The State of NFT Ticketing: Mega Report in 2022
Ticketmaster’s privacy concerns, holdbacks, restrictions on resale, and market dominance must be addressed as soon as possible
Various examples of NFT ticketing like FWB Gatekeeper, Bam.Fan, Seatlab, and Get Protocol are innovative and offer a fresh new approach to ticketing
POAPs and SBTs need to be considered for ticket-like usage in the future
The benefits of NFT ticketing outweigh the concerns, and NFTs are a viable tool for combating fraud, price ceilings, and offering utilities
Enter the surprise concert-going CyberKong in the room. Dozens of notable web3-based companies in the last year have created their own NFT (non-fungible token) ticketing platforms in an attempt to shake up the industry. What is so evidently wrong with ticketing as it stands today? There is the ever-present notion that Ticketmaster and other major ticketing companies are failing to curb-stomp the ridiculously overpriced resale market, and are actively contributing to prices getting more absurd. But is that true? Does Ticketmaster have a plan to restore its reputation, and potentially create their own NFT ticketing protocol? Will NFTs become a viable and dominant form of ticketing, or does NFT ticketing represent another use of blockchain just ‘because’. Fair-warning: this is a long article, because the subject is complicated and nuanced. Let’s dive into the state of ticketing in 2022, what is wrong with ticketing, and what the future looks like.
Keep this in your head. What are tickets used for?
Admission to an event
Right to travel (airplanes, bus, train)
Virtual queueing (waiting in line at the post office)
Pass (a subscription or use for a season)
Collecting (based on rarity, theme, country of issue)
We’ll look to the past to glean some insights. Sports and tickets go hand-in-hand, but the usage of tickets over millenia only became necessary once a system was needed to effectively handle a lot of people being in a single place at a specific time. Practically speaking, the best ticket is one that can be controlled and not easily reproduced. The first documented archeological evidence of ticket usage dates back to Rome in the first century. Numbered tessera (pottery shards, marble, or limestone cut into small cubes) were originally used to gain entrance into amphitheaters and arenas. In the case of the Colosseum, the archways and staircases were numbered, a Will Call booth was used, and resale markets existed.
In the United States, the first sports that utilized tickets was horse-racing, as early as 1665. As the population grew and modern sports began to emerge, ticketing systems were created to accommodate the growing demand for entertainment. Tickets gradually became more sophisticated, initially utilizing paper and print that would be difficult if not impossible to reproduce using a printing press. Tickets allowing passage aboard steamships in the 1800s often contained the signature of the manager and agent that issued the pass. The invention of the ticket stub is largely correlated with the popularization of theaters and moving pictures, allowing stub holders to use facilities before reentering. UPCs (Universal Product Codes) scanned via barcode were a game-changer in the latter part of the 20th century. The ability to have a unique identifier and quickly scan it made previous iterations of ticket management obsolete. Finally, the advent of modern computing has shifted ticketing to largely an online activity. Almost all tickets purchased for events today are done so through apps like Ticketmaster, or online through various portals. Ticketmaster allows you to find events, purchase tickets, and resell them if necessary. On the surface, it looks like ticketing is nearly perfected. Unique identifiers exist, everything is centralized in a single application, and you can find just about anything from sports to clown wrestling easily and with little effort. If Ticketmaster looks so perfected on the surface, why is this industry so ripe for innovation and change?
We find ourselves at a clear inflection point with ticketing technology. Every technological advancement seems to be one step forward and two steps back for ease-of-use with the caveats of privacy and security concerns. Is this the case with NFTs? Before we talk about Ticketmaster, let’s talk more broadly about fraud.
