A few years ago Ticketmaster, the dominant player in concert ticket sales, faced a threat from a handful of startup companies. One of them was CrowdSurge, which focused on allowing artists and bands to sell directly to their fans.
According to an amended complaint filed Wednesday in federal court, Ticketmaster hired one of CrowdSurge’s top executives, Stephen Mead, who hacked into his former employer’s database in order to provide real-time information about its plans.
The allegations paint a picture of a ruthless market leader doing whatever it takes to muscle a smaller competitor out of the way. According to the suit, the hacking was so extensive that Ticketmaster was able to see which artists CrowdSurge was hoping to work with, giving Ticketmaster the opportunity to obtain the artists’ business. Mead’s goal, according to the suit, was to “bring down the hammer” on CrowdSurge, and to “cut CrowdSurge off at the knees.”
The allegations came to light in the course of a federal anti-trust suit filed by Songkick, another ticketing startup, in December 2015. Songkick is a platform that allows artists, such as Adele, to sell tickets directly to fans before they go on sale through Ticketmaster. In the lawsuit, Songkick accused Live Nation Entertainment and Ticketmaster, which is a Live Nation subsidiary, of abusing their market power to pressure artists not to work with Songkick. CrowdSurge and Songkick merged in 2015 and agreed to do business under the Songkick brand.
During discovery in the suit, Songkick learned that Mead had kept 85,000 company documents on his laptop computer after leaving his job as general manager of U.S. operations for CrowdSurge. Those documents included confidential business plans, strategic and financial information, contracts, client lists, and dozens of user names and passwords to confidential CrowdSurge tools, according to the suit.
Mead had signed a separation agreement with CrowdSurge upon leaving the company in 2012, in which he agreed not to disclose confidential information, the suit alleges. However, Songkick claims that less than a year later Mead got a job at TicketWeb, a Ticketmaster company, and began sharing CrowdSurge’s trade secrets with his new employer.
According to emails disclosed in the litigation, Mead began providing reports to his bosses on CrowdSurge’s operations, apparently to compare it to Ticketmaster’s own artist platform. The reports included user names and passwords to Crowdsurge’s “toolboxes” for three artists, which included a wealth of data on ticketing, merchandise sales, and even customer data.
“I must stress that as this is access to a live CS tool I would be careful in what you click on as it would be best not the giveaway that we are snooping around,” Mead wrote in January 2014, according to the suit. He also invited his Ticketmaster colleagues to “feel free to screen-grab the hell out of [CrowdSurge’s] system,” the suit alleges.
Zeeshan Zaidi, one of the Ticketmaster employees, then prepared a presentation for Ticketmaster executives that included screenshots from the CrowdSurge system, the suit claims.
A few months later, Live Nation CEO Michael Rapino asked Zaidi to develop a plan to compete with CrowdSurge, according to the suit. Mead was tapped to help prepare the report, and obliged by providing confidential CrowdSurge documents, including financial reports and a “client pipeline” that outlined CrowdSurge’s plans to obtain clients and business deals, the suit alleges.
In 2014 and 2015, Mead also showed Ticketmaster employees how to access CrowdSurge’s “test sites” for potential clients, the suit alleges. CrowdSurge set up the sites in hopes of winning the rights to sell artists’ tickets. The sites were publicly accessible to anyone who knew how the URLs were formulated. However, Mead is alleged to have referred to them as “CS insider dealings” in one email. Ticketmaster was able to generate a list of 125 artists that CrowdSurge was targeting, which enabled it to pressure those artists to use Ticketmaster’s services instead, according to the suit.
In response to Songkick’s new allegations, Live Nation and Ticketmaster issued a statement noting that a significant portion of Songkick’s original anti-trust action had been dismissed by the court.
“In the face of those adverse rulings, Songkick has been forced to conjure up a new set of dubious arguments and theories, resulting in the amended compliant they recently filed,” the statement continues. “Songkick’s amended complaint is based on the alleged misappropriation of information that Songkick did not even try to keep secret, in some cases could not have kept secret, and in some cases shared with artist managers that work for Live Nation. The claims have no legal merit and Live Nation and Ticketmaster will continue to vigorously defend this case.”