How To Run A Blockchain Music Festival
By Shiv Madan & Rikesh Thapa, Co-Founders at Blockparty
Tl:dr: Event owners, connect with us here to use the Blockparty platform for your next event — to ticket, finance, connect with sponsors, and engage with attendees.
On September 15, 2018, Blockparty will co-produce America’s first music festival entirely on blockchain.
In Miami, ‘Best Life Music Festival’ will feature 2018 chart-topping R&B artists H.E.R. and Ella Mai alongside hot up-and-comers Snoh Aalegra, R.LUM.R + more. This year’s festival will utilize end-to-end blockchain for primary ticketing and ticket resale, as well as for fan engagement, influencer rewards, sponsorships and payment integration. As the Blockparty platform moves towards decentralization, we thought we’d write a guide on how to throw your own blockchain festival.
Why run a festival on blockchain? Simply put, blockchain is a better system for accounting, data management and transactions between trustless parties. And music festivals have more than their fair share of challenges with accounting, data and trust. Fake tickets. Bots. Scalpers. Unfair resale prices. Finding sponsors. Connecting with fans. Collecting revenue. The list goes on.
The goal of applying blockchain technology to festivals is to dramatically improve the fan experience while making operations and revenue generation more effective for event operators, venues and artists.
What is blockchain?
Let’s start with the basics. Originally launched in 2009 as the underlying technology of cryptocurrency, blockchain enables parties to transact directly with each other without having to trust one another, or any other third party. It is ‘distributed’, meaning that no single party controls all of the information contained in the ledger. And it uses encryption to maintain user privacy.
The system is forward-moving and immutable, where the rules of engagement between transacting parties are set in the first “block”, and each subsequent transaction is recorded in subsequent blocks in the “chain.” Cryptocurrency is a reward and payment mechanism that sits atop a public, permissionless blockchain that encourages cooperation between the parties.
How is Blockparty’s blockchain fixing ticketing ?
The Blockparty blockchain provides the infrastructure to enable any digital asset marketplace, like event tickets, airline tickets, digital music, art etc. It is based on two core technologies that enable fraud proof digital ownership and high frequency digital asset transfers: Quantum Protocols and Digital Identity.
Blockparty has built a unique integration of two smart contracts that are both necessary for a scalable ticketing platform. We call it the “Quantum Protocol”.
Blockparty’s “Quantum Protocol” seamlessly combines ERC-721 non-fungible tokens with ERC-20 fungible tokens that together enable high-frequency transactions of non-fungible digital assets, such as event tickets.
Let’s break it down. ERC-721 tokens are an untapped resource in the Ethereum protocol. The most well-known project to use them so far is CryptoKitties, which allows users to buy, sell and breed digital kitties, each with unique attributes. This is possible because ERC-721’s allow each individual contract to have different characteristics. This is unlike ERC-20 tokens that, like a currency, do not allow for variability.
CryptoKitties was a breakthrough step in the evolution of non-fungible digital assets, but their complexity severely bogged down the Ethereum network as the demand for CryptoKitties grew. It demonstrated that, while highly useful, ERC-721 contracts alone aren’t optimal for the trading of high frequency non-fungible digital assets, like tickets, digital music and computer game assets.
Enter ERC-20 tokens. Blockparty’s native ERC-20 tokens (BOXX), are fully fungible into the ERC-721 tokens that represent event tickets in the Blockparty system.
ERC-721 tokens can store a large amount of data, and can be programmed with self-executing rules. When a fan buys a ticket using Blockparty, a new ERC-721 token will be created, encoded with the buyer’s encrypted identity and a smart contract defining the rules for transferring the ticket.
Users can purchase tickets with fiat currency or with BOXX tokens. BOXX tokens can be purchased with fiat currency, or they can be earned through loyalty activities within the app, described in the next section.
To protect the system from failure or corruption, the two types of tokens are combined together with a trustless consensus protocol (an Oracle). The ERC-721 tokens can’t be duplicated, erased, or changed without the consensus of the whole system, and the ERC-20 tokens can’t be double-spent.
Some of the major challenges with ticketing stem from the inability to track a ticket after it has been resold. Either the event prohibits the transfer of a ticket, which means only the original buyer can use it, or the event allows the ticket transfer, which means the original buyer can resell the ticket on a reseller site such as Stuhhub or Viagogo.
