As the global Web3 economy has flourished over the past decade, many technologies that have emerged from this space have helped provide tangible benefits to millions across the globe. Non-fungible tokens (NFTs), in particular, are one such offering, piquing the interest of countless retail and institutional players thanks to their ever-growing list of use cases.
To this point, a critical, real-world application of NFTs that has emerged recently relates to the events industry, or the ticketing sector, to be more specific. From a financial standpoint, it is worth noting that the online event ticketing market is set to become worth a whopping $68 billion by 2025. And with lockdown restrictions now easing out globally, it stands to reason that any technology capable of relieving the various pain points permeating this market can potentially experience exponential growth in the near-to-mid term.
Today’s ticketing mechanisms are flawed … here’s why
Earlier this year, one of the world’s most prestigious soccer events in the world — the Champions League Finals — was rocked by a massive ticketing scandal. This resulted in 30,000 to 40,000 fake tickets making their way into the hands of fans who had traveled from across the globe to attend the match between Spain’s Real Madrid and England’s Liverpool at the Stade de France.
Following the incident, France’s Interior Minister Gérald Darmanin revealed that the debacle was due to the “poor ticket filtration practices” employed by the Stade de France’s administrative staff as well as the French Football Federation. He added that a staggering 70% of the tickets that were sold were fake, noting that over 2,600 of the counterfeits had even been validated by UEFA, the governing body overseeing the Champions League.
In a somewhat similar vein, a recent study pointed out that 12% of all concertgoers globally had fallen victim to a ticketing scam at one point or another. Similarly, another researcher found that roughly 11 million Americans lost their money to fraudulent ticketing schemes yearly. If that wasn’t enough, last February, UK watchdog Action Fraud reported a 62% increase in ticket fraud from the previous month, resulting in unsuspecting victims losing a combined total of approx. $340,000.
Poor oversight of secondary markets
It is a well-known fact that the issue of scalping, i.e. the illegal resale of tickets, has also been growing recently, largely due to the rise of bots and other similar digital tools. To put things into perspective, the secondary tickets industry is currently estimated to be worth more than $15B. Thus, if scalping continues to grow at the rate it is right now, event organisers stand to lose out on a lot of money.
Furthermore, it is worth highlighting that the sale of illicitly sourced tickets is usually facilitated via secondary markets that possess little to no regulatory oversight. As a result, these tickets are either marked up to obscene levels or are counterfeited and sold to unsuspecting buyers.
Despite the apparent risks, many eager event-goers continue to make their way into these secondary black markets, losing large sums of money in the process.
As most people know, NFTs are unique cryptographic tokens that are built atop blockchains, a property that allows them to remain verifiable and transparent at all times. In fact, this is one of their key selling points for the global ticketing industry because once a buyer’s information has been inputted into these tokens, it cannot be altered, falsified, or manipulated in any shape or form.
To elaborate, when dealing with blockchain ticketing systems, every transaction is facilitated in a transparent and traceable manner, eliminating the possibility of a fake or duplicate ticket being scalped off to a third person. If that wasn’t enough, because NFTs harness the power of the blockchain, venues can relatively easily determine the ticket’s original IP owner by scanning a QR code.
Lastly, NFTs employ cryptographic proofs, as a result of which vendors and eventgoers can easily establish each ticket’s provenance, thus mitigating the problem of counterfeiting once and for all.
When a ticket is issued as an NFT, a vendor can easily ascertain the buyer’s identity. This is because each ticket is directly linked to the owner’s KYC’d account. Not only that, but thanks to the programmable nature of NFTs, promoters and ticketing platforms have the power to deploy resale restrictions, ensuring the creation of a more secure and affordable secondary marketplace for everyone.
Moreover, since each NFT-based ticket comes assigned with a unique, immutable, and verifiable transaction on the blockchain that is linked to an individual’s credentials — including their photos and facial data — it is virtually impossible to impersonate a ticketholder.
Another unique aspect of NFTs is that they have been proven to provide their owners with a lot of additional value, especially in the form of perks such as VIP access to exclusive events, loyalty benefits, early bird offers, etc.
How NFT tickets work
After an NFT ticket has been acquired, it is automatically sent to the individual’s digital wallet. Most tickets are designed to change color once they have been scanned and verified at a venue such that once this happens, no other person can use the NFT to enter the venue. One of the most impressive displays of this technology was at Coachella 2022, where ticket holders were incentivized to download and scan NFT versions of their tickets in order to gain faster entry to the festival, accrue free food/drink credits, among other perks.
More recently, Las Vegas-based MGM Grand Resort introduced NFT ticketing to its events, with owners being given preference regarding prime seating, access to backstage meet-and-greets, and much more.
What lies ahead for the ticketing industry?
Despite the ongoing financial slump, researchers estimate that the NFT market could reach a cumulative valuation of $230B by 2030, thanks in large part to the growing use cases associated with these offerings. For example, a couple of months ago, Michel Cadot, France’s Olympic inter-ministerial representative, revealed that he had requested the IOC to implement a blockchain ticketing mechanism for the upcoming Olympic games.
Honestly speaking however, the Web3 ecosystem is still relatively nascent — thus, more education is needed amongst vendors and users regarding offerings like NFT tickets and how they can completely redefine the event management landscape.
Moreover, the adoption of NFT ticketing solutions ultimately lies in the hands of the many players operating within the event management space. Thus, it is of foremost importance that these innovations be received in the right spirit.
Looking ahead, it will be interesting to see how integrating Web3 and NFTs into today’s ticketing mechanisms can allow for increased fan engagement in addition to simply allowing them access to events.