Tradable Asset Subscriptions (TAS)
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July 10th, 2022

Imagine a controlled business model that didn’t rely on the endless acquisition of new customers. A business model, where healthy amounts of recurring revenue can be generated for business, stakeholders, and even customers. A model like this is antithetical to hypergrowth.

But why do we need it? And how could it work?


Early days

Since the inception of the internet in 1989, software & tech raced to build ultra-scalable companies. For nearly 30 years the golden age of the internet was driven by the deep pockets of Angels, VCs, and investors. But as return on investment goes, these people expect a 10x over 5 years or better. Forced hypergrowth is the result. Companies are not measured by the customer success they have, but rather by the potential revenue they are able to generate. This leads to unrealistic valuations and bloated capital distribution. Something drastically needs to change.

web1 » web3

Before the internet, business was conducted hyper-locally. Customers shopped within the confines of their physical, communal neighborhood. Then, the world-wide-web opened up a global storefront where cross-continent boundaries seemingly vanished. Next, humanity opted for a Glocal economy — a global outlook with a local approach. In this environment, centralized online platforms enabled endless business opportunities.

Today, all human interaction is slowly getting digitized — for better or for worse. But as history has often been a pendulum swinging in and out of extremes, we are now witnessing a move back to hyper-local business structures — just digital and community-led. We are evolving away from top-down centralized and towards bottom-up decentralized structures.

With web3 we evolve from capital-driven companies led by enforcing individuals to community-driven companies led by a voluntary collective. Instead of small groups hoarding wealth, everyone will have the chance to bet small and win big. Web3 is as big an opportunity as the early internet days.

Models & monetisation

Apart from freemium and one-time sales, SaaS is the internet's most successful business model. Subscriptions allow companies to become predictable machines, where compounding revenue can be generated. Instead of acquiring a single customer and most likely never activating them again, subscriptions lock customers in for months or years at a time. We know this from players like Spotify, Revolut, Medium, and many more.

Traditional SaaS ends up with the customer spending money to acquire a service they use for a fixed amount of time. Monetarily, the customer loses & the business/stakeholders win. But could that change?

I see a business model where all participants win.


NFTs

Hear me out. I know this term has been thrown around recently. It’s overused and barely understood. In reality, it’s not just about monkey images stored on a smart contract, it’s a vessel that can hold anything you want.

Unlike tokens such as Ethereum or Bitcoin, NFTs are ‘non-fungible’. They only have one copy and therefore introduce scarcity to whatever they represent (like images, tickets, subscriptions, licenses & more). Once minted, there is only one record of that asset on the blockchain. Forever.

In addition, NFTs are tradable assets. Sadly they are clouded by the many scammy collections that end up as “rug pulls”. But the bigger picture remains.

How NFTs work

Creators earn from NFTs in two ways:

  1. Initial mint (excluding deployment fees).
  2. Percentage royalties for every after-market sale.

This is great, but it creates two downsides:

  1. Limited collections are shot out once sold out.
  2. Royalties require hype to sustain a business long-term.

There is a way to solve this problem by designing a mechanism that ensures the assets are traded and hold their value.

Introducing TAS

Similar to SaaS, we need a name for a new business model. I’d like to coin it: TAS — Tradable Asset Subscriptions. This model is not specific to software but can be used for any subscription-based business.

A 2-year TAS visualized through the 3 sales stages.
A 2-year TAS visualized through the 3 sales stages.

TAS derives its value from digital scarcity. It’s not built for hypergrowth. It’s built for niche businesses that operate for the few, not the many. Here’s how:

  1. Access → each year a limited number of access mints are launched. Unsold tokens get burned to limit the overall supply & ensure digital scarcity.
  2. 1 year → after the first year, each token’s access to the product or service expires. This drives irregular and yearly recurring revenue.
  3. Sellingresets access. Buyers get full access for an entire year. Sellers lose access instantly. The business receives X% royalties from each sale.
  4. Mutationsextend access length on the same token. This results in doubling the NFT in its lifetime value from 1 to 2 years or more.

What’s interesting about mutations is their stacking mechanism that combines: 1. Access length, 2. Evolving looks & 3. Holder benefits. This makes holders mutating for multiple years superusers to which you can send Airdrops. The on-chain retargeting and marketing potential is unlimited.

Few > Many

The beauty of TAS is a never-before-seen flywheel in software and tech. Customers used to pay $19/m just to access Adobe Creative Cloud. And their money was gone. TAS reframes this B2C relationship as an investment in the form of a digital asset. At the very least it allows you to recoup your investment or even make a profit at the end of it all. And of course, you get to use the product/service for the access period. Crazy.

TAS isn’t for any kind of business. It’s for the hyper-local on the digital frontier. It allows for profitability with only a small number of users. Forget the 1000s you thought you needed. 100s are enough.

TAS breaks the hypergrowth loop VCs & Angels have pushed on us for years. It opens up endless possibilities for smaller, nimble organizations to exist for a limited subset of users who really care. For them, higher price points aren’t a problem, as you’re building for their unique profile & solving a massive pain.

Numbers

The core assumption of this primitive financial projection is that you as a company build brand authority through marketing and enhanced product features over time. With this, the value of the NFTs should be stable or increase — although the market will always end up defining price action.

Primitive TAS financial projection over 3 years.
Primitive TAS financial projection over 3 years.

Usecases

TAS allows companies to grow organically without the pressure of delivering returns — at a pace that doesn’t break them. Here are 3 strong usecases:

  1. Software for niches like floornfts.io.
  2. Exclusive communities structured like anti.co.
  3. Education & gated learning content like crypto college.

You will notice that with any of these examples (all don’t use TAS as outlined), there is a heavy focus on building a thriving community on the back of the product. If you don’t have this, things will be difficult.


Going full circle

TAS is a win for businesses, a win for consumers, and a win for stakeholders. It’s a framework with which you can make sure everyone is looked after with revenue share models from royalties and other benefits you’d like to add. The possibilities are literally endless. And personally, I cannot see myself going back to the money-grabbing mentality of SaaS. TAS feels fresh.

If you’re curious about TAS parallels, Unlock Protocol is frontrunning NFT memberships & subscriptions. Big ups to the Founder Patrick Workman.

If you’re keen on web3, but don’t know where to start, head to intoweb3.land.

If you like my thinking, you can follow me on Twitter.

I’ll see you around.

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