Hard to Speculate, Harder to Compete? Review The Transformation of NFTs

The cryptocurrency market has faced new challenges and has been in a prolonged slump, prompting many to explore alternative directions to understand how blockchain technology will develop in the future.

Non-fungible tokens (NFTs) experienced a wave of popularity in 2021, with many choosing these colorful images as symbols of their Web3 identity. However, as NFT trading volume declined, the focus of discussions shifted from the short-term value and speculative cycles of NFTs to the long-term utility of owning these NFTs.

Many brands have started exploring creative use cases for NFTs beyond quick investment opportunities. Now, companies are seeing NFTs as a way to strengthen the relationship between brands, creators, and consumers by linking rewards with long-term ownership.

For example, GQ launched an NFT-related magazine subscription service in February, while sports media outlet “Sports Illustrated” introduced an NFT ticketing program in May. Additionally, Starbucks launched a pilot version of the “Odyssey Web3 Loyalty Program” in October to reward its most loyal coffee drinkers.

These mainstream brands are primarily focused on attracting new customers seeking innovative experiences, and loyalty programs, memberships, and ticket opportunities are the most suitable scenarios for NFTs.

Enhancing Loyalty Economy through NFTs

Loyalty programs or point-based systems (such as Delta Air Lines’ Skymiles and cosmetics retailer Sephora’s Beauty Insider program) reward customers for purchasing brand goods and services. According to a survey conducted by LendingTree in July 2022, eight out of ten Americans are members of at least one loyalty program. Matt Schulz, Chief Credit Analyst at LendingTree, stated that consumers generally expect better discounts and more favorable paths through loyalty programs.

NFTs have found their place in these systems due to their ability to create communities around brands. Tara Fung, CEO of Web3 infrastructure company Co:Create, states that NFT loyalty allows users to establish closer connections with their favorite brands, while brands can more effectively engage and interact with customers.

For companies seeking to add Web3 loyalty benefits to their existing products and services, getting started is often a pain point. Ben Leventhal, founder of Blackbird, believes that NFTs are the most effective mechanism for attracting and rewarding restaurant customers’ brand loyalty.

Blackbird’s NFT loyalty program is simple: when customers dine at Blackbird-supported restaurants, they immediately receive an NFT that is minted to a unique backend wallet as their “dining proof.” Each time they return to that restaurant, the NFT transforms into a new token with more rare features.

Blackbird, like many other companies utilizing blockchain technology, takes a user-friendly approach by avoiding Web3-related terminology as much as possible. For example, some companies, including Nike and Starbucks, choose not to use the term “NFT” in their marketing materials, instead referring to their products as “digital collectibles” and “tokenized assets.”

NFT Tickets as the Future Trend

The chaos caused by the sale of popular singer Taylor Swift’s concert tickets exposed serious issues within the mainstream ticketing industry. From platform malfunctions to duplicate tickets and high resale prices, Swifties often face significant barriers to obtaining tickets.

NFT tickets can provide solutions to some of the problems plaguing the events industry. David Marcus, Executive Vice President of Music at Ticketmaster, explains that artists can use NFT tickets as a better way to control how tickets are distributed to fans. For example, the metal band Avenged Sevenfold provided exclusive tickets to live performances for holders of their Deathbats club NFTs through Ticketmaster.

Avenged Sevenfold’s lead vocalist, Matt Sanders, believes that not all types of events require NFTs, but they do offer fans more options and eliminate some of the pain points associated with buying and selling tickets.

Alfonso Olvera, CEO of NFT security company Tokenproof, states that NFT tickets can offer holders benefits such as on-chain verification of ownership, participation rewards, and artist royalties from secondary resales.

Web3 ticketing is still in its early stages, but some well-known companies are already entering the Web3 ticketing space. In May of this year, sports magazine “Sports Illustrated” launched SI Box Office, a self-service event management and blockchain ticketing platform that helps create and sell NFT tickets for events. The platform partnered with blockchain software company ConsenSys to mint all tickets on the Ethereum sidechain Polygon.

“We believe NFT tickets are the future trend for hosting live events, and NFT ticket sales can serve as an entry point for fans to explore blockchain technology and gradually adapt to Web3 events,” said David Lane, CEO of SI Ticketing.

Furthermore, SI Box Office aims to make it easier for traditional entertainment or media brands to enter the Web3 space and engage their audiences.

Web3 Membership Identity and Community Engagement

In addition to loyalty programs, some brands are using NFTs as a form of membership identity within an entire ecosystem. These ecosystems not only offer unique experiences or benefits to users but also create avenues for community growth.

Meral Arik, co-founder of Web3 membership platform Passage Protocol, explains that when consumers own a membership NFT, they feel a sense of ownership in the brand, community, or ecosystem represented by that NFT. As a result, consumers are more motivated to create value for the ecosystem, whether it’s through purchasing more products, engaging on social media, or spreading the word to friends.

Arik states that tokenized membership identities can also reward long-term engagement with the ecosystem. She highlights that Passage Protocol has built dynamic NFTs that evolve as holders interact with the brand.

Web3 beauty company KIKI World has built its brand around a growing community of makeup enthusiasts who want better connections with the manufacturers of their favorite products.

Using technology stack built by Co:Create, KIKI World launched the KIKI World Membership Passport NFT, granting holders access to a DAO. Within the DAO, members can propose product ideas, vote on upcoming releases, and participate in exclusive events and experiences.

Brendon Garner, co-founder of KIKI World, points out that membership programs can leverage blockchain technology to enhance user experiences and create more enjoyable interactions.

While NFTs serve as the tool driving the KIKI World membership program, the DAO component in their strategy helps foster a more interactive community structure—similar to real-life membership programs but with the additional advantages and security of blockchain technology.

Garner states, “Conceptually and philosophically, I think it’s important to be able to reward those who are making the most significant contributions and empower them to have a real impact on the areas they’re passionate about.”

Bringing Brands to Fans Through Web3

Looking ahead, tools like NFT loyalty programs, membership rewards, or NFT tickets provide a powerful framework for brands and consumers to gradually adapt to Web3. With NFTs, brands can build communities around their products, establishing connections and rewarding loyal fans who engage long-term.

Brands can leverage these tools cleverly, avoiding the risk of losing new users by chasing short-term trends. The focus should be on finding the right way to incorporate the technology rather than blindly following the hype. Additionally, NFTs don’t need to be marketed as the centerpiece of brand activities or Web3 strategies but can be used as tools to enhance existing programs, attracting mainstream users in a meaningful and sustainable way.

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