Wed, 12 Jan 2022
I'd like to propose a project that makes use of the technology behind NFTs
while solving real problems: digital concert tickets
As of early 2022, none of the popular NFT projects provide any actual property
rights. The only right associated with each token is the right to transfer the
token to someone else. This includes projects like the Bored Apes Yacht Club,
where the cost of membership in the yacht club is comparable to lifetime
membership at an actual yacht club; you get the exclusivity without access to
an actual yacht club.
There are applications where being able to verify and trade property rights
in unique assets could potentially be done at lower cost through the technology
introduced with blockchains. I've previously argued that efficient
replacements for rights licensing organizations like ASCAP and BMI, real estate
title search/insurance companies, and ownership or shareholder tracking like MERS
or ProxyVote are areas that could be fruitful for exploration.
Any of these would be large a undertaking so I'll propose a more tractable
problem in concert ticket NFTs.
Concert tickets have characteristics and associated problems that make them
well-suited for being represented as NFTs. They are
- Non-fungible: each ticket grants the right to use a specific seat in a specific venue for a specific duration
- High Value: each one trades at tens or hundreds (sometimes thousands) of dollars
- Existing solutions prone to counterfeiting
- Secondary markets are inefficient
Here's how concert tickets as NFTs would work.
- The venue (or venue's agent) selects a network on which the tickets will be issued
- The venue owner issues one Entrance Ticket as an NFT for each seat at the venue for an upcoming concert
- The venue owner either sets prices for each Entrance Ticket or auctions the tickets
- The Entrance Ticket is transferred to the buyer, completing the initial sale
- The buyer can resell the Entrance Ticket until the end of the concert
- On their way into the venue before the concert, the owner of the Entrance Ticket
exchanges with the ticket collector their Entrance Ticket for a Seat Ticket
This solves a few problems with current ticketing solutions.
Buyers can verify that they are buying an authenticate ticket. They would verify
that the issuer is the venue owner off-chain. The venue owner should publish
the the public key of the issuer. They can simply publish it on their web site, or
they could make use of a identity-linking mechanism like Keybase to link their
public key to multiple identities such as a twitter profile, a domain in DNS
that they own, and a website that they manage to provide buyers greater
confidence that they are buying from the legitimate seller.
When one concertgoer wants to buy a ticket from a previous buyer in a secondary
transaction, buyers can verify on-chain that the ticket they are buying was
originally issued by the venue by verifying the identity of the original
issuer.
This solves the problem with buyers potentially buying counterfeit tickets from
third-party sellers using Craigslist, for example. It also can reduce the
transaction costs associated with buying tickets on the secondary market
through trusted intermediaries like Ticketmaster.
Venues, i.e. ticket issuers, also benefit by eliminating the possibility of
counterfeiting tickets. Apart from the costs of mediating disputes when two
people show up with the same ticket in the form of a bar code or two people
claim the same seat number based on a printed ticket or screenshot, there will
be a greater demand for tickets from buyers who know that they can resell their
tickets. Therefore some of the benefit should accrue to ticket issuers in the
form of higher initial ticket sale prices.
Up above, I described how Entrance Tickets are exchanged for Seat Tickets at
the door. This solves the double-spend problem. A ticket holder could share
their private key with another person, allowing two people to prove ownership
of the same ticket if ticket ownership is simply checked at the door.
This may be minor problem, but since the tickets need to be checked at the door
anyway, we can have the ticket collector and ticket holder perform a trade
on-chain at the door.
The ticket holder transfers their Entrance Ticket for a Seat Ticket. The Seat
Ticket is issued for the same seat at the same venue for the same duration, but
is not valid for entering the venue. Now, a second holder of the private key
can no longer enter the venue, but the ticket holder can still ensure show the
usher which seat they own for the show.
A note about implementation:
At the moment, transaction costs on the popular networks for trading NFTs would make
secondary sales and my proposed Entrance-Ticket-for-Seat-Ticket transactions cost
prohibitive so there's work to be done. There are nascent
NFT projects on the stellar and ripple networks, where transaction settlement
time and costs are low. It may be worth exploring funding options from the Stellar Enterprise Fund or Ripple's Creator Fund.
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