In the case of the former, while this works some of the time, there are usually situations in which a ticket buyer can no longer attend and it’s unfair not to allow them to resell the ticket. In the case of the latter, the risks in allowing a ticket buyer to resell a ticket are enormous. For instance, a ticket buyer could be a bot run by a scalper, and the scalper may buy tickets in bulk and resell them at drastic mark ups. The identity of the final purchaser is usually not known, which can pose a security threat for the event. It also makes it almost impossible for event operators to gather customer data or track attendees.
Blockparty solves these problems by attaching the buyer’s digital identity to the ticket. When a fan buys a ticket, they must do so by registering on the Blockparty app, by either scanning their fingerprint or their face (using the technology available on their smartphone). This digital identity data is then encrypted before it is registered on the Blockparty blockchain, so the buyer’s data is protected, but the event operator still maintains an anonymized record of the ticket’s owner. If the buyer needs to transfer or sell the ticket, they can do so through an SMS ticket transfer function on the app, similar to Venmo. In the transfer process, the ticket de-attaches the original buyer’s digital identity and attaches to the new buyer’s identity.
To enter the festival, the rightful owner of the ticket will need to access the ticket on their phone by either scanning their fingerprint or face to enter the Blockparty app and reveal the ticket’s QR code. The ticket has a moving application on the screen that prevents fake ticket screenshots from passing gate security. Once the ticket is accessed, the QR code is scanned by the enterprise scanning device at the gate. The QR code information contains both the ticket identification information (the ERC-721 data) and the user’s digital identity.
Now let’s walk through the fan and artist experience before, during, and after a festival to see how blockchain improves the experience for fans, artists, vendors, and operators.
Before the festival
The fan’s experience starts with ticketing, so that’s the first place blockchain will show up.
In the live events industry, the cards are stacked against the average fan. To get tickets to an event, they have to deal with fake tickets, bots, scalpers, and unfair prices. Ticketing is broken.
Until now, it’s been “business as usual” for bots and scalpers and insiders to grab up to two-thirds of the tickets for a popular show as soon as — or even before — it goes on sale to the public. Many of these tickets land on reseller sites minutes after the show sells out, at prices sometimes 10 times as high as face value. Scalpers stand outside an event, selling tickets which are often fake. The technology that powers online ticketing hasn’t changed much in the last 20 years. It’s still a simple online marketplace and with an easy-to-hack captcha form to prove you’re a human.
How to buy a ticket
A ticket buyer can purchase up to 8 tickets on a web browser at bestlifefest.com or by using the Blockparty app. The app is free to download and is available on the Apple App Store or Google Playstore.
The ticket itself can only be accessed using the Blockparty app. This is so that Blockparty’s mobile-based digital identity technology can be employed at the gate to verify the owner of the ticket. Ticket buyers who purchase using a web browser receive a referral code that is entered into the app to redeem the ticket.
When you create an account on the Blockparty app, you must scan your fingerprint or use your facial recognition scan. You’ll have to scan your fingerprint or face every time you open the app — whether you want to purchase new tickets, transfer tickets, or show your ticket at the gate.
The purpose is to ensure that you are the only person able to access your ticket, and that the ticket has been purchased by a verified user.
Next, you’ll select the event and type of ticket you want in the Blockparty marketplace, and purchase it using either fiat currency or BOXX. You can connect a credit card to the app to purchase directly in fiat, or you could use your credit card to buy BOXX (to supplement the BOXX tokens that you have earned as rewards).
For Best Life Music Festival, there are three ticket tiers available: general admission, VIP, and artist meet and greet. When you purchase a ticket, you create a new ERC-721 token, encoded with the type of ticket and your encrypted digital identity. Unlike systems that use biometrics to verify identity, ours is completely safe from getting hacked or stolen, because only a one-way encrypted key representing your fingerprint is actually saved on the blockchain.
Each user can buy a maximum of 8 tickets, which means you can still buy tickets as gifts or buy tickets for a group of friends. By setting the cap at 8 tickets per digital identity, we take ticket-buying-bots and scalpers out of the picture. Each of the 8 tickets purchased by a single buyer can be transferred or sold to another attendee.
