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.
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