Could blockchain thwart ticket touts at events?

August 01, 2018
Chris Wheal

How much is fair? UK football fans faced ticket prices of close to £700 from touts for the Moscow England-Colombia game on 3 July 2018. That was before Fifa officials warned those who risked buying from non-Fifa sources could see tickets rejected at the turnstiles.

Extortionate add-on fees and industrial scale bulk purchasing have made event and gig-going eye-wateringly expensive for millions of fans and gig goers. Large swathes of event tickets are rapidly re-sold on the ‘secondary market’ – though the term’s a misnomer given the multiple hands a ticket can pass through at often far higher mark-ups.

Such a blazingly disfigured marketplace is surely the perfect opportunity for an incorruptible, transparent blockchain solution to showcase itself?

English fans in Moscow, June 2018 – many will have paid well over the headline ticket price

Setting the rules

Enter Aventus which claims to have created one such smart contract system to challenge industry distortions. Its protocol, lying across the Ethereum network, was put to work at the Moscow 2018 games, handling 10,000 tickets across the US and Europe. It also straddles both the primary and re-sell – or tout – market.

Founders Alan Vey and Annika Monari claim their tech allows event and gig organisers to set their own price-cap rules or prevent resale altogether, as well as letting the promoter take a commission. In effect creating something resembling a regulated market where there’s close to zero regs.

Sochi, Olympic Park before Spain-Portugal match, 2018

“We’re never going to be business-to-consumer selling tickets,” founder Alan Vey told Iain King of Sky News in July. “We’re going to sell the industry the infrastructure to make it work, and we’ll deal with the technology, which is our expertise. We won’t try and say we know exactly how to solve the problems; we leave it up to them [the rights holders and ticketing agencies] to set the rules that make sense for them.”

In theory blockchain tech brings several benefits – the artists or performers may be able to see who holds a ticket, when they bought and how much they paid. Even, in some cases, personal contact details. A level of control unheard of until recently.

Paper tickets are on their way out for many but many legacy – and control – issues still fester for gig goers

Rockchain

Alongside Aventus is another blockchain smart contract player, Tracker. CEO Jorge Díaz Largo says rights holders have scant access to fan data and the industry is dominated by monopolies.

“In five years, the ticketing industry will be completely different to what we know,” Díaz Largo told Open Ledger. “Artists will have the power to control the tickets and ticket touts will be a thing of the past. The industry is ready to change.”

Tracker’s team of former StubHub employees says their tech was deployed at the food, drinks and music The Cambridge Club festival over the summer with 9,000 users. Payment was made in euros, sterling or dollars (no mention of cryptos). Blockchain, in other words, was just the underlying payment structure.

Jorge Díaz Largo has no interest in an ICO – focus on the final product says the Tracer boss

Díaz Largo says he has no interest in an ICO for Tracker. “After a short period of time the founders can become millionaires and the pressure for a finished product can eke away. They just need to wait. How are ICO companies going to change an industry when their team’s motivation has a time limit?”

He adds: “I’ve a lot of respect for some companies who do [launch an ICO]. It requires a huge effort. We want our resources go to into changing the market, not how to get money fast.”

Halfway house solution?

Some may struggle for any investment. Valuations have been in freefall since the start of the year, including live music gig marketplace blockchain token Viberate (VIB), now valued at $0.072 after hitting more than $0.7 in mid January. Aventus (AVT) was trading at $0.8 at the end of July having risen to more than $6.5 in January 2018.

Talk to most companies in this space and it’s the underlying tech created that is important they say, not the market noise.

Michael Smolenski, CEO of Lightstreams, a blockchain network hosting smart contracts, is positive on new operators such as Tracker and Aventus – up to a point. But he’s sceptical of blockchain’s scaling issues.

Vintage concert ticket of pop band Depeche Mode, Budapest, March 9, 1988.

“Although I don’t know the exact architecture of these particular projects, what I’ve seen some projects do is build a halfway solution. They update the blockchain after the fact as a record of what happened but they remain the custodian of the data.” In effect such players then become another middleman along the value chain.

He goes on: “They’ll handle that transaction for everyone and make sure it’s fast and responsive, so everyone gets a good user experience but then they’ll update the blockchain with what happened.”

