Developing Long-Term NFT Vision and NFT-based Business Models

In this article, you’ll find out elements of a successful long-term NFT project and key things to keep in mind when developing your strategy.

How NFTs Can Help You Build Community

NFTs are making a huge impact in the business world. We haven’t seen this large an impact or this level of excitement about an innovation since the advent of social media. It feels like the very early days of Facebook or Twitter.

Primarily, NFTs allow businesses to create digital proof of ownership, attendance, and even transference to different experiences they offer their customers.

Additionally, NFTs are transparent and instant. The smart contract coded into the token can’t be edited or altered, which means the business that created that token will always see the return whenever that token is sold. If people purchase an NFT and later decide to transfer that NFT to a third party, the business will still receive a share of the transaction as written into the smart contract.

The business can still earn revenue just based on the fact that the experience it created for its audience is being accessed and enjoyed, even if that access wasn’t purchased directly through one of its sales funnels.

With NFTs, businesses are also offering their audience a chance to buy into their community. This is a much deeper connection than people who simply purchase a subscription. Buying into a community essentially gives that member partial ownership of that community. The members help determine the value of the community based on how many tokens they hold, as well as their asking price when they sell off their tokens after they no longer need access.

Whether an NFT grants people access to a community on Discord, an event, a course, or a coach’s calendar for special coaching opportunities, that access will be granted automatically and within a couple of minutes of purchase. So people will be able to reap the benefits of being an NFT holder faster than anything that requires manual verifications and checks or emails sent back and forth.

You also don’t have to worry about technical issues such as when an email is accidentally marked as spam or doesn’t get delivered for a variety of other reasons. The proof of their access is visible on the blockchain immediately, allowing immediate access.

How NFT Airdrops Work

If you use NFTs to reward your community and grant them rewards for participating in your community, those rewards are done through something called airdrops.

An airdrop is a transaction in which you send an NFT from your portfolio to someone else’s portfolio.

So, for example, you could have one NFT for your community and a separate NFT for attendance at your events. Every once in a while, you could decide to move your attendance tokens over to your community’s portfolios, along with whatever new benefit is coded into the smart contract of those attendance tokens.

You can also send more of your community tokens to token holders. If someone is holding 50 of your community NFTs, and you choose to reward them with another 10 tokens, you simply move them over using an airdrop.

How Proof of Attendance Works

The proof of attendance protocol, sometimes referred to as POAP, is based on the idea that you could give out NFTs based on limited-time concepts and have, possibly, a secret word to access them.

For example, TIME magazine does an amazing job in their TIMEPieces Discord community sessions. They’ll give out a secret word, and during that same timeframe, within about an hour, you can go to their website and put in the word. Doing so will grant you a special POAP.

How NFTs Can Transform the Membership Experience

Although membership-based websites appear to have been working just fine for a long time, if you look closely, you can see a lot of fundamental flaws around the current model.

For all its potential, the internet is really powered by a few business entities — Facebook, Google, and Amazon. There are plenty of people making good money on the internet but even they are dependent on these tech giants and are paying them to be able to do business. That payment could be in the form of data extraction, advertising, membership fees, or bandwidth, but they are paying.

Additionally, a large tech company, Apple, made one singular change to their users’ privacy and data handling, and that change kicked off an enormous drop of almost 30% in another large tech company, Meta’s Facebook.

Anytime a large corporation makes a singular change in its own business model that can have a significant impact on another company’s business model, that’s a sign of its fundamental weakness within the model. Typically, if a business makes a change, it only affects that business. Any other companies don’t have to worry about corporate-level fallout as a result of these types of changes.

Quite frankly, people are tired of the friction that these entities have caused in their internet experience. You can measure how tired they are just by seeing how many are shutting down their subscriptions, closing accounts on different websites, and using ad blockers to change their experience on certain websites. People are tired of having to sign up, pay separately, remember passwords and domains, and continually jump through hoops to be able to take advantage of the membership they want to sign up for.

Not only are people sick of the friction, but they don’t understand why the friction exists in the first place. Who are these companies serving? Are they members or clients? Are they users or products? Today’s membership-based business models aren’t set up to serve the members and they know it.

By changing your membership business model to an NFT (non-fungible token), you can remove nearly all of that friction. Anywhere you can connect to your members’ wallets, they can find your content. And they don’t have to remember a password to get into it. All they have to do is connect their wallet, and then the smart contract on the back end will check if the required NFTs are there and unlock whatever content that NFT holder has access to.

NFTs can create the same easy experience anywhere you want to connect with your members. If you want to create special content on your podcast or blog, you can do that without forcing people to log into your blog. You can also send them over to your Discord server, your Shopify store, or anywhere else you want to offer them a special benefit. They don’t have to remember yet another login to make it all work.

So you’re enhancing their experience on the internet with you, giving them the value of being a member of your community and an NFT holder, and you’re able to do it all without the complicated administrative back end of trying to manage and audit your memberships. If someone is done with your membership, they can simply sell the NFT to someone else.

