Category: Culture

Digital Citizens Alliance Issues Its First Report on Digital Secondary Markets

secondary markets

Today, both producers and consumers are increasingly aware that every opportunity and convenience afforded by digital commerce comes with an unwritten warning label that scams abound—from counterfeiting to price gouging to malware attacks. Thus, in 2024, Digital Citizens Alliance independently launched the Responsible Markets Initiative (RMI) to research existing and emerging harms in secondary markets. Its first report on digital secondary markets states …

Digital Citizens launched the Responsible Markets Initiative (RMI) – to put a spotlight on these markets to help consumers make smart decisions and provide information to policymakers grappling with how to ensure online trust and safety.

Among the many unfounded claims by tech-utopians is that the internet will bring about an age of abundance for producers and consumers alike. This belief, bordering on religious faith, is now being promoted as an inevitable benefit of artificial intelligence—and this despite the mountain of evidence that without regulation, cyberspace is a huckster’s playground. In RMI’s report titled When It Comes to Digital Markets, Trust Can’t Be Secondary, it highlights three secondary markets—event tickets, real estate, and domain names—where digital technology enables large-scale predatory practices that harm consumers with excessive prices and artificial scarcity.

Concerts and Sporting Events Are Now Luxury Experiences

Price gouging in the secondary ticket market is not news to anyone who has purchased event tickets in recent years, but the RMI report is an eye-opener just the same. It states…

Brokers use sophisticated techniques and relationships with promoters to snap up coveted tickets before fans can buy them. That in turn forces the fans who were beaten to the punch by brokers to shell out hundreds, if not thousands, of dollars in ticket costs and service fees to StubHub, Vivid Seats, SeatGeek, and other secondary platforms.

Historically, a scalper on the street commits a crime by selling tickets at a premium. But not only was the old-school scalper not marking up prices by thousands—or even tens of thousands—of dollars, he also did not have a means to pre-buy blocks of tickets before consumers had the opportunity to buy them at their original prices. That’s exactly what digital technology enables the ticket brokers to do, creating artificial scarcity by manufacturing a “secondary market” the moment the primary market opens to the public.

From there, according to the RMI report, the brokers’ blocks of tickets are sold via online platforms like StubHub who add more extraordinary fees to the prices that were already inflated by the brokers. Thus, a ticket for a premium event, say originally priced around $400, becomes a $1400 ticket as listed on the platform, only to finalize as a $1,900 ticket at the actual point of purchase. And all while creating an atmosphere that the consumer must act fast to obtain tickets or miss the event.

Even non-concertgoers are likely familiar with stories about Taylor Swift’s last tour for which American fans paid outrageous, secondary-market prices. “Some found it more cost-effective to fly to Europe to catch a Taylor Swift show due to European regulations that combat charging exorbitant prices for tickets…” the RMI report states. It also forecasts similar shenanigans for Lady Gaga’s upcoming “Mayhem Ball Tour,” stating,  “For example, second row seats in Section 212 are selling for $5,175.40 (with fees) on VividSeats.”

Let Me Interject …

As a copyright advocate, I cannot ignore the layers of hypocrisy the ticket sale fiasco reveals about tech-utopian claims. On the basis that the internet “democratizes” everything, the anti-copyright crowd alleged that artists’ legal rights create artificial scarcity and unjustly “seek rent” from consumers by charging fees to access works. With music, the careless response to artists was that they should forget sales of recorded music (i.e., embrace piracy) and “just tour.” In part, that directive was based on the claim that $12 – $20 was an “extortionate” price for a fan to pay for an album, and that claim was paired with the unexamined analysis that “hardly any of the money goes to the artists anyway,”

But between the streaming platforms siphoning most of the revenue out of the recorded music market and the ticket brokers and resale platforms driving event prices into the stratosphere, I fail to see how the digital age is fostering anything close to the utopian prediction of “abundance” for both music maker and music fan. And none of the billions of dollars referenced by the RMI report goes to the artists. Plus, speaking as a pre-digital-age consumer, I didn’t go to a ton of concerts as a teenager, but ticket prices were not comparable to a semester of college tuition!

This have/have-nots result is bad enough in the event ticket market and ripe for consumer protection measures by the federal government, but RMI’s focus on housing and domain name speculation has even more serious implications for community and business prosperity.

