Following his recent Ticketing Professionals Conference presentation, Softjourn's Lyubomyr Nykyforuk outlines three ways blockchain can be utilised for ticket sales
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With artists and other sectors of the music industry capitalising on the opportunities presented by non-fungible tokens, IQ takes a look at the ticketing possibilities
By Gordon Masson on 06 May 2021
Art auctions, album launches, video clips, gaming characters and even historic tweets have helped to put the concept of NFTs on the map, with hundreds of millions of dollars changing hands already this year for all manner of collectible digital assets.
The rush to become a part of this lucrative 21st-century phenomena has seen a raft of start-up enterprises amassing impressive sums in funding from eager investors, while the publicity that art auctions in particular have enjoyed has helped NFTs become one of the most searched-for terms on Google.
As a result, when it comes to leveraging the power of NFTs for ticketing, there is an ever-increasing pool of hopefuls trying to entice artists, venues, event organisers and established ticket operators to put their faith in the blockchain-based technology.
The multinational ticketing giants are cautious. Ticketmaster’s EVP of enterprise and revenue, Brendan Lynch, sums up their view on the use of blockchain-based operations: “Ticketmaster jumped into blockchain early, acquiring Upgraded back in 2018 and furthering our focus in the space through other investments and development.
“Blockchain ticketing is still in experimental stages and not yet scalable for broad ticketing delivery but is useful for specific low-volume situations. Right now, digital ticketing offers the same level of tokenisation, terms and security with way more scale – and since less than 10% of tickets get resold, a traditional blockchain still isn’t worthwhile for large onsales. But our cryptographers and engineers will continue to explore blockchain ticketing delivery to see where it can differentiate and add value in the future.”
However, the excitement among those who are helping to develop the NFT ticketing market is palpable and as the myriad applications and transparency that the blockchain can offer become more apparent, investment is flooding in to drive that development – including from the likes of Ticketmaster.
One company that has been working with blockchain for the last five years is Netherlands-based GET Protocol, which is also home to in-house ticketing operation GUTS Tickets. “It’s a little bit derogatory to say, but GUTS is sort of our ticket store asset to show what GET Protocol can do,” explains Olivier Biggs, the company’s head of marketing. “All of our tickets are NFTs and in our international expansion plans we are offering interested parties a white-label solution so that they receive the infrastructure of GUTS and can slap on their own logo and label.”
Championing the use of NFT ticketing, Biggs continues, “One of the big benefits is that you can really establish and sustain a connection from the artist or event organiser to the actual fan who shows up at the event. NFT ticketing also offers collectible opportunities, so whereas in the past you would put your event ticket stub on your fridge as a reminder, you can do this digitally by holding your ticket in your online wallet. This can include custom artwork from the artist or contain information about the show or whatever.”
Carolin Wend, co-founder and chief operating officer of NFT specialist Mintbase, is also bullish about its applications in ticketing. “I have a radical opinion on ticketing,” she tells IQ. “I used to work in ticketing for a company so I know how the business works, but in my opinion there is no innovation happening in the [big] platforms at all – it’s the same thing for the last ten or 20 years: you have a QR code, you go to a festival and someone scans it and you go in. Done. So it’s a one-time, single-use case for tickets – that QR code is used just once, for one purpose.
“With NFT tickets, it doesn’t need to be a QR code – your ticket could be a song or a video that is pegged to your smart contract. That’s much more dynamic as a format, but also, you keep it forever – the NFT is an asset that you own. And that is key. With NFT ticketing you can trade it wherever you want, you can gift it to a friend… this is not happening in the current ticketing system because although lots of [companies] have personalised tickets, you don’t really own the ticket because if you look at the definition of ownership it’s something that can be owned and controlled by myself. But if you look at traditional tickets, it’s just a QR code and I don’t really own it.
“With NFT tickets, I can trade it, but I can also verify that it is a real ticket, and I can control something in a very uncontrolled environment – the resale market.”
“With NFT tickets, I can trade it, but I can also verify that it is a real ticket, and I can control something in a very uncontrolled environment – the resale market”
Using cutting-edge technology to disrupt the ticketing business brings with it a different operations model, but intrinsically the two worlds are not that different.
“In the world of blockchain, you need verification of wallets, so what we do is, instead of it being a hexadecimal, we can verify that Josh Katz and Gordon Masson are friends. So, we can independently buy tickets to a show, but make sure we’re sitting next to each other because we’re verified as friends,” explains Katz, founder and CEO of New York-based YellowHeart, in which Live Nation/Ticketmaster was an early investor.
“YellowHeart also has a proprietary moving UPC barcode, which can be set to change from 1-5 seconds so that it cannot be screenshot. We could not have done this without blockchain,” says Katz. “The barcode rotates without connectivity, so you don’t need 5G or Wi-Fi. Since it’s on blockchain, it rotates based on the user’s private key on their device, so this would work for Burning Man or anything else that doesn’t have good connectivity.”
