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| By Jurica Dujmovic |
In a previous article, I discussed the practice of token gating — using an non-fungible token to provide owners with access to an exclusive set of benefits, such as a product, discount, service or more.
Token gating is catching on in the world of NFTs and beyond. In fact, the best example is from the world of sports.
Currently, you can buy NBA NFTs from their Top Shots store featuring highlights from games and players. But Ted Leonsis plans to expand the usefulness of these NFTs by providing holders with tickets to upcoming matches.
For example, you’d not only get a memento commemorating the greatest moments of your favorite team, but also a seat for its next game.
Today, I want to expand on this topic to see how web3 applications, like NFTs, can be the building blocks to better experiences in already established industries.
To help me shed some light on this, I interviewed Joseph Bradley, the head of business development and partnerships at the web3 infrastructure company, Heirloom.
Jurica Dujmovic: Let’s start from the very beginning. How would you define web3 and web2? How do these technologies differ and how do they complement each other?
Joseph Bradley: The current state of digital systems, let’s call that web2, is a series of applications — either mobile, web-based or a hybrid model between the two — that communicate with databases.
These applications and databases are typically owned by the same company — i.e., Twitter (TWTR) owns the Twitter application and the databases with which that application communicates.
In this way web2 is platformed based. All customer identities are created and controlled by the platform. This isn’t a problem so long as platform participants only want to interact with Twitter.
But what if someone wants to take the information they create on Twitter and use it elsewhere? There is no way to do this today.
The blockchain makes user-centric data portability and extensibility possible. The combination of web2 architecture with blockchain functionality at key “critical transactions” is web3.
Think of the web3 like a huge tent. The fabric of the tent top is web2. This fabric is made of data flow between apps and databases. But a tent without strong tent poles properly placed will not serve its purpose. There must be key places in the tent where resilient poles are placed to support the superstructure.
In this analogy the tent poles are blockchain functionality.
Jurica: Interesting analogy. How then, do sports and other complex business ecosystems benefit from blockchain?
Joseph: With this in mind, the reason that complex business ecosystems, sports certainly being one, need blockchain technology is that it can serve as a transactional rail that’s user-centric. Let’s keep in mind businesses are only made possible by users. So, embracing an architecture that puts them at the center is important.
Jurica: What’s actually changing and what are the trade-offs that need to be considered when integrating a blockchain system?
Joseph: To the first point, most systems are transitioning to be completely digital. Ticketing, parking passes, subscriptions to sports channels, purchasing apparel or concessions, VIP or box seat access — all of these transactions are now being funneled through digital systems.
Imagine attempting to service one specific user in all that complexity. It’s impossible. So, user groups are stratified and generalized. There is very low data fidelity.
Now recall the tent analogy: With web3, a user can create an account that is owned by them directly, not by the platform. They can then use that account to interact with all these disparate systems seamlessly.
The reason companies would want that is because it increases data fidelity and specificity. Web3 unifies a company's perspective on its users. The user is now able to signal to the company using the data they make available precisely what is important to them.
Deeper, more meaningful interactions are now possible.
So, all the transactions that existed with the user in web2 still exist, but the critical transactions — ticket issuance and authentication, parking passes being scanned, apparel being purchased, subscriptions being authenticated and fulfilled — are registered with blockchain infrastructure and held by the user.
Jurica: What about the tradeoffs?
Joseph: Now the tradeoff consideration becomes very interesting. Companies are relinquishing control over the user’s ID within their systems.
Why would they want this? Well, as it turns out the personal data that’s necessary to properly manage customer accounts is becoming a huge liability for companies. We see this playing out with consumer data protection initiatives like General Data Protection Regulation in Europe and California Consumer Privacy Act in California.
Unfettered big data in and of itself is not useful and, in fact, will be harmful for companies. However, the right customer data that is released by the customer at the exact moment it’s needed to transact with the company increases transaction efficiency by orders of magnitude.
Sports companies will use web3 because it empowers them to better serve their customers in a more efficient and curated way. Utilizing fiat to settle transactions won’t go away, but the velocity of those settlements and perks like dramatic curbs on fraud will be gained.