Artificial Scarcity in the Housing Market

Affordable, workforce housing, whether for long-term renters or new homebuyers, is at a crisis condition in many communities around the country. While there are multiple factors to consider, the RMI report notes …

A key factor in [housing] scarcity and price hikes has been homes no longer on the market because they have been monetized by homeowners or investors – either as vacation rentals placed on digital secondary markets such as Airbnb or as part of long-term real estate portfolios by private equity firms, real estate investment trusts (REITs), and large corporations oftentimes financed by private equity groups.

Both Airbnb and private equity (PE) acquisition are cited in the report as having adverse effects on availability, skyrocketing prices, and the character of communities. For instance, the report states that “…residents of Indian Rocks Beach [FL] have called [vacation] rentals a ‘cancer’ that is ‘destroying what was once a peaceful safe community…” At the same time, while not a digital market, “…institutional investors such as Blackstone and Pretium Partners could control 40 percent of U.S. single-family rental homes by 2030,” the report states.

Combine these two effects, and RMI is right to imagine how any American community can become like “Pottersville” in the nightmare sequence from It’s a Wonderful Life, where the soulless, greedy old man Potter owns the whole town. This is a concern of economic, political, and cultural equity. If housing in a community is occupied by a small fraction of wealthy homeowners, a majority workforce population renting from one or two PE landlords, and too many short-term (Airbnb-type) renters, the character and stability of the community are at risk because fewer of the residents have a stake in the life of the community.

As one hypothetical example, if a single PE firm in Manhattan owned 500 rental homes in my small Hudson Valley community, and those investors decide to price out half the long-term renters to make room for vacation (Airbnb) renters, that 250 family loss would be a substantial change at the polls when we vote for school board or county legislators. Meanwhile, the larger volume of vacation renters has both positive and negative effects on the community without any stake as residents. Examples abound, but it is easy to see how predatory acquisition of housing to create a secondary market can hollow out the vibrant center of any community.

Masters of the Domain

No, that’s not a reference to Seinfeld. Rather, “domainers” are the handful of folks who scoop up internet domain names in bulk for the purpose of selling those names at a premium. This practice of “digital real estate flipping,” to borrow the analogy from the RMI report, can cost a startup business a ridiculous amount of money just to obtain their own company name as the .com URL they need. To me, this form of “investing” is like roulette meets ransomware—picking names in advance to hold hostage on the theory that some of the “families” who want those hostages will pay huge sums for their return. Domaining should probably be illegal, but instead, “there are roughly 5,000-10,000 domainers who control between 15 million to 25 million domains (nearly all of which are .COM),” the RMI report states. It also cites this contemporary example:

The day that Pope Francis died, April 21, someone registered PopeLeoIV.com in hopes his successor would choose that name. The domain name is now parked with the email contact (as of May 12, 2025): thisdomainforsale@diginames.com. Presumably, it’s quite pricey. If the new pontiff had chosen to be called Pope John Paul III, that domain name is listed for $1 million.

Again, RMI focuses on both the extortion-level prices charged for domain names and the artificial scarcity of URLs created by domainers. “Millions of domains remain dormant while resellers hold out for high returns. And when these domains are not used but ‘parked’ (left undeveloped), it creates scarcity just like tickets and homes,” the report says. I know through attorney colleagues that even small businesses have paid thousands of dollars they can barely afford to acquire essential domain names; and I had a friend—a widow who didn’t know how to renew a URL for her semi-famous husband’s name—discover that the name quickly fell into the hands of domainers.

Further, the RMI report states that, “When neglected, [parked domains] become targets for bad actors who leverage [the URLs] to redirect traffic to malicious websites or subdomains they create. This tactic enables the criminals to spread malware, steal credentials, and present malicious ads that have viruses.”

Domainers are a classic example of the distinction between the promise of tech-utopians and the reality of the digital market. The bait of “democratization,” i.e., that anyone with an entrepreneurial spirit and a good idea can enter the market, is undermined by the switch of reality that some of the most successful entrepreneurs in the digital age seem to be anyone who devises a new way to hijack fair-market transactions.

The Responsible Markets Initiative recommends a “village approach” involving Congress, private interests, consumer advocates, and law enforcement to address the kind of predatory practices described in this report on secondary markets. To be sure, the overarching lesson of Web 2.0 is that leaving “the internet” to do its thing without oversight has had disastrous effects we are only now acknowledging, let alone addressing. And to RMI’s point, we do not want an otherwise valuable secondary market to become a black market operating in plain sight.

