How Can NFT Ticketing Disrupt the Ticketing Industry?
NFT (non-fungible token) is a relatively new technology that has generated tremendous excitement in the digital art market. In the first quarter of 2021, the NFT-arts market grew from 23 to 432 million dollars (+1785%). Now, this technology is ready to enter new markets. An example is the event organization, where NFT can significantly improve ticket sales by enhancing this project. NFT can make it cheaper, faster, more transparent, secure, and reliable.
Scalping (speculative sales). Scalping is buying tickets at the supplier and then reselling them for a quick profit on other platforms. People often use OLX, Craiglist, or Viagogo for this purpose. Research says that approximately one out of five fans bought tickets at a reseller. Usually, these were males (probably because they buy tickets more regularly).
Fake tickets. According to the research, at least one out of ten tickets bought in the USA are fake. Frequently, the more critical the event is, the higher the probability of purchasing a fake ticket. There are tons of instruments to verify the validation of tickets now, but the statistics are still discouraging.
The experts say that the main reason is that the speculators use armies of bots to buy the tickets in the nick of time, while the regular users do not have this opportunity. Then the frauds sell the tickets on disreputable platforms, where valid tickets are costly, while the cheap ones are typically fake. People tend to choose the most affordable option.
Photo of the famous performance, «Hamilton». At times, the bots managed to buy up more than 40% of the tickets to this event. Source.
Furthermore, since there are no exchange protocols, it is harder to detect fake tickets because many platforms sell them. There is no instrument to check the authenticity of all the tickets together. This requires a single database or protocol for exchanging data between them.
Not only that, but without these protocols, it is difficult to fight the speculators. For example, if the coordinators limit the purchase amount to five tickets to one person, the speculator can simply buy five tickets on one platform, five on the other, and so on.
Service cost. The ticket price includes not only the entry to the event. It also includes the service fee (the one we pay, so we do not need to go to the ticket box to buy the tickets). Usually, it is hidden (included in the ticket price) and averages up to 27% of the ticket price. This 27% includes operating costs, platform profit, risk premium, delivery charges, and so on.
Client’s trust. According to the research, around two-thirds of customers fear buying a fake ticket or becoming victims of another type of fraud (men are 2.5 times exposed to fraud than women). Frequently, people suffer from it when they buy expensive tickets or when they plan to visit an event in another city. It is a painful issue since it decreases the incomes of all the parties on the market.
NFTs are non-fungible tokens that have unique identification numbers stored on blockchains. NFTs differ from regular tokens like BTC and ETH because one NFT is not equal to the other; hence they are not interchangeable. For example, 50 cents always equal any additional 50 cents; no matter which coin is yours, this money will always have the equivalent value.
In other words, an NFT exists in one single copy, like an art piece. However, the content of the token can be whatever one needs: images, math graphs, or event tickets. Every person can create an NFT. All one needs to do is to use an appropriate platform and follow straightforward instructions. The entire process is not much complicated than posting a video on TikTok.
After creating an NFT, it can be traded, sold, and purchased on unique digital platforms or websites, befitting integrations. The NFTs themselves are on secure wallets. One can access them from any device with an internet connection. Moreover, neither the NFT creator nor the platform that issues or sells the token can not access the users’ wallets.
The coordinators of an event can use the blockchain to coin any amount of tickets and sell them the traditional way on their websites or applications. Not only that, but they can also code into the NFT everything they require: the image of the tickets, the ID number, the verification method, or even the selling method (fixed price or auction).
When the users buy the NFT ticket, it will be stored on their wallets (like those for Bitcoin or Ethereum tokens). Easy access through a mobile device granted. The users can manage their NFT tickets on those wallets (for example, sell them or return) or use it to show the key on the entry.
After the event, the NFT ticket becomes invalid, but it is still on the wallet and has a collectible value, or just as a memory.
Here is how it looks on the technical side:
Preventing fraud/ fake tickets elimination
Blockchain-based distributed registries provide a single source of truth that both event organizers and their attendees can use to authenticate tickets and prevent fraudulent schemes. This is possible because the coinage and transmission of NFT tickets are recorded on the blockchain, so all parties involved can verify its authenticity.
Programmable NFT tickets option
NFTs are computer algorithms. This means that the NFT tickets can have integrated codes in the generation, transfer, selling, or reselling policies. Furthermore, NFTs can have rules for distributing and redistributing royalties on primary and secondary NFT tickets sales.
In practice, event organizers can profit when selling NFT tickets on the secondary market by coding in them (or their smart contacts) the profit distribution rules for future resales. Moreover, in cases where tickets are named, or resale is prohibited, NFT tickets can be created not to be transferred and sold to anyone else.
New opportunities for gaining income. NFTs turn the tickets into programmable money (payment method), which creates an immense opportunity for gaining income. For example, one can use NFT tickets as collectible items, or add bonuses to encourage the fans to collect a certain amount of tickets to the events. NFT tickets can also function as a kind of gateway for food and beverage transactions, where the NFT ticket works as an analog of a bank card with a certain amount in the account or with access to the owner's bank account.
Reduced ticketing costs. Issuing NFT tickets is much cheaper than the traditional ticketing infrastructure, especially if it concerns paper tickets. Firstly, the cost reduction affects ticket production (you can use Ethereum or another blockchain network for free). Secondly, the implementation and maintenance of mechanisms that are designed to prevent fraud, scalping, and the sale of counterfeit tickets are no longer needed.
