These are notes from a guest lecture I did at a university for a Masters program in Strategic Events Management. This was a first for me, and certainly a learning experience, especially because it was via Zoom. Main takeaway was that the content needed to be even more simplified than it was presented, as most people are not able to comprehend the industry as straightforwardly as many of us knees deep into the tech.

There still seems to be a wide gap between the industry and the mainstream, and technology communication has been, in my opinion and those laypersons I’ve talked to, too difficult or, oppositely, abstracted to such an extent that it’s lost its practical meaning (“it’s totally global, it’s the future!”), even further alienating those common folk who are interested but not technical, which are most of the people. This is the challenge that we as an industry need to rise up to - to build context (historical and practical) around the technology, identify the problems, and tell, in VERY simple terms, how the technology can make our lives better NOW instead of how great their lives will be in the future.

I’ve omitted first parts in which I built historical context around Bitcoin and Ethereum, which I deemed necessary to allow the students to better understand where NFTs come from and to do my part in communicating the importance of Bitcoin. For simplicity sake I’ll use the Ethereum chain as the reference chain as more people are familiar with it than any other chain.

Structure

• Who is NFT?
• Creator Economy
• NFTs & Events

Who is NFT?

Short for Non-Fungible Token, an NFT is a token that can be used to represent ownership of a unique digital or analog item that contains its origin and history, as well as the code governing its behavior.

Non-fungible means that one NFT is not interchangeable with another one. A US dollar is interchangeable with another, so is a Bitcoin or Ether (the currency of the Ethereum network).

Non-fungible means that one NFT is not interchangeable with another one. A US dollar is interchangeable with another, so is a Bitcoin or Ether (the currency of the Ethereum network).

• Broke: Currently, ownership records of digital items are stored on servers controlled by institutions or companies - you must take their word for it!
• Woke: They can only have one (or multiple) official owners at a time and they're secured by the Ethereum blockchain – no one can modify the record of ownership or copy/paste a new NFT into existence.
• Broke:
  Companies with digital items must build their own infrastructure. An app that issues digital tickets for events would have to build their own ticket exchange.
• Woke:
  NFTs are compatible with anything built using Ethereum (or other chains). An NFT ticket for an event can be traded on every Ethereum marketplace, for a different NFT. So you can trade a piece of art for a ticket (bartering)!
• Broke:
  Creators rely on the infrastructure and distribution of the platforms they use. These are often subject to restrictions.
• Woke:
  Content creators can sell their work anywhere and can access a global market.

What are examples/uses of NFTs?

• Visual art
• Accreditation certificates
• Music Essays/articles
• Source code
• Decentralized domain names (ENS domains)
• POAPs
• Virtual game items
• Event tickets
• Retroactive monetization of value produced for free in the past. An opportunity to get some money for some technologically or culturally significant contributions. (retroactive public goods funding subset)
• Collateral for a loan

Why are they significant?

Creators can retain ownership rights over their work, and claim resale royalties directly.

Owners of NFTs have an on-chain proof of ownership over a digital/physical asset.As we humans are avid collectors and place value over the chain of ownership (provenance) over, for example, highly valued pieces of art, enabling this provenance feature for any human creation is a significant step in the right direction.

A lot of people argue that, for example, for digital artworks in the form of JPEG images, you can just simply right-click and save the image, and then post it all over the internet. And that's certainly true - you can do that.
Most NFTs do not carry with them any means of enforcement over the distribution of the artwork - it's just an entry in the public ledger that shows the owner and the artwork in question. More often than not what is sold is not the copyrights of a work, but rather a link between the artwork and the owner.
NFTs do not solve the issues related to copyright infringement and malicious actors selling an artwork's NFTs as originals. Recourse through curated marketplaces is possible, but it's still an open-ended question about how takedown requests will be handled by platforms (especially decentralized ones) and how these cases will be dealt with by the courts.

While the fact that freeloaders profiting off someone else's work can still be an issue, one of the most important aspects of NFTs still is the empowerment of creators to permissionlessly sell their artwork to fans and earn money not only from the sales, but also from the resales of the works. NFTs have allowed us to create digital scarcity of digital goods, which has been lacking on the internet, and which has resulted in artists lacking tools to properly monetize their art to make a living.

Combined, NFTs offer creators, their audiences, and developers who build for them an alternative to platform-driven monetization.

Creator economy

As mentioned earlier, NFTs have had a huge impact on the creator economy, but largely for visual artists so far.

You might or might not have heard about the NFT craze during late spring and summer, when various projects and artists were selling visual NFTs for 1000s, 100'000s and even millions of dollars. There was and still is a lot of speculation involved in the resale side of things for sure, with many people piggybacking off the hype of NFTs to push overpriced JPEGs on some other suckers who are willing to buy them for more.