 

Read the Full RMI Report

Photo by Yongkiet

The War on Smart Continues with Firings at the Library of Congress and Copyright Office

copyright

Since the election, I have been so certain these events were coming that I almost pre-drafted this post, but I didn’t want to be a jinx. Then when it did happen, I hardly knew what to say. Every day, we are confronted with evidence that the only agenda of Trump 2.0 is wanton destruction. I am increasingly convinced that Trump himself is a mindless wrecking ball set in motion by cyberlibertarians like Peter Thiel, animated by the “Dark Enlightenment” ravings of Curtis Yarvin, and determined to raze America and on the wasteland, erect their fever-dream of techno-feudalist “corporate zones.” Of course, I only think that because that’s what they explicitly said they want to achieve.

Last Thursday, around 7:00pm Eastern, Trump fired Librarian of Congress, Dr. Carla Hayden, and then, on Saturday afternoon, he dismissed Register of Copyrights and Director of the U.S. Copyright Office, Shira Perlmutter. So, the first conflict in this shit-show (maybe) will be jurisdictional. Although the Librarian is a presidential appointee, the Library and Copyright Office comprise employees of the Legislature. Thus, a president doesn’t necessarily have the authority to fire Copyright Office or other Library staff, and as of yesterday, Trump appointees, Paul Perkins as acting Register and Brian Nieves as acting Deputy Librarian, were both turned away from the Library according to a story in Wired.

Trump also named his former defense counsel and current assistant AG Todd Blanche as acting Librarian, and other reports on social media stated that DOGE employees arrived at the Copyright Office and were also turned away. So, this is now a right and proper clusterfuck wholly consistent with the Trump brand of governance. Whether Congress will assert its authority in this mess is this week’s question along with the other question: Why?  Why aim the Trump wrecking ball at the Library of Congress and the U.S. Copyright Office?

Dr. Hayden was a natural target for the hate-machine wing of the MAGAverse. She’s Black, an Obama appointee, and easy to accuse—and was accused—of fostering a “leftist DEI” agenda.[1] Notably, the White House email she received about her termination accused her of “putting inappropriate books in the library for children,” which is classic Trumpism—not only an invented allegation about Dr. Hayden, but one which highlights that these people have no idea what the Library of Congress is or does.[2]

Trump firing the Librarian of Congress is an attack on the institution consistent with other administrative attacks on cultural and scientific institutions throughout the country. Appointing a DOJ attorney to be acting Librarian signals hostility toward the purpose and meaning of the Library—a hostility in harmony with the rhetoric of Goebbels wannabe Stephen Miller, who talks about incubating a nationalist, “patriotic” culture. As any student of history knows, that’s a recipe for stupid—not just book stupid, but can’t feed oneself stupid. Today’s editorial in Time by Alondra Nelson, explaining her resignation from both the National Science Foundation and the Library of Congress, makes the point. She writes:

In both these roles, over the past few years, I’ve been asked to serve on diverse bodies that offer guidance about how the Executive and Legislative branches can be stewards of knowledge and create structure to enable discovery, innovation, and ingenuity. In the instance of the National Science Board, this ideal has dissolved so gradually, yet so completely, that I barely noticed its absence until confronted with its hollow simulacrum.

The Copyright Office Debacle

The day before Register Perlmutter was fired, the Copyright Office released a “pre-publication draft” of its third report on copyright and AI—this one addressing training AI models with protected works. Because the Office does not release “pre-publication” drafts, it was clear as of late Saturday, that the report had been quickly distributed ahead of the anticipated firing of the Register. In this regard, Shira Perlmutter is owed a debt of gratitude for publishing the Office’s statement at a time when over 40 lawsuits are asking the courts to weigh the issue of AI training with protected works. But why was the report controversial and a likely catalyst in Trump’s desire to fire Perlmutter?

The pending third report made the AI developers anxious because, as with any report of its kind, the Office would aim to provide guidance on the legal considerations and implications without necessarily choosing sides. The AI developers have been lobbying hard in the press, and with appeals to the administration, to argue that training AI models with protected works is per se fair use. Further, they have argued as a matter of national interest that “winning” the AI competition with China is too important to allow copyright rights to interfere. Not that there’s any merit to that claim, but between Trump’s addle-minded concept of nationalism and the fact that he’s elbow-deep in Big Tech’s booty, copyright interests have been anxious since the inauguration that he might stick his mittens into the mix.