Blockchain vs dot.com

This means these companies have a closer resemblance to a dot.com entity rather than a disruptive peer-to-peer operator, Smolenski suggests.

Away from the speed and scaling problems there’s another issue – confidentiality. “Blockchain transactions are immutable. That’s great. But the downside to that is that if you put your personal information on there, it can never be removed and it’s public for everyone to see, so it does not comply with various data protection regulations.”

Lady Ga-Ga tickets were sold up to three times the headline rate in 2017 London concerts

Like GDPR, for example. Smolenski says it’s better to use blockchain for recording financial transactions and activity approval via digital signatures while ticket info and sensitive personal info is stored off-chain, still decentralised but handled on an authorised, need-to-know basis.

“You need to be able to make sure that people’s privacy is respected and that you comply with legal regulations on how the systems are run. If you don’t solve that then you don’t have a solution.”

Privacy issues – are they being taken seriously?

Smolenski is working on an ethereum-based solution he hopes to get to market within the next 12 months.

This market’s a mess

There’s another issue not immediately obvious – the sheer complexity of the market place. In the UK the main ticket market depends on who owns a venue, the leverage of the promoter and the relationship they have with their own agents.

Some tickets are actually sold at below market value to ramp up loyalty or merchandise sales. In contrast, US venues tend to exert rather more direct control, though scalpers often work around state law by routing tickets via jurisdictions where the practice may still be legal. In Europe it’s the promoter that has the upper hand, generally speaking.

Either way, the secondary market should be called for what it is – the tout market. For the moment this re-sell market isn’t going away and the current Conservative government is keen for fans to re-sell their tickets, if they want.

“There are advantages to fans being able to sell on tickets that they don’t want,” digital minister Matt Hancock told the NME earlier this year.

Taylor Swift performs in concert at Wembley Stadium on June 23, 2018 in London

“Venues can choose not to allow re-sale above face value, and some do. As we found in the Waterson Review [an independent report into consumer protection measures for online secondary ticketing facilities] published last year, fans overwhelmingly want the chance to re-sell a ticket if they can’t use them and have a functioning secondary market. What we need is a secondary market that is fair – not skewed.”

Artist anger

To their credit artists like Adele and Ed Sheeran have tried to take on the touts. Sheeran’s recent stadium shows forced many to bring ID and booking confirmation details from a primary ticket agent; re-sold tickets were forced to go via one re-seller only, Twickets.

But when fans search online for tickets Google doesn’t differentiate between primary agents and secondary marketplaces – so caveat emptor.

Ed Sheeran wants fair ticket change along with other major artists

Who are the major touts?

The main four secondary ticketing websites are Viagogo, StubHub plus GetMeIn and Seatwave. Both GetMeIn and Seatwave are owned by Ticketmaster (who in turn is controlled by parent company and concert venue giant LiveNation).

That means Ticketmaster profits on both fronts as the margins on the ‘secondary’ market are considerably bigger than the primary market.

The market is further skewed by some ‘fan-to-fan exchange’ marketing. Most ‘fan-to-fan’ tickets supplied are sourced by professional touts who just sell them on.

There’s increasing confusion of who sells what. Last year a Which? Investigation found that touts had moved into the primary market. The Consumers’ Association found 17% of tickets for Lady Gaga at the O2 Arena in London and 15% of tickets for the first night of the BBC Proms at the Royal Albert Hall were being flogged on secondary sites.

“Tickets for the first night of the BBC Proms, that originally cost £38, were also found to have a mark-up of 279% on StubHub (£144) and 300% on GetMeIn! (£152),” Which said.

Ticket touts made headway into the BBC Proms at the Albert Hall, Which? found

Bots cut down to size, finally

Professional sellers have used use bots – software designed to process a repetitive task quickly such as buying tickets – with success, especially in the main primary market. While they remain legitimate across many industries bots have served the genuine sport or music fan poorly.

But as of 5 July bots are now banned in the UK. FanFair Alliance campaign manager Adam Webb says that means there’s “potential to root out the bad actors and to allow a new breed of fair, transparent, and law-abiding ticket resale services to flourish”. There’s also enforcement from consumer legislation and agencies like the National Trading Standards and Competition & Markets Authority.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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