This is because the ability to identify, authenticate and authorize users requires high data fidelity and specificity in data reference. Web3 makes this possible in a solution set that keeps the user at the center.
Jurica: You mentioned how the focus of web3 is on the user. What does that user — the member of the modern audience — want?
Joseph: Looking at the sports industry specifically, audiences want sports on demand.
They want playbacks and pauses. They want direct connections to the franchises and athletes. They want to experience the game in whichever way suits their needs at that moment. For some people, that means watching the game on their cell phone. For others, that’s watching in a bar and using their phone as a “second screen.”
The second screen phenomenon is very interesting, as it implies that the level of connection delivered through the primary screen isn’t enough.
And therein lies the challenge: What any given fan wants from a sport, sports team or athlete is ever so slightly different than what the next fan wants.
Some people are good with reading recaps, others have to catch the game on a big screen or in person. But no matter the nuance in experience, the vast majority of users are tech-savvy.
Jurica: And how does blockchain serve these new tech-savvy audiences?
Joseph: Let’s break that down just a bit more. What does tech-savvy mean in this context? It means that people have come to understand how to use technology to get what they want.
In sports, this means experiences delivered to the edge. More specifically, the media supply chain is now multi-format, multi-channel at least and mixed format, single channel at most.
The former encompasses audiences using second screens at live events or as they view broadcasts. The latter is utilizing a single content delivery channel that delivers mixed format. (something like Twitch, but with extensions).
In either configuration, audiences want a curated, engaging experience that enables participation. They want to comment on plays, screenshot and share bad calls, vote on polls and bet on outcomes.
Audiences expect real-life experiences to be digitally delivered or enhanced such that they are navigable, like the internet.
The way that audiences attempt to create this outcome today is by having multiple channels opened at the same time. The challenge is that the audience is forced to actively toggle. Tweet a bit, stream a bit, bet a little, perhaps shop as an offer is displayed, etc.
This is because the audience member has a different and disparate identity on each platform. Augmented or virtual reality advances won’t fix this. Blockchain technology, however, can.
Jurica: How so?
Joseph: Because the goal isn’t to aim a firehose of content at an audience member and overload them with information. The goal is to give them a curated experience that enables them to participate across many channels, platforms and delivery experiences in a unified way.
While the “experience” will no doubt be delivered by visually compelling dashboard, the data handling that underpins that dashboard will be driven by a blockchain identity management tool kit.
Think of it like this: People used to operate entertainment systems with TVs, stereo systems, etc. attached. Each device had its own remote. That was compressed to a universal remote. But each device had to be configured to the one remote to enable control of all devices.
Blockchain functionality will serve as the configuration tool for these experiences. One might use a single ID to log in to multiple platforms at the same time, then use that unified view of the experience to select the desired experience flow.
Another way to think about this is through the way that ad experiences are delivered today. When you go to a website, the ad banners and side panels are configured to recognize the cookies attached to your browser and then deliver content that is most likely to get your attention. Those banners and panels are actually just an empty window waiting to be filled by an ad server once your cookies are observed.
A similar delivery mechanism is very likely, but with one important expectation: In our case, the user will be deciding which information they will provide to these platforms and what they want to see, similar to an RSS feed or the way a Reddit account is configured.
And because the ability to transact is native to blockchain, upgrades, purchases and offers will also be available to him in the way that he chooses.
Tech-savvy audiences want to be at the center of curated experiences. They want control and flexibility. These are the key themes.
Jurica: What does Heirloom do in that regard?
Joseph: As the business systems that support the sports industry continue to build toward a user-centric delivery model, the linkage that will govern this transition is identity solutions.
But recall the earlier conversation about the inadequacies of big data outside of appropriate collation and use. We need more than just identities. These identities must be served up and made available such that they are user centric.
Preserving privacy but making data identifiable and available is the key. And that’s where Heirloom comes in.
We start by deploying identity systems that run parallel to current processes for both businesses and the customers they serve. The result is a landscape of customer identities interacting with business identities.