Meanwhile, at the end of April, Tom Jones of the right-wing American Accountability Foundation told the Daily Mail that it was time Trump, “…show Carla Hayden and Shira Perlmutter the door and return an America First agenda to the nation’s intellectual property regulation.” So, in addition to being a general dickhead about “leftist agendas,” Jones reiterates the incoherent proposal that America can hope to “lead” in IP while its Executive promotes brain drain across multiple sectors and attacks independent thought and diverse creativity wherever it can. Because attrition like the resignation of Alondra Nelson is exactly how you lose in IP, in case anyone’s keeping score.

So, Dr. Hayden’s ouster, packaged in the rhetoric of “anti-DEI,” is an attack on yet another cultural institution (one that houses the world’s largest collection), while the broadside at the Copyright Office may be solely about the reports on AI. Regardless, Trump gets to feed red meat to the MAGA nationalists and his Big Tech patrons at the same time, and where we are now is a lot of uncertainty pending chaos. Further, if Trump 2.0 is indeed designed to soften the ground for a techno-feudalist makeover, then tanking the creative economy would fit that agenda, as would allowing AI developers to build whatever they want without oversight of any kind.

One can only imagine who an illiterate, demented, and seditious facsimile of a president would tap as the next full-time Librarian of Congress—my money’s been on Kid Rock since November—but it will likely be someone whose idea of a national library roughly matches Pete Hegseth’s comprehension of national defense. Everything about Trump 2.0 mimics weak, authoritarian nations, including the aforementioned effort to foster a nationalist culture. To achieve that aim, authoritarians will always try to exsanguinate the professions supported by copyright law while they destroy evidence of historical fact and scientific discovery—a narrative housed within and symbolized by the Library of Congress.

Not since the British torched the place in 1814 have occupants of Washington shown so much contempt for America’s genuine capacity for greatness. More profound than the hostile takeover of the Kennedy Center, removal of historical material from federal institutions and websites, or cutting the NEA budget, the concurrent dismissals of the Librarian and Register should be understood as an attack on the intent of the IP clause of the Constitution to “promote science and the useful arts.”

[1] As an aside, I criticized Dr. Hayden in 2016 for her improper and sudden ouster of then Register of Copyrights Maria Pallante, and I would likely still quarrel with her on that and other copyright matters today, but all that has nothing to do with these recent events.

[2] The Library houses the world’s largest collection of EVERYTHING. It is not comparable to a library in your local community.

Photo by Extender_01

“Innovation” Doesn’t Mean Anything

"innovation"

Two headlines in the first week of this month said a lot about the United States as an “innovative” nation right now. One story announced that the first driverless semi-trucks are on the highway covering normal long-haul routes, and the second reported that the final shipments of pre-tariff goods from China were arriving at U.S. ports. Leave it to contemporary America to dispatch a new fleet of robot trucks just in time for the cargo containers to be empty. On the other hand, I guess it works out in principle because the unemployed truck driver won’t have money to buy the goods that won’t be on the shelves.

According to the tech-utopians about a decade ago, the displaced truck driver shouldn’t worry because he now lives in a world of abundance and can, at last, spend his days painting or writing poetry or making music with all the leisure time he now enjoys. Isn’t that what happened? Didn’t technology “innovate” that Keynesian promise of a social and economic golden age? Doesn’t look like it. In fact, we’ve even got machines to write poetry and make music, so the ex truck driver will just have to pound sand.

Big Tech historically calls everything it does “innovation,” allowing scant room for critique of a product’s pros and cons while labeling any policy that might protect some injured parties “anti-innovation.” Even where harmful results are identified and become the subjects of congressional hearings, the product makers effectively sell these “unintended” hazarrds as a price that must be paid for “more innovation.” And, by the way, that promised “age of abundance” will start any day now, if we are just patient and keep feeding the beast more data.

The Coalition for a Safer Web can describe in grim detail how social media and other tech platforms have “innovated” teen suicide, scams, and drug trafficking. Or the recent proliferation of AI “companion” apps (virtual girlfriends and boyfriends) has “innovated” new concerns among child psychologists—and these apps may also “innovate” new vectors for malware attacks. And, of course, increasingly realistic AI deepfakes may further “innovate” our fleeting grasp on reality, which has been essential to “innovating” American democracy to the edge of extinction.