The Black Market
Fraud has been an issue with tickets since the dawn of paid events. More fraud means higher prices for infrastructure to support dealing with increasingly sophisticated fraudulent counterfeits, security hacks, and AI-powered ticket-purchasing bots. Premints, blacklisting, and allow-lists are common practices precisely to push for equitability. Consumers have a difficult time distinguishing real tickets from fake ones, especially when previous methods to appear authentic are circumvented and physical attributes are copied in detail. The higher the value, the higher the chance for counterfeit tickets. One of the most notable examples of this was the 2008 Beijing Olympic Games. A sleek and professional looking website designed with the name ‘Beijing 2008 Ticketing’ collectively fooled $50 million dollars out of the pockets of fans worldwide. Keep in mind that’s just a single scam. Up to 5 million fake tickets are sold per year worldwide, with some concerts having nearly 1 in 10 people purchasing tickets ending up receiving a fraud.
What’s Wrong With Ticketmaster?
Before extrapolating on the specifics, let's bullet out what exactly is wrong with Ticketmaster (and tickets in general, as they have become one in the same):
Privacy: a monopoly controlling this much data with specific terms is bad.
Holdbacks: lying to people about how many tickets are at a concert isn’t cool.
Restrictions on resale: you have to use our platform, or else.
Leveraging other parts of their business: Live Nation is the primary concert promoter.
It’s pretty much impossible to have a conversation about the future or current state of ticketing without bringing up Ticketmaster. The amount of things the company has done to create as much of a monopoly as possible over the industry doesn’t just seem criminal, it is criminal. For starters, ticket resale is the fastest growing segment of Ticketmaster’s business. They have a financial incentive to not just allow scalping, but to actively partner with scalpers. Because most ticket sales are now digital, Ticketmaster has locked down the resale market by creating one of its own, and no longer works actively with ticket resale marketplaces like Vivid Seats or StubHub. There’s simply more money to be made from resale sales than from primary, and the data supports that.
Another practice that has induced real hatred in recent years is the practice of holdbacks. Holdbacks are a practice where only a portion of tickets are put on sale for the first day. There have been plenty of instances in recent years of Ticketmaster holding back as much as 50% of the actual tickets for an event on the initial first day of sale. This is obviously a form of artificial scarcity, which causes normal concert-goers to resort to using the resale market on the application in order to get a ticket. This can cause a ticket that might normally be $100 to end up costing as much as $600, or even higher (in more extreme cases, think Justin Bieber and Taylor Swift).
Unfortunately, we are not yet free from the pain of Ticketmaster. Executives have already indicated that there is a considerable amount of internal R&D happening surrounding web3 at Ticketmaster, and they will no doubt pivot if their current monopolistic tendencies sour their reputation to the point where that is necessary. In February of 2022, Ticketmaster partnered with the NFL to offer limited edition NFTs to celebrate Super Bowl LVI. Each fan who attended got a complimentary and customized NFT featuring where they sat, acting as a sort of POAP (Proof of Attendance Protocol), but with Ticketmaster’s decidedly unfun corporate twist.
Ticketmaster will continue to engage in anticompetitive behavior until it either goes out of business or the sun engulfs the Earth. Which is more likely in our lifetime? One might suggest simply not going to events that have tickets hosted via Ticketmaster, but that also hurts creatives, and it seems unlikely that enough people would boycott the platform to make a tangible difference. Seeing individual venues pivot to using recently created ticketing platforms and utilizing NFTs could make a dent in the market in this decade. As mentioned by John Bergmayer of Public Knowledge, Congress could pass the BOSS Act, which would bring transparency to the marketplace and end some of these practices. Legislation needs to be passed to prevent these behaviors from continuing to proliferate.
But hey, we’re using the most extreme examples of the modern ticket market. That said, in terms of market share, Ticketmaster has the highest share of sales among competitors at around 66 percent of sales as of June 2021. We could talk about Ticketweb, AXS Tickets, Ticketsocket, or Movietickets, but they’re small fry by comparison. When was the last time you bought a ticket through Ticketsocket, anyways? Let’s look to the future.
