NFTs and their use in the entertainment event industry
One of the most exciting recent developments in digital technology has been in the area of blockchain, with the commercialization of non-fungible tokens (NFTs), which allow for the creation and exchange of unique digital assets. NFTs have multiple possible uses, not least in the entertainment event industry. But is that industry ready to benefit from them? In this article, we’ll explore the potential applications of NFTs in the event industry and how smart contracts can help improve the way events are managed and experienced, as well as the concerns they bring.
What is blockchain and what are NFTs?
First of all, what is blockchain technology? Blockchain technology is a decentralized digital ledger that records transactions in a protected and transparent manner. It is designed to be unchangeable, meaning that once a transaction is recorded on the blockchain, it cannot be altered or deleted. This makes blockchain technology particularly useful for industries that require secure and transparent transactions, such as finance, supply chain management, and now, the event industry.
Non-fungible tokens (NFTs) are a type of digital asset that are unique and cannot be replicated. They are stored on a blockchain and can be bought, sold, and traded like any other asset. Unlike cryptocurrencies such as Bitcoin, which are interchangeable and have the same value, each NFT is unique and can represent anything from artwork to music to virtual real estate. In the event industry, NFTs can be used to represent tickets, merchandise, and other event-related assets. Now with NFTs also come smart contracts, which can be described as self-executing contracts, meaning they have predetermined actions and when these actions are met, the contract executes. They are stored on a blockchain network and can be accessed and executed automatically by anyone with the appropriate permissions. Smart contracts can be used to automate certain aspects of event management, such as ticketing, access control, and revenue sharing. Now how exactly can one do that?
Benefits in ticketing
By owning an NFT ticket, you own a piece of digital media that is unique to you and can’t be replicated or duplicated. This makes it much more difficult for someone to steal or copy your ticket, leading to a more secure and seamless experience when attending an event. However, by issuing tickets as NFTs, event organizers are also able to retain control over the resale market. By using smart contracts, the organizers can set a price ceiling on event tickets. Price ceilings work like a maximum available price for a sale. For instance, the original ticket was sold at 100€, by using price ceilings, event organizers can force that the ticket re-sale can be at the maximum of 110€.
Currently, it’s not uncommon to see tickets being resold at significantly inflated prices on websites like StubHub, Viagogo and others, often within minutes of the tickets going on sale. These resellers, or scalpers, purchase tickets in mass using bots and then resell them on for a profit, often to visitors who were unable to purchase tickets from the official ticketing platform. However, with the use of price ceilings, the event organizers could make sure that their visitors didn’t overpay for their tickets, and they would be able to minimize a portion of the profits currently being made by scalpers. This isn’t to say that the use of NFTs will completely eliminate scalping, but it would certainly make it more difficult for scalpers to operate at scale.
With the use of NFTs as tickets, event organizers can not only gain more control of their secondary market but also create new streams of revenue from secondary sales of the tickets. We are talking about royalty splits. Royalty splits come from a re-sale of a ticket, when a percentage of the revenue created from the sale is automatically sent back to the original owner. For example, let’s say the event organizers set the royalty split of 10%. Now one of the tickets is being re-sold for 100€ on the secondary market. This means the person selling the ticket will receive 90€, while the other 10€ will be automatically sent to the event organizers wallet. By doing this, the organizers are able to generate a transparent and effective system for the secondary market as it provides better security and reliability for both the organizers and buyers.
How NFTs can add value to customers
In addition to secondary market control, NFT ticketing could also provide benefits and added value for visitors and increasing the overall experience, while still creating revenue. Event organizers are able to create different rewards using NFTs, such as unique event badges, special VIP access, autographs in digital form and so on. The possibilities are truly endless. This would offer visitors a unique piece of digital media that they can keep as a memento of the event and by doing so creating a sense of exclusivity and uniqueness that can enhance the visitor experience and increase brand loyalty. All of these rewards can also be used as collectibles, making them valuable even after the event is over.
Alongside making profit from selling these unique rewards, event organizers can create extra revenue the same way as with ticketing – by using royalty splits. By adding royalty splits on collectibles, they can receive a certain percentage, if the owner decides to re-sell it on the secondary market. By collecting certain collectibles, which the event organizers are able to track and locate with the use of blockchain and its transparency, you can receive special deals or discounts on any future events, making some of them very valuable. With this the event organizers are creating loyalty around their event and building a long-lasting community while sharing experiences.
