US Sues to Break Up Ticketmaster, Enter Blockchain Ticketing?

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Many Web3 enthusiasts and optimists have touted (no pun intended) blockchain ticketing as a major real-world use case that blockchain could revolutionise.

Years into this journey, the leading blockchain ticketing vendors in the space have at best put low-to-mid single-digit millions of tickets on-chain, which in isolation is a strong statistic, but a dent in the $85 billion market that is ticketing.

A shake-up seems to be on the horizon as the US Government sues Ticketmaster's parent company Live Nation citing monopoly concerns.

Could this be the crack in the armour that lets blockchain ticketing companies attract meaningful market share?

Discussed in this edition of Sporting Crypto:

1. Overview of the Ticketmaster lawsuit ⚖️a) Ticketmaster’s dominance is real

2. Is this the opening blockchain ticketing needs?a) Why blockchain, in ticketing?b) Do the commercials stack up?

3. Analysis & Concluding Thoughts 🧠

Overview of the Ticketmaster lawsuit ⚖️

The Department of Justice (DOJ) has sued Live Nation, the parent company of Ticketmaster, accusing the entertainment giant of using illegal tactics to maintain a monopoly. The lawsuit said the firm's practices had kept out competitors, leading to higher ticket prices and worse service for customers.

Live Nation responded to allegations that it wielded a monopoly by saying it was "absurd" and that it "ignores everything responsible for higher ticket prices" citing online ticket scalping, artist popularity and higher production costs.

The lawsuit said the company had maintained its position by using ‘exclusive long-term deals, threatening venues that used rival ticketing firms, acquiring potential competitors, tying the use of its venues to its promotion services, and deploying other practices’

It said its share of the market had been shrinking and its profit margin of 1.4% was the "opposite of monopoly power" — even though the company saw a record year in 2023. Their stranglehold on the market is clear for all to see.

As per the graph below, a survey showed that 60% of US customers aged 18-64 had bought tickets from Ticketmaster in 2023.

Additionally, Live Nation reported its best year ever in 2023 in terms of both attendance and ticket sales. Attendance was up by 20% compared to 2022, with over 145 million fans attending more than 50,000 events. Ticketmaster sold 620m tickets, up 13% compared to 2022. Revenue was up 36% to $22.7 billion; its operating income went up 46% to $1.07bn; while its sponsorship revenue went up 13% to $1.07bn.

Ticketmaster may claim their operating expenses are high and profit margins are low, but their increase in revenues have come from predominantly one place; consumers.

Is this the opening blockchain ticketing needs? ⛓️

I’ve long said that ticketing is the most obvious unlock for blockchain in sports, but also the most difficult one to execute at scale due to the infrastructure and commercial deals in place.

There have been 160+ blockchain ticketing startups in the last decade, and the large ticketing players in the space — Ticketmaster included — have had forays into this space themselves. Ticketmaster have acquired a couple of Blockchain ticketing companies, and have also launched token-gated ticketing experiments, most notably with rock band Avenged Sevenfold.

But why, in an industry that has so much enthusiasm from the Web3 side, have we seen such little success compared to the major players in ticketing?

The problem that Blockchain ticketing hasn’t solved is not a technological one, it’s a business and commercial problem.

There are two main reasons for this:

1. Behemoths such as Ticketmaster have huge resources to pay partners sums of money that NFT/blockchain ticketing businesses could only dream of.

2. Many ticketing deals are done with venues rather than teams directly, adding to the complexity of how Blockchain ticketing gets their foot into the door. These deals are also done for long periods that could span the entire lifetime of a Blockchain ticketing start-up. Ticketmaster also owns many venues.

So those are some reasons why blockchain ticketing hasn’t exploded — but why is there so much energy behind disrupting this particular sector?

Why do the startups in this industry believe blockchain ticketing is better?

• Fraud controls: If every ticket is an NFT or tokenised on the blockchain, it’s easier to verify whether it’s real or not. Even physical tickets could have NFC chips in them connected to a blockchain.

• Sponsorship Inventory: NFT Tickets can provide an added layer of sponsorhip inventory for franchises.

• Collectibility: The tickets could become digital collector items in the same way we’ve seen with physical ticket stubs.

• Better Data: One of the big issues ticket issuers have right now is knowing who the secondary buyers of their tickets are. Blockchains are pretty good when it comes to provenance.

• Fan Engagement on Steroids: The ability to elongate engagement with fans dependent on a specific event ticket is a big opportunity. Being at the game LeBron broke the NBA scoring record for example — the momento you received as a ticket is there permanently. LeBron, the Lakers or the NBA could then offer holders of those tickets exclusive perks and marketing nudges going forward.

To summarise, blockchain could solve a real pain point in the ticketing industry, but the commercials don’t currently stack up because of the way that mainstream vendors have built relationships with venues, leagues and teams. But how this has been done, is being questioned by the DOJ, which could lead to an opening for blockchain ticketing startups.

The issue is, even if Ticketmaster is broken up, does this monopoly become an oligopoly, and is the challenge at hand for blockchain ticketing startups identical to what it was before?

Does the old boss become the new boss, just slightly more fragmented?

Many I’ve spoken to in the sports industry love the idea of implementing blockchain ticketing, but as soon as they bring their commercial teams into the room — they point to the “this is how much money we get from [Redacted] ticketing provider yearly”.

How do you compete with that as an upstart?

Does this situation remain, but with lower prices to pay, but prices that incumbents are still better placed to finance?

Others I’ve spoken to have been left unimpressed by some blockchain ticketing startup capabilities, even at a smaller scale — citing janky user interfaces, user flows that involve wallets and more. Of course, when there are 140+ blockchain ticketing startups, there will be a huge variance in the quality of their offering.

🧠Analysis & Concluding Thoughts

The ticketing industry desperately needs a shake-up, but just how much change the DOJ suing Ticketmaster will bring about is unknown.

There is no guarantee that services will be cheaper, fraud-repellent, have greater throughput to avoid Taylor Swift-esque debacles or improve the user experience, as a result of this lawsuit.

Monopolies are bad, but too much choice can also create horrible customer experiences. Customers will almost always go to where is cheapest as long as the product is serviceable, but at the same time, nobody wants 20 ticketing applications on their phone. The aggregation layer here remains to be seen, but if this requires more open systems, then perhaps blockchain ticketing vendors could find an interesting route to market.

There is also no guarantee that blockchain ticketing startups will be thrust into the mainstream, mostly because of the lack of guaranteed financing they can offer. Incumbents, a broken up Ticketmaster or otherwise, will still have the edge here.

Blockchain ticketing has been the most well-resourced of any Web3-based sports segment in the industry (apart from licensing), and yet the results are still mixed.

There are so many smart people working at solving this problem using blockchain technology, and yet, it’s hard for me to tell for certain how mainstream this solution becomes.

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