Benefits of NFT Ticketing
The gut reasoning to utilizing NFTs given the current market dominance of Ticketmaster is simply that they are not Ticketmaster, but that wouldn’t be quite right. Let’s break down some of the benefits of using NFTs as tickets:
Public visibility to how the tickets are programmed
Resale price ceilings
Built-in rewards (instant loyalty program for fans)
Forgery prevention (not easily forged/validated on-chain)
Faster and cheaper (Flow blockchain is a great example of this being the case)
Perpetual revenue (resales can continue indefinitely as tickets live on as collectables)
Immutable - NFT tickets are stored on-chain, not in your pocket
Traceable ownership is major, but also currently possible through mainstream ticketing protocols. You get the idea, the blockchain is immutable and you can clearly track through a scanner who owned what, when, and what they paid for it. It’s public information. Most blockchains work this way. Smart contracts and tokens as ‘programmable money’ is really at the root of these ideas; think of NFTs as distinctly unique and non-fungible versions of fungible currencies.
Because of smart contract protocols, public visibility into how the tickets are programmed means external audits can happen and people can confirm for themselves how everything actually ‘works’. The same is true for being transparent when it comes to resale price ceilings and royalty splits. If an artist wants to make sure the resale market doesn’t get out of hand, that can be baked into the contract they sign. If an artist wants higher royalties for resale sales of NFTs as collectables, that can be negotiated prior to the event as well. This ties into one of the last bullets concerning perpetual revenue; as long as the tickets are live on a blockchain, you can theoretically make money off of them through royalties. Making tickets more unique, hand-crafted by artists, and truly desired means the floor price after an event will remain higher than it would be otherwise.
Because NFT collections are so customizable, a single NFT can act as a ticket perpetually, granting a fan or group of people access to regular events, annual shows, you name it. Suppose you’ve got a convention where there’s only room for 5,000 people, so you make 5,000 NFTs. Reselling the ticket on the open market becomes vastly easier with platforms like Opensea (even if there are still issues with decentralization and standardization here). In the case of VeeCon 2022, VeeCon NFT holders got into the event with an NFT and scannable code. The ticket to that event will live on forever, and has already become a collectible in the eyes of some people. As VeeCon’s site mentions ‘By owning a VeeFriends Series 1 token, you get three VeeCon Ticket NFTs airdropped for free, one per year: 2022, 2023, 2024.’ Pretty cool utility, right? You can see the appeal here as opposed to a single week or day event. Built-in rewards seem like an obvious benefit to any NFT diehards. Creating purchasable NFTs can set you up as a creator for having access to a group of people that are interested in what you’re creating or doing, and now you’ve got their wallet #. On-chain analytics and seeing what else your fans are into is a rapidly emerging field that we’re calling ‘Owner Relationship Management’. Think CRM + NFT = ORM. A good example of a platform for web3 that is doing exactly that is Sayl. Remove the middleman and deliver continuous value to customers. I encourage taking a look at their platform here: https://sayl.finance/
Forgery prevention is another obvious advantage. As I mentioned before, having auditable and traceable transactions publicly is a major plus. You either have the NFT in your wallet, or you don’t. Baked-in cryptography backed by a reliable blockchain means you get what you pay for. There’s no way for me to fake owning a BAYC or CryptoPunk. I can lie to my friends (I tried that, it didn’t work) and say I’ve got one, but even if you make a fake collection it is immediately clear that it isn’t the real deal. Creating applications that can verify instantly if a ticket is coming from a legitimate source is a big deal. Faster and cheaper is another point I’d like to stress. Although some blockchains can be slower and more expensive (looking at you, ETH) we’ve seen the rapid popularization of faster and cheaper blockchains that are still very reliable. The best implemented example of this that I can think of is Flow. Flow is trusted by the NBA, UFC, Ubisoft, Samsung, and the NFL for implementing a few various projects. It’s PoS (Proof of Stake), meaning it uses vastly less energy than Ethereum, and transaction fees can often be a fraction of a cent (or 0.000001 FLOW). Compare that to Ethereum’s average $20 per transaction and the difference becomes obvious. When you factor in Ticketmaster’s numerous ‘service fees’, the choice becomes even clearer. A PoS-based blockchain for ticketing is right around the corner, and it isn’t going to cost a lot of money to make it work. Flow already supports NFTs, and tying in all previously mentioned benefits is entirely possible. And yes, it is eco-friendly.