Quick ticket production. One more significant advantage of NFT tickets is the speed of production and issuance. Depending on the network blockchain, the coordinators can create hundreds of thousands or even millions of tickets in less than one minute. Producing tickets traditionally might take about a week.
Client’s trust. All the advantages of the NFTs we mentioned above might significantly increase the client’s trust. This will directly influence the attendance of the events, hence the ticket sales (which is crucial in the post-COVID-19 times).
Let’s take a look at what are the benefits of NFT tickets for the event guests:
Benefits and incentives from event organizers. Since the initial sale of NFT-tickets can be linked to the wallet of a particular user, event organizers can implement various loyalty programs on this basis. It can be bonuses and discounts, the right to get access to VIP sectors, or the opportunity to get an artist's autograph.
Selling NFT tickets as collectible items. The uniqueness of NFT tickets allows them to be used as collectible cards, stamps, or coins. The success of selling various images, videos, texts, and animations in the form of NFTs on platforms such as OpenSea, Sandbox, SuperRare, and Rarible indicates a greater interest in such NFT items.
Reselling tickets on the secondary market. Using NFTs provides an easy and safe way for owners to resell tickets to upcoming events that they can't go to. And since there is no risk to the purchaser here, the resale price of the ticket may be the same as the event organizer or official reseller.
More security and anonymity. Blockchain technology makes NFT ticket transactions much safer, primarily if they are issued on large networks like Bitcoin, Ethereum, and Binance (and BSC), which are almost impossible to hack because of the features of distributed registries.
Now let's also take a look at the benefits of using NFT for ticketing for event organizers.
Creating artistic tickets. Traditional digital and paper tickets usually look too ‘straightforward’ and therefore uninteresting due to the desire to save money on their production. In addition, they are also very limited in functionality (it is just a ticket with a few security features). NFT-tickets, on the other hand, are not limited in any way either by their appearance or their functionality.
For example, you can create an NFT-ticket that will look like a painting of the ceiling of the Sistine Chapel, or it can be a 3D model of the building. Moreover, you can create an NFT-ticket, which will not only be a pass to the concert, for example, for Travis Scott but will contain his Fortnite skin.
Getting profit from reselling NFT-tickets. We have already written that event organizers can profit by reselling tickets due to the smart contracts. From the perspective of the average ticket buyer, who simply can not go to some event, it may seem unethical (why should he lose money?). However, you might code various conditions in the ticked. For example, one may code that if there was a single resale from a wallet, the ticket owner could sell it further without any difficulties.
Or you can specify that when reselling the tickets, the buyer must pay the recommended price, while the seller will pay the surcharge (commission in favor of the organizer). This will fight scalping and other similar fraudulent schemes.
Protection for online events. Right now, paid online events and online courses have almost no protection against someone connecting to them for free, as the maximum the organizer can do is use a password, IP verification, or something similar. If NFT is used, access to content can be protected using blockchain technology. For example, you can use NFT tickets, which will not be an image, but the right to watch a movie on YouTube one or more times, coded into a smart contract.
And it is possible to make the system track precisely what the user is watching, how much time, or precisely what piece of content was watched. This creates new opportunities for selling and monetizing content. Such mechanisms are used in marketing, but if desired, the system can be easily transferred to online events and content sales sectors.
The ease of distributing NFT tickets. Another vital advantage that coordinators can derive from using NFT-tickets is the ease of selling and distributing to customers. In essence, NFT tickets can be transmitted as QR codes via SMS or messenger message. Unlike a simple QR code or messenger message, NFT tickets will be protected from copying, counterfeiting, or unauthorized resale on the secondary market.
Simple ticket authentication. There are already quite a few services in the blockchain world that can verify the authenticity and origin of food, clothing, shoes, electronics, cars, etc., very easily and quickly. In the case of using NFT to sell tickets, event organizers can create a similar tool to verify their NFT tickets that all stakeholders, including the end buyers, can use.
KYC and AML compliance. Event organizers can derive a final benefit from using NFT to sell tickets in compliance with KYC and AML procedures. Such checks could be coded in a smart contract that would use various identity verification services without revealing the buyer's anonymity to the ticket seller.
Kings of Leon. In early 2021, Kings of Leon released their eighth studio album ‘When You See Yourself’; they also released three types of limited edition NFTs to support it. The first two NFTs are the album (audio recordings) and a great limited edition set that includes vinyl and a brightly animated digital album cover. The third type of NFT is 18 ‘golden tickets,’ six of which were auctioned off, and the remaining 12 were placed in a virtual vault for later sale or to give to someone as a gift.
Each holder of a ‘golden’ NFT ticket is guaranteed four front-row seats at any Kings of Leon concert during each tour for life. In addition, the NFT ticket holder also receives a VIP experience: personal driver to and from the concert, concierge at the show, time for personal interaction with the band, exclusive lounge access, and branded bags, t-shirts, etc.
Dallas Mavericks. Mark Cuban, a billionaire, and Dallas Mavericks club owner, said he plans to go NFT next season. He wants to create collectible cards of the best moments and events in the club’s history. Also, he wants to generate tickets for Dallas Mavericks matches.