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Live events are coming back in a big way. Multiple-day music festivals, rollicking stadium concerts and big-time sporting events have resumed with gusto upon the cautious easing of Covid-related restrictions, but fans can expect some significant changes in the way they secure admission to such experiences.
Blockchain technology is undoubtedly poised to disrupt the ticketing industry, but not in the way that many may think. To understand the benefits and limitations of blockchain-based technologies within the events space, including NFT applications, one needs to understand how the industry works. When you buy a ticket for an event, what happens behind the scenes can vary wildly. Here are just a few illustrations:
Scenario 1: You purchase a ticket from a venue’s website for an event within its space. The venue is the merchant of record and handles all aspects of production and promotion of the event, including paying the DJ or artist a set fee (typical) or percentage of sales. The model remains the same no matter how popular the artist may be.
Scenario 1B: Identical in every way to the above scenario, except a third-party ticketing platform (such as Eventbrite or Tixr) charges the customer’s card and provides them the ticket. The third-party platform takes a small fee and sends the rest to the venue; it has no involvement in production and no minimum number of tickets it must sell through promotion.
Scenario 2: You purchase a ticket for a live show (let’s say J.Lo) at a massive stadium. Live Nation, through Ticketmaster or a middleman such as StubHub, takes your payment. In these cases, Live Nation typically handles all production, promotion and marketing, chargebacks and disputes, and also offers lucrative guaranteed payments to the artists — at least months, if not years, in advance of their performance.
Scenario 3: You purchase a ticket directly from a DJ or artist. The DJ is now the merchant of record and liable for everything that could go wrong with the event. Unless they have some agreement with the venue that a specific percentage of ticket revenue belongs to the artist and the venue makes its money some other way (perhaps through alcohol sales), the artist is responsible for not just managing ticket sales, but also promoting and advertising; creating pro-forma budgets; divvying out payments to scores of vendors, including security, production and permitting; and dealing with chargebacks, fraud, cancellations, rescheduling and much more.
Too Many Hiccups
When people buy tickets to special events, they often do it in a mad rush. The underlying infrastructure must be able to fulfill those ticket sales — from the moment of charging customers’ cards to delivering the tickets — without downtime and within seconds. Ticketmaster’s infrastructure is built to handle this immense load, but if J.Lo wanted to sell 60,000 NFT tickets to her own show and bypass the platform, she would likely have to spend hundreds of thousands (if not millions) of dollars to build the technology on top of the blockchain required to support it.
Some NFT companies may claim to offer a way to eliminate the middleman for artists and fans for events, but NFT event tickets sold directly from an artist are still rare in a sense. A large portion of the NFT landscape is taken up by art collection (not event-related) NFTs for sale or tickets sold by venues or producers (middlemen) such as the BlockDown festival in Croatia or the already passed SCOPE Art Basel show in Miami Beach.
Now, the approach of selling NFT tickets directly from artists to fans will likely work for smaller artists but not household-name artists. There’s too much work involved for them to become the merchant of record, and they enjoy the advance payments that “middlemen,” such as Live Nation, provide them. All that said, while larger artists may still hand off the responsibility to third parties like Live Nation, NFTs could create a more direct connection between artists and fans by allowing memorabilia to be embedded within the NFT itself (such as a signed photo with the fan’s name), as well as the nostalgic effect of having a used-but-immortal NFT ticket that will never be lost in a drawer or thrown away by accident.
On the Horizon
Certain middlemen who are not involved in multiyear contracts with artists or production stand to be drastically impacted by the blockchain/NFT revolution. Ticket-reselling platforms offer fraud prevention as a value proposition. With blockchain or NFT tickets, there is no chance of copying a ticket and selling it as an original, so that value proposition quickly disappears. The segment of the market potentially most at risk of disruption from NFT ticketing is these types of ticket-reselling platforms.
Currently, NFT tickets see moderate adoption. Large players like Live Nation have not yet employed them and made the actual ticket an NFT. Instead, they have done things like selling memorabilia ticket “stubs” as NFTs. This soon will change, and they will likely offer actual tickets within NFTs, especially as more consumers become used to the idea of possessing them and using a crypto wallet.
It’s an exciting time in the live-events industry because of these bleeding-edge developments. As time progresses, smaller artists could more often turn to NFT ticket platforms to sell their own shows, and household artists will continue to enjoy their lucrative long-term contracts with event-platform juggernauts. The more things change, the more they stay the same.
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