As 2021 draws to a close, non-fungible tokens (NFTs) are being explored by an increasing number of live event operators, right-holders and famous names, building on an established and growing presence in digital art and gaming.
Unquestionably, it is an intriguing space that has already attracted numerous high-profile participants, including rapper Snoop Dogg, basketball great Shaquille O’Neal and DJ Steve Aoki, as well as major sports properties like Real Madrid (pictured).
In late October, in arguably the most significant NFT development in live entertainment to date, Live Nation launched a Live Stubs NFT alternative to the traditional concert keepsake for ticket-holders at selected shows in North America.
Challenges
Even NFT advocates though will acknowledge there is a wide margin of error in attempting to gauge the scale of the opportunity in ticketing.
Major obstacles clearly remain in the way of mainstream adoption of these digital assets that are underpinned by a unique code on the blockchain – and sceptics of NFTs are quick to point them out.
For example, most NFTs are currently only available to buy with cryptocurrencies and specially-enabled digital wallets. ‘Owning’ NFTs does not cover copyright, raising doubts about their long-term values, which appears to fluctuate wildly. Long-term use cases of NFTs are yet to be defined. Furthermore, there are concerns over quality and reliability across a disparate space that comprises more than 4,000 different blockchains, platforms and cryptocurrencies, most of which create an eye-watering carbon footprint through an energy-sapping ‘minting’ and trading process.
Therefore, of course, NFTs could just be a bubble that bursts before truly breaking into the entertainment sphere. However, if they become an authentic part of fandom and the live experience, the potential for disruption across the sector is immense.
Disruptive potential
Canadian company OARO, a provider of enterprise identity and access management (IAM) solutions, is one organisation at the forefront of exploring such possibilities. The OARO eco-NFT platform can be utilised by brands to create limited edition digital collectibles whilst having virtually no impact on the environment thanks to the use of an energy-efficient private blockchain, countering one of the key criticisms of NFTs.
“Aside from ticketing, the biggest area for NFTs in the live entertainment industry is fan engagement. For instance, many artists have begun creating and selling NFT artwork to their fans,” Alejandro Tornero, general manager of OARO eco-NFT, tells TheTicketingBusiness.com.
“Not only can NFTs act as a great way to engage fans – providing unique, collectible merchandise – but they also have the added benefit of providing a new revenue stream for artists.
“NFTs can also be keys to private websites, providing fans with access to unique pieces of information about the artist, ticket discounts and early access to events through promotional offers. Effectively, this acts as a more tailored loyalty incentive than just a simple newsletter with a discount code.”
Value
The NFT market is almost impossible to quantify accurately at this stage, but predictions by some analysts earlier this year that the NFT sector may surpass $1.3bn in value by the end of 2021 now appear to be major underestimates.
For instance, over the first eight months of this year alone, NBA Top Shot, the most established NFT marketplace in sport, generated a sales volume of more than $700m.
On a smaller scale, musical artists have also started to get in on the act.
In March, Kings of Leon (pictured) dipped a toe in the market by becoming the first superstar band to bundle NFTs in an album launch, and generated more than $2m in sales through token sales alone.
The album, ‘When You See Yourself’, was released on traditional music streaming services as well as in NFT form on blockchain-based music platform, YellowHeart, offering buyers of the tokens unique advantages.
“The NFT drop included three different types of tokens,” Tornero explains. “The first was a special album package, while the second offering included live shows perks, and the third contained exclusive audio-visual art.”
For the “ultra-fans”, six NFTs were auctioned off, giving each buyer four front-row seats to one show of every Kings of Leon-headlining tour for life.
Benefits for live entertainment
Aside from opening up a new revenue stream, NFTs offer a multitude of benefits for the live entertainment sector, according to Tornero.
“When it comes to ticketing, they solve a lot of the issues currently being faced by the sector,” he says. “Not only do they help to eliminate counterfeiting, but they could also reduce or even eliminate the ‘scalping’ market by controlling prices for sales. Additionally, NFTs could also make the sale and transfer of tickets much more secure and fast through its tamper-proof digital ledger.
“Once you shift your focus from seeing NFTs primarily as artwork, you can see that they can represent any form of unique information, such as an event ticket.
“Event organisers can mint the required number of unique NFT tickets onto their chosen blockchain. They can then programme the NFTs to set a sale price – and you can also programme them to set a resale price – or even run the sale as an auction where people can bid for tickets.
“When implemented well, NFTs have the potential to drastically improve the ticketing experience for both organisers and attendees.”
Digital adoption
The COVID-19 pandemic has accelerated the digitisation of many processes, from ticketing through to payments, and Tornero believes such behavioural changes can help to drive adoption of NFTs.
“NFTs have been one of the biggest developments in the world of music, and many fans are now more blockchain-savvy than ever before,” says Tornero, before citing figures from NFT-focused website NonFungible that claimed sales of such tokens reached a cumulative value of $2.5bn in the first half of 2021.
“Across the various lockdowns, people have had the time to better understand the world of blockchain.”
As the strains of the global pandemic begin to ease, it seems inevitable that NFTs will continue to gain traction, from the perspective of ticketing and fan engagement, for the time being at least.
The long-term success of the space is open to debate, and likely to hinge on mainstream adoption by fans of sport, music and live entertainment. However, in the race to engage fans in increasingly creative ways, there is little doubt that NFTs have a potential that proactive operators have a duty to explore.
Images: Nathan Fertig on Unsplash, Little Savage/(CC BY-SA 4.0)/Edited for size, ceedub13/(CC BY 2.0)/Edited for size