Finally, Utility for NFTs!
Unless you’ve been actively avoiding any form of tech content for the last couple of years, you’ll almost certainly have heard of NFTs.
Discover what NFT ticketing is & how it can provide a solution to the problems faced by fans, artists and event creators who use traditional systems.
NFTs have taken the world by storm since their introduction to the masses on the Ethereum blockchain in 2017. Since then, the NFT trading market has sat at a consistently high volume, leading to Collins Dictionary naming it their Word of the Year in 2021.
With NFTs now firmly a part of society and blockchain technology becoming more stable and scalable, it's time to consider how NFT ticketing will improve the event ticketing industry.
Issuing tickets as NFTs would solve many of the problems that currently exist with Web2 solutions. As it stands, a handful of big-name companies own a vast market share of the ticketing industry. Their business models and practices do little to enhance the experience for artists and fans.
Discontent about the event ticketing industry has continued to grow post-pandemic. As people look to prioritise their spending on experiences over possessions, the somewhat questionable methods employed by ticketing industry leaders continue to find themselves in the spotlight.
Whenever tickets to a big-name artist or event go on sale, it has become commonplace to see social media flooded with fans voicing their frustrations, either at missing out on tickets or at the prices they are being asked to pay.
While it's clear that big-name artists and popular events will always command a high price, the inability of ticketing platforms to address the issue of scalping continues to disappoint those who would genuinely like to attend events.
So what is NFT ticketing? And can blockchains provide a solution to the problems facing fans, artists and event creators who use the traditional ticketing platforms?
Blockchains are distributed networks that record all of the information on them with a chronological time stamp. Data is encrypted into blocks which are then chained onto the previous one, providing an immutable record for all of the data they hold.
To read more about blockchains and how they work, check out this article here.
Blockchain networks are responsible for the rise of NFTs. NFT is an initialism for Non-Fungible Token. NFTs are digital assets that are unique and cannot be replaced with others of the same kind.
NFTs are digital assets that live on a blockchain. Thanks to the way that blockchains record the data they hold, it is possible to guarantee the authenticity and originality of these digital assets in a way that simply wasn't possible with Web2 data structures. Blockchains also record the rightful owner of an NFT, meaning we can now see who owns the original piece of digital media stored on a blockchain.
NFTs can be many different things. Originally, they rose to prominence as simple collectable images in the same way that trading cards were collected in years gone by. Since then, NFTs have evolved to become videos, audio clips, and much more.
The non-fungible nature of these digital assets means that they are finding use in various areas of industry, including supply chain management and medical records.
For the event ticketing industry, using NFTs to guarantee the authenticity of tickets is a logical step in line with the evolution of technology. For years, little has changed about the way that tickets are issued and authenticated, and as discussed earlier, this has meant that there has also been minimal change in the practice of scalping tickets for popular events.
Event tickets are simply something that grants the holder access to an event. In digital form, they are currently authenticated using QR codes and or tied to a person's identity when they purchase a ticket. When a fan presents their digital ticket at an event, the QR code will allow them access to the venue if it has not already been used.
An NFT ticket is no different, except that the data will be stored on a blockchain, and the ticket will be a non-fungible token. In practice, NFT ticketing is not that different to Web2 ticketing for fans. They will still receive a digital ticket, which can be authenticated using either a QR code or NFC technology to grant them access to the venue.
While issuing tickets as NFTs is not sufficient to change the status quo of event ticketing alone, the addition of smart contracts to the equation is likely to make a dent in the ability of scalpers to profit.
However, before we get into that, it's worth noting that NFTs guarantee authenticity, meaning tickets from an NFT ticketing system will prevent ticketing fraud. It's a sad fact, but ticketing fraud still costs fans a staggering amount of money each year, with around £3.7 million lost to ticketing fraud in the 2021/22 financial year alone.
Given that NFT ticketing platforms can eliminate fraud, it already seems to make sense that the event ticketing industry should evolve to use NFT tickets, especially when we also take into account the unparalleled secondary market control that they can offer.
Smart contracts are self-executing pieces of code that live on the blockchain. They are able to be triggered when certain conditions are met, for example, the sale or transfer of an NFT ticket.
