(This article is part two of our breakdown of NFTs. For a quick refresher on what NFTs are, what they were originally meant to do, and how we got to this drab point with a dazzling new technology, check out part one HERE.)

The technicalities of NFTs, blockchain, and all other web3 innovations might sound great to the technicians, engineers, programmers, and executives involved in developing them, but the average person, those developers hope to convert into users, rightly needs practical examples of how these innovations will impact day-to-day life. In the art realm, NFTs have yet to become ‘sticky’ enough to form a consistent market that offers something compelling to most people. This is where the marketing and messaging of the last few years work against the platform’s future.

The average person has been made to think that if NFTs are valuable, it’s no doubt as some product, service, device, or app that they would engage with directly. While there certainly are personal uses and functions for NFTs, the truth is that brands, platforms, and creators stand to gain the most through implementing NFTs into their functions - and that will benefit the average person.

Consider wifi or electricity. Do you understand how either of them works? What are the underlying science and technologies that support them? For most of us, the answer is: I don’t know how they work, but I know how I use them. NFTs - operated by brands, platforms, and creators - might most ideally function along this same paradigm. The average person doesn’t need to understand exactly how NFTs work, but they will notice and enjoy and benefit from the downstream offerings NFTs enable. So, in the same way, you don’t need to own electricity or Wi-Fi in order to use them. You won’t necessarily need to own an NFT (or even know when you’re using an NFT) to benefit from what they offer.

The use cases elaborated below are meant to demonstrate both the game-changing potential of NFTs as incorporated by businesses and enterprises, and the ways in which the average person stands to benefit from NFTs becoming commonplace in the technology, brands, and services they already use and the offerings web3 tech will make commonplace in years to come.

Engagement

Ticketmaster, the prominent ticketing platform, could innovate in one simple but game-changing way: by transforming event tickets into NFTs. This change would streamline ticketing processes, allow new engagement between performers and audiences, enhance security and offer insights into fan behavior.

Under this concept, every ticket purchased through Ticketmaster would become an NFT, securely stored in fans' digital wallets. Each NFT ticket would contain metadata, which is useful to the company in a myriad of ways in terms of security, offerings, and customer insights. Allowing Ticketmaster to recognize superfans who frequently attend specific artist or genre events.

Superfans - those who frequently attend events or demonstrate high engagement regardless of their spending - would be identified through their NFT ticket collection and could enjoy exclusive benefits like early ticket access, VIP experiences, and special recognition. Personalized recommendations would keep superfans engaged by notifying them of relevant events. All of this serves to foster a strong sense of community.

Ticketmaster's NFT system could also monitor the secondary market for NFT tickets, tracking resales (and preventing scams, scalping, overcharging, and security threats) and identifying trends through insights into fan behavior, potentially reshaping the ticketing industry.

Artists could benefit from this data to engage with their most dedicated fans and offer unique experiences, increased fan engagement, tailored marketing, potential revenue opportunities, and enhanced artist-fan relationships.

Taylor Swift's fan club (or any other performer’s fan club) could introduce a unique system where fans can join for free and receive an NFT granting access to an exclusive Discord community. This NFT-based fan club can also monitor for super fans’ engagement within the Discord community, with metrics measuring fan engagement, message frequency, participation in discussions, and attendance at virtual events. A real-time leaderboard could highlight the most active fans, showcasing super fans who spend significant time and show dedication.

Super fans would receive special recognition and rewards, including exclusive meet-and-greets, early access to concert tickets, NFT collectibles, exclusive merchandise, and personalized shoutouts from Taylor Swift (or whoever). Fan-driven activities and challenges would encourage engagement and involvement. The NFT-based fan club and Discord community would transform Taylor Swift's fan base into a vibrant, engaged ecosystem where super fans are celebrated for their dedication, enhancing the artist-fan connection.

This system benefits by building a strong fan community, recognizing passion and dedication over spending capacity, increasing engagement, enabling direct artist-fan interaction, and incentivizing non-monetary contributions. Challenges include ensuring accurate metric measurement, handling fan data and privacy rights responsibly, and maintaining inclusivity among fans, educating fans about these services, and ensuring scalability.

The Ticketmaster example is specific, but with a bit of imagination, hopefully demonstrates how NFTs could be used in countless other industries in countless ways. The potential here for brands to understand their customers is massive. You can track spend (think of ticket sales - you may not buy every ticket that ends up in your wallet directly from the company, but now you get credits for that) or you can track interaction (imagine using an NFT gated platform as a fan forum and seeing who contributes the most), you can reward engagement as well. You can actually see this in action right now as Boba Guys plan to build out their customer loyalty program on-chain, just as Starbucks did last year. This type of NFT usage provides an amazing opportunity to actually reward people who spend time instead of money evangelising xyz. (And if you don't think people will do work for free, you may be surprised to know that a study by Northwestern University found that Reddit Moderators did work equivalent to almost 3% of company revenue FOR FREE in 2019.

