Global election meddling, Novichok, Syria, Ukraine, London house prices – it’s not hard to find things to blame “the Russians” for. Then again, as Juha ‘Richie’ Mattila, veteran Finnish promoter and frequent Russian tourer points out, how would the rest of us like to be judged for the sins of our leaders and our oligarchs?

“We shouldn’t tour Russia because of Putin? Yeah, well, everybody should quit touring the USA then,” he hoots. “It’s [like] the old saying: don’t judge a book by its cover.”

Russia’s renewed role as the villain of international politics is so entrenched in the western narrative that it’s easy to forget there’s a real country under there – unimaginably huge, rich in culture and with plenty of good guys.

“You need to remember, Russia is part of Europe, even if politically it’s a little different,” says Mattila.

The international sanctions in place since Russia annexed the Crimea nearly six years ago have put a drag on the economy, destabilised the ruble and, from a live perspective, punctured the growth of cities other than St Petersburg and Moscow.

There was a period, not long after the beginning of the sanctions, when the prospect of seeing international acts in even Russia’s wealthiest two cities seemed in doubt. “Moscow Can’t Afford Foreign Performers,” read a 2015 headline in English-language newspaper The Moscow Times, citing a 95% fall in shows by western acts due to unaffordable fees.

“We shouldn’t tour Russia because of Putin? Yeah, well, everybody should quit touring the USA then”

In Moscow and St Petersburg, the market has bounced back – if not all the way, then enough that the relatively lighter schedule of international shows has sharpened demand for what tickets there are.

“It’s an interesting tendency in Russia lately,” says Ed Ratnikov of leading promoter Talent Concert International (TCI), which in October sold a 51% share to CTS Eventim.

“The market is going down due to sanctions and government politics, and people’s income is not getting any better but the business is growing.”

In the absence of a full complement of international stars, Russian acts including Basta, Max Korzh and Zemfira have graduated to stadium status. Leningrad, formed in the 1990s in St Petersburg, the city formerly of that name, made Russian music history this summer with a stadium tour, playing Kaliningrad, Moscow and Nizhny Novgorod in June, amidst a series of dates in arenas. Hot local pop stars include Zivert, Artik & Asti, Cream Soda and Shortparis.

“We have a new generation of kids who were born and live in the digital era,” says Ratnikov. “They have their headphones on 24 hours a day, they share tunes fast and make unknown artists well known in hours. Those kids are the majority of our ticket buyers now and are eager for quality entertainment.”

Russia’s instinct, where international music was concerned, was always to go big, and its early outdoor spectaculars – the 1989 Moscow Music Peace Festival at Luzhniki Stadium (featuring Bon Jovi, Ozzy and Scorpions), 1991’s Monsters of Rock at Tushino Airfield (Metallica, AC/DC et al), The Prodigy in Manezh Square in 1997, Chili Peppers and McCartney in Red Square in 1999 and 2003 – live long in the memory.

“The market is going down due to sanctions and government politics, and people’s income is not getting any better but the business is growing”

In spite of ups and downs, that pattern of serial one-offs has given way to a steady, professional business in the past decade or so. The most seasoned Russian promoters now have three decades of experience to draw upon, and the main cities have taken big steps too.

“Russian infrastructure has improved significantly,” says Ratnikov. “We have new airports, world-standard sports arenas and stadiums as well as recognisable hotel chains. Russia has improved very well during the last decade.”

Estimates of the size of the ticket market in Russia range from R45billion (£545m) to R60bn (£727m) per year [source: PwC]. Subject to more favourable economic and diplomatic conditions, there is still an enormous amount of room for growth. Moscow has a population of 12.4m, St Petersburg 5.4m, and in the comparatively dormant secondary markets there are 13 more cities of more than a million, led by Novosibirsk, Ekaterinburg and Nizhny Novgorod. Partly because prices are often out of reach for average incomes, concerts sit behind cinema and theatre in turnover terms. But an ever-growing contingent of promoters is working hard to shift the balance.