GET Protocol’s Biggs notes, “With the tickets being tied to a smartphone, we did not anticipate how big a benefit that would be. But that allows you to know, 100% of the time, who has the ticket, rather than who originally paid for it. The benefits are amazing – you can see who has already shown up to the event and who is running late. We had an event where there was a public transport outage and half of the audience was running late, but the artist was able to send those people specifically a message saying don’t worry, we know you are on the way and we won’t start until you get here.
“So you know exactly who you are talking to and you don’t have to fight social media algorithms and hope that you somehow reach the right people.”
“We had an event where half the audience was running late, but the artist was able to send those people a message saying don’t worry, we won’t start until you get here”
While most music fans have a stash of ticket stubs as souvenirs for shows they have attended, those involved in NFT ticketing believe that the collectability element will result in tickets being traded, post-event, between fans.
“We have a white-label integrator of the protocol in South Korea, but because we’re sober Dutch people we thought that the collectible thing might be a bit gimmicky and we had doubts about how many people would use it,” admits Biggs. “But in the land of K-pop they know about fandom and the level of involvement that real fans can have; any type of reward or interaction between a fan and the artist is priceless.”
Katz is all in on the collectability angle. Demonstrating the use of artist video content as the NFT ticket, Katz claims such dynamic technology is far more engaging for fans, and underlines the collectible element.
“Essentially, if you go to see a show and you’re one of ten people in the audience to get a special NFT ticket, then that makes those tickets hugely collectible after the show. Plus it’s proof of attendance that you saw your favourite acts play at some tiny venue in, let’s say, London,” says Katz.
“The scarcity in the nature of tickets is a business – there are only so many front row seats, for instance.” Programming those tickets with audio or visual add-ons would only enhance their rarity. “These tickets will be worth more after the show than they were before,” claims Katz. “The value add of this technology is massive.”
“Any type of reward or interaction between a fan and the artist is priceless”
One of the much-touted advantages that NFT ticketing offers is its ability to clamp down on secondary ticketing profiteers. That aspect was one of the driving forces behind the launch of YellowHeart.
“YellowHeart comes from the fans and was built for fans: its goal is to create frictionless commerce between the fans and the artists,” explains Katz.
“I’m religious about the band Phish – I go to every concert. I’m also a huge Yankees fan, but I’m constantly getting ripped off. Spending [US]$1,000 to take my family to a baseball game was driving me insane. And as a Phish fan, I travel with a large group of fans, some of whom are doctors and lawyers and have well-paid jobs, but tickets are still an issue. I can travel with 20 people but ten do not have a ticket because they are on StubHub for $900when the face value is $80.”
Determined to come up with something that could disrupt that status quo, Katz turned to the blockchain and its ability to make transactions transparent, as well as allowing fans to ensure what they are paying for is genuine. “We have full transactional details of every ticket,” says Katz. “11.5% of tickets that get sold through the secondary market are fraudulent. But using the ticket history, or blockchain ledger, fans can see that their ticket was minted by Ticketmaster, for instance, then who it was first sold to and for how much, so they can judge if they’re being ripped off. So NFT ticketing gives the fans authentication and transparency around tickets.”
That’s a selling point also highlighted by Liam Boyd, CEO of music at Bondly, who comments, “NFT tickets are on the open blockchain, which means anyone can see how they are transferred at any time. This in turn allows greater transparency as well as enhanced security resulting in peace of mind for all parties involved. You can also send the holder updates and info through sending additional NFTs.”
It’s that final point that sets NFTs apart.
“NFT tickets are on the open blockchain, which means anyone can see how they are transferred at any time. This allows greater transparency”
While NFT ticketing requires the audience to, by and large, all be in possession of smartphones, there are procedures to allow others into venues. But more on that later.
For those who are in possession of 21st-century equipment, assuming the ticket holder has their NFT ticket stored in a digital wallet on their mobile device, the possibilities for communication with them are endless.
“It allows the artist to know exactly who attended their concert, and it could also lead to artists rewarding super fans by sending them exclusive content or inviting them for a meet-and-greet and stuff like that,” notes Biggs.
Katz says, “Right before the show you can send people a message telling them that you’re going on stage in 20 minutes – you send that through the ticket. Chainsmokers are early partners in the company and one of the things we’ve talked about with them is the ability to send messages out to, say, 20 fans [letting them know] they’re looking forward to rocking out with them next week. That’s where we’re heading with all of this.”
So, what about those people who don’t own smartphones?
“We’ve been very focussed on having a product that is not just cool technologically, but that can also serve all users,” says Biggs. “In our first year, we did some pilot events with a comedian whose audience is in the older demographic and therefore might not be tech savvy. That was very viable because we wanted to make sure anybody who bought a ticket didn’t have any surprises.