In web3, this is a portable, extensible, user-controlled identity that creates the ability for users to transact across a wide variety of disparate technologies and within a variety of different situations — be that in-person at a venue, paying for a streaming service online, placing a bet on a team that then can be paid out in person, etc.
Jurica: How do NFTs fit in what Heirloom does and what sports industry wants to do with web3?
Joseph: Properties like NFT marketplaces enabled by Heirloom are simpatico with existing sports team apps that serve up functions like digital tickets, parking passes or in-venue offers.
The core principle of Heirloom is to introduce the identity features that seamlessly stitch together web2 with blockchain functionality. Businesses shouldn’t have to rebuild their legacy technology and the customer experience shouldn’t be interrupted. Instead, both will benefit from increased opportunities to interact in novel ways.
Jurica: I’m sure our die-hard crypto audiences would like to learn about companies that tackle the same problem Heirloom does, but without reliance on legacy technologies.
Joseph: There are groups like Disco (Disco.xyz) that are taking a web3 native approach. Disco is an extremely impressive group and one to track.
Other innovations like zero-knowledge proofs — the ability to query data without revealing anything other than the relevant information needed — will only force-multiply this paradigm. Polygon (MATIC, Tech/Adoption Grade “”) zkEVMs and the Mina Protocol are two zero-knowledge projects to keep an eye on.
Jurica: So far, we’ve discussed privacy, identity and personal data. There is big potential here, both for businesses such as yours as well as the sports industry and its eager, digital-first fan base.
We haven’t discussed one important subset of the sportsindustry which is especially vibrant in theUS:amateur sports. What are some of the ways that blockchain will impact amateur sports?
Joseph: Amateur sports will certainly be impacted in this new paradigm. I would expect operational elements such as ticketing, parking management and other general customer service applications to be addressed in short order.
That said, with the NCAA’s new ruling on Name, Image, Likeness (NIL) amateur college athletes now have the ability to benefit financially from certain sponsorships, which are crucial to profitability in many sports.
The confluence of brands and amateur sports will be a huge step forward, although I do expect that to take a bit of time as the implications of NIL are still very much still being understood.
At the high school and collegiate levels, I imagine ticketing and promotional aspects of those events to adopt this technology in short order. It’s just a cleaner, easier implementation for the totally analog way that those smaller ecosystems operate on today. Meaning ticketing for high school games could immediately be digital with very little effort.
Jurica: What about professional sports?
Joseph: Professional sports are brought in from the sponsorship perspective. Large crypto, blockchain and web3 companies have begun to enter into naming deals with arenas and stadiums globally.
Certain franchises are directly sponsored by the same types of companies, as well — an important first step as it increases the visibility of these companies. And we’re also seeing racing teams and various professional sports franchises in the United States experiment with NFTs.
The confluence of those experiments with operational functionality is close. The conversation is picking up a ton of momentum. The really interesting part here is that once we see these systems start to be adopted at scale, the experience for both the sports companies implementing the technology and the customers using the technology will be similar to what it is today, if done properly.
The difference will be that the customer will have the ability to buy a NFT and then, for example, present it at an in-venue experience for a VIP experience. Or purchase a season ticket and then benefit from a curated venue experience, like having the opportunity to purchase team apparel at a discount because they arrived early.
Perhaps most compelling, a fan could watch every game in the season via a streaming service and then be rewarded with an autographed piece of memorabilia and be presented with the chance to attend a meet and greet with the team at the first home game the following year … all without ever opening an email, calling to arrange logistics or being given inaccurate information.
The key to this technology is that it provides continuity by removing friction through the creation of a unified, granular view of what is happening around any particular fan. This was never possible before.
Jurica: Thanks for your time, Joseph. This was very insightful.
Joseph: Thank you for having me.
There you have it. While we’ve discussed of the sports industry in some length, it’s important to outline that web3 has the potential to help create a more personalized and engaging experience for consumers of other types of content, worldwide.
By creating bespoke, user-centric ecosystems, companies can better serve their customers and create new opportunities for interaction.
What’s your take on web3? Let me know by tweeting us at @WeissCrypto!
Best,
Jurica
