Ticketmaster goes blockchain, and it’s easy to see why
Blockchain can give complete end-to-end control over a ticket's life cycle, in a way that actually works.
Ticketmaster has acquired Upgraded, an Ethereum-based blockchain platform for digitising event tickets.
"Ticketmaster is constantly exploring emerging technologies, and there aren't many that have the unique possibilities of blockchain," said Justin Burleigh, Chief Product Officer at Ticketmaster, North America.
Blockchain is especially relevant to the events industry, where blockchain's unique ability to digitise almost anything and create clear trails of ownership allows it to track event tickets from initial release to buyer – to resale if applicable – and then right to the gate.
Uniquely, it also allows for much more enforceable crackdowns on the scalping problems endemic to the industry through the use of programmable restrictions on resales.
Or much easier and more complete monopolisation of the scalping market for any given event, if you swing that way.
According to Ticketmaster, less than 4% of the tickets originally sold on the Ticketmaster platform are also re-sold on Ticketmaster. Blockchain can potentially bump that number up to 100% of all re-sold tickets, overnight.
In the case of Upgraded tickets, barcodes and other key ticket details aren't shown until the doors are open and the ticket owner is physically near the venue, so there's no copying and selling of those details ahead of time.
Meanwhile, the platform allows the event owner or primary ticket seller to place restrictions on resale, such as blocking resale completely for all tickets or just a subset of tickets, and putting a price cap on the sale value.
Usefully, it also allows the option of choosing which markets resales are allowed in. If someone doesn't want scalpers re-selling tickets on Amazon, the tickets can't be resold on Amazon. And if Ticketmaster only wants to allow resales on the Ticketmaster platform itself, where Ticketmaster can earn a commission from all sales, it can do that too.
It offers complete and effective control over the entire ticket life cycle, to be used for good, for evil or maybe for a little bit of both.
The business of scalping
Scalping is essentially where someone buys an event ticket, and then re-sells it later at a higher price. It's practised on an industrial scale these days, where professional scalpers use bots and automated purchases to swoop in and buy as many tickets as possible the instant they go up for sale.
They then re-sell these at potentially enormous markups.
This is often bad news for fans who are faced with a much smaller market of ordinary-priced tickets, and will often be priced out of attending events entirely as the price of the remaining tickets potentially goes from hundreds of dollars to thousands of dollars.
Scalping can also be extremely profitable for platforms like Ticketmaster, as long as they also control the re-sale market. This is because they can essentially double up on the commissions from ticket sales.
First they receive a cut of the initial sale, which can reportedly be as much as 10% of the ticket price when selling to the scalpers. Then they can earn a second commission all over again when the scalper sells the ticket to the end user, as long as that second sale also happens on its own platform.
Ticketmaster doesn't want to see those re-sales end up on eBay or anywhere else, and the Upgraded blockchain system might let Ticketmaster enforce this.
An enormously profitable opportunity
There are conflicting reports on how deeply Ticketmaster is involved in the scalping scene.
On the one hand, there's some fairly damning video evidence.
On the other hand, Ticketmaster accurately points out that there's always going to be a resale market and it's better kept in line by entities like Ticketmaster than just let run rampant. It also notes that recent systems like "Verified Fan" have put discounted early tickets in the hands of fans who have demonstrated their commitment ahead of time by watching videos, buying merchandise and similar.
In the long run, the most profitable and sustainable opportunity for Ticketmaster is probably to find a way of balancing the competing needs of the primary and secondary markets, which means having complete overview and control of all ticket sales and resales on an event-by-event basis. This is what the Upgraded platform can give it.
For the first time this might let Ticketmaster create a holistic end-to-end marketplace for event tickets which it can control in exceptional detail.
The new marketplace
Picture something like a cryptocurrency exchange for digital event ticket tokens, where scalpers and other buyers and sellers can trade tickets in a free market. This might let Ticketmaster pocket a lot more commission on a lot more transactions, with assets changing hands potentially dozens of times rather than just a few.