“There is always a way to get someone in through customer support. Sometimes people lose their phones on their way to the concert, or they change phones or something. But given that you are already in the system and you have bought a ticket, there are ways to verify your identity at the location.”
From YellowHeart’s point of view, Katz notes, “If someone shows up without their device, they can go to the box office with a government-issued ID and our system can verify who they are, allowing them to walk in the door.”
“Right before the show you can send people a message telling them that you’re going on stage in 20 minutes – you send that through the ticket”
Rules, royalties & revenues
Another unique tool for blockchain-based ticketing is the ability for NFTs to be encoded with specific sets of rules, which can benefit both the creator of the ticket and the final user: the fan.
Bondly’s Boyd tells IQ, “We have an amazing end to end NFT tech stack, which includes NFT creation, white labelling for music artists and brands, and an NFT swap feature called BondSwap where fans could actually swap their NFT tickets with each other. We also have an incredibly talented and large creative team who really bring these NFTs to life with art, music, perks and rewards.
“Bondly’s NFT ticketing is giving artists and festivals, for example, the opportunity to expand their fans’ experience and interaction with music through unique content, rewards and more. Fans can even receive festival maps or line-up information as the ticket is a world of opportunity.”
Katz agrees. “We are able to encode any rule you think of on the ticket. And a rule can go down to a single ticket or a section of the audience – and the artwork can be made specifically for different sections, so the front-row tickets can be different from the second row, which helps to make the tickets super collectible.
“Rules such as age restrictions, uplift limits for the resale on secondary markets, which can be easily set to zero. Then there’s transferability – you have a lot of tickets that you might not want to be transferred, such as guest list, or you might allow for them to be transferred once.
“You can also set limits for the maximum number of tickets a wallet can hold, which can also help eliminate scalping. So, if you set the limit to four tickets, if they tried to buy a fifth, it would be declined.”
GET Protocol’s Biggs notes, “There are also lots more technical things that NFT ticketing can do in terms of royalties or residual revenues, where you can programme the tickets so that if they are resold on the secondary market, a certain percentage always goes back to the original artist or event organiser, or both. So without having to police it or organise a whole infrastructure for this, it’s simply programmed that you will automatically receive any residual revenues – so very low effort and very high reward.”
Indeed, Wend predicts such applications could even help some event organisers to rewrite the ways in which their businesses operate.
“What we have developed on Mintbase and the new NEAR blockchain is something we’ve called split revenues and split royalties,” she explains. “That means, when I put an NFT ticket on sale for my festival, for example, Rihanna would get 5% of every ticket sold, David Guetta gets 5% of every ticket sold, another artist gets 2%. At the moment the ticket is sold, the money gets split between the different parties. This is a completely new innovation because it means those artists are stakeholders in the event and they get paid at the ticket sale because it is a peer-to-peer system.
“It’s a new paradigm of doing ticketing because promoters can say rather than getting paid a few thousand dollars, artists could get a percentage of each ticket sale, giving the artists more incentives and motivation to push the event because they are stakeholders.”
“You can programme the tickets so that if they are resold on the secondary market, a percentage always goes back to the original artist or event organiser, or both”
Of course, one of the key selling points for anyone considering trialling NFT ticketing will be the cost of using such a system. Biggs reveals GET Protocol’s pragmatic approach when he observes, “We need to be competitive to provide an alternative to the big ticketing companies.”
Others provide greater detail. “Costs depend on which blockchain the NFT company uses, as transaction fees fluctuate all the time,” says Wend. “But minting one NFT is fractions of a cent and creating a shop for the smart contract is about $40 [€33]. So, for a 5,000-capacity gig, minting the tickets and creating a store would cost about $60-70 [€60-58]. And Mintbase takes 2.5% of every ticket sold.”
Comparing YellowHeart’s fees to that of the major ticketing outlets, Katz proclaims, “We’re 10% of the price.”
He continues, “Traditional ticketing fees can range between 12% and 47%. YellowHeart is 2.5% to 5%. And that’s only to the seller. Buyers don’t pay fees.
“We did not build YellowHeart so that the industry could make more money off the fans. They can if they use it correctly because more fans will attend events and they will want to spend more money. If they’re not being ripped off on tickets, they’ll spend more on concessions and merch and everything else. I’ve lost count of the number of times I’ve been to a show where I’ve spent $600 or $800 on tickets and I’ve said to the people I’m with, let’s go for dinner and they can’t because all of their money has gone on the tickets. That’s the truth of what goes on.
“I’m a fan and I’ve sat in the audience with other fans who have been ripped off for years, and I just knew there had to be a better way. So I built this for the fans. Hopefully, the artist will care enough to use it for their fans.”
