Ticketing is an industry with glaring problems, from scalping to fraud to scams. Ekin Genç explores how NFTs present a fundamental fix to a major industry and speaks to the builders working on scaling a technology that has already been adopted by the likes of Lewis Capaldi, Ticketmaster, and UEFA.
Getting a train ticket or a museum pass is often a smooth experience. Just pay online and show the QR code on your phone upon arrival. But it’s a wildly different experience when you try to snag tickets for a much-hyped gig or a football game — especially when you have to resort to secondary markets, often rife with scams and grifters.
Ticketing is a $72 billion industry that can be incredibly frustrating for venues, fans, and artists – indeed, performers of all types. “To all our Fans Around the World: Help Us to Stop the Ticket Touts,” British band Mumford & Sons wrote in 2015. “Many tickets on secondary sites are being sold by touts who are simply in the business of ripping off the fan by charging an extortionate amount for sold out shows.” Nothing has stopped “very sophisticated” resellers who con buyers and ticket issuers in a myriad of ways, they said, including breaking the software code and faking identities.
For years, it has seemed that for whatever solution creators and venues tried, ticket touts were always one step ahead. However, with NFTs enabled by smart contract technology, venues and creators have the technology stack that feels almost ready-made for the ticketing industry’s woes. As a result, dozens of startups are pursuing NFT ticketing solutions, whilst numerous venues are using the technology already, from Real Madrid FC and UEFA, to the NBA and NFL.
“It is a marathon, not a sprint.”
— Maarten Bloemers, CEO of the GET Protocol Foundation
“The main bottleneck we see in the ticketing industry itself is those within it who oppose innovation and try to keep things as is — either from greed or complacency. We are not worried about these types however, as we are fully aware it is a marathon, not a sprint, and we are in it for the long haul,” Maarten Bloemers, CEO of the GET Protocol Foundation, tells Culture3.
Founded in 2016, the foundation supports the development of GET Protocol, a digital ticketing infrastructure built on the Polygon network, an Ethereum sidechain. Over 2 million tickets for almost 12,000 events have been processed on the platform to date, a quarter of which were sold in the first three months of 2022, according to onchain data.
Ticketing is an industry with glaring problems, and the existing blockchain tech stack is already being used to resolve many of them. The core innovation of blockchain technology is the potential for verifiably unique assets, which prevents counterfeiting. Meanwhile, smart contract technology allows the original ticket resellers to embed price limits on the price of their tickets, and the storage of transaction records on the blockchain makes all transactions, from issuance to resale to invalidation, a smooth and transparent process.
“NFT tickets eliminate these issues entirely.”
— Josh Katz, CEO of Yellow Heart
Plus, the ability to track tickets enables moving QR codes, which means you can’t just screenshot a ticket and get to the venue before the legitimate ticket holder. For example, UEFA used NFT tickets for Euro 2020, the European international football championship, which activated only when ticket holders got close to the relevant stadium.
"In the past, if tickets to a show sold out quickly, fans would either miss out or pay for a ticket at a much higher price point. Even worse, many tickets are resold as counterfeits, which means fans pay more, and still don’t get to see the show. NFT tickets eliminate these issues entirely. They put the control back in the hands of artists and fans, ensuring that fans won’t get ripped off or stuck with a counterfeit ticket,” says Josh Katz, founder and CEO of YellowHeart. YellowHeart is an NFT marketplace for ticketing, music, and community tokens. Kings of Leon released 18 NFT tickets through the marketplace in March, which provides access to front-row concert tickets at every tour the band does, for life.
But initial ticket sale is only one part of the process. The secondary ticket sale market is projected to reach $9.7 billion by 2027, according to market research firm Brand Essence. Maarten explains that “our tickets are fully traceable onchain, meaning that fans can see not only the validity of their tickets, but also the price previously paid for it and whether it’s been checked in.” GET has built a ticket explorer with live ticket data, a purpose-built explorer similar to general blockchain explorers like EtherScan for Ethereum or TzStats for Tezos.
