Are NFTs the Future of Subscriptions?
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Many creators and brands rely on subscriptions to make a living. But traditional subscriptions are built on platforms that could change rates and policies at any time.
I believe that we’ll see a rapid shift to NFT memberships in the near future. This shift is a massive opportunity for web3 companies.
Why NFT memberships are better
What the drawbacks are
How this could work in practice
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Why NFTs are better than traditional subscriptions
In the creator demand curve, I wrote about how creators and brands can maximize their earnings by targeting different fan willingness to pay:
Ads can target casual fans who aren’t willing to pay anything.
Subscriptions can target active fans who will pay a small amount.
NFTs can target super fans who will pay a lot.
But I now believe that NFT memberships are better than traditional subscriptions. Here’s why:
1. Creators and their communities own the NFT
Imagine that you’re a live streamer on Twitch.
With traditional subscriptions, Twitch sets your subscription price and share of earnings. If Twitch decides to cut creator payouts, there’s no easy way for you to move your community to another platform.
With NFT memberships, you own the NFTs with your community. No platform gets to dictate how you interact with your fans.
2. Creators can personalize the NFT membership
With traditional subscriptions, the benefits and terms are often pre-set. On Twitch, for example, you can only offer perks like custom emotes to your paid subscribers.
With NFT memberships, you can personalize your NFTs’:
Look and feel. For example, you can make a pfp (profile pic) collection that fans can show off to spread the word.
Terms. You can control the mint price, number of NFTs, and royalties from secondary sales.
Benefits. You can give NFT holders access to a private community, premium content, IRL events, and more.
Because NFTs are programmable, what you offer is only limited by your creativity:
Your NFT’s look and feel could evolve if fans do specific tasks.
Your NFT could be a bundle that grants access to content from many creators.
3. Creators and their communities share in the upside
With traditional subscriptions, fans who have supported a creator since the beginning don’t see any upside as the creator becomes more popular.
With NFT memberships, both creators and fans can share in the upside as the NFT becomes more valuable with the community.
Drawbacks of NFT memberships
As the saying goes, “With great power comes great responsibility.”
Since NFT memberships give creators and communities control over their outcome, it’s important to be aware of a few common pitfalls:
1. Traders could flip your NFTs and ruin the vibe of your community.
Traders could come into your community and snatch up all the NFTs without giving your real fans a chance to share in the upside at all.
To avoid this, you could offer whitelist spots to fans and set parameters so that no single person can buy too many NFTs at once.
2. Fans can get priced out of the NFT membership.
If things go well, your NFT collection will increase in value as your community grows. As a result, new fans might get priced out (not to mention the gas fees!).
To avoid this, you could issue subsequent NFTs at lower prices for fans who can’t afford the OG collection. You could also use L2 and other L1 chains to avoid gas.
3. Fans might react negatively to NFTs.
Unfortunately, many creators and fans have a bad impression of NFTs due to scams and people looking to make a quick buck. As a result, you might alienate some fans if you pursue NFT memberships without clearly communicating the value prop. Fans can see through your true intentions so ask yourself this question:
Are you looking to make a quick profit or build a sustainable community?
How this could work in practice
Let’s imagine again that you’re a Twitch streamer:
When you’re just getting started, you rely on Twitch to grow your audience.
After reaching a certain size, you decide to invite your fans to an owned community (Discord isn’t 100% owned, but it’s a close proxy).
You launch your first NFT membership collection with your community’s input. You decide the mint price, number of NFTs, and membership benefits.
Fans who buy your NFTs are motivated to spread the word about your content because they share in the upside too. At some point, your OG NFT collection becomes too expensive for new fans to purchase.
You and your community decide to issue a new NFT collection to bring in more fans as owners.
To summarize, I think NFT memberships are the future of subscriptions because they let fans share in the upside and let creators target multiple fan willingness to pay:
I think this is one of the most exciting trends in web3. If you’re building a solution for NFT memberships, I’d love to get in touch.