Charity and Social Good

Personalized Impact Reports for Charitable Donations: NFTs can bring transparency and personalization to charitable giving. Donors receive unique NFTs representing their contributions, granting them access to personalized impact reports. These reports, tailored to the specific donation, provide real-time updates on how their funds are being utilized. For example, a donor supporting a clean water project can use their NFT to see the direct impact of their donation, creating a stronger connection to the cause

NFTs for Social Good Projects with Revenue Sharing: NFTs can be used to fund social good projects in an innovative way. Donors purchase NFTs representing initial investments in projects like local well systems. Once the project becomes profitable, NFT holders become stakeholders, earning a share of the revenue generated. Moreover, NFT holders can actively participate in decision-making, voting on how extra revenue should be reinvested to improve the project or support the community. This approach turns charitable giving into an ongoing impact investment, aligning donors' interests with community success and ensuring transparency and accountability in the process.

Secondary Sale Revenue & Record Keeping

When thinking about the potential of new technologies, a focus on customer/user advantages gets a naturely large portion of the attention, but brands and platforms stand to gain significantly from NFTs, too. As a demonstration of the transformative potential of NFTs - in addition to the ticketing industry - let’s look at the luxury watch market. I’m a watch enthusiast (and car enthusiast, but we’ll just focus on watches right now), so this is one industry that gets my blood pumping.

By utilizing NFTs, brands and platforms can not only track provenance to ensure the authenticity of their products but also capture a portion of the profits generated in the secondary market.

Imagine this: a watch brand has created a scarcity by limiting the number of watches they produce and sell each year and currently have a 5 year waiting list. The price their watches sell for new is $27.800, but let’s say you don’t want to wait 5 years and have money to burn now. Used, the watch sells for $55,400. (‘Used’ here means that someone on the waitlist purchased it and then resold it almost immediately.) If you are the brand, you just saw your item's price sell for double, and you only made money on the primary sale. (Yes, I realize there is an argument here for only caring about primary sales being a link to the luxury of the brand, but it’s still worth noting this is an lost opportunity)

In the luxury watch industry, each watch purchase could come with an accompanying NFT ownership certificate. This NFT certifies the authenticity of the physical watch and provides an immutable record of its ownership history on the blockchain. When the watch is resold in the secondary market, a predetermined percentage of the resale value is automatically transferred to the luxury brand's wallet via the NFT smart contract. This approach ensures trust, transparency, and security while allowing the brand to maximize revenue.

Similarly, in the ticketing industry, NFT-based tickets offer a powerful tool to combat ticket scalping. Ticketmaster, for example, could issue NFT tickets for all its events, and a percentage of the resale price on secondary market platforms would flow back to Ticketmaster through the NFT smart contract; they could also identify scalpers if they see a large number of sales from certain wallets. The blockchain records the tickets' transaction history, reducing the risk of counterfeiting and enhancing trust among buyers.

In both cases, NFTs enable the tracking of provenance and ownership, ensuring the legitimacy of luxury goods and event tickets. Simultaneously, they create a sustainable revenue stream by capturing a portion of the lucrative secondary market sales. This approach benefits brands and platforms by increasing revenue and trust while providing consumers with secure and authentic products and tickets.

The provenance consideration is interesting, as certain items that we have huge used/secondary markets rely on third parties to track the maintenance of the item (think of Carfax when it comes to used cars). But what if the NFT tied to the item actually contained that info as well? This innovation is already in development. A good primer is provided by Chainlink, and a cool use case for used cars can be found on their Twitter.

1000 Fans

We have discussed the concept of 1000 Fans before, but let’s take it a step further and envision how this could work. NFTs provide an innovative solution that makes crowdfunding and revenue sharing much more accessible. Artists initiate NFT crowdfunding campaigns, offering limited NFTs representing stakes in their upcoming work, be it a film, album, or art installation. NFT holders, in return, receive a portion of the revenue generated from the artist's work, such as streaming, sales, or box office earnings.

Additionally, NFT holders could share in the success of the artist's intellectual property (IP) sales. This model fosters a supportive community, aligns interests, and empowers artists to pursue their creative visions with streamlined financial backing. It offers a unique win-win scenario where artists gain funding and NFT holders become stakeholders in creative ventures, deepening their connection with the artists they support.

This macro-sourced, micro-funded approach promises to offer an on-ramp into industries and sectors in a way that democratizes who can attempt to break their way in. This potential alternate route allows newcomers to sidestep traditional gatekeepers in an array of fields, offering the possibility of success at scales that could enable hobbyists to grow into professionals without the traditional obstacles that limit access based on geographic location, socio-economics, etc.