“The market is getting more and more competitive, while the incomes of Russians don’t tend to rise,” says SAV founder Nadia Solovieva. “But we are used to this economic reality –that’s the way things usually are here.”

As infamous art collective Pussy Riot can attest, politicians and the country’s legal system are not against interfering with the Russian music scene. Homemade hip-hop has come under fire for its poor moral character, and a spate of small shows were shut down last year in a crackdown on allegedly seditious youth music that affected artists including Siberian rapper Husky and teen band Frendzona.

Increasingly, big business is taking an interest in the Russian live sector

But increasingly, big business is taking an interest in the Russian live sector. European giant Eventim’s move into promoting follows its ownership of ticketing operation Parter.ru since 2006. However, in practice, the major corporate influence on the Russian live business comes from domestic tech, mobile and finance juggernauts, which have claimed entertainment tickets as a feature of their own wider online offering.

Russian Internet titan Yandex took its share of the e-ticketing market to an estimated 20% in the summer with the acquisition of TicketSteam. Yandex’s rival Mail.Ru Group invested in ticketing aggregator TIWO’s Moscow-based Ticketing Platform at the same sort of time, while Russian bank Tinkoff has held a 20% stake in concert ticketing market leader Kassir.ru since 2018, when mobile giant MTS also snapped up leading ticketers Ticketland and Ponominalu.

“It is about creating ecosystems and marketplaces,” Ticketland CEO Vitaly Vinogradov told the IQ International Ticketing Yearbook 2019.

The next step for Russia and elsewhere, believes Katerina Kirillova, co-founder of local blockchain distribution ventures Tickets Cloud and Crypto.Tickets, will be a shift to smart ticketing. When promoters and vendors can track and control tickets using blockchain technology, she suggests, data, marketing and anti-touting value will follow, while consumers are rewarded with secure tickets and music-driven social networking opportunities.

Existing tickets needn’t be threatened by the dawn of crypto, according to Kirillova, who adds that Tickets Cloud is in the process of securing its next funding round. “None of the traditional resellers wanted to integrate with us, because they considered us competitors, but now we have almost all the key resellers integrated as partners,” says Kirillova. “We don’t want to compete with them, but we want to provide the technology.”

Continue reading this feature in the digital edition of IQ 87, or subscribe to the magazine here

Cloud-based ticketing platform Tickets Cloud trialled an updated version of its crypto.tickets distributed ledger technology at electronic music festival Signal.

Tickets Cloud launched ethereum-based crypto.tickets in 2017, using the blockchain platform to sell tickets for a 6,000-capacity Kraftwerk concert in February 2018. The newest version of the technology debuted at Signal festival, which took place from 15 to 18 August in Nikola-Lenivets, Russia.

More than 2,000 tickets were transferred using the technology, increasing the data available to organisers by 15%. Festivalgoers were also able sell unwanted tickets through the platform, with organisers receiving a cut for tickets sold on for higher than face value.

Each ticket was distributed with a unique, dynamic QR code to a Tickets Wallet, available on Android and Apple smartphones. All transactions were recorded in a distributed blockchain registry, providing access to the ticket’s “history” and owner information.

“We wanted to save our customers from issues like fake tickets and scams happening around the resale of tickets, and we also wanted to streamline ticket purchase and admission, making it safe and convenient,” says Sergeev Fadeev, CEO and founder of Signal Festival.

“We like to implement new exciting technologies so we decided to experiment with smart tickets, and we were not disappointed,” adds Fadeev.

“We like to implement new exciting technologies so we decided to experiment with smart tickets, and we were not disappointed”

Festival organisers were able to send messages to attendees, notifying them of any schedule changes or sending greeting from artists. Data from the app allowed organisers to identify the most engaged fans, offering promotional opportunities for future events.

Over 250 valid ticket holders communicated with each other via a chat room, arranging meet-ups, exchanging gig photos and swapping performance opinions.