Everything on the back end will smoothly and automatically transfer over without the need to call you or set up any new accounts or change anything over.

Why Should Businesses and Creators Consider NFT Business Models?

It can be challenging for businesses and creators to stand out and capture the attention of their audience. We’re constantly bombarded with messaging from brands, media, and other creators.

NFTs provide a way to differentiate and offer unique experiences that can help businesses and creators stand out and build stronger connections with their audience, even in crowded and saturated markets.

NFTs can be used as digital assets to curate unique experiences for audiences such as providing exclusive access to content, merchandise, and more. This can help to build a sense of exclusivity and community among fans and make them feel more invested and connected to the business or creator.

For example, a musician could release an NFT that grants the owner access to exclusive concert experiences or behind-the-scenes content. A clothing brand could release an NFT that grants the owner a unique piece of clothing or access to a limited-edition product line.

Another key advantage of NFTs is the network effect.

Early adopters of social media platforms were able to build larger audiences and gain more influence as the platforms grew in popularity than their counterparts who were slower to adopt, and the same can be true for NFT projects.

Businesses and creators that get in early on NFT projects can benefit from the growth and adoption of the technology as more people get involved in the ecosystem and the technology becomes more mainstream.

NFT Business Models That Are Working

NFT Business Models for Customer Loyalty

Moving forward, successful NFT business projects will be launched to enhance the customer experience and loyalty with an existing business.

For example, a coffee brand could use NFTs as part of a loyalty program to develop a loyal fanbase by letting customers earn and collect NFTs as rewards for their purchases.

Starbucks recently launched the beta of its Web3-based loyalty program called Odyssey. Odyssey participants will be able to “engage in Starbucks Odyssey ‘Journeys’ which are a series of entertaining, interactive activities to earn collectible ‘Journey Stamps’ (NFTs) and Odyssey Points that will unlock access to exciting new benefits and experiences.”

NFT Business Models for Pre-Sales

Another way to leverage NFTs is securing pre-sales of a product.

Liquid Collections helps anyone launch a bespoke, small-batch wine or spirit brand by selling NFTs that can be redeemed for a product when the beverage is bottled and ready to ship. The Overpriced JPEGs podcast launched the Overpriced Jin label with Liquid Collections and then airdropped the OPJ Liquid-backed token to past guests as a thank-you.

Building further on the airdrop and redemption model, a brand can partner with an existing NFT project that aligns with the brand’s target audience or values by airdropping that project’s holders with an additional NFT (digital asset) that can be redeemed for 20% off their product line or service.

NFT Business Models for Long-Term Experiences

Then are also NFTs tied to long-term NFT gaming platform experiences.

Cryptoys are a family-friendly NFT collection. Each of the digital collectibles is purchased blind. Each cube can be digitally unwrapped to reveal the Cryptoy’s form. Once unwrapped, the creature can be used to play in a virtual arcade.

NFT Business Models for Self-Sovereignty

Have you ever signed into a website with your Gmail address? Do you wonder why a third party like Google or Facebook is the gatekeeper between you and another entity? Have you thought about what the gatekeeper is learning about you or sharing with the entity you’ve signed into? You’re not alone.

The result is a growing conversation around using blockchain technology, NFT technology, and self-sovereignty to decentralize the internet so that every person will own and control their digital relationships and data via an NFT.

NFT Business Models for Community

NFTs can also be used to gather and connect people to an NFT community centered around shared goals.

Afropolitan is minting NFTs to build a Network State — a digital nation launching as an online community to connect “the best that Africa and the diaspora offer across art, finance, tech, health, energy, sports, and media.”

It will then grow to include physical spaces.

98% of all NFT projects will likely fail for a multitude of reasons.

Lack of Vision or Originality

As sometimes happens, we see breakout success stories like the Bored Ape Yacht Club that seem to come out of nowhere and spark everyone’s imagination. And not long after, everyone is trying to recreate that same level of success. Marketers try to model these success stories, often not realizing that once a success story becomes a phenomenon.

Remember that launching an NFT project is a lot like launching a new business. And just as with any other type of project or business, you need to solve some type of problem.

The problem and how you solve it is up to you. You can solve an emotional need by developing an amazing and supportive community. You can solve a nostalgic-seeking individual’s psychological need to re-embrace their youth. Solving a problem really means that you have to get creative in the market and think about what your hook is going to be.

This is the part that marketers understand. However, a lot of creators will launch their NFT projects without taking enough time to really consider what problem they’re solving with this launch. They put together a great idea with appealing artwork, they get out of the gate eager to sell their 10,000 NFTs, and then when they stall out at 160 sales, they can’t pinpoint what they did wrong.

The truth is, they put so much consideration into their long-term vision that they forgot about the fact that people want to see something tangible now. So if you have an original idea with a long-term vision, what are you showing the world today?