Concerns about the use of NFTs
Of course, as with any new technology, there are also potential drawbacks to the use of NFTs in ticketing. One of the main concerns is around the accessibility of NFTs, particularly for those who may not have access to the necessary technology or infrastructure to participate in blockchain networks. A lot of people still don’t even know NFTs exist, let alone where to buy them, store, or transfer them. These can create problems for event organizers and could also prevent some visitors from coming.
Another concern is around the environmental impact of NFTs, as the problem is their high energy consumption, and more specifically the energy consumed by the blockchain that allows them to exist. All aspects of online activity consume energy, and NFTs are no exception. The machines and servers that store the blockchain consume huge amounts of energy. Most of them use the Ethereum blockchain, which is one of the most energy-consuming of all blockchains and its environmental impact is significant. However, this is a well-known problem, and many different companies are trying to improve it.
In conclusion, NFTs are changing the world of event ticketing by offering customers a secure and transparent way to buy, transfer and store their tickets. NFTs with the use of smart contracts also come with extra benefits, such as creating price ceilings and royalty splits, and adding additional experiences for visitors with collectables to potentially generate more revenue for event organizers. However, the use of NFTs in the event industry doesn’t come without its challenges. The environmental impact of NFT transactions are issues that must be addressed in the developing world of blockchain technology and will hopefully be resolved in the coming years while the technological skills needed to acquire them gets simpler. Overall, the use of NFTs in ticketing and admissions has the potential to revolutionize the industry by providing a safer, smoother, and more engaging experience for customers, while benefiting event organizers and visitors alike.
Regner, F., Schweizer, A., Urbach, N. (2022). Utilizing Non-fungible Tokens for an Event Ticketing System. In: Lacity, M.C., Treiblmaier, H. (eds) Blockchains and the Token Economy. Technology, Work and Globalization. Palgrave Macmillan, Cham.
Samuele Marro, Luca Donno (2022) Green NFTs: A Study on the Environmental Impact of Cryptoart Technologies
The consumer trends that are shaping travel & tourism
When society changes …
“When society changes, tourism changes.” These were the words of Prof. Dr. Harald Pechlaner in a round-table discussion at 2023’s ITB tradeshow in Berlin.
No industry is affected by change in social practice and consumer attitudes more than that of tourism. We live in a fast-paced world, where innovation and change have become the norm, driven by social upheaval and technical innovation. A particular catalyst was the Covid-19 pandemic that brought the entire travel and tourism industry to a halt, challenging many previously held assumptions. The resulting social changes will be reflected, in the coming years, in the way people travel, interact on their journeys and enjoy their leisure – and, therefore, in the products and services offered by the travel and tourism industries.
Some long-established aspirations have been questioned by the industry, such as the inevitability and the desirability of growth or the role of domestic tourism in a destination’s mix. Other trends have emerged unexpectedly or been accelerated. It is widely agreed that there has been a fundamental shift in the way travellers will approach their leisure and business journeys in the coming years. Numerous articles and trend studies/surveys have been published since 2021, each claiming to describe the nature of these trends and identify those that are here to stay.
The trends most commonly identified
This article provides an overview of this literature, to highlight the trends that most ‘experts’ agree to be of lasting importance. In summary, these are:
The craving for experience
The emergence of new modes of travel
The importance of sustainability
The emphasis on value (for money)
The phenomenon of blended travel
The effects of digital technology
The increasing importance that consumers give to health and well-being
Changes in booking habits.
This article is based on the study and analysis of a number of published consumer trend studies and surveys. It was enriched by information obtained during conferences attended during the 2023 ITB trade show in Berlin.
The most frequently mentioned consumer trends have been collected and consolidated in an Excel table including their most important characteristics. An overview of the trends surveys and sources used can be found in the summary table below.
Consumer Trends – Summary Table
This article does not cover the content of these reports exhaustively, but highlights some of the most important trends, in particular those driven by changes in social attitudes and behaviour.
The desire to travel & the craving for experience
For the consumer, travel appears more important than ever. According to the Traveller Value Index 2023 published by the Expedia Group, 46% of people say that travel is more important to them now than it was pre-pandemic. They also value travel more than they did pre-Covid19.
With this general craving for travel comes not only a desire for extraordinary, once-in-a-lifetime experiences, but also for travel to be more meaningful. Following the confinements and travel restrictions of the pandemic, it may be that people no longer want to take the risk of being prevented from traveling to their bucket list destinations.
This craving for experience can also be observed when looking at the rise of new forms of tourism and the newly gained popularity of different destinations. According to Skyscanner’s Travel Trends Report 2023, wildlife spotting and hiking are in the top three tourism activities planned for holidays this year. Euromonitor further highlights that nature-based activities like adventure or eco-tourism are expected to account for 57% of all tour packages worldwide in 2023.