Meanwhile, for diehard fans and those with a penchant for memorabilia, tickets have never been just vehicles purely of transactional value. Wearing festival wristbands and keeping a corkboard with concert ticket stubs point to the greater value that committed fans attach to what others see as just pieces of paper. NFTs, which replace the paper, help leverage this aspect.
“At this pace, all tickets will be NFTs within the next 5-10 years.”
— Josh Katz, CEO of Yellow Heart
Consider Heroes Den Bosch. When the Dutch basketball team beat their rivals in a key semi-final with a last minute dunk, fans across the country had experienced an iconic image, but only the actual attendees, verified by their NFT tickets, could show undeniable proof that they were there: an NFT of the moment airdropped exclusively to the wallets of attendees (the wallet associated with their original ticket). Seasoned NFT collectors and traders will be familiar with the model: NBA Top Shot is a licensed NBA project of short clips as NFTs, built on the Flow blockchain by Dapper Labs. Examples abound of sports teams pursuing this model of ‘ticket-enabled memorabilia’ in order to provide extra value to fans.
Further, the interplay between decentralised finance (DeFi) and NFTs unlocks a broader set of opportunities. Financing events using funds raised by existing ticket sales is common, whilst NFT creators can use protocols like GET Protocol to pre-fund their own events by collateralising future ticket sales. Big names are already paying attention. In May, ticketing company XTIXS and GET Protocol launched a DeFi-funded event for singer Lewis Capaldi’s August 23rd concert in the Icelandic capital of Reykjavik.
The event reached its funding target in fewer than 24 hours, Maarten explains. “What the liquidity providers are buying are batches of NFT tickets, the value of which they will recoup once the primary sale takes place,” he explained. In this experimental case, the liquidity was provided by people from around GET’s network, “to ensure that the flow works and our smart contracts are behaving as they should.” But the product will gradually become available to users anywhere in the world.
Leveraging ticket sales, potential or realised, as collateral is not a use case that necessarily requires NFTs or decentralised finance, but both methods can add value. When it comes to NFTs, the use of the underlying smart contract technology delegates enforcing the contract to mutually agreed code, removing the requirement to go through other lengthier procedures if tickets do not sell as expected, and thus removing some of the risks.
Meanwhile, the contribution of decentralised finance adds value too: by broadening the scope of financing opportunities, more creators have the ability to launch events and build their career, whilst it is a new way for groups of people to unite around a market hypothesis or group of creators to make a return or build an agency.
With novel financing models pushing boundaries, web3 clearly poses new challenges for policymakers, particularly when decentralised finance presents new investment opportunities and risks. But when it comes to the core NFT ticketing issue, the technology solves a problem that policymakers have run out of solutions for. Indeed, Brilliant-Economy898, the pseudonymous admin behind the Reddit subreddit r/NFTTickets, an online community of NFT ticketing enthusiasts, believes that NFT tickets will make compliance with legislation even easier.
“We see more and more that legislation aims to kill scalping and fraud, but they fail to execute as they have no tools: blockchain-based open protocols could solve this,” they argued. “Translate the legislation into smart contracts and impose the rules that way, by demanding such a protocol is used by anybody who wants to sell tickets, like some sort of a license.”
NFT technology itself goes a long way beyond the JPEGs that currently make up the lion’s share of the market. Josh argues that “with how quickly technology, as well as artists and fans, have caught up to the general concept and benefits of NFT tickets, I don’t see the momentum slowing down. As we reimagine how tickets are sold and distributed, the possibilities are endless.” Indeed, Josh expects this momentum to accelerate. “At this pace, all tickets will be NFTs within the next 5-10 years.” Maybe it will take a little longer than that, but the use case is clear. Grab your tickets, this one will go the distance.
“Many tickets on secondary sites are being sold by touts who are simply in the business of ripping off fans."
Mumford & Sons, 2015 — NFT tickets have the potential to make ticket touting impossible
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