A verified fan might do their due diligence to access tickets early and then sell them at a profit, or someone might show up on the night to see if they can score a leftover ticket which suddenly plunges in price when it goes unsold as an event starts.
Ticketmaster can disperse tickets into this market in whatever distribution it wants, as early or as late as it wants. It might release a small number of tickets well in advance for some price exploration ahead of time, and keep things from getting out of hand by ensuring that enough tickets end up in the hands of verified fans, and can ensure that certain tickets or sections are not resellable at all, so whoever shows up on the night is the same person who initially purchased the ticket.
Having this level of control, as provided by the Upgraded blockchain, might allow Ticketmaster to strike that complex balance between profiting massively where possible, and satisfying other stakeholders – specifically venues and artists.
Part of the reason Ticketmaster has such a firm grip is because it negotiates exclusive deals with venues. Essentially it unloads a dump truck full of money on stadiums and other venues on the condition that those venues only ever sell tickets to their events through Ticketmaster, minus any tickets negotiated otherwise.
Handing out money
Profits from merchandise, food and beverage sales and even event parking can also all be negotiated and distributed to various stakeholders. (Fun fact: the global parking industry is worth US$25 billion a year according to the International Parking Institution).
But regardless of its tight grip, Ticketmaster can't just pursue the greatest short term profits by letting scalpers run wild.
It depends on its exclusivity agreements with venues, and those venues need to satisfy artists, tour organisers, corporate sponsors and others. For example, by personal preference Billy Joel always keeps the front row of his show empty, and then brings audience members from the cheapest seats to the front. This is in part to combat scalpers, he says, and in part to just get the good vibes up in front.
That stipulation – to not sell any of the most expensive seats – is costing venues and by extension the ticket retailers a small fortune per show. But if it's worth it, it's worth it. There aren't that many acts which can sell out a stadium at any given time, and at the end of the day the goal is to maximise the usage of venues as a resource. Stadiums are expensive, and every night they go unused is a night they're not earning their keep.
Finding the balance
The greatest possible long term revenues for Ticketmaster will almost certainly be found by striking a balance, and getting as tight control over the entire ticket life cycle as possible.
It can set aside a portion of total sales, which can be varied and arranged on an event-by-event basis, to make eye-watering profits from as the secondary market goes crazy.
It can also simultaneously leave a certain amount for the Verified Fans, while further adding value through the accompanying merchandise sales boosts or associated marketing, as well as sell venues on the ability to customise ticket sales in granular detail, or let artists customise their own ticket sales.
In the case of the Billy Joel example, that might be a way of profiting by selling those front row seats at reasonable prices to actual fans, who might also pay for parking, merchandise, beverages, refreshments, etc, rather than simply leaving those seats empty.
Ticketmaster's ability to provide marketing services or boost merchandise sales through systems like Verified Fan, and collect, use and sell data, and further optimise its ticket revenues on an event-by-event basis, are all significant benefits on top of that.
It's no wonder Ticketmaster sees extraordinary potential in blockchain technology, because the opportunities are extraordinary. But in the very long run it's still a middleman, and if there's one thing blockchain is especially good at it's cutting out the middlemen.
Plus, the old "there's always going to be a secondary market" adage isn't necessarily true anymore. It will probably be good for business to keep repeating it though.
How completely blockchain disrupts the ticketing business, and how quickly it's going to happen, remains to be seen. Ticketmaster has to get with the program though, because blockchain competition is coming and it can't be left behind.
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VET, XLM, BTC, ADA
- Bitcoin price viciously dips to US$51,000 after hitting $1 trillion market cap
- Bitcoin crashes below $50,000 after more cryptic Elon Musk tweets
- Ethereum price crashes 15% overnight as cryptocurrency market drops
- Ethereum price scales up to a new all-time high as crypto market continues to gain momentum
- Bitcoin price tops AUD$67,000 as debate rages over Bitcoin’s merits