Beating the Scalpers: Royalty Splits & Price Ceilings vs Dynamic Pricing
Everyone agrees that the scalpers need to be stopped, but what's the best way to do it? Royalty splits and price ceilings? Or dynamic pricing?
Blockchain technology has the potential enhance the experience for those in attendance and provide a deeper connection for people watching on TV.
This month, sports fans were spoilt for choice by Wimbledon being back with a vengeance, the UEFA Women’s Euros kicking off on Wednesday the 6th of July and the Silverstone Grand Prix. Post-summer, there’s plenty to get excited about, too, with the 2022 Fifa World Cup taking place in Qatar between November and December.
Live sports have recovered well from the pandemic years, and interest in them shows no sign of slowing down. It’s easy to see why as well, a considerable part of the attraction in attending live sporting events is being close to the action, the rush of adrenaline and the feeling of connection to the athletes as they compete.
Blockchain technology has the potential to take this even further, providing a way to enhance the experience for those in attendance and providing a deeper connection for people watching on TV.
Web3 is already being explored as a way of enhancing the experience and has been a significant part of the NBA’s fan engagement since the 2020 launch of Top Shot.
So in this article, we’re looking at the numerous possibilities that Web3 holds for increased fan engagement, more connected experiences and the various benefits to clubs and organisations that use it.
Fans are desperate to feel part of the action, and as demonstrated by the NBA, NFTs offer a way of enhancing the connection between fans and their teams.
NFTs are no longer just images, audio or video clips. The next evolution of NFTs is known as utility NFTs, providing the holders of them with additional perks and benefits. These utility NFTs open up a new world of opportunity for the way in which technology can be used to increase fan engagement.
Top Shot is an early pioneer in using Web3 to increase fan engagement and has had remarkable success, with buyers spending over $45 million in a single day in 2021. The opportunity for fans to collect and own highlight moments from their favourite athletes and teams has proved extremely popular. NFT collectables are a digital evolution of trading cards and give fans the opportunity to own a unique moment from their favourite team.
Blockchain is driving a new, more interactive era of fan engagement too. For example, blockchain technology has given rise to DAOs, decentralised autonomous community-led organisations with no central authority whose members can vote on proposals and moves made by the collective.
The new league Fan Controlled Football is merging NFTs, DAOs and Web3, allowing token holders to vote on the plays their team makes during games which are streamed live on Twitch.
While not every sport lends itself to fans deciding the following action on a play-by-play basis, it’s an exciting use of Web3 technology to provide a highly interactive live sports experience through NFTs.
The traceable ledger of blockchain networks can help identify and reward the most loyal fans. For example, if tickets were issued as NFTs on a blockchain, it would be easy to track your most regular and loyal supporters. They could then be airdropped perks, discount vouchers, tickets or any other NFT as a reward for their continued support.
Loyalty goes both ways, and it is inevitable that an acknowledgement of their support would firm up the relationship that fans have with their teams.
Rewarding fan loyalty is one of the reasons we created SeatlabNFT. Not only does our platform offer perks and benefits for users that hold our $SEAT token, but we’ve also built in the functionality for event organisers to airdrop NFT collectables to selected ticket holders on our platform.
It is not just collectables where NFTs can generate income for organisations and clubs.
Season ticket holders are always happy to pay their annual dues to ensure their support of the club. In the same way, with Web3, digital membership cards become available in the form of NFTs for loyal supporters to purchase.
Membership cards can give access to a whole host of exclusive benefits and content designed specifically for cardholders. Alongside collectable NFT drops, you can give cardholders access to a range of IRL perks.
Organisations could even have different levels of NFT membership cards which come with different tiers of perks. NFT access passes could be airdropped to holders with the opportunity to meet athletes or experience a game from a VIP box.
We’ve even included NFT membership cards as a part of our own NFT ticketing platform, as a way to offer additional value to fans who regularly attend live events. There are three different tiers to choose from, each with its own set of exclusive perks and benefits.
Not every fan gets to watch the action live and in person. However, NFTs offer a way for fans to feel a part of the event, even when watching at home.
Airdrops of NFT collectables can be done before, during or after an event to fans identified through NFT membership cards, or blockchain ticketing. One way this could be utilised is to airdrop supporters an NFT video clip of a winning goal while the match is live, or an NFT photo of their team lifting a major trophy as they do it.
You can also mint a limited run of NFTs from a specific game available to purchase or to give away as prizes for entering a competition.
Web3 also stands to make several other beneficial changes in the live sports industry, in addition to the enhanced fan experience it provides.
While NFTs provide engagement and an enhanced experience for fans, they can also generate additional revenue for clubs and organisations that use Web3.
Fans and the support they offer are the lifeblood of a team. Their investment allows clubs and athletes to compete at the highest level and on the biggest stages. NFTs and the additional engagement they provide are a valuable way of giving fans tangible value and a deeper connection from their support.
