Issue #4: Monetisation for creators in web3
Happy Monday and a big welcome to the 56 new subscribers who have joined us since the last issue.
Yesterday, I returned to civilisation after 12 days of hiking through the outback. Re-entering reality felt a little strange, made even weirder when I read that Taco Bell is now offering couples the chance to get married in the metaverse at their very own virtual Taco Bell wedding. Sorry, what?!
What's coming up below:
Some strong signals from big brands moving into the web3 space.
How DAOs could shape the future of projects and businesses.
The practicalities of monetising a web3 project and a simple tool to help with this.
1. It’s a party in the metaverse
Taco Bell isn’t the first fast food company to enter the web3 space. Earlier this year, Wendy’s launched the Wendyverse, their virtual fast food restaurant located in Horizon Worlds, a virtual reality platform. And while Horizon Worlds is technically not web3 as it’s owned by Meta (you might’ve heard of them—they used to be called Facebook), it’s yet another signal from an established brand that they believe this is a worthwhile investment.
It’s not just fast food companies scrambling to get a slice of the web3 pie. Last week, Miley Cyrus swung in on her wrecking ball, filing trademarks in the categories of “virtual currency management software” and “virtual clothing, footwear, sports gear”. The former is interesting, and the latter is less surprising, suggesting that Miley might be releasing virtual merch in the not-too-distant future.
On top of this, it recently came out that Google invested $1.5b into blockchain companies between Sept 2021 and June 2022. And, more interestingly, the founder of Telegram (the chat app) suggested last week that they might make it possible to auction usernames on the platform like NFTs.
What this means for you: These are exciting times, and the fact that you’re reading this right now is a sign that you’re already ahead of the curve.
2. Much aDAO about nothing
One of the web3 concepts that excites me most is the DAO—distributed autonomous organisation. Think of it like a project or a business made up of more than one collaborator, where everyone is in pursuit of a common goal.
If 2021 was the year that NFTs shone, 2022 is the year where we’re starting to see what’s possible with DAOs.
Krause House is one example, made up of basketball fans aiming to collectively own an NBA team. If they succeed in this goal, every participant in the DAO would potentially have a vote in everything from which players get to play through to what uniform they wear on court. And, of course, we would hope that any profits would be distributed back to DAO participants.
Shibuya.xyz is another example. It’s an animated film where NFT holders can vote on the plot of each chapter and own a share of the final film.
As an online course creator, I can see a DAO structure being a way to collaborate with guest experts and give them a share of the finished online course. As a podcaster, this could look like listeners or sponsors owning a share of the show.
What this means for you: Expect DAOs to become as mainstream as NFTs soon. This is a great beginner’s guide to understand exactly what a DAO is and how they work.
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3. Money money money, in a web3 world
To date, most of the major NFT projects that you've seen in the headlines follow the same monetisation model: the brand or artist releasing the collection sells each NFT with an immediate inflow of Eth (or another cryptocurrency). Then, if the NFT is sold in the secondary market, the creator gets a % royalty as specified in the smart contract.
For example, let’s say I’m releasing an NFT collection with 1,000 NFTs, each selling for 2 Eth. Purchasing one of my NFTs gives you access to every online course I’ve ever created and all future courses I will create, so it’s a pretty good deal.
If all 1,000 NFTs are minted—in simple terms, sold—I would make 2,000 Eth (and I’d probably retire to a small town in the south of Italy).
Now, let’s say you purchased one of my NFTs for 2 Eth, and the price goes up because more people want to access my courses. You no longer need access to the courses as you’ve completed them all, so you sell the NFT for 3 Eth. In the smart contract I’ve specified that I will get 10% royalties on secondary sales, so when you sell the NFT you receive 2.7 Eth and I receive 0.3 Eth. Give or take a little for gas fees and any transaction fees imposed by the platform.
This monetisation model is simple. But it’s a little too simple for the varying needs of creators and businesses that are entering the space. And the rising number of royalty-free marketplaces means that creators are losing out on the royalties they could make from secondary sales.
In the last year, we’ve seen a number of “membership” NFTs—where owning the token gives you access to a community and often other resources. Similar to a traditional membership site. This further highlights the challenge with the existing monetisation model, as memberships and communities require resources to run and royalties from secondary market sales might not be enough to sustain this in the long run.
I recently came across Unlock Protocol, which is one of the more promising solutions to this problem, making it simple for creators (that is, those of us who aren’t technical and couldn’t code to save ourselves) to set up and sell membership NFTs, sell NFT tickets for an event and more.
What this means for you: When you’re dreaming up any kind of NFT project for your brand, consider the different monetisation options available to you. No-code platforms like Unlock make it easy to set these up with minimal technical knowledge.
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Either way, I'd love it if you could please take 2 minutes to let me know how I'm doing. What would you like to see more of? Less of?
Until next week,
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This should go without saying, but I am a marketer, not a financial advisor. The content in this email is for educational purposes only and should not be taken as financial advice. Please take care and do your own research before investing in any web3 projects.