“Every festival, every musical event unites like-minded people, and that’s why we’re focused on the social component of our app,” says Egor Egerev, founder of Tickets Cloud and сrypto.tickets.

Tickets Cloud currently sells tickets using crypto.tickets technology to more than 30 local events in Russia and is preparing to launch the technology at its first events in Europe and the USA.

Crypto.tickets can be integrated with any ticketing system, with Eventbrite already offering the necessary integration, in addition to Tickets Cloud.

Speaking to the International Ticketing Yearbook 2018, Tickets Cloud founder and managing director of the Moscow Ticketing Forum, Katerina Kirillova, told IQ that crypto-tickets were the “antidote to illicit resale”.

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Blockchain is a distributed public ledger where any records stored are secure, tamper-proof and available to everyone. Moreover, every transaction is time-stamped and its validity has to be checked by multiple entities within the network. Essentially, it’s a golden record of the truth that creates trust among multiple parties, which makes this piece of technology capable of replacing an intermediary in situations when a trusted third party is required.

A number of blockchain-related projects have emerged in the entertainment industry. Each seeks to address the industry’s challenges in its own way, and has developed services to address the needs of the whole event industry: organisers, ticket distributors, customers and musicians. Here are some of the most successful projects – and the problems in the event industry they’re aiming to solve…

KickCity is set to disrupt the event industry by making ineffective centralised marketing and third-party billing redundant

KickCity
KickCity’s founders insist that the event industry, a $30 billion market, is in trouble. With more than 100 events happening every minute across the globe, event organisers and agencies face multiple problems: They have to deal with unnecessary commission for credit card processing by third-party banks, ticket touting and fraud, all while trying to advertise their events. Nearly 20% of most events’ budget goes on marketing, but almost half of organisers can’t get people to respond to invites. Moreover, 26.4% of event organisers don’t know which online tool to use, and the rest of them tend to become victims of ineffective online advertisement.

Existing online advertisement platforms are designed to be profitable at the expense of their users. In contrast, KickCity is an online value-based community, which is strongly supported by an offline events community. It’s a blockchain-based, hence decentralised, platform where anyone can earn digital tokens by contributing promotional power, find local events and connect with like-minded people.

Using the blockchain technology, KickCity is set to disrupt the event industry by making ineffective centralised marketing and third-party billing redundant, while freeing up to 50% of organisers’ time through decentralised reward-based promotion.

“Blockchain has a good shot at … making the whole booking process more transparent”

Crypto.Tickets
Ticket counterfeiting has been the biggest problem that event organisers, ticket distribution platforms and secondary marketplaces have been struggling to deal with for many years. For instance, earlier this year thousands of Ed Sheeran fans were denied entry to his show because the tickets they purchased through unverified sellers for a price up to eight times higher than face value turned out to be fake.

Crypto.Tickets is a blockchain-based platform aiming to solve the counterfeit ticket crisis. By using the ethereum blockchain and implementing smart contracts technology, Crypto.Tickets is capable of embedding a cryptographic proof of genuineness into every ticket.

“Blockchain has a good shot at solving all those problems, changing the standards of communication between various parties and making the whole booking process more transparent,” says Egor Egerev, the company’s founder. “This is possible thanks to smart contracts that enable event organisers to set complex policies for crypto-tickets, such as various categories, pricing, exchange, refund or resale rules and revenue sharing. At the same time, the customers can be dead certain that their tickets aren’t fake. Blockchain technology is not just a competitive advantage, as many have claimed. We are building a system that will be able to work with any ticketing system.”

“A high level of centralisation generates profits only for a small group of people, while the majority of others involved in the live music industry are left struggling”

Viberate
Here’s what Viberate had to say about the centralised nature of the music industry in their promotional material: “A high level of centralisation generates profits only for a small group of people, while the majority of others involved in the live music industry are left struggling. Small, independent music enterprises, such as underground clubs, labels and local event organisers, are bullied out of the business by big, often even corrupt, corporations on a daily basis.”