Sporting the word “innovation” as a cloak for all manner of sins, the tech industry contends that the materials used to build the next generation of AI products (i.e., the works of artists and creators) are so essential for even more “innovation” that copyright rights must be disregarded. Elon Musk and Jack Dorsey even opined that the U.S. should simply abandon intellectual property rights altogether, and the industry rhetoric appealing to the current administration claims that copyrights must not hamper the national interest in “winning” the competition to build the “best” AI.

The folly of declaring an intent to “win the AI war” without defining what success looks like is consistent with U.S. tech policy for decades and with policy affecting all sectors, public and private, today. To call Trump 2.0 incoherent is too kind, as that term can imply well-meaning error when, in fact, the administration is engaged in a purposeful, multi-pronged attack on science and the arts in direct conflict with the intent of the progress clause of the Constitution.

Article I, Section 8, Clause 8, giving Congress the power to “promote science and the useful arts” by establishing copyright and patent laws was an expression of the Framers hope that the fledgling, agrarian nation might one day create great cultural works and inventions. But of course, IP law alone can’t do that. Quite simply, without the I, you ain’t got no P—and I is under assault in the United States. Brain-drain and chaos are now the hallmarks of every federal department from healthcare to defense, and in the private sector, Trump’s goons attack universities, the motion picture industry, publishers, authors, journalists, and scientists—literally anyone smarter than they are, which includes a lot of damn people.

“Innovation,” Copyright, and AI Training

Big Tech argues that all AI training with protected works should be exempted from infringement claims by the doctrine of fair use. Ordinarily, broad claims about fair use remain in the blogosphere while specific legal questions are weighed in court. But in regard to AI training, I worry that the general perception of the technology as “innovative” may result in overbroad application of “transformativeness” under factor one, which considers the purpose of a use.

For instance, Judge Chhabria, in last week’s hearing in Kadrey et al. v. Meta, stated that Meta’s Llama is “highly transformative,” which may signal an overbroad reading that synonymizes “transformative” with “innovative” while also eliding a thorough weighing of the extensive purposes for which the use is made. Or in a nutshell, how can a court fully consider the purpose of a use when the technology at issue is dynamic and open-ended?

As noted in an earlier post, landmark fair use cases have involved technologies that were complete models as facts presented to the courts—e.g., the VCR and the Google Books search tool. The court did not need to wonder, for instance, whether the purpose of Google Books—i.e., to provide information about books—might also be used to build an AI “psychologist” that may harm patients seeking mental healthcare. In fact, as The Guardian reports on this very issue, Mark Zuckerberg advocates “innovating” psychotherapy with AI “providers,” thus adding doctor next to historian, journalist, and constitutional scholar to the list of qualifications he lacks as he proceeds to break all things.

In this context, and with the recognition that Meta’s commercial interests entail application of its AI tools across many, if not all, initiatives in the company, what exactly is the purpose of Llama as weighed in a factor one fair use consideration? I’m not convinced the court can really know.

Beyond the Four Factors

When Congress codified fair use in the 1976 Act, it sought to convey over a century of judge-made law as statutory guidance, but beyond the four-factor test, “courts may take other considerations into account,” writes Professor Jane Ginsburg in a paper about AI and fair use. Indeed, she cites to the Google Books case, in which the court states, “the use provides a significant benefit to the public.” But with a product like Llama, where a court has reason to predict substantial crossover between socially beneficial and socially toxic purposes, how can a judge reasonably decide whether the purpose is “highly transformative” when the facts themselves are so ephemeral?

It is one matter for a court to consider the “transformativeness” of an AI built for a clearly defined purpose as presented, but it seems another matter if the technology has myriad purposes, including ones that will manifest after a case has been resolved. Whether Midjourney’s purpose to enable the production of visual works makes fair use of visual works in its training may be a sufficiently narrow consideration, but by contrast, an LLM developed by Meta is arguably open-ended development for purposes as yet undefined.

After all, Meta began with a college student ranking sorority girls and is now a trillion-dollar company that has altered the course of human history—and many of its “innovations” have had destructive results. In this light, the courts should decline to find “transformativeness” in the same overbroad spirit in which the tech industry wields the term “innovation.” Because without a clear definition and coherent law and policy, “innovation” is how we end up with a truck with no driver carrying a load of nothing to nobody.

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