YellowHeart CEO Josh Katz on the Power of Next Gen Smart Ticketing

With the return of live events post-pandemic have also come renewed frustrations with traditional ticketing platforms like Ticketmaster. Fan and artist complaints about Ticketmaster are a tale as old as time — whether about exorbitant fees, scalpers, scams, etc. — but they have been taken to new heights over the past few months, particularly as many people experienced issues getting tickets to Taylor Swift’s upcoming tour and others were blocked from attending a recent Bad Bunny concert in Mexico.

According to Josh Katz, Founder and CEO of Web3 ticketing platform YellowHeart, there are several reasons for this. “First of all, with the return of live music in full force in 2022, everyone has been on tour and there's more people using tickets than ever before,” he says.

“The sector is growing rapidly overall, but simultaneously, the public is smarter and more informed than ever before. If you have any issue, you have an outlet to be verbal about it to a greater community. And an industry that's been complacent for a very long time is suddenly being forced to deal with the consequences of not doing right by consumers in many, many ways.”

YellowHeart refers to its Web3-powered offering as smart ticketing, opting to forego any mention of buzzwords like NFTs or the backend technology. “Unfortunately, NFT has taken on a negative connotation and a life its own around JPEG pictures and art,” notes Katz. “We combine a variety of technologies, mostly Web3, to create what we call smart tickets, which are transparent in nature because they're on the blockchain. They use smart contracts to be able to send royalties away from scalpers and back to the artists and teams, and can also be used to cap resale price. So that is what we call it right now.”

One of the most exciting things about the evolution of the ticketing industry is that tickets are increasingly being used and capitalized on even after an event has concluded. Katz shares that while the ticketing sector has been very lucrative, it has also been relatively boring to date.

“If you look at what a ticket has been to date,” he says, “it’s a barcode or a receipt or proof of entry, you scan it, it dies, and that's it. The reality though is that it is the connection to billions of passionate music, theater, and sports fans across the world, and it's never been utilized properly to create ongoing retention and engagement of fan bases. The ticket stub acts as a memento, and it can act as a gateway into all types of other experiences, opportunities, further entertainment from that artist, etc. where you don't lose the fan.”

Katz also notes that technically, Web3 technology is not needed to accomplish this, but there has been an overall lack of innovation in the space, and Web3 is the direction the evolution of the sector is heading to provide a better experience.

For example, the absolute transparency it provides into the total ticket inventory would have been useful in the case of the Taylor Swift fiasco. “We have no idea of what percentage of inventory was issued to whom,” explains Katz. “Did 20 percent go out the back door to trusted business partners or ‘scalpers’? Did X percentage go to American Express for cardholders? We have no clue. Blockchain opens up full transparency around all of that, so that really helps. The other thing is that with an NFT, you have provable scarcity. You can prove that there’s only one of a certain ticket so there's no counterfeiting — it's just not possible.”

He adds that it’s not necessarily about every industry becoming completely transparent, but the world in general is more public than ever before thanks to social media, and customers expect accountability from the companies they do business with.

“It's going to be very hard in the future for companies to treat their customers poorly and stay in business,” says Katz. “In this particular case, they're able to do that for some reason. The customers are treated extremely poorly, yet they're able to stay in business because of the way that things have evolved. This has been a sector that has been, once again, pretty boring, without a ton of competition, and that no one's really paid attention to. Now it seems like that's all changing.”  

Next gen Web3 ticketing solutions are showing a lot of promise with fans and artists and demonstrate that there is indeed a better way of doing things. However, especially in the US, there is a huge obstacle to overcome, which is Ticketmaster’s (and Live Nation’s) near monopoly on the system.

Some artists are starting to take a stand — country artist Zach Bryan, for example, titled his recent live album “All My Homies Hate Ticketmaster” and is doing his best to avoid Ticketmaster venues for his next tour to be able to have more control over availability and ticket prices, but it will be an uphill battle.

In order for there to be real change in the industry, Katz believes that the US will need to follow Europe’s lead: “What I think will need to happen on some level is the same thing that's happened in Europe, where in order to foster innovation and fair trade and lack of competition, you might just have to make it illegal for venues to have specific ticketing contracts,” he says.

“That way, if they want to work with Ticketmaster, they can. But if they’re bringing in a certain artist who wants to ticket with YellowHeart, they can also do that. Right now, they're stuck having to use who they have a deal with. And it goes both ways, because those venues historically have taken advances from Ticketmaster to lock down the exclusive agreements, but it makes competing incredibly hard, and because of there's no competition, there’s very little innovation.”

Despite the ongoing challenges, YellowHeart has seen a lot of interest in smart ticketing from artists, fans, and venues, and has started to work with more mainstream venues around the world.

“It’s early days, but there seem to be a lot of people who are interested in a new evolved solution,” says Katz. “We're super excited about the continued adoption of this. Our product matured tremendously in 2022 and had major use cases in cities like New York, Vegas, Miami, and London. Seeing mainstream venues moving on to evolved ticketing in 2023 will be really exciting.”