The curious case of Celebrities and NFTs

Movement from Passion Economy to Owner Economy

I have been bombarded with this question in the last few days - what is NFT and how is it affecting the celebrity ecosystem? So here is an attempt to put a perspective to it.

I have had the fortune of observing the celebrity ecosystem in India and US fairly closely - and also of engaging at senior levels with multiple decision-makers like Celebrity Management Companies, Sports Management Companies, Leagues, Global big IP owners, Distributed event ecosystem, MarTech organizations, Influencer agencies, and global top marketeers and M&A specialists.

I have been super curious about these rising conversations of NFTs and have had an opportunity to interact with some of the smartest folks in this space like Nischal and Sandesh from WazirX, Steven from MahaDao, Sandeep from Kalamint, Toshendra from NFTically, Pradeep from Blockchain Council, Harish from Unocoin, Ram from Guardian, Elizabeth from Consensys (Metamask), Kamal who hosts crypto webinars for IIMA, Chandrashekar, Aniket and a lot more - and I am so grateful to them for helping me understand this space better. In this journey, I helped a B School create a program in its MBA Marketing on NFTs.

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Celebrities are adored, loved (or hated) but have always been in news. But the last few months have changed the way fans engage with them - (and the way they make money)

A lot about the world of celebrity is a mystery - and fans adore their screen persona/arena performance - and have an unknown “I want to be like him/her” thought which makes them engage and follow their footsteps. Global tech biggies like Instagram have created a multi-billion dollar ecosystem of Influencers, and China has focussed on the Key Opinion Leader (KOL) ecosystem for helping brands use these influencers to create a new (and huge) path of monetization. We have seen celebrities telling you what to eat, what to buy, what to drive, where to live; they even taught their skill to you but now tech has taken a whole new meaning in the celebrity world.

While the traditional celebrity agencies were grappling with the new-age tech-driven platforms taking away a significant pie of celebrity monetization from under their nose; here came the NFTs - and within a few months - it has left the celebrity ecosystem excited and confused about this new ecosystem which will make the Instagram / Youtube “Celebrity Monetisation revolution” (Launch of creator education platform here) sound like a tiny no-body (more on that later hopefully) !!

So let's start with “Why is it so Jargon’y & Techie ??
        

The crypto world is full of terms, abbreviations, jargon and acronyms and so much assumed knowledge that it can feel very exclusionary and exclusive. Cryptocurrency exchanges in India like WazirX and CoinDCX suggest that the Indian crypto holders are aged between 18-35, and are “tech early adapters” which leaves a majority of the world with real money (also called Fiat currency) (and “big celebrities”) out of it. Exclusivity always means rarity and complexity - which enables a few to lead this “otherwise open decentralized ecosystem”.

Dichotomy? Well not really. Inability to access early rush? Most definitely.

The decentralized Crypto world is Tribal and Self-sustaining - it's a thriving community for sure. The members’ love of a coin or NFT creator becomes part of their identity, believers in particular crypto protocols can become evangelical, and hence there are multiple discord groups dedicated to platform evangelization and nurture - but unfortunately, they are all spread out and the knowledge is difficult to consume.

But let's forget that and stick on our core - celebrities and monetization

“There has never been a greater need for artists and fans to find a new way of engaging given the lack of industry events from COVID-related shutdowns,” Remo Prinz, co-founder of the Zurich-based Fyooz, said in a statement.

How are NFTs minted ? and sold ?
        

Minting is as simple as creating a listing. Different platforms have different processes but its a fairly simple one to understand. The more important thing is which blockchain to list it on (interoperability between blockchains is still a grey area). Currently, Ethereum is the most popular chain for NFTs. It is followed by Binance and Tezos, which are more affordable when it comes to transaction fees.

NFTs are sold in multiple ways. I will be using examples of eCommerce for better understanding

1. Marketplaces : These are like the amazon.com or flipkarts of the NFT ecosystem. These are typically horizontal platforms where creators can list their NFTs and buyers can buy them. They typically are based on a specific blockchain - and plan to have seamless interoperability. The big names are Opensea, Rarible, Kalamint, WazirX, etc. It's easy to set up but your NFT is trapped in a sea of other NFTs and it's your ownership to create the market for it. Unlike eCommerce, the sales of NFTs are public hence buyers follow trends closely in terms of what's selling. Typically the bigger community NFTs take a major part of these sales. Very recently, WazirX's NFT marketplace launched a Lakme Fashion Week collection where designers and artisans can offer their work as Non-Fungible Tokens (NFTs). Designer?Manish Malhotra?bears the baton for this revolution by creating 5 exclusive NFTs.
2. Curated platforms: Global organizations are now creating their own NFT marketplaces (akin branded eCommerce / D2C) which are created for niche communities with the storyline/engagement/gratifications/rewards all aligned to the aspirations of the community. A notable example is Dapper Labs which is behind Cryptokitties and NBATopshot. These are akin strategic partners who work with community owners to create a 0-1 journey in the NFT ecosystem

1. Sell yourself from your own platform - white-labeled stores: Very comparable to how Shopify has enabled everyone to create their own eCommerce store, there are platforms that have created this for NFTs. A few examples are Nftify, NFTically, Guardian, etc. For creators having niche communities who want to start their journey - this may be a good starting point. Fun fact, Guardian is the platform behind the much-hyped Amitabh Bachchan launch of NFTs soon on beyondlife ; and NFTically is behind the storefront of Zee Studios.