Building a Community That’s Too Small to Support the Project

The next reason why some NFT projects fail is they forget to build their community up to critical mass.

Most marketers can tell you to start building a community before you launch your business. And most businesses understand the need to build a community themselves. However, when launching a traditional product, there’s no restriction on the size of the community you need. When you launch the product, you launch it to the audience you have and then you can continue bringing new people into your community after the fact.

That’s not what happens with an NFT project.

With NFTs, once you launch the NFT project into your community, if that community isn’t at critical mass — meaning it has 5 to 10 times the number of members in it than the number of NFTs planned for the launch — then there’s no one left to bring into the NFTs.

So if you’re launching a project with 10,000 NFTs, your community should be built up to 50,000 or even 100,000 interested participants. That’s the only way to sell the 10,000 NFTs and create the value that powers them.

Ignoring Syndicates

After marketing, it really comes down to who you’re initially engaging with. Most of the largest players in the NFT space are part of a syndicate, also called an alpha group, where if one buys into an NFT project, they all follow suit and buy into the same project.

Of course, working with a syndicate isn’t required. Some creators design their projects specifically not to work well with syndicates and whales, who are the big investors who’ll buy up 10% to 20% of the supply and then share with others the projects they’re involved in. However, ignoring these groups rarely works to your advantage.

Lack of Post-Launch Preparation

It’s possible to have a successful NFT launch and still fail in the long term. One of the most common reasons is not having the right people on the team to manage the project after the sale.

You can take an artist, a developer, and a marketer, put them together, bring a product to market, and sell it out, but then what’s the plan after that? The artist is done with the art. The developer is done with the blockchain side. And the marketer is wondering, “What do I sell next?”

Many people who get involved in NFT projects fail to look at who the team members are on the project before the launch and how many of them have experience after the launch.

And that’s kind of a problem with the shiny-object, short-term type of thinking that has worked so far. But it’s not going to continue working for new people coming into the space. To really succeed with your NFT project, you have to think about who the leader of your NFT project is going to be and what their experience is within the NFT space. How are they going to help your NFT project succeed?

Another reason many NFT projects fail in the long term is that they don’t have a vision for money management. They’ll have a vision or a roadmap for the NFT itself, they’ll raise funding, and then have no idea what to do with the money. So think about how you’re going to use your funding to continue building the community and providing value to make the project successful over the long term.

Predicting the Future of NFT Memberships

Cryptocurrencies, Web3, and NFT-based membership models are going to be much more prevalent in the near future. It’s going to become the way of building technology. Users and developers collectively own this technology, helping to decentralize memberships even further. We’re going to see businesses moving away from Silicon Valley owning everything over to a model where their users own their own memberships.

We’re also going to see the strengthening of businesses and consumers in many ways. No longer will one business be able to fall victim to another business making a decision about their own client handling.

Let’s talk about what some of the successful long-term projects are doing and considerations when developing a long-term vision for your NFT project.

Secure the Backing of Notable Investors

One thing potential investors will consider with any NFT project they might be looking to buy is who’s backing the project.

A lot of the more successful NFT projects are backed by venture capitalist investors. In addition to lending credibility to the project, it also signals to other potential investors the project has been through its due diligence. Someone has checked out the legal documentation and the team has been doxxed. These are the signs that people who are really looking to build wealth in the space are looking for.

Doxx Your Team

Once again, the breakthrough successes from a few years ago worked because rules like this weren’t yet becoming the norm. Now, launching an NFT project as an anonymous creator isn’t only risky, but discouraged.

If an NFT project is raising millions of dollars, potential buyers want to know the background of the people who will manage that money. If they’ve never run a business, there’s a high probability that they won’t have a clear idea of what to do with the money and it won’t go toward growing the project.

Convey Your Vision Through a Public Deck

Investors today want to see a public deck with NFT projects. Art is great, utility is a given, but investors want to see the deck. A deck, sometimes called a pitch deck, is a presentation used to pitch an NFT idea to any number of audiences, but especially to investors.

Your deck should contain each of the elements that we’ve already talked about: a high-level summary of the project, the problem you’re addressing, your marketing strategy, your team, financials and projections, and so on.

Incorporate a DAO and Tokenization Into Your Project

Forming a decentralized autonomous organization (DAO) can also help ensure long-term success of an NFT project.

DAOs are organizations driven by tokens and owned by the community. Typically, to be done correctly, there has to be a token allocation. For example, suppose there are 10,000 NFTs and every NFT gets airdropped 100 tokens. If you own 10 NFTs, you now have 1,000 tokens, so you’d have a larger vote in the direction of the DAO.

A lot of projects issue what’s called a utility token that people can use inside of their ecosystem. Some popular projects do it so that if an investor wants to get alpha, meaning they partnered with a project for a whitelist or an allow list, they can buy those access rates for their token. They might be able to use them to buy tickets to real-life events, for example, or whatever utility the project is creating the token for.