The paradox of sustainability
This growing popularity of outdoor activities and nature-based holidays can also be attributed to the high importance given to sustainability.
While sustainability has been a priority for the travel and tourism sector for some time now, it became even more prominent over the period of the pandemic. Consumers pay even closer attention to their impact on the environment and seek more sustainable options in how they live and travel. According to Expedia’s Traveller Value Index 2023, 90% of consumers are looking for sustainable travel options and most consumers state that they would pay more for inclusive travel options. The WTTC quantified the number of travellers apparently ready to offset their carbon footprint with 69% in its Consumer Trends Report 2023 – whether or not this is actually reflected in their purchases.
Different studies, including Skift’s State of Travel 2022 report, highlight that in this respect a say-do gap can be observed; and that while travellers are interested in being offered sustainable travel options and say that they are willing to pay extra, only a few end up spending the extra money. Willingness to pay extra for off-setting may be further threatened by the current increases in cost-of-living and high inflation.
A question of value
The duration of the current cost-of-living crisis and current high levels of inflation is yet to be determined, but their effects on tourism are undeniable. Skyscanner, the Expedia Group, and the WTTC, to mention a few, have highlighted price as a main priority for travellers in 2023. According to Expedia’s Traveller Value Index 2023, one consumer in two says that inflation will impact their travel plans in the coming year.
However, this increased price sensitivity doesn’t necessarily mean that travellers now look for the cheapest options; rather that they want their money’s worth when travelling, making value-for-money a key term for the travel and tourism industry. Even though consumers still prefer saving money in other areas of life, instead of reducing their travel, more than half indicated that inflation would impact the nature of their trips. These changes led to an increase in off-season trips and less visited, lower cost destinations becoming more popular.
The rise of blended travel
According to Expedia’s Traveler Insights Report for the first quarter of 2023, the flight data shows that tourists are now taking longer trips on average.This is often attributed to the rise of blended travel. The combination of business and leisure travel is on the rise, and many surveys claim that it is here to stay. With the newly gained flexibility to work remotely following the pandemic, more and more people take the opportunity to work from anywhere, thus creating new opportunities for tourists and destinations alike.
One of the benefits mentioned is that blended trips can, to some extent, mitigate the effect of inflation and high cost-of-living, as employers may meet some or all the costs of travel and accommodation. According to Skyscanner one in six tourists are likely to take blended trips in 2023. Euromonitor forecasts the global spend from blended trips to double between 2021 and 2027, further highlighting the potential of this trend.
Digitalization, flexibility, and well-being
Several smaller trends and changes further shape the travel and tourism landscape. Digitalisation continues to impact tourism and new technologies are used to enhance the travel experience at all steps of the customer journey. VR/AR/MR, AI, and the Metaverse are among the most prominently mentioned innovations in this regard. Especially at the beginning of the customer journey, technology, social media, and OTAs play an important role. According to a Skyscanner survey, half of the respondents have made travel plans inspired by what they have seen on social media. And whilst the booking window itself remains short, consumers are spending more time planning and researching their trips than they did before the pandemic.
The pandemic also led to an increased customer need for flexibility when booking holidays and trips. Cancellation policies became more flexible, with possibilities for refunds. Expedia’s Traveller Value Index suggests that this trend, in terms of both demand and supply, is here to stay.
Another trend that emerged during the pandemic is the increasing importance of wellness, mental health, and well-being. Expedia’s Traveller Value Index 2023 puts physical and/ or mental health benefits among the top reasons for people to take holidays. Holistic well-being destinations and offers like yoga retreats and destinations spas are high on the bucket lists of travellers, according to Euromonitor.
What will the future hold?
The future is likely to bring even more change to the travel and tourism industry. Skyscanner mentions some further long-term trends that may further disrupt the industry. Among these are holidays among the stars, where 1 in 4 respondents expect to holiday regularly in the future, and virtual travel, which 26% of respondents see as a possible mainstream form of holidaying.
Despite all these trends and changes, certain things remain the same. For example, traditional holidays like sunbathing or boating trips and city breaks remain popular. Also, luxury travel is seen as remaining a strong long-term trend.
Euromonitor International (January 2023): Top 10 global consumer trends 2023
Expedia Group (2022): Destination Marketing Guide. Insights to inspire, connect and convert travelers
Expedia Group (November 2022): 2023 Traveller Value Index. The gap between traveller expectations and industry perceptions
Expedia Group (February 2023): Traveler Insight Report. 2023 | Q1
Tiqets (May 2022): Must-Know Travel Industry Trends for the 2022 high season