Blockchains Enable a Premier Experience for Creators and Fans
When Dapper Labs’ NBA Top Shot began gaining traction early last year, the concept of non-fungible tokens splashed into the mainstream. Top Shot, a platform for fans to collect and trade basketball highlight clips, introduced the masses to the concept of digital assets — and sparked an unprecedented hype cycle around NFTs.
As this new paradigm of digital ownership gained visibility throughout the year, NFT profile pictures stole the spotlight. Collections such as CryptoPunks and the Bored Ape Yacht Club propelled the NFT market to new, astronomical heights. Meanwhile, metaverse platforms like the Sandbox sold digital real estate as NFTs, Web3-native gaming platforms like Axie Infinity sold in-game items as NFTs, and other projects, such as Poolsuite and LinksDAO, began to dabble in NFTs as proof of membership. In total, 23 billion USD worth of NFT collectibles were traded last year, according to the DappRadar 2021 Industry Report.
In the whirlwind of hype, NFTs have gained a degree of infamy. Vocal skeptics scoff at cartoon ape jpegs and lodge accusations of fraud and exploitation, and in all honesty, their skepticism isn’t completely unfounded.
NFT sales volume by quarter in 2021. Source: Dapp Radar
As Meta, Nike and other established brands dip their toes into the Web3 waters, it’s apparent that legacy megacorporations are piling onto a bandwagon chasing a massive and emerging consumer market. To outsiders, the NFT hype appears to be yet another way for those companies to wring profits out of users.
However, while the digital collectibles market is enjoying remarkable growth, there are countless (and arguably more legitimate) applications for non-fungible tokens that have yet to catch the public eye.
One of the more promising applications of this technology is NFT ticketing.
Tickets are Inherently Non-Fungible
Tickets are a gating mechanism, designed to grant their holders access to an event or offering. Whether it’s for a flight, class or concert, a ticket is a one-of-one pass granting access only to its holder. While centralized entities like airlines will likely prefer to maintain the status quo and keep passenger data confined to their own servers, NFTs have the ability to revolutionize event ticketing.
If a creator sells tickets to their event as NFTs, then only those who hold that specific NFT ticket will be permitted access. Infrastructure for token-based access control is already well established in Web3, thanks to tools such as Collab.Land. While minimum token balance thresholds are the more common method of validating internet community membership, the underlying principle remains the same for ticketing IRL events; any blockchain explorer can verify whether someone holds the required NFT ticket to gain access to a given event.
The transparent and immutable properties of blockchains make NFT tickets fraud resistant in several ways. Legitimate ownership of an NFT ticket can be verified by checking that the person presenting the ticket is the owner of the wallet in which the NFT resides. Upon entry, an NFT ticket can be burned to prevent would-be scammers from attempting to reuse or resell the ticket. Finally, prior to an event, NFT tickets listed for sale on secondary marketplaces can be easily verified, saving fans from the gut-wrenching experience of showing up to an event with a fake ticket.
Thus, NFT tickets meet the fundamental ticket requirements; they are unique to each holder, they cannot be reused and they cannot be forged. Yet NFT tickets provide many more possibilities.
Blockchains Can Unlock New Features for Tickets
Given the transparency of the blockchain’s immutable ledger, event creators can track ticket transfers. In the United States, secondary sales are a $12 billion market, accounting for nearly 20% of the domestic ticket market, according to SeatGeek management estimates for 2022. Using smart contracts, an event organizer can hard-code an automatic royalty payment any time a ticket to their event is resold, unlocking a whole new kind of post-sale revenue capture for creators.
That same property also enables creators to combat ticket scalping, by enabling them to void any ticket that has been resold. Interestingly, NFT tickets give creators the opportunity to set a maximum resale price that, if exceeded, voids the ticket. This way, a creator could conditionally allow secondary sales as long as they don’t exceed the original ticket value, ensuring a fair price for all fans. Alternatively, all secondary sale proceeds above the original ticket value could be directed back to the creator, to a predetermined charity, or any other destination of the creator’s choosing. These mechanics can be further expanded by delegating differing percentages of secondary sale proceeds to multiple beneficiaries.
