I’ve been labelled a ‘Web3 skeptic’. If you’ve read any of my other content here, you’re probably just confused about how I feel. So, let me clarify:
Much of the capital that has been poured into Web3, to date, has been wasted. Too many get-rich-quick schemes and half-baked ideas. We need to do better. Specifically in demonstrating the practical, tangible benefits of the technology.
It’s difficult (as Marc Andreessen will attest) to pin down a solid Web3 use-case. That doesn’t mean we’re wrong, it just means we are early.
In the 90s, it was so fun to play with the internet. The online chat rooms and messaging boards. Email. Browsing the internet. Audio files. Much of this tech was half-baked back then, so it was hard to see what they’d be used for. This is where I think we are with Web3.
Elizabeth Yin
If a person believes that Web3 really is the future of the internet, then they should be able to articulate the (theoretical) gains, right?
That hasn’t really been the case up to now. So let’s try, beginning with a use-case I discussed with someone in the thread linked to Elizabeth Yin’s quote:
The Ticketing Use-Case
You cant suggest reinventing an industry without looking at the pros and cons of how it operates today. Too many suggested Web3 use-cases fly in the face of reality because the fundamental research hasn’t been done.
And let’s face it, for this example that means one thing:
Ticketing in Web2 with Ticketmaster
There are a number of well written articles1 which cover why Ticketmaster is a behemoth. They are worth reading, particularly for perspective on how many competitors Ticketmaster has crushed over the years.
I’ll attempt to summarise the key points here. First the strengths:
Venues love it
Ticketmaster was the first ticketing platform to revenue-share with venues that adopted their solution, offering a percentage of their service charge. They also make sure that venues are paid promptly, if not in advance, reliably.
Artists love it
When you are the defacto platform for ticket sales, you build up an incredible database of customers, and a wealth of data about their preferences and demographics. If you want to make sure an event is sold out, Ticketmaster is the way to get that done.
Consumers tolerate it
Tickets going on sale for a major performance are an IT nightmare: a huge number of users, all at once, trying to complete a relatively complex transaction. The ability to scale capacity to accomodate for demand is key, and Ticketmaster has proven it does that well.
Now the weaknesses:
Venues suspect they could do better
If you are reliably selling out your venue, because it’s the best in the area and you’ve built something great, you might start to wonder if you really need Ticketmaster.
You may get a fraction of their service charge, but if you ticketed your own events you would secure a bigger percentage and build up your own customer database.
Artists could absolutely do better
Let’s say you are a tremendously popular musical artist with a global fanbase.
Wouldn’t you LOVE to be able to own all of the data related to your fans? Wouldn’t you like to own all of that traffic? Maybe build a ticketing system that made sure die-hard fans were looked after, and scalpers had a harder time? Offer them a fairer price, from which you extract a bigger percentage?
Customers deserve better
We could focus on the massive legacy tech stack, and how slowly Ticketmaster moves with updating their platform to provider a better experience, but the obvious choice here is the service charge. As a consumer you are quite frequently paying double the actual ticket price for a sub-par service.
So, with all of that in mind, how can Web3 offer a clear improvement on the ticketing experience – for all three stakeholders in the process?
Ticketing in Web3
It seems clear to me that no Web3 solution can compete with Ticketmaster on its own terms. It is too well embedded in the industry, and offers the lowest-risk outcome for the major stakeholders: venues and artists.
The only way forward is to present an entirely new model for ticketing, focused on the key values offered by Web3 technology: decentralisation, privacy, security.
An open protocol for all stakeholders
It seems reasonable to start by assuming that neither the venue or the artist should ‘own’ ticketing, nevermind an external corporation. There is too much value that is being controlled by just one party in a multi-party transaction.
We can imagine that a Web3 implementation of ticketing would begin in a fairly standard manner: a user signs up by connecting with (or setting up) their wallet, adding as much additional information (name, email, etc) in that flow as they are comfortable sharing.
This registration could happen at the point of sale when buying a ticket, or earlier, when joining a band’s official fan club or a local venue’s online community – with the usual membership incentives.
The created/connected wallet would then serve as that individual’s identity for any band, venue or ticket seller which was built on this technology.
I want to go see Metallica
To play out a scenario, let’s say this user wants to attend the 2024 Metallica tour at the Birmingham NEC Arena.
A) They could visit the Metallica website and connect their wallet on the tour page, which would highlight the tour dates in their area, and allow them to purchase directly.
B) They could visit the Birmingham NEC website and connect their wallet on the event calendar page, which would higlight events which fit their preferences and history.
C) They could visit any number of other websites that have this platform integrated – be they local event pages, Metallica fan groups, niche metal communities, or big national event agencies.
In each scenario, a small percentage of the ticket price is awarded to the originator of the sale.
The next part of the transaction will be based on whatever terms have been agreed between Metallica and the NEC.
- The NEC get 100% of ticket revenue until the venue rental is paid off.
- The NEC gets a percentage of revenue until their costs are covered.
- The NEC gets a fixed percentage of total revenue.
- The NEC rental is financed in advance, against the future revenue of ticket sales, based on historical sales performance.2
The remaining ticket revenue is sent to Metallica, with the option of doing a further division to secondary stakeholders such as logistics companies, catering agencies, supporting acts, charities etc.
Crucially, both the NEC and Metallica are able to capture data from the transactions, monitor how well an event is selling in real-time, own their own part of that promotion and the revenue it yields, have optimal cashflow, and build a better understanding of their audience.
Long term, the NEC could reward some of their most regular event attendees with early access to ticket sales, discounted tickets, or perks in the venue like free drinks or VIP section access.
Metallica could build a database of its fans worldwide. Which fans always come to see them when they are in town? Which fans have travelled the most to see them around the world? Which fans have been following them for the longest? Again, there are obvious opportunities here for Metallica to reward true fans with early access to sales, discounts, exclusive merchandise, meet and greets… etc.
From the perspective of the user, they build a closer relationship with the NEC, being rewarded for their patronage, and they enjoy a sense of recognition from Metallica for their loyalty. They also get much more fairly and transparently priced tickets, and a super experience as a buyer/consumer.
Conclusion
A system like this would need to build significant momentum to compete with the incredible momentum of Ticketmaster, but there are enough network effects (and existing incentives to provide a better, more fairly priced alternative) that it certainly has the potential.
There are also much deeper and more thought-provoking possibilities when you start to consider how else this platform could be integrated into other platforms and services, or where else it could be relevant in its application.
- https://slate.com/human-interest/2015/05/ticketmaster-why-do-so-many-music-venues-use-it-when-everyone-hates-it.html, https://www.wired.com/2010/11/mf-ticketmaster/ [↩]
- Indeed, the entire cost of the event, band, venue, logistics, support, could be financed on historical data. [↩]