Alt Asset Allocation Ep 75: Ticket NFTs and Music NFTs with YellowHeart’s Josh Katz
Primer: The ticketing industry is rife with scalpers and bad actors. Blockchain is one of the most obvious use cases to remedy what is happening in the ticketing industry. In this episode of Alt Asset Allocation, Josh Katz shares about the winding journey of YellowHeart and how his firm is taking ticketing and music NFTs to the next level.
Background
Founder of YellowHeart
Passionate about music. Is a guitar player
Worked for Clive Davis after college
Subsequently, he worked for Jive Records
Started a custom CD company. Eventually, it grew into the largest private streaming company in America
In 2013, he was figuring out Bitcoin
In 2016, he sold his company and went down the crypto rabbit hole
Started hosting Ethereum meetups in New York
Experienced ticket scalping and came up with Ticket Chain (currently YellowHeart)
In December 2018, their project kicked off
A year later, Live Nation invested in the company
Live Nation owns Ticket Master. Their chairman helped explain the ticketing business to him
When COVID came, Live Nation stopped funding them and Yellowheart went out of business
He kept at it and refocused the marketplace around music instead of tickets
Approached the managers of various artists and was shut down. Only Kings of Leon and their manager were open to him
When they put out the Kings of Leon drop in March 2021, they became an international story and YellowHeart returned
What Catalyzed Kings Of Leon To Pursue NFTs?
NFTs are the next format for music
The Music And Ticket NFT Scene
They reopened their ticketing business in November 2021 with NFT.NYC
Plenty of use cases:
Memorialization of ownership
Shared ownership
Profit sharing
Their platform allows bands to connect with their fans directly
They advised Kings of Leon to provide perks to NFT holders once they are able to start touring
Unfortunately, they did not do that
“So the lessons learned are, if you're going to go out, and you're going to collect millions of dollars, or even any money from your fans, you need to give them something tangible in return, not just a digital good that’s called an NFT.”
- Josh Katz
Difference Between Music And Tickets
A piece of art or music needs to be priced accordingly. If it’s priced for beyond what it’s worth, it needs to have additional utility
A concert ticket provides an entire performance. They come alive when you enter the venue
Value That NFT Tickets Provide
💡 MGM Resorts has launched an NFT-ticketed event with Jabbawockeez and YellowHeart.
The ticket was sold as an NFT
At purchase, the ticket was black and white. Upon scanning it to enter the show, it becomes coloured and the Jabbawockeez start dancing
The NFT comes with a food and beverage credit while at the show
The credit is redeemable at a certain bar within the MGM property
Over 50% of attendees redeemed their credit. They got to meet fellow attendees of the event
The next day, they dropped the collectible for everyone who attended
Checking Into The Event
Users need the YellowHeart app
Will be enabling MetaMask on their app in 2 weeks
Have a frontend user app that reads the ticket and a redemption app that the people taking the ticket use
Their Involvement In NFT.NYC
Partnering with Tao Group, the largest nightlife operator, to have NFT-only ticketing into their club
They are powering NFT.NYC’s award show — a YellowHeart NFT ticket is needed to access the show
Will have a Metaverse post-show to hang out with everyone who attended
Key Selling Points Of NFTs For The Music Industry
A year ago, it was about chasing money
When some of the biggest stars contacted them, they declined as they are trying to put out long-lasting community products
“A lot of people came back with the wrong reasons and didn't understand. They thought that they could put out an NFT and say goodbye.”
- Josh Katz
YellowHeart is about building fan bases and communities and giving artists a direct relationship to those fan bases
State Of The NFT Market
NFT market is at an inflection point right now
The rise of profile picture NFTs has reflected badly on NFTs
“When you have true innovation with this technology, around the use of it for all types of amazing applications, essentially to cut out rent-seeking middlemen in most cases and to actually create amazing digital based utilities, it got overshadowed by $100,000 profile pictures.”
- Josh Katz
Now, NFTs with utility and real use cases are coming to light
The Future Of NFT Tickets And Music NFTs
Music
The music industry has changed a lot. From $20 for one song to music is free
Thinks that the damage is done. No longer should artists just sell music as music
There should be something more to it (e.g. access to a community, exclusive physical goods, real-life experiences, etc.)
Owning a percentage of the royalty as an investment does not make sense (e.g. paid $500, get $0.60 as royalty)
Ticketing
Ticketing is an industry that’s rife with counterfeiting, fraud, bad actors, etc.
Blockchain is one of the most obvious use cases for the ticketing industry
Using the blockchain, when a ticket goes on to the secondary market, profits no longer flow to a third party scalper
NFT as a ticket stub are numbered, providing provable scarcity
NFT tickets can offer pre and post-event benefits to holders
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