Fan Economies Fan the Flames for NFT Sales
As digital art sales soar, fan fervor drives secondary markets.
Celebrities are entering the cryptosphere at a break-neck speed: in a now-infamous Tonight Show segment, host Jimmy Fallon revealed that he and guest Paris Hilton are both members of the Bored Ape NFT community. Actress Reese Witherspoon — long a proponent for women in the workforce — has taken her fight for equality into the metaverse with NFT marketplace World of Women. Overseas, actor Shawn Yue shattered digital art sales records with the mid-March release of his Zombieclub Token, which became the top-selling NFT on marketplace OpenSea less than three hours after being launched.
While celebrities who ‘shill’ their NFT projects have received mixed reactions from the public (poor Matt Damon), true fans have embraced the opportunity to connect with and support their favorite creatives within the emerging web3 economy. Creatives have likewise embraced the opportunity to engage with fans through increasingly-innovative means — like live AMAs and access to community-exclusive events — which come packaged into the sale of a digital asset.
Because they are non-fungible, holders must move quickly to mint their NFTs and claim the benefits they provide; a gamified tactic largely responsible for the success of campaigns like Zombieclub. This imbues each NFT collection’s launch with a sense of scarcity — which, combined with the desire for affiliation spurred by a celebrity’s endorsement of the work — creates a viable secondary market for the discerning crypto collector.
How Fan Economies Function
Traditionally, relationships between celebrities and their fans are one-sided. Artists are easily able to reach their fans through social media posts, appearances, and meet-and-greets — though more often than not, each of these activities is carefully controlled by the artist’s public relations team. Because celebrities rely so heavily on positive public perception, they may shy away from engaging with their fan base casually.
Fans often want nothing more than a meaningful relationship with the artist they favor — but are limited in their access, relegated to commenting on the artist’s social media or writing letters to their marketing team.
NFTs have created new opportunities for artists to personally engage with their biggest supporters without needing a script or marketing team. The exclusive nature of non-fungibility and the tiered ranking system seen in many digital art drops ensure that a creator’s most dedicated fans move quickly to secure their NFT, minting as soon as they are able to. This helps the creator to form more intimate relationships — and ultimately fan communities — with the followers who have proven their support for them.
Soaring Secondary Markets
Even for those not interested in personal engagement with a celebrity or their community, fan-focused NFTs offer a compelling alternative to unaffiliated digital artworks.
Data from 2021 collected by market tracker NonFungible shows that while primary NFT markets typically see higher sales volumes, more buyers actually participate in secondary marketplaces — and spend more money within them.
Why is that, exactly? According to Sean Rooney, head of research for Valkyrie Investments, crypto whales — those who hold a specific cryptocurrency in vast sums — often purchase a high quantity of NFTs during their initial launch, in hopes of assuming control of the asset’s market share and then being able to set a higher price within the secondary market. So:
fewer buyers buying more NFTs >
more scarcity + exclusivity >
more buyers spending more money on the same assets.
In the case of celebrity-endorsed and fan-focused NFT projects, secondary markets may prove to be especially valuable: the creator already has a fan base who have demonstrated their support for, and desire for affiliation with, that celebrity. If the NFT allows its holder to enjoy special access to the creator, it becomes a must-have item for their most dedicated fans. And if the NFT becomes a must-have item, then its secondary marketplace value will soar.
Despite their relative recency, the NFT and cryptocurrency markets are exploding. As new creators –– be they celebrities, artists, or crypto-enthusiasts –– enter this space, competition inevitably grows stiffer and spurs creators to innovate new methods of connecting with their fans. And in that bidirectional ecosystem, everyone wins.
Whether you’re a celebrity super-fan or an experienced crypto collector, it would be wise to explore the growing fan economy before making your next NFT purchase.
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