In today’s live music ecosystem, dominated by large booking agencies and centralised ticketing platforms, only a small fraction of performing artists are lucky enough to have agency representation. Without it, they have to deal with marketing, sales, networking, legal, taxation and debt collection issues all on their own, instead of focusing on creative aspects. At the same time, event organisers are constantly looking for acts to fill their line-ups, as dealing with artists who don’t have proper representation can result in no-shows, poor performance standards and legal problems when issuing payments.

Viberate is an emerging start-up, aiming to create a global marketplace for the live music industry with the use of ethereum blockchain for bookings and musicians and implementing smart contracts to sell tickets. While Viberate plans to partner with talent agencies and ticketing vendors, their larger vision is to create a matchmaking platform for unrepresented artists and event organisers from all over the world. Musicians will be able to use the platform for promotion and exposure, while the promoters will have an entirely new resource for discovering new acts, as well as a decentralised escrow service for issuing payments through the ethereum blockchain.

Artists control their pricing, distribution and revenue splits for streaming and sales, with more than 20 times the earning potential of the streaming platforms

TokenFM
TokenFM is a direct-to-fan platform, the first to adopt blockchain technology to address existing media challenges and empower the future of media distribution and fan relationships. Artists control their pricing, distribution and revenue splits for streaming and sales, with more than 20 times the earning potential of the streaming platforms. Fans can support artists directly, receiving true album ownership (ie the ability to collect, buy, lend and resell) and exclusive access to artist chats or experiences, ticket or merchandise presales and more.

Because of the blockchain technology, each sale can be identified directly, allowing the music itself to serve as the key for the fans’ access to exclusive opportunities with the artists they love. Media creators are reimbursed directly and transparently for all sales.

This incentive transforms passive listeners into active promoters that stand to benefit financially when their favourite artists benefit

PeerTracks
PeerTracks is another solution using the blockchain technology to change the way artists interacts with their fanbases. It is a fully legal streaming and downloading service which proudly compares their 5% fee to Apple’s 30% take, while noting the difficulties for artists to gain access to the iTunes store.

Thanks to the blockchain technology, all the music sales are peer to peer, completely traceable and transparent. PeerTracks utilises an incentive structure put in place by the Artistcoin token, which can be bought and sold, with their value going up the more an artist’s content is streamed or downloaded.

Artists can also offer perks and goodies to any of their coin-holders. This incentive transforms passive listeners into active promoters that stand to benefit financially when their favourite artists benefit, as Artistcoins can be easily traded for other cryptocurrencies and even flat currencies.

Imagine a blockchain-based trust network providing the basis for attendees to pass through ‘priority lanes’, avoiding bag searches and scans

As with any solution, blockchain will not be a perfect answer to all the problems the event industry is facing. But at the very least, it will level the playing field – and artists, organisers, consumers and fans will see the main benefits. These include much-improved ticketing distribution, artists’ promotion and even the safety of visitors: For example, blockchain technology is capable of aiding identity management, as every past transaction of every user is not only publicly viewable and traceable, but also had to be validated by other users across the network – imagine the event registration process and on-site control where a blockchain-based trust network provides the basis for the attendees to pass through ‘priority lanes’, avoiding bag searches and scans and allowing security personnel to focus on new and unknown attendees.

This means that overall, a transparent system based on blockchain technology would generate more revenue for artists and create more opportunities for the whole industry. These six international projects illustrate and give an opportunity for us to imagine the tremendous improvements to come in this field.

Katerina Kirillova is the founder and strategy/development director at Tickets Cloud and crypto.tickets, general director of Euroshow Moscow and managing director of Moscow Ticketing Forum.

The ticketing market in Russia has largely developed according to its own rules. While the era of electronic tickets didn’t begin until the late 2000s, the sector is now in the process of rapid formation.

According to news agency Intermedia, the turnover of the market for cultural events (excluding cinema and sports) in Russia topped US$1.2 billion in 2014, and experts estimate the size of ticketing industry to be around $2bn.

