Over the past few months, people have started using the term “NFT” interchangeably with the term “digital collectible.” This is unfortunate, because while most of the digital collectibles in the news are NFTs, the technology can be used to create value in many additional ways. When thinking about fan development, which we will define (just for this article) as a collection of purpose-built tools designed to grow communities of interest, perhaps the most obvious use for an NFT is as a ticket to an event. Let’s review some of the benefits you might expect from combining a ticket, some unique digital assets, and a smart contract.
NFTs are Smart Contracts
All NFTs are smart contracts. A smart contract is just like an old-fashioned verbal or paper contract, except with a smart contract, when the conditions are met (digitally), the contract executes automatically. Immutable, self-executing contracts coupled with the automatic exchange of funds (or tokens) open up a world of possibilities for ticketing.
The Elimination of Duplicate or Fraudulent Tickets
Every NFT is unique, and ownership is written on a public distributed ledger (blockchain) which can be read by anyone. If your ownership of an NFT has been validated, a quick matching of public and private keys (using something as common as a barcode reader) would instantly verify that the person with the NFT in their digital wallet was the authentic owner of the ticket.
Revenue from Secondary Markets
If someone sells their NFT ticket, that transaction can trigger royalty payments to the issuer as well as any other stakeholder – artists, sports leagues, athletes, sponsors, promoters, a charity, or literally anyone with a digital wallet. These business rules can be hard-coded into each NFT, and like all smart contracts, when a transaction occurs and the conditions are met, funds automatically change hands.
Visibility into Transactions
Bots, scalpers, bad actors, criminals, and 2nd-party sales on eBay or other auction sites are common. NFT tickets offer an easy way to gather actionable business intelligence about how and where your tickets are being sold and resold. You can find the exact moment of the transaction, the exact address of the digital wallets in use, the amount of the transaction, and much, much more. Contrary to popular mythology, NFT transactions are not anonymous. There are several commercial firms such as Chainalysis and CipherTrace that offer blockchain BI tools.
Reduced Ticketing Costs
NFTs are not mined, they are minted. This is a non-trivial technical distinction. Today, you can mint NFT tickets for less than 10 cents apiece – and the price of NFT ticket production will continue to drop.
You can, of course, mint NFT tickets as stand-alone digital collectibles. But you can also use NFT tickets to allow fans access to an auction where they might bid on NFTs containing more valuable exclusive content. Because of the NFTs ability to collect 1st party data, they can also be used to augment loyalty programs. The marketing techniques will need to be tested, but the technological capability is built in.
Data-driven Marketing Opportunities
Today, if you purchase six tickets to a sporting event and bring five family members or friends, the ticket seller has a business relationship with you but has no information about the other five people in your party. NFTs have the power to change that. If each attendee was required to present an NFT for entrance, the NFT would need to be transferred to their personal digital wallets. Depending upon how you wrote the business logic and what data you asked for as a condition of the ticket sale, the NFTs could collect a wealth of actionable first-party data.
NFTs can be bought, sold, traded, swapped, used as collateral, borrowed, lent, etc. In other words, your ability to financially engineer to create additional value is only limited by your creativity and your audience’s willingness to participate. The blockchain’s ability to democratize finance is part of what makes the technology super-exciting, super-dangerous, super-volatile and awesome! It is also why the world of crypto and DeFi (decentralized finance), writ large, has the attention of governments and regulators worldwide.
Whether your audience is a community of interest, a community of practice, or a community of passion, next-level marketers will have the opportunity to let their imaginations run free. What does your audience value the most? How can you empower them to participate? What additional value can you help them obtain? What is the next generation of loyalty program? How much “access” to the star attraction can they achieve? Smart contracts will give smart marketers the tools they need to design new kinds of marketing programs with ongoing, automated value-creation components built in.
Traditional ticketing software has been a race to the bottom. Most of the systems are old and tired. Not surprisingly, almost every major ticketing company has announced that they are planning or already working on or about to launch a new NFT ticketing product. This is great. While there will be way too many different approaches, some will emerge as better than others. Consumers will vote with their wallets (as they always do), and this new tech will evolve.
Importantly, some of the most interesting blockchain projects are polychains or multichains which are being built to aggregate disparate blockchains. These new blockchains of blockchains will empower Web 3.0 and certainly play some role in the evolution of NFT ticketing. In the meantime, I hope some of these ideas resonate with you and get you thinking about new ways to create value for your business.
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Author’s note: This is not a sponsored post. I am the author of this article and it expresses my own opinions. I am not, nor is my company, receiving compensation for it.