Key takeaways
- YellowHeart issues tickets as NFTs with programmable rules that define behavior, participants, and payment distribution.
- Ticketmaster controls over 80 percent of U.S. venue contracts, while exclusive ticketing arrangements are illegal in most European countries.
- NFT tickets create collectible digital stubs with post-event utility programmed into smart contracts beyond traditional proof of entry.
- Blockchain transparency enables on-chain analytics to identify fraudulent ticket behavior like wallet holding multiple tickets without redemption.
- Live Nation's dual role as both largest promoter and ticketing owner creates incentive to maximize prices rather than enable fair fan access.
Tickets that stay alive after the show
Ashton Addison: Give us an overview of what YellowHeart is building for the entertainment industry.▶ 00:24
Josh Katz: We've built a blockchain-enabled ticketing platform that issues tickets as non-fungible tokens, with rules built into them about how they behave, who the participants are and who gets paid, plus other utility. We see live event ticketing as an industry that has never evolved. You buy something, get proof you bought it, it lets you in the door, and it dies. With YellowHeart, the ticket comes alive when you buy it, and when you scan it, your journey begins. It's the evolution of ticketing.
Ashton: Can an NFT ticket replace the paper stub that fans keep as a memento?▶ 03:14
Josh: No question it does that. We're trying to enhance the stub with 3D art and regenerative tickets, so every single one is unique and very collectible. Then you can go past the stub into utility that can be programmed into the smart contracts. The ticket has collectibility past the event because it still has actionable opportunities in it. Imagine coming home from a great concert or sporting event and your ticket actually has more to give.
Imagine coming home from a great concert or sporting event and your ticket actually has more to give.
Fraud, double-selling and Ticketmaster's grip
Ashton: Outside finance, why is ticketing such a strong use case for blockchain?▶ 01:38
Josh: That was the original premise behind YellowHeart: to weed out bad actors. Live event ticketing has suffered from fraud, counterfeiting and all types of negative activity that has hurt fans and their ability to buy tickets. It's also a fragmented industry. You have large players like Ticketmaster, StubHub and Vivid, and none of their technology speaks to each other. Often the same ticket is sold multiple times across platforms and nobody knows. I've heard it from Mumford & Sons, Pearl Jam and a lot of other artists whose fans show up to find their ticket was already scanned because it was sold across multiple marketplaces. That gets solved naturally by using this technology.
Ashton: How hard is it to break into an industry where Ticketmaster controls so many of the best venues?▶ 04:57
Josh: It's definitely hard. In the US, Ticketmaster owns over 80 percent of the contracts and the venues. Only in the US is it legal to have exclusive ticketing contracts for venues. In most other countries it's illegal, because it leads to monopolistic behavior. In Europe, if an act says it wants to use YellowHeart, the venue has to entertain that. In the US that's not the case. Ticketmaster is owned by Live Nation, which is also the largest promoter, so it's the bank behind most major tours. A major artist gets told, 'We want 100 dates, here's a $100 million advance and here are the venues,' and they're all Ticketmaster venues. We know our product is much better for the fan and the artist. My hope is that, with the transparency of social media and now blockchain, venue operators, teams and artists will do right by their fans and wake up to the fact that there's a better solution.
Music NFTs and policing scalpers
Ashton: Are you also using NFTs to connect artists and fans directly through music?▶ 10:18
Josh: We are. To build the best fan experience, YellowHeart developed its own wallet, because MetaMask and similar wallets aren't meant for entertainment or live events. Ours has rotating QR codes with the user's public key embedded, so we know who's checking into an event. We also built native music and video streaming, initially so a ticket holder could get a live stream of a concert. We've since put out NFT albums and music on the same technology. Last week we released 'Imagine' by Julian Lennon, the first time he has recorded his father's iconic song, for Ukrainian refugee relief. Right now it's only available as an NFT, and I believe BMG will put it out to streaming services next week. The NFT isn't on IPFS. We host it natively so it can't be ripped, and you have to own the NFT to listen to it.
Ashton: Do NFT drops suffer from the same scalping problem as old-school tickets?▶ 13:30
Josh: There's a lot of money there, and scalpers are going to try. It's up to the artist and the industry to shut it down. Eventually there will be scalpers with 2,000 wallets, the way they have 2,000 credit cards today. But we run on-chain analytics on every wallet that holds our tickets. We watch where they're headed and who's redeeming them, and we're very quick to label who we believe are scalpers and not allow them to buy. They can open another wallet, but how long can that go on? Blockchain offers ultimate transparency, which has the ability to absolutely shut down scalping. I also think artists and teams need to worry less about optics and price correctly. Tickets are often underpriced for optical reasons and then the market drives them higher. The Yankees do it correctly: tickets are extraordinarily expensive, but there are often tickets under face value, so fans feel they're getting a deal.
Blockchain offers ultimate transparency, which has the ability to absolutely shut down scalping.
Paying by card and the protocol token
Ashton: How do people buy NFT tickets without crypto, and is there an advantage to paying in crypto?▶ 16:39
Josh: We built our own credit card processing for crypto. Our CTO looked at the options on the market and decided to build it himself. Now about 95 percent of our ticketing transactions are on credit card. In my opinion, the behavior of crypto holders is to hold. My dollars are still worth a dollar tomorrow, but my ETH could be worth more, so I don't want to part with my ETH. I want to part with my dollars. We've ticketed a number of NFT and crypto conferences, and even there we see high percentages of credit card purchases from native crypto people. We do see crypto purchases, but nowhere close to 50-50.
Ashton: Is YellowHeart building a native token ecosystem?▶ 18:21
Josh: Yes. We are the technology partner and the first user partner of the YellowHeart protocol. The token came live this week on Bittrex Global, and we'll be coming to other exchanges soon. It's going to drive utility through the YellowHeart platform and hopefully other platforms. The goal is to power a peer-to-peer exchange of live events, where people can mint tickets and sell them straight to fans. When fans buy, they have the option of opting into a community. The ticket is your key to joining it. You don't have to, but you have the option. That's what everyone wants: to find people with similar likes and interact with them.
This interview has been edited for length and clarity. Recorded June 2022.
