Christie’s sold a digital artwork as an NFT* in March 2021 for $69m, putting the artist, Beeple, in the top three most valuable living artists. Most of us had never heard of Beeple, nor had we any clue what an NFT was. $69m for a digital something-or-other seemed a little steep but certainly piqued our interest.
It’s easiest to think of NFTs as digital collectibles. Some people collect physical items like art, stamps, trading cards, stickers or antiques and depending on their condition and scarcity, those items become more or less valuable. Now, people are collecting digital items for keeping or trading in a similar way. Some buy these items for pure enjoyment, others do as an investment or even to make a successful career out of it.
Although it feels like the latest new craze, NFTs have been around since 2017 but have become more high-profile in the last few months as some have sold for millions. Whilst perhaps still pretty niche, mainstream brands are now starting to get involved.
Which brands have already launched?
The NBA were one of the first mainstream brands to launch an NFT offering with ‘NBA Top Shot’ which allows buyers to purchase NFTs for NBA ‘Moments’ (essentially players scoring baskets). https://nbatopshot.com/
Pringles (yes, the crisps) launched 50 animated NFTs and Taco Bell did something similar although the value of sales was not in the Top Shot league.
NASA launched an NFT that could be used to redeem a physical ‘secret timepiece’.
Gucci is one of the first luxury fashion brands to launch, with rumours that other fashion brands have plans in the works.
Topps, famous for its physical trading cards and Topp Trumps, launched a collection of NFTs for Major League Baseball. https://toppsmlb.com/
Manchester City launched commemorative NFTs after winning the Premier League. https://www.mancity.com/news/club/nft-launch-man-city-63757018
The IOC has recently announced it will launch Olympic pins as NFTs.
Andy Murray and the AELTC have also launched a collection including the match-winning ‘moment’ that Andy won Wimbledon 2013. https://we.new/
Where is the value?
Whilst some NFTs are being sold for vast sums of cryptocurrency (and more recently for standard currency), many are actually sold for relatively little. As with physical items, the more unique and interesting NFTs are, the more likely they are to generate higher bids.
Since ownership of an NFT does not typically mean any IP has been transferred to the buyer, people are questioning what someone gains from owning an NFT. If they don’t acquire the IP, what’s the value? They can’t do much with it except put it in a digital wallet, claim bragging rights, and hope that they make a decent profit when they come to sell it.
When you buy physical collectibles, you don’t buy the IP rights when you buy these items either, so it really is no different. An item is worth what someone is prepared to pay for it.
As with physical collectibles, there will be items sold for huge amounts, but then there will also likely be a ‘mass market’ business which people are participating in for fun, which is potentially the case for NFTs over the long term.
Does it make sense for my brand?
No doubt there will be some brand owners trying to launch NFTs quickly to cash in on what is perceived by many to be a passing fad, but I think NFTs are likely to be a growing area and so brands should consider a longer-term strategic approach.
Many brands license into categories like apparel, footwear, homeware, stationery, health and beauty and so on. NFTs should be thought of as a new category for brand extension and should be assessed as part of an overall licensing strategy.
NFTs are still relatively new and are largely bought using cryptocurrency. There has been some negative press around cryptocurrency including around money laundering and sustainability. Brand owners will need to look to work with reputable companies who have strategies in place for dealing with these challenges but should also consider any perceived negative association with their brand.
Whilst for many brand owners this category will be very interesting – particularly sports, entertainment and fashion brands - it may be that entering into this category makes absolutely no sense for some brands. If that’s the case, jumping on the bandwagon should be avoided.
My IP is already being sold as an NFT – and it wasn’t me.
For some brand owners, they are discovering that their IP is already being used to sell NFTs without their authorisation. One such example is DC Comics. They discovered that an ex-employee (who had worked on the Wonder Woman brand) partnered with a digital artist to create some Wonder Woman NFTs, which they sold for $1.85m. DC Comics reacted by warning their artists not to use the IP for NFTs. They have now said that they are reviewing their NFT strategy which is likely to involve them creating new NFTs that can be sold as ‘authentic’.
We are encouraging our clients to take a proactive approach to addressing unauthorised use of their IP. This could mean that they launch their own official NFTs as well as looking at what online brand enforcement strategies they need to employ to monitor NFT marketplaces.
I want to get involved but don’t know where to start…
The unfamiliar set-up and language around NFTs mean that brands are put off from getting involved - but for digital-savvy early-adopter-types, they are already comfortable with the idea of buying NFTs. Brand owners should consider how they can tap into this consumer group.
If you are interested in learning more about NFTs, want to create and launch your own NFTs, or need advice on unauthorised NFTs, we can help you.
We aim to offer the best advice, commercially led, with no agenda, no waffle, no jargon.
*An NFT, or non-fungible token, is essentially a digital token which verifies the ownership of a digital asset. The term NFT or ‘Nifty’ is typically used to describe the digital asset although it’s actually the ‘receipt’ for the asset which is the NFT.