We’ve all been there. Waiting in the digital queue overcome with a bitter mix of excitement yet anticipation, anxious to see whether tickets are still available and at what price they may possibly be. ‘Surely they’re not sold out already’, you think to yourself.
You see ticketing in general is the ultimate conundrum of supply and demand, an industry where (possibly more so than any other on planet earth), has an incredibly outsized demand than supply. Thousands of eager fans tapping on the table, waiting for the janky countdown of the ticket queue to go down bit by bit.
This very simple, yet very potent balance is ultimately why the relationships in the ticketing industry are simply so toxic. When one party can hold the power of supply over the heads of thousands chaos ensues - made even more frustrating by the black box, centralized nature of the business they operate within.
You don’t have to look far to see the problems, just this last week Oasis’ fans were met head on by these very issues, from queue times to hidden fees to scalping season and dynamic pricing, the list grows endlessly.
He who owns the supply, owns destiny
From the early days of ticketing, when the first real business cases were formed, a few select players realized a very important fact, that control over ticketing supply mattered above all else. If they were able to be the ones to issue tickets, dictate the rules of a ticket sale and capture revenue in the process, then they had the very real chance to scale up and gobble the world.
But that raises a question doesn’t it - how do you control the ticketing supply as a third party when the artists are the real monopoly? After all, the artists are the ones who fans pay out of pocket for.. they’re the reason we commute across the world, sleep in muddy fields and book time off work to experience and partake in magic together, so why is it that they don’t control their own supply?
It’s a good question and admittedly one that is nuanced, but for sake of simplicity the answer lies in the boring old world of financing.
Mother Nature Be Kind On My Event
You see, events are risky. They’re a complex nest of relationships and timing and a bit of luck and the truth of the matter is that not all events sell out, in fact most don’t.
Just think of the possible outcomes that can lead to an unsuccessful event, here’s just a handful:
Tickets are priced wrong or deposits end up being too high
Not enough people hear about the event
A more popular event ends up being on the same day
Mother nature comes in and washes the party away
Pandemics knock on the door (cough Covid)
That sounds like a headache, right?
Unfortunately that’s just part one of a two piece migraine, the second is cash flow.
The Ticketing Lifecycle
Think about when you buy a ticket for an event. At what point in the event lifecycle are you actually at, when you’re buying the ticket? What has actually happened before you took that step?
It turns out A LOT.
Depending on the event in question, a timeline could look like this:
12-18 Months Out:
An agency or organizer decides to put on an event, they go through the ideas and concept development plus initial planning, here they’ll also likely bring onboard a promoter who will handle marketing, ticketing liaison and sales.
12 Months Out:
With an idea fleshed out, the organizer and promoter take the first steps in bringing the event to life, it’s time for them to secure their venue, artists and sponsorships.
By this point they’re already needing to pay expensive deposits on the venue, book artists with a deposit and pay for concepting, socials, website and all manner of assets needed to promote the event.
6 Months Out:
With the venue and artists booked, it’s now time for tickets to go on sale to the public through the ticketeer, this is the point at which you’re sat in the queue and buy your tickets.
In some cases the organizer/promoter is able to recoup their deposit costs at this moment, but in many cases ticketeers will withhold revenue until closer to the event.
1 Month Out: Final preparations, rehearsals, confirmations.
Day of Event: Execution and management.
What you can immediately notice is how large the gap is between the time at which event deposits are paid and when revenue is recouped from ticket sales. This cash flow gap is what a select few ticketeers have weaponised to scale and forge monopolies.
Going back to the timeline, the truth of the matter is that many organizers or promoters simply cannot afford the huge upfront event costs it takes to bring their dreams to life.
So what do they do?
They take out event financing from a ticketeer.
The World of Centralized Event Financing
Because events are so risky, the world of event financing is an polarizing one. The large majority of banks simply won’t provide a loan to an organizer, artist or promoter as revenues are not dependable enough and carry too much variability.
This has opened a breeding ground for ticketeers to swoop in and be the all important financing crux for those looking to put on an event. But why are ticketeers happy to finance when even banks won’t?
The answer lies in the fact they’re the first party to touch revenue whenever tickets are sold. Because of this, they’re able to dictate rules in a way banks never could.
Whenever a ticket is purchased, the money goes back to the ticketeer before the organizer gets their share of that sale, this means a ticketeer can stretch the percentage fees they take on a sale based on the financing they provide upfront. They can also deploy whatever tactics they wish in order to make enough money to break even and likely make a huge markup of profit - from hidden fees to withholding tickets for the secondary market and more.