So how should a celebrity/agency or a channel go forward ?
        

While this is an overall unbelievably unpredictable market of (otherwise illogical) NFTs like?Etherium Rocks (Images of Random rocks) selling for millions of dollars; I think it will follow the basics of monetization - and also about how traditionally celebrity content (and access) is consumed and paid.

Collectibles (Eventually to be showcased or traded) and Moments' NFTs

Celebrity moments are a great deal - sports is even bigger. NBA created NBAtopshop with Dapperlabs earlier and last year's numbers skyrocketed. What is NBAtopshot you say? Its a collection of rare moments in NBA which were earlier converted to Cards - and are now digitized (among other things). Even media companies like CNN are jumping in. ISL (Indian Super League) has partnered with Terra Virtua for the same.

Merch (Memorabilia) & Collectibles NFTs : Collectibles and celebrities go hand-in-hand. For ages, we have been seeking images with celebrities (now selfies), their autographs, their owned clothes, etc. This follows a trend of flashy NFT auctions by high-profile musicians. Canadian DJ Deadmau5 launched a series of digital collectibles this week, RAREZ, worth around $100,000. A piece of this collection called “In Titan’s Light” sold for 78?ETH?(approx $50,000) on NFT platform SuperRare. Sports merchandizing is adding massive valuations and is an investor's favourite.

Also unlike other assets which one owns, NFT ownership is not private and exclusive in the same sense that physical ownership is. Although you can own a Monet and keep it behind closed doors for your own personal viewing, anything you buy as an NFT will, by default, be visible to the world ; anyone can download the digital image/video from your NFT (because it's on a public blockchain) and keep a copy for themselves. The only 'tangible' thing, therefore, that you possess by purchasing an NFT is an immutable record on a public ledger that you own said NFT - and the associated (bragging) rights and transactability that come with it.

India has seen only the top-of-pyramid?kind of behavior in this - and its yet to reach the regular investors and high growth asset class seekers. Big auction houses?like Sothebys and Christys have not existed and the buying in India has been limited to paintings by top artists which had a showcase and trade value. Even player merchandise etc in high fan following areas like IPL teams haven’t flown off the shelves (unlike our peers in NBA / EPL etc). While the total focus of NFTs is in this space in India, this will take time to take off (as a real business / transactive). Remember, collectibles and rare artifact trade is fairly mainstream in US (Remember Pawn Stars ?)

Hybrid NFTs :

Where there is a physical transaction associated with the NFT - its not just a digital ledger - its access rights to something - very comparable to a premium club membership. These could be like concert tickets, access tokens, participation in a limited access showcase, meet & greet with celebrities, advertising inventory, ability to participate in a raffle - these seem like an ignored area as of now but it has two key elements which work in its favor:

a) Counterfeiting may be a genuine problem in areas like ticketing / official merch etc hence smart contracts work really effective

b) there is a tangible operating value in it which is absorbed in mind-space of a buyer

...hence super niche communities with significant affinity to content creation and affiliaton to the overall storyline - become big transaction markets. A great example is WeNew which was started by the NFT superstar Beeple whose NFT was sold for a whopping $69 Mn. The launch of Andy Murray's Wimbledon NFTs and Louis Vuitton NFTs are great case studies in this.

Royalties

Royalties in art and music have always been a sore area. There have been talks about creating a music tokenization platform that slices up song royalty rights into crypto tokens that anyone can buy and trade. One of them is Royal which has generated enough buzz to raise $16 million in funding, a relatively massive haul for a crypto seed round. The concept is simple but revolutionary, its not a label, but an artist who decides how much of his or her royalty share to reserve for limited digital assets -holding fans and how many “official editions” to mint for a given song. The platform then facilitates the sale of those LDA tokens, generating cash for the artist and the possibility of future income for the song owners.?

NFT only launches:

TikTok has started creator-led NFT ecosystem on its platform and has kick-started the movement where NFTs meet creators meet social media. Lil Nas X launched the collection over TikTok.

Anthony Hopkins' upcoming movie is launching on NFTs. Other top celebrities launching their music and content exclusively on NFTs are KatyPerry, Doja Cat, Billy Gibbons, Tony Lanez. Celebrities like Snoop Dogg have created massive NFT collections too

India has a myriad cultures of multiple languages and performers from all walks of life. While trade and monetization may not be of focus, however, support in launching niche artists would definitely see the light of day through NFTs. There is a trend of niche artists launching their albums and performances on NFTs and die-hard fans supporting it by buying NFTs of these. If luck favors, who knows these investments in support of these artists become massively tradeable once these artists top the charts.

Domain Names' NFTs:

This is super hot as we speak with maximum trade volumes (Opensea). Domain names have a history of trade owing to access limitations - and with a whole new economy arising out of it - domain names become key. This may not apply to the celebrity ecosystem though - unless agencies miss out on booking the celebrity domains on the crypto ecosystem.

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If you are in the celebrity business (which means if you are an influencer/celebrity - present/past/future; or a celebrity agency or a marketeer or an educator in this space); this is not something that you can ignore. Be a part of it, educate yourself on it - don't do rookie mistakes of assuming social media following = Buyers. Work with a smart community-led approach; create a follower community around your true story - and strategize the rewards and ecosystem first.

Remember - NFT marketplaces are not just like e-commerce websites over Crypto ecosystem- they are way beyond that !