concerts, according to court papers. The competitor was identified only as a U.K. company with an office in Brooklyn, New York, but details in the court documents indicate it was Songkick.
Songkick specialized in providing performing artists with digital tools known as an “artist's toolbox,” which, in part, allowed them to pre-sell tickets to their shows on their own websites separate from blocks of tickets made available to Ticketmaster, which is owned by Live Nation Entertainment Inc.
Ticketmaster and Live Nation allegedly hired a former employee of the competitor to glean information about its business practices, plans and client artists. The former employee provided Ticketmaster executives with his old log-in information, which they repeatedly used to access the systems and find out the company's pricing, and used it to develop a competing platform.
Court records indicate the scheme was spearheaded internally at Ticketmaster by a then-executive named Zeeshan Zaidi. Ticketmaster said in a statement Wednesday that the employees involved in the scheme were fired when their conduct came to light. Zaidi pleaded guilty to related charges in Brooklyn federal court last year.
“Their actions violated our corporate policies and were inconsistent with our values,” the company said. “We are pleased that this matter is now resolved.”
Songkick sued Live Nation and Ticketmaster in Los Angeles federal court and reached a $110 million settlement in 2018 that included the sale of its ticketing assets to Live Nation. Other Songkick assets had been sold earlier to Warner Music Group.
Ticketmaster had other legal troubles too. A year ago, Live Nation settled a Justice Department investigation that found the company repeatedly violated terms aimed at protecting competition in live music promotion and ticketing when the government approved its purchase of Ticketmaster in 2010.
Michael Rowles, the general counsel of Live Nation, appeared as Ticketmaster's corporate representative during a Wednesday afternoon hearing in Brooklyn federal court formalizing the agreement.
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