Lastly, NFT tickets aren’t prone to some of the issues that have marred ticketing platforms in the past. If a blockchain is decentralized, it will be prone to less downtime, or none at all. While looking up your actual seat at a game might prove difficult if you show up to an event without a QR code to scan, I have no doubts that the industry will find innovative ways to make losing your ticket virtually impossible. A decentralized solution to TaaS (Ticketing as a Service) could be exactly what we need. A blockchain focused on delivering utility and value for tickets and events. In many ways this already exists with dozens of viable blockchains that could be this solution. What we want to avoid is the centralization, lying, price gouging, manipulation, and resale market concerns that are rampant with Lord Ticketmaster.
Examples of NFT Ticketing
Now that we’ve explained the benefits of NFT ticketing, let's take a look at some of the most notable industry leaders in this nascent space. What you’ll notice about some of these startups is their eagerness to be transparent, and to be everything that Ticketmaster is not. Many of the benefits I’ve already shared above regarding NFT ticketing are present in these projects and solutions. However, some differ in a few ways, and I will highlight those differences below. FWB Gatekeeper
Friends with Benefits (FWB) started as a social DAO with cultural creators, thinkers, and builders. In line with their desire to shape web3 culture, FWB has created FWB Gatekeeper, a tool for IRL token-gating. This tool was first used at ETH’s Euro conference this week. Those familiar with token-gating understand how cool it is to see this utility outside of Discord. As their Mirror mentions ‘Once the ticket holder arrives onsite at the event, [the] event organizer uses the FWB Gatekeeper mobile app to scan the QR code and verify that the ticket holder is still holding the correct token type and amount. Event organizer then “admits” ticket [the] holder and their attendance at the event, collecting web3 addresses for follow ups such as proof of attendance, airdrops, and data visualization.’
This will be a fantastic way for web3-native communities to host events without even having to create tickets. Just using the native token for the community is all that is required for admission. You can imagine this application being built out more, allowing for increased utility and rewards when being used.
Bam offers out of the box, end-to-end, white-labeled ticketing and event management systems, or used more simply as an API-driven TaaS model. You can sell tickets directly on your website, and make it look however you want. Great company and solution for brands who want everything to look and feel a particular way.
Seatlab might be the most notable NFT ticketing company, and has made a point from its inception to be as transparent as possible. Seatlab is built on the Gen-3 NEAR protocol, which utilizes sharding architecture via Nightshade. Essentially, this means NEAR can process 100,000 transactions per second, making gas fees a non-issue. Seatlab’s goal is to completely eliminate fraud, forgery, and counterfeiting. Once you’ve created a seller account, creating events and listing tickets is fairly intuitive and simple. The process for creating and minting tickets looks very similar to some all-in-one solutions for creating NFTs. Sellers are not charged a platform fee, and the $SEAT token acts as the utility token for the platform. The whitepaper is on the website, and spells out the tokenomics and plan for the future of the platform.
Get Protocol https://www.get-protocol.io/
Get Protocol was one of the first players in this space, and is probably the second biggest name after Seatlab. The one extremely cool thing about Get Protocol is that they are pioneering the field of DeFi-funded events. That’s right, using decentralized financial tools to receive funding for future events without taking on other forms of debt. Liquidity providers can assess the risk and reward of future events and tickets, and revenue can flow back to the provider of the liquidity after the event has taken place. Once again, this is governed through smart contracts. As software solutions like this continue to become more popular, we’re going to see more software developers with legal backgrounds becoming increasingly important.
The Ticket Fairy https://www.ticketfairy.com
On the surface, Ticket Fairy just looks like another alternative Ticketmaster, Stubhub, or AXS. But Ticket Fairy is more innovative, offering reward tiers and more analytics when it comes to referred sales, revenue, and clicks. But what is most exciting about Ticket Fairy is the support for web3 wallets. Ethereum, Polygon, and Solana are supported, and it is possible to verify NFT ownership in real-time with a crypto wallet. This opens the door for token-gated and community-based incentives and rewards. Below is how the portal looks on an event with Steve Aoki. Notice the separate options for Avatar & Crystal Holder RSVPs via Metamask token-gating.