How to transfer a ticket
If you bought a ticket for a friend and you want to give it to them as a gift, or have them pay you offline, you can transfer the ticket for free. But if the event is sold out and you want to sell it to someone else for a profit, the rules encoded into the ticket smart contract will set price caps on your sale.
At Best Life, the markup on each ticket transfer is capped at 10 percent. So for the General Admission ticket, which starts at $35, the first owner cannot sell the ticket for more than $38.50. The second owner would be capped at $42.35, and so on. With each sale, Blockparty takes a 10 percent cut of the markup. Of that 10 percent, 5 percent goes to the promoter, and 5 percent goes to Blockparty. This allows the platform, and the promoter to earn money from ticket sales in the secondary market, but protects fans from price gouging. The platform also makes it possible to set a hard cap on the price of the ticket — say $60 — so that any transfers above $60 would not be allowed to add additional markup. But we haven’t used that function for Best Life.
These markup rules and price caps are intended to eradicate scalping. To turn a serious profit as a scalper, you need to be able to buy hundreds or even thousands of tickets at face value and then sell some of them for two, three, or more times face value in order to make up for the many tickets you won’t sell. With the rules we’ve set in place for Best Life, a reseller can only earn a maximum of a few dollars on each ticket sale and have a limited scope to bulk buy tickets — hardly a worthwhile prize for speculators, even if it is the most popular event of the decade.
Our innovative application of blockchain and cryptocurrency technology allows us to introduce new incentives to help sell more tickets and promote fan engagement.
Every person who downloads the Blockparty app has the option to register to promote the event and earn rewards of BOXX tokens. For Best Life, if you get one or two people to buy, you’ll earn BOXX rewards of 20 or 40 percent of the price of the ticket (1 referral of a $35 ticket = 7 BOXX, 2 referrals of a $35 ticket = 14 BOXX). The scope for setting reward tiers and plans is limitless.
Additionally, we are introducing a promoter rewards program. By signing up to be a promoter, a user can participate in reward-based marketing activities, such as sharing videos or posts about Best Life on social media, or promoting the festival on college campuses, or selling tickets. They’ll be eligible to receive larger ticket allocations specifically for resale, and to earn rewards in fiat currency and BOXX tokens.
Artists who perform at Best Life can receive a bonus payment in the form of BOXX tokens. On top of their usual fee, we have added an incentive bonus of up to 20% in BOXX tokens (so if their fee was $10,000, they would receive an award of 2,000 BOXX). In return, the artist would need to participate in marketing or on-site engagement activities such as fan meet-and-greets, media interviews, merchandise signing sessions etc.
In a mechanism that intends to stimulate decentralized activity between fans and artists, the artists can also stake their earned BOXX tokens to pay fans and promoters who participate in promotional or sales activities in support of the artist’s new music or tour.
These marketing activities could include social media posts, shares, or downloads, and other promotional activities that the artist would otherwise pay large fees for.
At the festival
Fans, artists and vendors will experience significant improvements in their experience at the festival itself under the Blockparty system.
Getting in the gate
To enter the festival, each ticket holder will open the Blockparty app on their smartphone. Again, this requires scanning the fingerprint that is associated with that account. This guarantees that only ticket holders can enter, improving event security and preventing ticket fraud. Even if someone stole your phone, they couldn’t open your app to use your ticket because they would not have your fingerprint.
Next, the user will reveal the QR code associated with the ticket. This QR code can’t be saved as a screenshot because of moving images on the QR code screen page that are recognizable to gate staff. Gate staff will scan the QR code, and grant the user access to the area of the event their ticket authorizes them to enter.
Blockparty’s technology speeds up the entry process because the scanning application is faster than physical ticket verification. Additionally, using on-chain/off-chain batch processing, the Blockparty blockchain enables higher frequency transactions than are normally possible on the Ethereum network.
For future events, the Blockparty system is also capable of eliminating another step in entering a festival — showing your ID to receive a wristband for drinking alcohol. The ERC-721 token can already include information about whether you satisfy the drinking age. So the festival could be set up so that you scan your ticket to enter alcohol areas or to order drinks, instead of wearing a wristband. However, state liquor laws will probably take a while to catch up with this functionality, so we are currently not deploying this utility.
