Key Takeaways
- The scalping crisis is a market design failure, not a cause for criminalizing fans or outsourcing enforcement to opaque platforms.
- The U.K. has criminalized the use of bots to purchase tickets.
- Price caps and bans are blunt tools at best.
Entertainment is a cornerstone of culture that is, at times, monopolized and exploited for profit at the cost of the fans who enjoy it. The Federal Trade Commission has sued popular ticketers Live Nation and Ticketmaster for allowing brokers to harvest tickets in the primary market to be sold for a significantly higher price.
The U.K. was seven years ahead of the curve with a ban on the use of bots to purchase tickets, giving fans the opportunity to experience their favorite art at fair prices without having to deal with bots harvesting tickets.
While lawsuits and regulations can deter ticket scalping, the answer is a preventative infrastructure of programmable tickets with identity control.
The Anatomy of Scarcity
The demand for tours and finals far exceeds available seats, turning a profit engine out of any method that enables buyers to acquire multiple tickets. The opacity of primary sales only aggravates the confusion and mispricing, as fans can hardly tell what tickets are available or what tiers are on offer.
The U.K. recently adapted to that, eliminating the opacity by forcing Ticketmaster not to add “platinum” labels on tickets without added benefits.
To make matters worse, the fickle identity controls fail to enforce a one-person per ticket allocation, leaving a wide gap for brokers to exploit with bots that buy more tickets with synthetic accounts.
Even with the bot laws in place, the identity checks are minimal and insufficient in holding back the scalping issues.
Price Caps and Bans Are a Blunt Tool
While the industry might oversimplify the solution with bans and static caps, the reality is that this only adds a layer of opacity with suspicious channels in which fans lose protections and face the risk of fraud.
The result of the solution then becomes an aggravation of the problem, where caps shift volume to grey markets instead of addressing scalping.
This creates a cycle of depleting resources dedicated to a cat-and-mouse game of chasing violations for enforcement. The issue becomes evidently a systemic failure to prevent scalping with a misdirected focus on enforcing rules, while brokers continue to find gaps in the system to exploit with increasingly sophisticated bots that fool identity detection measures.
Design-Oriented Approach
Addressing ticketing’s systemic failure requires a design-oriented approach, with programmable tickets baking rules into the asset itself. Promoters need to program the purchase limits for each person.
Caps on resale, and revenue splits in the tickets, enable execution the moment the purchase is completed rather than an elongated list of terms and conditions that buyers hardly read, and naturally, neither do bots.
This can be augmented by a zero-knowledge personhood methodology that proves fundamental attributes, whether uniqueness, age, or location, without compromising privacy.
With verifiable credentials held in a user wallet and proven with cryptography checked by verifiers locally, user privacy is secured, and verification is ensured.
This movement is already in motion, with researchers exploring zero-knowledge for deployment, lowering the risk of adoption for event organizers.
The National Institute of Standards and Technology has taken initiatives such as its privacy-enhancing cryptography program, along with documentation of practical applications that take constraints into consideration.
The net result from this direction is an automatic enforcement of fairness that ensures data privacy, while shrinking the arbitrage surface without shifting volume toward grey markets.
Overcoming Friction and Privacy Issues
Naysayers who object to this shift may argue that there is friction in the onboarding process and that having an identity on-chain may pose a risk of surveillance.
Addressing such barriers is crucial when driving the use of zero-knowledge proofs in programmable tickets to avoid the risk of thoughtlessly evangelizing a solution without considering its implications.
To that end, it is important to highlight that obtaining a credential and storing it in a wallet is only done once, after which friction is non-existent, as users can simply prove eligibility through a tap when purchasing. This ensures a seamless flow of information in a reusable manner.
The European Commission exemplifies this with its EU Digital Identity Wallet, standardizing the storage and presentation of credentials, but there still remains the question of privacy if credentials are on-chain. The answer to that is identity does not necessarily have to be on-chain, but simply the proof of identity, without raw PII.
Institutions such as the Electronic Frontier Foundation argue that guardrails must be in place to prevent mandatory disclosure of ID where unnecessary, maintaining that proofs are bound to specific purposes of verification, resulting in resistance to bots without a data honeypot.
The Path to Adoption
If fairness is hardcoded into tickets, fans won’t need lawyers to get a seat for their favorite shows. The path forward necessitates a practical plan that establishes this design, one where tickets serve as a verified credential connected to a proof of personhood without compromising privacy.
If there is a need for ticket resale, it must be in a controlled official channel that still maintains a per-wallet limit in an auditable framework that does not expose PII.
The CMA’s verdict that Ticketmaster must change pricing and sales tactics showcases the need for clarity and fairness in the ticketing space, and this can be established with a design that proactively deters exploitation, rather than reactive punishment after the cost is incurred.
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The views, thoughts, and opinions expressed in the article belong solely to the author, and not necessarily to CCN, its management, employees, or affiliates. This content is for informational purposes only and should not be considered professional advice.
About the Author
Terence Kwok is the CEO and Founder of Humanity Protocol, a leading organization dedicated to amplifying human potential amidst the transformative impact of artificial intelligence, now valued at over $1 billion.