Next-Gen Applications (Alt-Tickets)
The following are two protocols (one in use, another proposed) that will have ticket-like usage in the near future. In the case of POAPs, they are very popular and could be used in the future for ticketing. For SBTs, they are theoretical, but could be used for IRL token-gating. We’ll briefly highlight each and you can decide if how they work is worth digging into more.
Proof of Attendance Protocol (POAPs)
POAPs are a new way to prove you’ve attended an event, either virtual or physical. They often store or commemorate memories, and are given out at the beginning or end of events. Because there’s still the potential for fraud, all POAPs are minted through the official POAP smart contract and run on the Ethereum sidechain Gnosis Chain. This gives them the added benefit of being minted nearly for free, and usually distributed with the distributor eating the cost. Because Gnosis is compatible with Ethereum, you can convert POAPs to Ethereum’s mainnet if desired.
POAPs can be used to reward behavior, and are often referred to as a blockchain resume of sorts. You can imagine an associated POAP being issued after college graduation, or certification of completion of a course. Some DAOs vet their members by checking out their POAPs; after all, you can’t fake it. We’re seeing this pave the way for on-chain, vetted resumes. They’re also a great way to manage subscriptions by engaging with users and fans that actually are receptive. POAPs represent a form of ticketing, but are an entirely new way to engage as well. I encourage anyone interested to check out https://poap.xyz/.
SoulBound Tokens (SBTs)
Proposed in 2022 by Economist Glen Weyl, Puja Ohlhaver, and Ethereum founder Vitalik Buterin, SBTs can be considered a primitive building block of web3, particularly in a trend known as Decentralized Society (DeSoc). DeSoc is based around principles of composability, bottom-up community, and emergent networks owned and governed by users. SBTs differ from NFTs in that they cannot be transferred.
SBTs could come to represent credentials, affiliations, or commitments made on web3 networks, and exist as tokenized representations of achievements, traits, and features that make up a person or a collective. Although the mechanics are still being outlined, the idea would be that Souls could issue and attest SBTs to other souls. The best example might be the completion of a course or degree, where the Souls issuing the SBTs would need a percentage vote to issue an SBT to another soul. It is clear the mechanics of this would play nicely with current DAO structures. Provable and accurate medical records are still important and subject to potential manipulation in 2022, and are a great example of a type of record that would benefit from a protocol like SBTs. Vitalik’s initial thoughts can be found on his blog here: https://vitalik.ca/general/2022/01/26/soulbound.html.
Clearly we’re in an interesting stage of the evolutionary development of tickets. While Ticketmaster on the surface has solved a lot of the headache surrounding purchasing and using tickets, most of us can agree that it is very much a love/hate relationship. What new NFT ticketing companies bring to the table is a bold and fresh approach to something that is otherwise overlooked or too boring to think about in detail. But the devil is in the details. A fairer, more equitable world can be made more fair by using ticketing companies that aren’t inherently anti-competitive, and embracing change (even if it isn’t perfect yet). The industry leader for NFT ticketing is yet to be determined. Plenty of all-in-one NFT tools are scrambling to incorporate IRL NFT ticketing into their solutions, and we’ve highlighted a few above. Ticketmaster may indeed pivot to making all of their tickets NFTs, and that is a very real concern. The utility, security, and benefits from using NFTs as tickets is hard to ignore, and usable platforms are already here. Traditional brands hoping to embrace web3 in a safer and more tangible way could benefit from incorporating their usage. One thing is for certain: NFT ticketing is here to stay, and it works.
Need help with your web3 go-to-market strategy? Eager to dive into web3 and NFTs, but not sure how to approach it? Reach out to immutablelabs.io and schedule a chat with one of our experts!
This article was originally posted by Chris here: https://mirror.xyz/kahris.eth/Zfg3xx8p4xnKgaHtQ-1DMPuRXfdh1pT_bIfxLytaO7c