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.

 

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Photo by Yongkiet