But it doesn't mean that some of the projects were not deserving of such high valuations. Ultimately, beauty and value lies in the eye of the beholder, and with NFTs that certainly is the case. One of the more notable examples of highly valued JPEGs are the BAYC and Cryptopunks, which now sell for a lot of money, but a lot of owners are not selling them, because these apes have a meaning to them and to some extent a good portion of the crypto subculture due to their cultural and historical significance of having been one of the earliest projects that went viral and marked the beginning of the future of NFT. Being able to own a piece of history and culture is what gives these artworks their value.

But NFTs have a lot more general practical purpose than just jpegs.

Digital art, music and writing (outside of bestsellers) have for decades struggled to capture some of the value they deserve.

• The only way for someone interested in film to make money was to make their own movies, TV shows or music videos, which have an incredibly high barrier for entry for several reasons, and very often might not have been the type of content the artist wanted to create.
  • Since the advent of Youtube, the full creative potential of creators was unleashed, as now anyone with any budget could release a video on the platform and create a following of their art.
  • And after Youtube transitioned to an ad-based revenue model and began sharing their revenues with the content creators, a career in Youtube became a possibility. Unfortunately, Youtube takes an enormous cut from the revenues, making it very difficult for creators to earn enough money without consistently getting 100'000s or millions of views.
• Similar for musicians. Before online music streaming, and iTunes & Spotify in particular, the only way for musicians to "make it" was by signing with a record label and releasing music through them, often giving them a big piece of the pie and being limited as to what format and content they could produce.
  • But same as with film, signing with labels is a huge barrier of entry, making it almost impossible for many smaller musicians to make a living.
  • Spotify and Youtube has changed that for musicians as well, but even less so than for video content creators on Youtube, as the big music streaming platforms pay very little for a lot of streams.
• And digital visual artists have it even worse. Because it's a digital-native image and because an artist might put a decent resolution image of the artwork on their IG or website to showcase, and offer it for sale, many people simply opt to copy-paste the image and use it for whatever. Even those who do end up paying for the work and downloading it, they are no better off in terms of true ownership of the art than those who simply copy-pasted the (slightly lower resolution but still good enough) image or animation.

There are more examples of this (like writing), but the common theme is that before the internet the chances for a creator to make a living off their work were slim, and once the internet became mainstream, the creator economy boomed as platforms enabled ways for creators to capture some of the ad revenues.

However, that's still not enough, as artists continue to struggle to earn enough to make a living.

To understand the significance of NFTs in fully unlocking the potential of the creator economy and democratizing content creation from the perspective of monetization, it can be useful to consider two concepts:

• The Long Tail
  • A business strategy that allows companies to realize significant profits by selling low volumes of hard-to-find items to many customers, instead of only selling large volumes of a reduced number of popular items. (think Amazon & rare books)
• 1000 True Fans
  • Anyone who's familiar with the book Tools of Titans might remember a reference to an essay called 1000 True Fans, which posits that for a creator to make a comfortable living, they "only" need 1000 fans and a 100$ profit from each to make $100,000 a year.
  • The essay uses The Long Tail concept to illustrate the point that most artists, craftspersons, entrepreneurs etc do not need to have 100,000s or millions of fans/customers to make a living.
    • Not everyone wants to become a super star, not everyone can become a superstar.
    • You only need a small number of dedicated fans who will go above and beyond to buy whatever content you create.
  • And this is exactly where I see NFTs helping out especially well for the long tail of artists that do not have access to an auction house like Christie's or the MoMA, but who do have the potential to have at least a thousand true fans by reducing the friction of getting their art out there on the marketplace and monetizing it.

NFTs & Events

So now that we've built some context around blockchains and NFTs, it's time to jump into the exploration of the potential of NFTs in the events space.

The pandemic brought the events industry to a grinding halt, financially devastating many, and forcing organizers to quickly adapt and pivot to events held digitally.

NFTs offer a way to both make the ticketing process less complex and cheaper, i.e. improve the existing ticketing experience both for the organizer and the customer, to unlock new branding opportunities and attendee experiences. One of the most exciting features of NFTs is their programmability.

Costs

• The cost of minting all of the tickets is incredibly low, and can be done for a few dollars.
  • However, a third party (or its automated dashboard for NFT events ticketing) specialized in facilitating the secure minting and distribution will have to be hired, though for a lower per ticket cost than traditional ticketing services.
  • NFTs allow event organizers to handle ticketing much more easily and securely, all the while allowing for them to bypass/minimize revenue loss due to intermediaries taking a cut for every ticket sold (Eventbrite taking 2-3.5% per ticket + set fee).