Mintbase’s Wend adds, “Most NFT companies are on Ethereum – we are on Ethereum – but we are now on NEAR Protocol as well, so we are a multi-chain platform. The difference is that on Mintbase and the NEAR blockchain, it’s much more affordable than on Ethereum to mint and trade NFTs. So, it’s cost efficient, but it’s also climate neutral because NEAR uses a proof-of-state mechanism, and not the Ethereum proof-of-work mechanism. So that’s better for the environment.”
“I’m a fan and I’ve sat in the audience with other fans who have been ripped off for years, and I just knew there had to be a better way”
While Ticketmaster’s Lynch may be unconvinced about the scalability of blockchain ticketing, the company is still keen to talk up its abilities to provide clients with NFT ticketing options.
“Ticketmaster can help provide any artist, team or event with a solution to have their tickets deliver special NFTs,” says Lynch. “NFTs provide immediate benefits to sports and artists by opening up new ways to engage with their biggest fans. For so long a ticket has simply equalled access to an event, but with NFTs it can be so much more – in the months between an onsale and the event a ticket can become a channel for fans to access things like exclusive content or limited edition merch, or artists and teams can carve out unique loyalty and VIP engagement opportunities to surprise and delight fans before during or after the event, we can also designate different levels of super-fan status based on attendance and other engagement to unlock rewards and dynamic fan club benefits.”
Lynch adds, “The possibilities are endless, and we are planning some really exciting things.”
Bondly’s Boyd is realistic about the prospects for the new format, but he is confident that the benefits will make NFT tickets a huge hit with fans everywhere. “At the moment, the NFT ticket will not replace the traditional ticket, but owning an NFT gives fans many benefits,” he says.
“In the short-term, I believe it will be used for intimate live events and [for] welcoming, alongside a traditional ticket, as we at Bondly are using it. In the long-term, it will become the ticket and replace traditional tickets as we know them now,” Boyd forecasts. “At Bondly we are using our place at the forefront of NFT technology to continuously innovate and find new exciting ways to make NFTs more accessible to the masses and really shorten the education journey along the way.”
Wend is equally bullish and reveals that Mintbase is currently building a hybrid NFT event for Wilde Möhre Festival, which is held across four weekends in Drebkau, Germany. “We are planning a virtual twin of the festival, but also at the event there will be an NF-Tea House where people can drink tea and create their own ecosystem around NFTs. Every artist who is performing at the physical festival will get the opportunity to sell their own NFTs – tickets, art, whatever,” she says.
She adds, “I think traditional ticketing will be replaced by NFTs because it is peer-to-peer and it’s transparent on the blockchain, meaning people cannot be lied to anymore. It’s the future, not only for ticketing, but also for many other digital markets.
“2022 will be the big year for NFT ticketing. Wilde Möhre is happening this year but that’s because it’s just 1,000 people at each edition and it’s outside, so it meets Covid rules. That makes it perfect for us to use as a case study and play around with what we can offer. Things will break because it’s a new technology, but we can take those lessons and apply them to other events. In fact, we will be presenting the concept at the Future of Festivals Conference in Berlin in November.”
Katz concurs with Wend’s NFT takeover assessment. “In the short-term, I think the incumbent ticketing giants are going to try to do this themselves and fail,” he says. “They are in such disarray trying to get concerts back that I don’t think they are going to pay attention to this. But I think that the fans are going to demand this technology once they use it.
“Pre-Covid, YellowHeart had our hands tied. We had a Live Nation/Ticketmaster relationship and there wasn’t much we were able to do outside of that. Post-Covid we’re getting calls from major teams, artists, venues, festivals, you name it, they’ve been calling us because they realise there are better ways to do ticketing and it’s a whole new world now.”
Revealing that GET Protocol is already operating in four territories – Germany, Italy, the Netherlands and South Korea – Biggs comments, “We’re in the sweet spot of having enough experience to know what we’re doing and to bring new technologies to the masses with a framework that people understand and allows them to enjoy events every day.
“We were either very lucky or very smart, as we knew that NFTs were going to enjoy a wave of publicity, but we did not quite anticipate how big it would become in the mainstream world all of a sudden. A lot of people come to the conclusion themselves that the stuff in the art world is cool, but what about ticketing?”
Biggs concludes, “For NFTs we are at the peak of the hype right now. Everyone wants to do something, whether they understand it or not, but that means it’s also going to have to deflate somewhat, which is also very healthy.
“As with the blockchain hype, a lot of people who saw cool ideas in the beginning actually had to make them work. So we’re in for a big unsexy and uninteresting period where people find utility and create it and try to cram it into a market fit and fail miserably before trying again. But hopefully they will come up with some cool things along the way that will actually benefit people.
“The interest is there and it has to be on the radars of the bigger players as well who can sense where things are going and will definitely want to be a part of it. It’s very exciting.”
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