Buying food, drinks and merch
At Best Life, as with tickets, you can purchase items at the festival with either the credit card that is connected to your app, or with the BOXX that you have purchased or earned through marketing activities. In 2018, Best Life will be run with a hybrid of cash and cashless on-site payments. For any fans who don’t decide to utilize the Blockparty app, they’ll be able to stand in line and pay with credit card or cash at the counter. And fans using the Blockparty app will be able to purchase merchandise from select vendors using BOXX tokens.
There are many opportunities for driving fan engagement using BOXX rewards at the festival itself. For example, at a multi-stage festival, our platform can geo-fence a particular stage during one particular artist’s time slot. Anyone who attends that artist’s performance could earn a reward from that artist through the Blockparty app in the form of tokens. This reward could also come in other forms, such as a digital download of a brand-new, unreleased track by that artist.
Fans could also earn BOXX rewards by sharing videos on social media, or engaging with sponsors and brands, or competing in contests, or supporting artist promotions.
These BOXX would be paid by whichever party was sponsoring the fan engagement, be it Blockparty or the artist, the event operator or a sponsor.
After the Festival
At many festivals, the real work for vendors and event operators begins when the festival wraps up. There are many accounting challenges that pop up, including tracking sales, distributing vendor fees and dealing with disputed ticket purchases (charge backs). Putting all purchases on the blockchain will significantly improve all of these processes.
Accounting for and distributing revenue
A blockchain-based payment system for vendors at an event introduces much better options for accounting for and distributing vendor revenue. Vendor transactions are recorded on one payment ecosystem on the Blockparty blockchain which would account for all revenues earned inside the event. Revenue splits are often pre-agreed between vendors and event operators, and percentages could be pre-assigned in smart contracts and paid automatically or allocated at the end of the event in the final accounts.
No matter which arrangement they choose, operators and vendors would quickly receive insight into the revenue generated, which locations and vendors were most successful, what times during the event drove the most buying activity, etc. These insights could help maximize profits at future events.
Future incentives for artists and fans
As with any rewards program, the use of BOXX tokens to reward positive behaviors between artists, event operators, sponsors and fans will provide a boost to customer loyalty. For example, some of the rewards fans earn at a festival may not be redeemable until after the festival, or a customer may not end up spending all of their BOXX earnings at that event. Those tokens would be available on the Blockparty app to purchase future event tickets. The same is true with artists who receive a bonus payment in BOXX tokens. They’ll have incentive to accumulate tokens to use Blockparty for fan engagement and marketing promotions beyond the conclusion of the festival.
In the fun and friendly setting of a music festival, Best Life will offer a live demonstration of some of the more advanced applications of blockchain for consumers. Digital identity management, high frequency non-fungible digital assets transfers, at-location payments and consumer rewards programs.
Blockparty aims to deliver fair ticket prices and a fraud-free and safe festival environment. We will also demonstrate the exciting possibilities for tokenization as the future of fan and influencer engagement for artists, event operators and sponsors. Finally, fans and vendors will all benefit from a far more efficient and streamlined approach to ticket sales and on-site purchases.
As more festivals and events adopt the Blockparty system, we expect to see more innovation and development of new applications on top of Blockparty’s technology for ticket sales, demand generation, festival logistics, rewards and sponsorships. We look forward to showcasing the Blockparty system live in action at America’s first ever blockchain music festival !
Tickets are available here at: www.bestlifefest.com. For media requests, contact: firstname.lastname@example.org.
Other Music Projects We’re Excited About
Choon — founded by deejay Gareth Emery and business manager Bjorn Niclas, Choon is a blockchain-based music streaming service that will pay artists for each stream on the platform. It is intended for use by both signed and unsigned artists and has already added 10,000 artists.
Ujo — a part of the Consensys family, Ujo is a non-tokenized music rights platform that aims to capture music usage from all sources and make artist payments on the blockchain. Run by industry experts Jesse Grushack (SFX Entertainment) and Natalia Romiszewski (Three Six Zero, Universal Music), Ujo mapped existing infrastructure and offers a side-by-side solution.
Viberate — solving artist bookings from the ground up, Viberate started by building an exhaustive global database of venues and artists. This decentralized platform will enable artists and venues to engage directly for bookings as well as facilitate agency-led bookings through smart contracts. The team has arguably the largest music industry database on the blockchain.