By Alejandro Tornero, General Manager of OARO eco-NFT
With an established and growing presence in the worlds of art and gaming, non-fungible tokens (NFTs) are set to dominate discussions across the live events industry in 2022 and beyond. As lockdowns internationally have lifted, artists and event organisers have been hit by a new challenge – an outdated and inadequate ticketing system. Whilst decentralised ticketing isn’t an entirely new concept, it provides the most efficient and effective way for the live events sector to meet the increasingly digital demands of fans.
Musicians like Kings of Leon have been at the forefront of this trend, being the first band to release NFT ‘golden tickets’ that unlocked actual front-row concert tickets at every tour venue. From the $2m they generated through token sales, there’s little doubt that other artists will see the potential and soon follow suit.
When it comes to ticketing, NFTs solve a lot of the issues currently being faced by the sector – such as eliminating counterfeiting and reducing the ‘scalping’ market by controlling prices and sales. Whilst NFTs are believed to be a promising new technology for many elements of live entertainment, there are still obstacles to overcome.
It’s difficult to say when NFT ticketing will become a viable mainstream alternative to more traditional methods – and even the strongest exponents of NFT tech acknowledge that there are some major obstacles to overcome. For instance, the majority of NFTs can only be bought exclusively with cryptocurrencies or through digital wallets with special capabilities. Furthermore, some argue that NFTs are not actually ‘owned’ by users as they don’t cover copyright, making them a risky investment with their long-term value uncertain.
Quality and reliability are questionable across the unregulated space of more than 4,000 different blockchains and cryptocurrencies, many of which raise some serious concerns about ecological impact. Some blockchains – especially ‘proof-of-work’ systems – can produce high carbon emissions from the mining and trading of coins.
However, none of these challenges are impossible to overcome – the issues around how you purchase NFTs and ownership or copyright rights are simple to solve with the right technology. The question of ecological impact is also just a question of implementation. Newer, more advanced blockchains are usually built to have a significantly lower carbon impact, and some are even carbon negative. The potential benefits significantly outweigh the concerns – and if implemented correctly, NFTs could cause disruption across the entire sector at an unprecedented scale.
Advantages for the industry
Today’s outdated ticketing system is vulnerable to fraudulent sales, counterfeits, scalping scams and much more. For example, when an established ticketing vendor releases tickets to a music concert or sporting event, these can be sold on for an extortionate price (or scalped). Operators are turning to NFTs in the hope of solving these issues.
At the core of any blockchain ticketing system is the digital ledger – an indisputable, tamper-proof source of truth where all transactions and transfers are logged. NFTs can make the sale and transfer of tickets much quicker and more secure through this encrypted digital ledger, preventing tampering. Until now, artists and organisers have suffered significant losses due to the clandestine nature of reselling. Through an NFT ticketing marketplace, artists and organisers can provide a forum to legally resell tickets at fair and reasonable prices. What’s more, they can even create smart contracts that provide them with a percentage of each sale, opening doors to better cash flow from each event and fewer empty seats. It’s even possible to sell these NFT tickets years after they’ve been used, retaining commission fees.
Moreover, one of the less well-known benefits of these NFTs is the ability to generate collectibles from tickets that serve as souvenirs – much like a virtual pinboard or picture album where you can display remember, and prove that you attended any events. There are, of course, many other potential uses and applications for non-fungible assets. Some are gradually being discovered through the universe of users in emerging online metaverses, but many others have yet to be discovered.
A period of digital transformation has swept the world since the COVID-19 crisis. Whilst much of the global economy took a brutal hit in the wake of the pandemic, the crypto market surged, becoming a safe haven in this period of decline. As a result, many artists, musicians, and businesses are finding innovative new ways to engage their customers. Fundamentally, the pandemic gave people the time to better understand this nascent world
L’Atelier BNP Paribas and Nonfungible.com reported that the cumulative value of the NFT market tripled in 2020, continued to rise in 2021 and now exceeds $14 billion. Whilst the growth of NFTs in the last few years is staggering, it remains to be seen if the space will succeed in the long run, as mass adoption by fans of sports, music, and live entertainment will be paramount.
Businesses need to do more research to understand what NFTs are and what they can and cannot do with a system where they co-exist with their business model. It is clear, however, that NFTs have a potential that forward-thinking operators should explore in the race to engage fans in more creative ways.