NFT assets and collectables for fans are not only a valuable source of revenue for the organisations that use them but also create a thriving fan ecosystem and subculture. Best of all, any resales of NFTs can be governed by smart contracts that enable royalty splits, allowing for perpetual revenue generation within this ecosystem.
Despite the recent crypto market downturn, Top Shot recently passed the $1 billion mark in sales, generating substantial income from fans trading their collectable moments, thanks to smart contracts.
Smart contracts are a key feature enabled by blockchain technology.
Smart contracts are self-executing pieces of code that affect NFT assets hosted on a blockchain. These will execute when certain conditions are met and can be used to define royalty splits from secondary sales of NFTs.
When using smart contracts, it is possible to set where a percentage of the revenue from any secondary sale is directed. When an NFT is sold on a secondary marketplace, the percentage of revenue defined in the smart contract is then automatically sent to the royalty beneficiary. On our NFT ticketing platform, this is referred to as a royalty split.
The ability to define royalty splits makes it possible for the club or organisation that created the NFTs to receive a share of the revenue generated by fans trading collectables. When viewed in the context of the NBA’s Top Shot collectables, there is a clear opportunity for significant revenue for organisations that utilise NFT collectable assets for their fans.
Smart contracts can also be used to define a maximum price for the resale of NFT assets on the secondary market. Price ceilings provide a level of control over the secondary market for NFT tickets and collectables by reducing the ability of touts and scalpers to make massive profits by taking advantage of fans.
A price ceiling sets the maximum price that an NFT ticket or collectable can be resold for on the secondary market.
Used in conjunction with one another, royalty splits and price ceilings via smart contracts will give new control over the secondary market. In addition to this, NFT tickets and digital collectables can be programmed as non-transferable or non-resellable, which would mean they are forever tied to a single wallet for the former, or transferable but not sellable for the latter.
The SeatlabNFT platform gives event organisers unparallelled control over the secondary market in ways never before possible.
The secondary market control provided by NFT ticketing also benefits season ticket holders and the clubs they support.
Not all season ticket holders are able to attend every game their team plays. Currently, many large clubs forbid the resale of tickets for individual games by their season ticket holders. While it’s understandable that clubs don’t want to see season tickets used as an opportunity for scalping, there are times when resales are legitimate for genuine fans. Preventing resales leaves empty seats in the stadium and also means loyal fans’ money is lost.
Using NFT technology for season tickets would enable the secondary market control that smart contracts provide. This would make it possible to allow season ticket holders to sell tickets for individual matches they are unable to attend, with price ceilings that would make the resale affordable for fans looking to attend.
Similarly, smart contracts could also govern where a percentage of the revenue from a season ticket holder’s resale goes. It allows season ticket holders to recoup some of their money if they can’t attend, gives fans who missed out a chance to see the action and allows the club to generate extra revenue from the secondary sale.
Fraud is a hot topic in the world of live sports at the moment after the ugly scenes in Paris for the UEFA Champions League Final this year. With Paris also hosting the Olympics in 2024, a spotlight is being shone on the way ticketing takes place for major sporting events.
While UEFA says they implemented blockchain ticketing, it underutilised the technology. Tickets were issued as usual, with customer data stored on a blockchain. When Liverpool football club requested paper tickets for their supporters, UEFA obliged, leading to a slew of fake tickets.
Issuing tickets as NFTs applies the same traceability found in blockchain to a fraud-proof ticketing system. Nobody wants to see fans become the victims of ticketing fraud or clashing with police, and NFT ticketing has huge potential to change this, so long as the tickets themselves remain entirely digital and stored in a blockchain-compatible wallet.
As Web3 continues to revolutionise entertainment and enhance experiences for people worldwide, the live sports industry has an excellent opportunity to create closer connections with fans and generate additional revenue by doing so.
Additionally, blockchain technology also provides control over the secondary market and a greater level of fraud prevention, while opening up new revenue streams for event organisers.
We’re creating SeatlabNFT as an NFT ticketing platform that changes how event tickets are sold, giving teams and athletes an opportunity to reward fan loyalty through NFTs and collectables, and making live sports events more immersive for everyone watching, both at home and in the stadium.
The SeatlabNFT platform includes features for event organisers to mint and airdrop collectable NFT assets to selected ticket holders in the form of images, videos or audio recordings. We’re also building a secondary marketplace, where fans can trade and buy NFT collectables, all of which can be governed by smart contracts which determine the royalty splits from any of those sales if desired.
To learn more about how we’re revolutionising event ticketing, read our full litepaper.
If you’d like to know more about how SeatlabNFT can help with your NFT and blockchain ticketing needs, reach out to our customer support team by emailing email@example.com