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I am crypto curious.
You might have read that between the lines in my recent Demise of the Dollar. Markets can be wrong at times, but when a new asset attracts a trillion dollars in capital, you might want to pay attention. Hence, my interest in learning more.
To satisfy that curiosity, Invictus pulled together a private discussion with numerous blockchain and crypto experts. The conversations ranged from technical to informative to a bit of wishful thinking. Still, it was fascinating.
My modest contribution to the evening was asking this question: “There are an endless array of innovative, disruptive technologies, ranging from software to molecular biology to materials sciences to whatever. If Bitcoin was not $60,000, would the Blockchain have captured as much mindshare? How can we separate the technology from the trading vehicle?”
An economist in attendance responded by asking a simpler, smarter question: “What is the use case for blockchain?”
The next morning, I found myself DMing with a fund manager who attended, kicking around some use ideas. As a fan of music and a non-fan of the ticket resellers, we started discussing live music – by extension, Broadway shows and Sports. Really any live event where there is a robust demand at different price points for tickets and a secondary market to take advantage of that.
None of these concepts are new; many are 5 years old. There are plenty of posts and white papers on the topic. Look at these few:
GET (Guaranteed Entrance Token) Protocol
Blockchain and Ethereum — How Can They Be Used for Events? (2018)
Explore Blockchain Ticketing Possibilities With the right experts and application, concert tickets on blockchain are more transparent and secure
Here is the abstract of the Smart Event Ticketing Protocol by the GET foundation in Amsterdam (August 5, 2017):
“Ticket fraud and exorbitant secondary ticket prices are age old phenomena that have had artists and their fans worried since the times of Dickens and Shakespeare. Thirty percent of all tickets are resold with mark-ups between 30% and 700%. The event ticket market is know to be non-transparent, inexplicable transaction costs added to tickets are a common practice among ticketing services. The solution is a blockchain based event ticketing protocol used by ticking and booking companies that will make exorbitant secondary market ticket prices and ticket fraud occurrences of the past. The protocol will offer these features while providing absolute transparency for all actors involved.”
I have no idea if the GET protocol is what ultimately becomes the standard for this, but we can hypothesize what a modern ticketing technology built upon the Ethereum blockchain would look like in real life:
Taylor Swift announces a new tour for 2022. She uses a “smart ticket” – a blockchain based protocol with a built-in smart contract as part of its offering. Note this is not the small print on the back of tickets you currently purchase but a full contract. It specifies the rights of the creator/artist (or other event producer) who is offering the ticket; it also details the rights of the buyers.
Built into each ticket is the allowance of a resale at face value at no cost. If you buy tickets for a friend, or end up unable to attend, you can resell at face value (or less) to anybody, but just once. As soon as it leaves your wallet, the transaction is recorded on the public ledger — you no longer having anything left to sell it again.
Here is where it gets interesting: If it’s resold for a higher cost, TayTay can capture a percentage of that transaction – say 50% 70%? – of the upsell. It it were 100% the first buyer would have no incentive to resell higher.
It is transparent, automatic, and accrues to the benefit of the artist, not a third-party middleman. Tickets become purely digital products, with a unique QR code (tied to the transaction hash) that gets scanned for admission. It can easily be sold person-to-person, smartphone-to-smartphone. IT COMPLETELY BYPASSES TICKET RESELLERS like Stub Hub or Ticketmaster.
Of course, most artists don’t have the economic market power of Taylor Swift; some do, and soon after, everyone from Drake to Imagine Dragons to Coldplay wants in. Perhaps a consortium of artists sign-on to a standard ticketing protocol. Eventually, the technology gets adopted universally from superstars to working artists.
The result: It cuts out the middleman, captures more of the premium resell market to the artists. Maybe it even makes ticket sales fairer.
Bands used to tour to promote their albums, which was how they monetized their created works. Now, they put out an album so they can tour, which is where most of the monetization is today. If they could capture a higher percentage of the gate – including secondary market resales – it could change the economics dramatically.
I suspect the challenges to this are less technical and/or legal then they are a matter of incumbent market power and existing contracts. A universal standard married to refined technology of smart tickets is a potential game changer for the live events industry. For a change, the advantages accrue to the artists.
As a newbie to this, apologies if I mangle the jargon. Maybe this is oh so obvious. But it answers the question “What is the use case for blockchain.”
What other services will take advantage of these new technologies?
UPDATE: April 10, 2021
Forget overvalued artwork, Mark Cuban sees NFT ticketing as the mass-market disruptor
Cuban owns the Mavericks and their arena, the American Airlines Center. This means he can single-handedly disrupt the resale market. Once this happens, he has a template for taking that technology and applying to the entire live events industry, replacing the middlemen with a cheaper, more advanced mechanism for reselling tickets.