Payments to stakeholders & ease of accounting

• Although we are still very early in the mainstream adoption of cryptocurrencies, with many hurdles still in the way, the potential for making payments easy is significant.
• The event organizer's smart contract can be programmed to fully automate the redistribution of the revenues to every party involved either as the ticket sales are happening, or after the whole event wraps up.

Privacy

• NFT ticket purchases are perfect from a user privacy PoV, depending on the type of event and whether a KYC (know your customer) process needs to be followed.
  • Because tickets can be purchased using anonymous crypto wallets that are not (directly) linked to any individual, the whole ticket sales process can be done without collecting a single piece of data about the customer.

Counterfeiting, Scalpers and Authenticity

• After an event organizer mints a set of tickets, each of these tickets contains easily verifiable information about the authenticity and history of ownership.
  • It's practically impossible for some malicious actor to forge an NFT ticket.
• It's possible to program the tickets to be transferable or non-transferrable.
  • If a ticket is allowed to be resold, it's possible to program in that a % of the price (a royalty) is either transferred to the events organizer or a charity. It's also possible to set a maximum allowable resale price to prevent scalping.
• The blockchain-based nature of the NFT allows for the end-user (as well as the ticket scanner at the event) to verify and validate the authenticity of the ticket with a 100% certainty.
  • In a world where on average 12% of people buying concert tickets get scammed, that's significant.

NFTs in action

Kings of Leon

• Released their latest album When You See Yourself as an NFT, as well as two additional sets of tokens collectively named NFT Yourself.
• The album NFT was being sold for two weeks, after which the minting stopped, and the NFTs became tradeable collectibles.
• They also minted 18 unique golden tickets. 6 were auctioned off and 12 were vaulted by them.
  • Each golden ticket unlocks a concert ticket.
  • Whoever owns that token is guaranteed four front-row seats to any Kings of Leon concert during each tour for life.
  • The token owner also gets a VIP experience that includes a personal driver, a concierge at the show to take care of their needs, a hangout with the band before the show, and exclusive lounge access. Upon leaving the show, the fan's car will have four bags filled with every item from the merch booth.
  • This excessive packing of features into exclusive NFTs was intended as an "extreme example to prove a point", which is to demonstrate how much control can be programmed into the ticket with smart contracts.
• Another 6 unique tokens were offered with elaborate audiovisual art.
• All of the proceeds from initial NFT sales as well as future sales of the NFTs went to Live Nation's Crew Nation fund for out-of-work touring professionals.

Gary Vaynerchuk & VeeCon 2022

• Investor & social media personality will host a multi-day conference only accessible to the holders of his VeeFriends NFTs, making the ticketing fully NFT-powered.
• Similar to Kings of Leon, Gary went above and beyond to offer various sets of NFTs, each offering a unique set of experiences at the VeeCon conference. Each artwork (of amateurishly drawn animals) was drawn by Gary himself.
• Gary has amassed a huge fan base around him with which he engages on social media, and with NFTs he saw a way to formalize the community he had built by offering the VeeFriends NFTs.
  • Some are simple, allowing a three-year admission to VeeCon annual conferences.
  • Others offer various interactions with Gary, both inside and outside the event, like playing board games during the conference, and going fishing with him.
  • VeeFriends sales generated $23 million in primary sales, and there's an active secondary market taking place as well, measured at around $72 million.

New experiences

• Customizability - each ticket can be customized to have a unique design, either designed manually by hand by an artist, or by using a generative algorithm with randomness to create unique visuals of a particular theme.
• Digitally capturing moments (POAPs)
• Personalized, physical products turn digital
  • A product that's been individually configured during a customer event, could have a digital giveaway of the 3D model in the form of an NFT.
  • For awards ceremonies that take place online, highly customized and distinct individual digital versions of awards.
• Retroactively offering prizes, discounts or access to other events or gatherings to ticket holders or attendants who had participated in some activity or a round-table discussion at the event, or dedicated fans who have attended at least, for example, 5 events in the past.
• Driving audience engagement by allowing attendees to win NFT badges for attending workshops, which they can exchange for swag or rewards.
• Raising brand awareness by selling custom NFTs and at the same time raising money for charity or funding of public goods.
• Offering sales of physical merch based on digital NFTs.
  • Air Jordans that were initially sold as a digital 3D NFT that used generativity designed models, will be custom made for the NFT holder.

Of course, some of these unique experiences can be replicated using the conventional ticketing methods. However, some of them cannot, and more importantly, the underlying security, safety and efficiency of the tickets allow for even the replicatable experiences to be managed with much greater ease and lower costs.

You can ‘technically’ chop a tree down with an axe, but if you have access to a chainsaw, why wouldn’t you use it?

We’re only at the very beginning of practical use of NFTs in the real world, so it’s impossible to anticipate to what extent we’ll be able to push the technology. The toolsets offered by blockchain technology is an impressive one, and we’re yet to tap into its full potential.