At the end of March, the first conference in Russia on ticketing solutions and technologies, Moscow Ticketing Forum, was held in the Russian capital. The conference brought together around 600 key market players from Russia and beyond to discuss the state and future development of the Russian ticketing market. While delegates showed a high level of expertise, our European colleagues can learn much from the Russian approach and experience.

I believe that Russia can undoubtedly become a trendsetter in technological development in the global ticketing market and in the entertainment industry.

Our European colleagues can learn much from the Russian approach and experience

Online vs offline
By the end of 2016, 65–70% of all tickets sold in Moscow and St Petersburg were paperless. While this percentage is obviously smaller in the regions of Russia, where it averages 30%, it is expected that sales of electronic tickets will continue to increase, reaching 80% in larger cities this year.

Electronic tickets in Russia are bought mostly by millennials, with paperless sales of up to 60–70% at youth-focused concerts and events. However, a majority of ticket sales in Russia are still offline.

Monopoly vs diversification
In comparison to international ticketing markets, there is no monopoly in Russia. While CTS Eventim dominates in Europe and Ticketmaster in North America, the Russian market is more diversified. Tickets for most events are sold through several major ticket agencies, including parter.ru (Eventim’s local operation), kassir.ru, ponominalu.ru, concert.ru and many others.

In Russia, as elsewhere, each ticketing partner is allocated a quota by the event promoter, with each selling only their own quota and taking a fee on any tickets sold. This means customers visiting a ticket agency’s website can only view that seller’s inventory.

Most experts in Russia consider the ‘quota’ system of ticket distribution to be obsolete

Imagine what would happen if airline tickets were sold on a quota model. Each aggregator would show only its own limited pool of tickets – with business-class tickets available on one service, tickets in the middle of the plane on another and seats closer to the tail on a third.

This distribution model is still used in both the Russian and international markets. Most market experts in Russia, however, now consider this approach obsolete.

Trend #1: Towards a global distribution system
The answer is a ‘global distribution system’, wherein all tickets are available for purchase through all possible channels, as it is in the aviation industry.

Through global-distribution technology, it is possible for promoters to open access for all tickets to be sold by all ticket distributors. Under a global distribution system, all distributors receive equal access to the ticket database in real time.

A transition to this model is beneficial for event promoters, who can connect to as many tickets distributors as they want. It increases sales – as every customer can have access to all tickets in their budget in one convenient place – and allows promoters to accumulate data, previously held by ticket agencies, about their audience.

One such global-distribution service in Russia is Tickets Cloud, a cloud-based platform that allows promoters to connect to an unlimited number of distributors – such as ticket agencies, social media sites and artists’ fan clubs – to sell tickets around the world.

More than 30% of Russian theatres are now utilising global distribution systems, as well as several concert venues in Moscow, including YotaSpace (1,500-cap.) and Crocus City Hall (7,500-cap.)

Trend #2: Social selling
As Steve Machin, CEO of Accent Media (.tickets), said at Moscow Ticketing Forum: “The amount of tickets sold via social networks is constantly growing, and we can not deny it.”

According to local experts, promoters who consciously rely on sales through Vkontakte – a Facebook-like social network, the most popular in Russia – sell an average of 30% of their tickets through the service, and this trend is set to continue.

Trend #3: Secondary opportunities
The Russian secondary market in its current state is still unregulated and largely outside the law, with ticket brokers paying no taxes. This niche, therefore, is ripe for technological innovation, and a number of Russian start-ups are working in this direction.

Enter Eticket4 – Russia’s first online ticket marketplace. This start-up was presented in a competition for ticketing technology at Moscow Ticketing Forum and was well received by delegates.

Moscow Ticketing Forum demonstrated that ticketing industry players, both inside and outside Russia, realise the importance of new technology in not only increasing sales but developing the entire live music industry.

Blockсhain, chatbots, tools for dynamic pricing… All are gradually penetrating the Russian market – and all are being welcomed.

Katerina Kirillova is general director of Euroshow Moscow and managing director of Moscow Ticketing Forum.