Lorenzo Esparza is the CEO at Manhattan West, a modern investment firm that serves athletes, entertainers and high net worth investors.
Crypto, Web3 and now non-fungible tokens (NFTs) have successfully made the transition from just a fad to firmly in the cultural zeitgeist.
If we think of money in the decentralized economy as crypto, then we can think of NFTs as goods for purchase in the digital economy. NFTs are unique digital assets that can be purchased on the blockchain. When you purchase an NFT using crypto, the asset exists as a hyperlink to the image you have bought the rights to, and that is what makes it “non-fungible.” Not unlike a physical piece of fine art, NFTs are the digital equivalent of illiquid assets.
As one of the fastest-growing segments at the nexus of culture and commerce, it comes as no surprise that we’re seeing professional athletes and entertainers rolling out their own NFT strategies. While I primarily work with entertainers and athletes, these tips could be applied to brand leaders as well as they look at how to best position their NFT endeavors.
For those considering entering the NFT market, here are five key considerations while building out your strategy.
Understand what you can and cannot do.
Production company Miramax sued director Quentin Tarantino over his NFT collection based on his original screenplay of Pulp Fiction, with the studio claiming that NFTs do not fall under Tarantino’s minimal contractual rights to the script. Word to the wise: Before you start minting NFTs and putting them up for auction, get clear on the names, images and likenesses you—and any organization you are associated with—have the legal rights and exclusivity to create and sell that content to the public.
There are no ‘industry-standard’ deals.
Our clients in professional sports and throughout Hollywood see how NFTs can diversify their personal brands, but this whole space is only a few years old. Today, NFTs are doing everything from finding new ways to bring festival-goers Coachella wristbands and merch to bringing people back from the dead—like hip-hop journalist and photographer Lawrence “Loupy D” Dotson who released a rare collection of Tupac photographs on NFT auction platform OpenSea. Because of the dynamic and constantly evolving landscape, there is no one-size-fits-all approach. The benefit is that with the right support, NFT deals can be negotiated and customized to provide further brand visibility.
Determine the best way to engage.
We are seeing a wide variety of ways celebrities and professional athletes are engaging with NFTs. There are the “operators” who are launching NFT platforms and online communities for creators to network and sell their NFT collections, like Tom Brady’s NFT platform Autograph and John Legend’s collaboration with OurSong. Then there are the “creators,” launching their own NFT collections in collaboration with NFT companies, like Snoop Dogg, Steve Aoki, Ellen DeGeneres, Eminem and Grimes. There are also the “owners” like Bored Ape Yacht Club, who have sold their NFTs directly to celebrities like Justin Bieber, Neymar and Kevin Hart. And there are several other use cases yet to be discovered. All this to say, it’s critical to understand the diverse ways to engage NFTs and align your strategy with the use case that makes the most sense for your needs.
The blockchain is forever.
The blockchain is a permanent, publicly transparent ledger of every transaction ever made using crypto assets. If you decide to investigate NFTs, do not forget that on the blockchain, they are irreversible and live on in perpetuity. Though things are rapidly changing, in 2022, there is no practical way to delete NFTs. Make sure you have a well-defined path as you build out a strategy to get involved in this emerging asset class.
NFTs are just the beginning.
While it is entirely possible that you could uncover the next best use case for NFTs tomorrow, the possible financial losses, gains and legal ramifications of entering the world of NFTs unprepared could be grave. It is essential to enter into the digital asset space cautiously and carefully. Consider partnering with experts in emerging tech such as blockchain and crypto.
NFTs are a novel way to build a community, engage with fans in a new way and diversify your brand. Aside from the digital scarcity driving the high value of some NFTs, this tech sits at the charged intersection of the creator and digital economies and is burgeoning with possibilities yet to be discovered.
I expect that NFTs are just the beginning and that we are going to start seeing content being built on top of these NFTs—creating a blue ocean of opportunity. But before you get involved with NFTs, have a well-defined strategy with your team that will lead to the most successful strategy launch.
Article Credit : Lorenzo Esparza / Forbes