Smart contracts are one of the reasons that NFTs have become popular in collectable gaming, as blockchains and smart contracts allow users to trade NFTs amongst each other in a trustless system (i.e. with no third-party oversight).
If event tickets are issued as NFTs, smart contracts would be able to set conditions for what happens to those NFT tickets once they have left the box office.
For example, smart contracts are able to set a price ceiling for the resale of an NFT. This includes the resale of an NFT ticket.
Since the ability of scalpers to profit is entirely dependent on their ability to add a huge markup to the price of the ticket they purchase, then smart contracts controlling a price ceiling for NFT tickets would severely hamper the ability of scalpers to profit.
Similarly, smart contracts can also control royalty splits for NFT tickets. This means that when a ticket is resold, a set percentage of the revenue generated can automatically be sent back to a royalty beneficiary.
Used together, price ceilings and royalty splits are powerful tools that can enable a healthy, flexible secondary ticketing market that benefits the live events community.
Control over the secondary market is important for fans, artists and event creators, as it will direct revenue to those who make live events possible in the first place and provide a fairer experience for fans who have voiced their discontent at current market practices. NFT ticketing is making this possible.
Control over the secondary market is important, but NFT ticketing is also changing the way that fans experience live events for several reasons.
Firstly, one of the popular methodologies for defeating scalpers is known as dynamic pricing. This is a system where the price for tickets fluctuates in accordance with the demand for them. While this seems logical, it actually comes at the expense of true fans, who are forced to pay outrageous prices to see artists they have supported for years.
NFT ticketing marketplaces are able to beat the scalpers with royalty splits and price ceilings instead of through dynamic pricing, providing a win for everyone involved in the live events industry.
However, it is not just through secondary market control and fairer box office access that NFT ticketing is changing live events. Since blockchains record the owners of NFTs, it is possible to use the technology to recognise and reward NFT ticket holders' attendance and loyalty with digital collectables, access passes and much more.
NFTs have evolved significantly since their inception, and it is now possible to create NFTs which have additional utility for the owner.
Utility NFTs are just like regular NFTs in audio, video or image format, but they also function as access passes, discount vouchers, proof-of-attendance badges, membership cards and more; the possibilities are almost endless. These utility NFTs can provide a new level of live event experience for fans, depending on how artists and event creators use them.
With blockchain-based ticketing, event organisers can use an NFT ticketing system to identify their ticket holders and airdrop them NFT souvenirs, access passes or discount vouchers before, during or even after the event to heighten engagement.
Our Immersive Fan Passes are NFTs that can be used by artists, brands, clubs or organisations to connect with fans in the same way that is possible with NFT tickets and airdrops.
However, rather than function as event tickets, these NFTs can be offered as part of a tiered loyalty system to create tailored rewards and perks for different fans. Different tiers can be offered at different prices, allowing fans to form closer connections with their favourite artists.
As with NFT tickets, perks and rewards are fully customisable and can be airdropped to Immersive Fan Pass holders at any time. Similarly, these NFT passes can also be traded and sold by fans, with smart contracts governing conditions around those resales.
In this sense, they can also generate potentially significant revenue for both fans and the issuer.
This means the new Web3-powered loyalty programme functions as a two-way street, benefitting the fans and those selling the fan pass.
Brands and artists selling fan passes are incentivised to offer high-quality content, perks and rewards to justify a high price. Fans benefit from these high-quality offerings, but they also drive up the potential resale value of the Immersive Fan Pass, from which the current owner could profit, and through royalty splits, so can the issuer.
It's another way that NFT ticketing platforms offer a dynamic, fresh way of connecting with fans.
NFT ticketing companies are already beginning to challenge the big-name players in event ticketing.
At SeatlabNFT, our goal is to provide an NFT ticketing platform that event creators and artists can use to sell event tickets online, easily and securely, using blockchain technology. SeatlabNFT allows for price ceilings and royalty splits, helping take back control of the secondary market. It's free for artists and event creators to mint tickets using our NFT ticketing system, and we've also included a secondary marketplace for fans to buy and sell NFT tickets fairly.
SeatlabNFT is also built to improve the live event experience, which is why we've included airdrop functionality as a way for artists to connect with their fans and reward them with something of real, tangible value.
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