Picking up where traditional tickets leave off, NFT tickets can benefit both the organizer and the attendee long after the event is over. For an organizer, the primary benefit is data visibility.
After an event, blockchain records enable the creator to track attendance based on which NFT tickets were scanned for entry. By aggregating that data from multiple events, a creator can identify loyal fans and distribute loyalty perks and rewards, if they choose.
Using data from secondary market activity, a creator can optimize their initial ticket sale price to more accurately reflect the intrinsic value ascribed to an event by fans. Alternatively, they could create weighted, pricing algorithms that account for repeat fan behavior, secondary market prices and other data points.
And while legacy ticketing companies can provide similar services, the blockchain won’t charge you a fee to see and use your own data.
For fans, NFT tickets can become collectibles. The Web3 sensation POAP (Proof of Attendance Protocol) was developed for this concept of digital mementos, enabling organizers to distribute NFT badges to event attendees. This protocol could easily be integrated with NFT tickets, automatically distributing a POAP to anybody who scanned their ticket for entry during the event window.
Last November, Live Nation announced “Live Stubs,” free commemorative NFTs available for select events on Ticketmaster. Pushing the idea further into the spotlight, the National Football League announced this week that each fan who purchased a ticket for Super Bowl LVI will receive a free commemorative NFT unique to their ticket — a strong indicator of the League’s belief in blockchain technology.
The idea of NFT tickets as post-event collectibles has perhaps even more value for continuing-education events and certificate classes. Proof of attendance for such an event, stored on-chain, can double as an immutable transcript of one’s skills and qualifications.
NFTs As a Back End Solution
The Web3 learning curve is steep, and can stand in the way of creators learning how to mint tickets as NFTs on their own. To address this problem, platforms such as GET Protocol, Centaurify and The Ticket Fairy are developing solutions to onboard event creators and introduce them to the power of NFT tickets — and it’s working. Since 2016, GET Protocol has processed over one million tickets on-chain, with over half of those being NFT tickets, according to their website.
Among those building blockchain-based ticketing platforms, one unifying theme is a desire to provide organizers and attendees with a frictionless experience. Achieving such a goal requires sacrificing a degree of decentralization, but when it comes to tickets, that might not be a problem.
Event organizers are presumably more concerned with planning the experience they’re selling to attendees, and ticket buyers’ main concern is protection from fraudulent tickets. As long as the user experience isn’t negatively disrupted, consumers don’t necessarily need to know about a platform’s blockchain back end.
The NFL Marketplace is a great example, selling commemorative NFTs minted on Polygon but priced in USD and purchased with credit cards. Similarly, while Ticketmaster allows users to link their own Web3 wallets to their marketplace, the platform default is a custodial wallet connected to a user’s Ticketmaster account.
The Future of Ticketing
The desire to accept this tradeoff, in order to create a seamless experience for users, presents an interesting opportunity for competition between the Web3-native startups and the legacy Web2 corporations.
Established brands are knocking on the gates of Web3, dropping NFT collections to cash in on the hype, and earning some pushback from consumers. Meanwhile, metaverse messaging from public companies to Wall Street is still unclear, muddied with contradicting definitions, plans, and outlook models. As legacy companies compete for investor attention, traditional ticketing companies are uniquely positioned to make a quiet, yet significant, entry into Web3.
Even with Live Nation running its own commemorative NFT experiment, the NFT ticketing playing field is still fairly level. Other legacy ticketing platforms may choose to develop their own solutions, or they may enter the space through strategic acquisitions and partnerships with Web3 startups. In either case, the ticketing industry can adopt this new technology to improve their platform experience and generate genuine interest from investors and consumers alike. Unless a Web3-native platform finds a catalyst for widespread adoption, the legacy platform that moves into NFT ticketing first will earn a meaningful advantage.
The clock is ticking as Web3-native platforms continue on their upward trajectory. While consumer familiarity with legacy ticketing systems has so far ensured their market dominance, that won’t last forever.
Bennett Baker is a Web3 enthusiast interested in how DAOs and NFTs experiment with new systems of coordination and ownership.
BanklessDAO is an education and media engine dedicated to helping individuals achieve financial independence.