Why you should care about this

NFTs have emerged as a transformative force capable of reshaping both the media and marketing landscapes. On one front, they offer the potential to dismantle traditional gatekeepers that have historically controlled the media and entertainment industries. In an era of hyper-customization, streaming platforms like Spotify and Pandora have made strides in tailoring content to individual preferences but within walled gardens. NFTs present an opportunity for individuals to invest directly in the content they care about, bypassing these gatekeepers. This shift is exemplified by multi-million-dollar deals like Amazon's $250 million for the 'Top Gear' cast and Netflix's $500 million for 'Seinfeld' streaming rights, acknowledging that audiences are drawn to platforms offering their favorite content.

Moreover, NFTs have the power to disrupt the social media landscape, where brands currently allocate significant portions of their marketing budgets—with brands spending $65.31 billion in 2022—for campaigns that can sometimes resemble 'spray and pray' methods. NFTs enable passionate fans to openly express their enthusiasm for artists, brands, or causes, transforming them into authentic evangelists. Brands can then reward these NFT holders, creating a new paradigm. Instead of solely investing in traditional social media campaigns, brands can allocate resources to both dedicated evangelists and conventional outreach. This approach combines community-driven marketing with traditional methods, leveraging the influence of passionate supporters and word-of-mouth recommendations, ultimately driving sales.

In essence, NFTs empower individuals and artists alike to redefine the media landscape. Creators can sidestep traditional gatekeepers and engage their fan base directly, focusing on their craft and content creation. Meanwhile, consumers can invest in content they genuinely care about, fostering a more personalized and community-driven media experience. NFTs represent not merely tokens but a revolutionary paradigm shift, granting creators and consumers the power to shape their media journey in an era where customization and community-driven content reign supreme.

This shift isn’t just good for artists: it can produce a cultural shift. As a culture, we praise and champion diversity of thought. But when it comes to our options and choices as consumers, those choices are curated by (or, said differently, limited to) the tastes and sensibilities of major studios, publishers, etc. While it is certainly true that the traditional systems have produced important, excellent quality, culturally defining art and media, it is also true that this process yields results which have been put through an inherently narrowed lens. Factually, the more access is expanded, the better it is for creators and audiences

Speculation during the early days of the internet excitedly promised a democratization of who got to tell their story. Enthusiasts told cautionary tales about publishers nearly missing classics by authors like Harper Lee, Roald Dahl, Albert Camus, George Orwell, with the subsequent dread of: imagine the classics the publishers did miss; the classics, the perspectives, the stories that never had a chance to connect to an audience because gatekeepers obstructed them.

Virtually every media format has become either less difficult or expensive to produce and distribute due to technological innovations, and that’s never been more true than with the advent of the internet. And while not everyone is a journalist, everyone can report on their experience in a way that has never been the case before. One can be content taking whatever Spotify or Netflix, Penguin / Random House, or your preferred news source, and that is a fine option. But the internet also implies such a gigantic possibility that we could use these technologies - including NFTs - to springboard into a patronage system of creator support akin to that of the Rennesaince era, allowing outsiders and longshots to scratch their name into the stone of time, leaving a legacy –

Well, you see where I’m going there. There’s a lot of potential here, that’s my point.

The Way Forward

NFTs represent a transformative technology that, while initially marred by misconceptions and distractions, holds incredible potential. To achieve widespread adoption, they must become akin to WiFi—an indispensable background technology that seamlessly empowers users without the need for a deep understanding of its intricacies. A prime example of this approach is DMarket, a platform facilitating the sale of digital collectibles and virtual game goods. Despite operating partially on the blockchain and utilizing NFTs, DMarket's user experience is smooth because it is similar to any other web2 platform, the term 'NFT' rarely enters the conversation. Their $200 million in sales amidst a turbulent NFT landscape underscores a vital lesson: what truly matters is not how NFTs work but the value they deliver.

Users don't need to comprehend the technology; it just needs to work seamlessly. NFTs, in essence, may make the most sense as the domain of researchers, investors, and those who require an in-depth understanding, while for the masses, they should simply empower a new era of creativity, connectivity, and commerce through brands and platforms which are already a part of their lives.

Web3 seems to be going through a public relations crisis. Each technology seems to be obstructed by a wrong idea about what it is, usually triggered by poor explanations or questionable sales pitches meant to attract reckless investors. Detractors seem to be gnashing their teeth for the early demise of NFTs. Given what they may think NFTs are, this makes sense.

But NFTs are not dead, and they’re not going away. Their utility may one day be indispensable and as valuable to brands as Facebook or Amazon. For that day to come, we’ll need to widen and adjust our mindset around what NFTs are and how they can best be used. I’m a car enthusiast, so I’ll close with this analogy: we flooded the NFT engine, and now it won’t start - but that doesn’t mean there’s something wrong with the car.