If you’re looking to put on a venue concert and need 250k for deposits, a ticketeer will assess your worthiness based on past event performances, track record, projected sales and ticket pricing for the upcoming shows and so forth.
The key for these ticketeers is in both the fee margins and the percentage success rate of all events across a calendar year or rolling period - they can then calculate at what rate of event failure they can handle whilst still making money.
Ultimately this also means they can raise their fee structure to arguably whatever percentage they demand. We’ve heard stories of some venues being locked into a ticketing deal, receiving one and a half year’s revenue upfront, in return for paying 10% fees per ticket sale for a five year deal.
Your imagination can go wild on how these deal structures ensure the overwhelming moat these large ticketing players have in the ticketing industry as a whole.
What if there was another way?
It turns out there is.
In 2008 a new technology was born, created by a mysteriously anonymous person or group that went by the name of ‘Satoshi Nakamoto’. This figure decided that they had enough of the opaque centralization in the financial industry and set out to create an open ledger - similar to a database but whose content could be shared, verified and transparently proofed by anyone, that technology was called the blockchain.
Now whatever your preconditions of cryptocurrencies or bitcoin may be, what’s important to recognize is the value of the unique characteristics made possible by the blockchain. Going back to the analogy of tickets, imagine a world where when a ticket is created, anyone can verify when it was created, who it was created by and for what price the tickets were set by the organizer themselves.
Now imagine the ability for that ticket to come with rules of sale that anyone can verify and enforce. For example an artist wishes to sell a ticket strictly for $50 and earn their money whether the ticket is purchased on a primary or secondary marketplace.
If that ticket was issued on the blockchain - that artist can enforce those rules of sale and in turn any marketplace or ticketeer has to use that standard in order to sell that artist’s tickets.
This means that no matter where those tickets were sold, the artist would make and receive their money instantly whenever a ticket is sold for their event and what’s more they can enforce the minimum and maximum rule of resale too.
That’s the very real reality we live in, where thanks to the blockchain it is now actually possible to have a transparent, fair and creator controlled ticketing industry.
As a fan, nothing changes in the way that you buy, pay and interact with a ticket. You can still pay on a website with a normal debit or credit card, see a QR code in your ticket app and attend an event and have the time of your life.
In the background however, the system changes, gone from an opaque centralized rails where a single company dictates the rules and can change them on a whim - but an open, public and transparent system that should you want as a fan, you can verify yourself.
With all that being said - ‘how is this going to be adopted’, I hear you say.
Well, it already is being adopted, for example GUTS Tickets and Djebber in the Netherlands, OnTapp in the UK, Defy Tickets in the US and more are all issuing tickets onchain in the background through OPEN. Contributing to 6.8 million+ tickets being issued on this new fair standard.
Anyone can view these tickets in real-time on the OPEN explorer:
To expedite the process even further, the key goes back to event financing. We know that centralized ticketing companies use event financing to forge new lock in deals and make money - what if we could do this publicly and transparently using the blockchain?
That’s where DeFi (Decentralized Financing) Event Financing comes in.
Along came DeFi
What blockchains are incredibly good at is sourcing money or capital from across the world in a way that’s public and instantaneous to send. Just how banks use a database to track how much money you have and where you send it to. Blockchains do the same thing, they have a ledger which shows what wallets hold which coins or tokens.
This means that as an event organizer, I can crowd fund my event deposits through OPEN and raise funding to pay deposits, without having to get a loan from a single ticketing company that will lock the organizer into harsh ticketing fees or multi-year contracts.
What’s more that these financing pools can over time grow very large, because ANYONE can contribute to them no matter where they live in the world. Whether you’re a fan or investor, you can bring events to life and earn a % interest set by the organizer when tickets are sold.
Have a look at early versions of what this looks like on our financing hub:
This blockchain ticketing world, or ‘onchain' ticketing’ for short, has the power and benefits to change the ticketing industry as we know of it today.
The key is in incentivised alignment, where organizers, promoters, artists, venues and fans benefit from this system and get rewarded to use it, share it and make it a reality.
Onchain ticketing comes with a whole host of benefits too outside of financing from adding transparency into the ticket sale process, allowing organizers to set and control their rules of sale and allowing fans a cherishable way to remember their event and connect to organizers through digital content only made accessible to ticket holders, it’s a new world of exploration.
We’re excited to bring this to life bit by bit and whilst it’s a marathon and not a sprint, the time has never been better to put control back into the hands of organizers and artists.
Are you interested in helping out the cause further? Join our Discord below and meet our friendly community helping to make this a reality with us: