NFTs Rock for Musicians and Music Fans

NFTs have so far proved to be popular in several industries, including art, gaming and luxury brands. The reason for this is that they have demonstrated an important use case: they create a lasting connection between brands and their customers.

Enter a new industry eager to experience some NFT magic: the billion-dollar event-ticketing industry. According to Rachel Wolfson, the sector of this industry most likely to be disrupted by non-fungible tokens is the online event-ticketing sector, which is expected to reach $60 billion by 2026. The form this is likely to take will be the emergence of NFT ticket platforms or marketplaces issuing virtual tickets on a blockchain network.

Colby Mort, head of marketing and communications at Get Protocol, a company that is an NFT ticketing infrastructure provider using the Polygon network, commented, “Since 2016, Get Protocol has processed over 1 million on-chain registered tickets for events across the world, with 500,000 being NFT tickets processed during 2021.”

Essentially it is hoped that NFTs will solve some of the inefficiencies faced by traditional ticketing systems. Josh Katz, CEO of YellowHeart, a marketplace for music and live-event NFT ticketing, explained that NFT tickets give fans more control, as well as offering ongoing royalties for artists. He has pointed out that with the traditional ticketing system there are a number of issues, including that of ticket touts who inflate prices: “There are tremendous challenges around ticketing today, including counterfeiting, bad actors, rampant fraud and, more than anything, fragmentation. For instance, when a major ticketing platform releases a ticket, it can be bought and sold across secondary marketplaces multiple times. NFT tickets solve all of these problems.”

In his view, one of the benefits of NFT ticketing is that it redirects money from third-party ticket sellers back to artists, because they can pay out royalties, as well as benefit stakeholders and event organisers. As he says, “The artist take is 95% primary and 5% secondary, currently. But when YellowHeart secondary opens in Q2, artists will be able to set their own secondary rate and keep up to 100% of revenue flow.” That’s good news for artists.

The control over secondary markets is possibly the most important aspect of NFT tickets. It is well known that ‘ticket brokers’ buy up event tickets in the thousands to resell at inflated prices, and the NFT tickets will remove that market, which disadvantages both artists and fans.

So what do artists think? Marc Brownstein, co-founder and bassist of The Disco Biscuits, supporters and users of NFTs said: “As creators and artists, being able to have some stake in the secondary ticket market is valuable. For example, if you are releasing a 500-ticket show and each ticket is $50, these can sell out instantly and then be listed on Stubhub for $500 each. This is a scenario artists know too well, so having commission on secondary sales is very opportunistic.”

And Katz revealed that the Kings of Leon tokenised NFT album generated close to $1.45 million during the first five days of sales on OpenSea. That may be due to the fact that fans didn’t only get an album, they had an opportunity to experience VIP fan experiences, band meet-and-greets, exclusive tour merchandise and more.

Even if there are challenges to NFT ticketing in music and sport, there is a belief that it will nevertheless expand during 2022 with the rise of the Metaverse. Katz added that YellowHeart is looking into applying its NFT tickets within Metaverse environments, although he did say that Metaverse ecosystems will never be able to fully replace live concerts, but they can complement them.

Web 3 is nothing new

The idea of a decentralized web has been in the minds of many for around 20 years, but when you read much of the press about it today, you’d be forgiven for believing it was a brand new concept.

The concept is a response to the domination of Web 2.0 by the Big Tech companies, Facebook and Google in particular, explains Michael J. Casey, and their “data-driven economics.” Most of us understand by now exactly how those two companies in particular exploited the web and us, even as at the same time they reunited us with old friends, helped us grow businesses and made searching so more intuitive. After all, who remembers using search engines in the era Before Google? It was much slower and you really needed to know how to search.

However there is quite some debate raging around the concept of Web 3. On the one hand, as Casey reports, there is Chris Dixon who is a fervent Web 3 supporter and a believer that Web 3 projects are creating real value, and on the other, Jack Dorsey, who claims the “term is just a buzzword exploited by venture capitalists to boost their equity and token investment.” Casey says in response to this, “That smart people – including two famous “Tims” – have been exploring an exit from Web 2.0 for so long suggests Web 3 projects have worthy ambitions and that there will be public benefits and business payoffs if they succeed.” But he concedes, “this long history reminds us that solving a very big problem is hard and that investors would be wise to take grandiose promises with a grain of salt.”

It is possible not to side with either Chris or Jack, and instead focus on the core structural issues with Web 2.0 and why there’s a need to change them. The fundamental problem with Web 2.0 is the misalignment between the interests of the giant companies that dominate the Internet and those of the general public. Casey says that whilst blockchain is a solution, it is not the only one. As Casey says, “We need a mix of technologies (both decentralized and centralized), regulation and economic rationale to enable business models that bring those competing private and public interests together.”

Let’s not forget that Tim Berners-Lee, the father of the Internet, said in 2006 that the web needed an overhaul. He allegedly coined the term Web 3.0, in reference to the evolution of universal data formats and artificial intelligence removing the need for intermediation by third parties to allow a true “machine-to-machine” communication network.

Currently, Web 3.0 is primarily associated with blockchain, cryptocurrency and NFTs, and the debate is still ongoing about what Web 3.0 could potentially be in the end, but as Casey remarks, there is still a long way to go before we can escape The Matrix!

Solana boosted by Bank of America

Alkesh Shah, a digital asset strategist at Bank of America, is sweet on Solana. This week in a research note he claimed that Solana, widely seen as a competitor to Ethereum, could become the “Visa of the digital asset ecosystem.”

Solana only launched in 2020, and since then has become the fifth largest cryptocurrency with a market cap of $47 billion. Its impressive growth spurt has outperformed that of Ethereum, and it has been used to settle over 50 billion transactions. It has also minted some 5.7 million NFTs.

Despite this performance, it still has its critics, and they argue that the speed at which it settles transactions comes at the cost of decentralization and reliability. Shah doesn’t buy this. He believes the benefits outweigh the drawbacks: Its ability to provide high throughput, low cost and ease of use creates a blockchain optimized for consumer use cases like micropayments, DeFi, NFTs, decentralized networks (Web3) and gaming.”

In his note, Shah also pointed out that he believes Solana will take market share from Ethereum, simply because it offers lower fees, is easier to use and has greater scalability. He told Business Insider, “Ethereum prioritizes decentralization and security, but at the expense of scalability, which has led to periods of network congestion and transaction fees that are occasionally larger than the value of the transaction being sent.”

Ultimately he thinks Solana may take over the transaction settlement side of the market, while Ethereum focuses on “high-value transaction and identity, storage and supply chain use cases.”

But perhaps the most surprising element of Shah’s note is the comparison of Solana with Visa. Visa processes an average of 1,700 transactions per second (TPS), although if pushed to the max it could do 24,000 TPS. By contrast Solana has an upper limit of 65,000 TPS. Ethereum handles about 12 TPS. The difference is striking.

However, as Solana followers will know, the network has suffered a number of problems recently, something that Shah acknowledges. Already in 2022 there have been withdrawal issues on both Binance and Coinbase and an alleged DDoS attack on 5th January, something the network denies. And in December of last year there was a DDoS attack, as well as reports of network congestion. This does not seem to have deterred investors this week. After several rough days, Solana (SOL) has bounced back to $151, an increase of 8.56% from a 52-week low of $130, although it has some way to go before it reaches its former ATH of $260.  But if Shah is right, and Solana becomes the “Visa of the digital asset ecosystem” who knows how high its price may go.

Why the Metaverse needs rules

A country’s constitution establishes the rights and responsibilities of citizens. Therefore it makes sense that the Metaverse, which is likely to be somewhat akin to a country, should have something similar. Otherwise, as Stephanie Hurlburt and Rich Geldreich say in an article on the topic, “we fear the metaverse will fail as a public, open system and only recreate social media’s glaring flaws with steroids.”

The two tech entrepreneurs and co-founders of Binomial, point out that the dangers we have already seen: Facebook was found to be shaping election results, and Twitter “was embroiled in scandals around its impact on public safety and censorship.”

If the Metaverse is uncontrolled, it is likely that we may find ourselves exploited by it. Just as we were by Facebook and Cambridge Analytica, perhaps in an even worse way.

Hurlburt and Geldreich say one way to ensure this doesn’t happen is by insisting that the Metaverse’s core building blocks are made of open standards and open source code. Furthermore, all data policies must be both transparent and understandable, and any research conducted in the Metaverse must be made instantly available to the public.

We must also establish what the Metaverse is and what it isn’t. In some ways the series of lockdowns most of us have been through in the last two years have normalised living virtually, so we’re prepared for a highly immersive virtual world where people gather to socialise, play, and work.

Neither should one company own the Metaverse. Most of you will be aware that Facebok has changed its name to Meta, which is a blatant attempt to co-opt and dominate the emergence of a Metaverse. The social media giant has already invested $10 billion in it this year, an eye-watering sum that points to their strategy.

Now we must ensure we learn from the mistakes of the past, i.e. the way in which the social media platforms have insinuated themselves into global politics for one. Hurlburt and Geldreich believe the best way to avoid this is by having some simple rules. These include establishing who can access its key building blocks, and the answer should be everyone. They give the example of the Internet. When Tim Berners-Lee created the Internet, he released key pieces as open source code that was free and accessible for everyone. The Metaverse and Web 3.0 must operate on the same principle.

Data policies are both transparent, and understandable. Facebook, Twitter and Co may have a data waiver policy, but few of us understand it. So we need policies that are clear to the majority, because if the Metaverse is left unchecked, personal data mining and extraction could become the single most powerful surveillance mechanism ever invented.

Governments can create rules and laws for the Metaverse. For example, a company’s earnings must be made public by law, so a company’s research in the Metaverse could easily follow a similar rule. More protection is also needed from algorithms that direct people to extremist sites. Research showed that 64% of people visiting such pages had been directed there by the Facebook algorithm, and there are strong arguments for making this information public, rather than allowing a company like Facebook to cover it up.

Companies also have a role to play. Whilst governments make laws, companies should agree “a set of baseline rules.” They must know by now that the court of public opinion is not often on their side these days, so they need to pay attention. Hulburt and Geldreich say, “If the public displays enough appetite for a Metaverse constitution, Big Tech’s hands will be tied.”

The future of the Metaverse is in your hands, just as much as it is in the hands of the tech companies. Make use of your power before others strip it away.