This article is part of a 10-piece Digiday series that explores the value of NFTs and blockchain technology. Explore the full series here.
Memberships have been used by publishers for decades to identify the most passionate subset of readers — those willing to spend their own money for access to exclusive content and connect with other fans of the brand. But as some publishers experiment with the Web3 world, NFT holders are starting to be viewed as the new brand evangelists.
Keeping them happy means providing added tangible value to their NFT purchases of hundreds or thousands of dollars, such as access to exclusive events, subscriptions to premium content and message boards. But keeping those super fans content could come at a cost to those businesses’ bottom lines.
Blockworks, Playboy and Time are a few media companies that have started to form “communities” out of the people who have purchased their NFTs, while crypto publisher CoinDesk is using participation tokens to reward its most active readers to form a pseudo-membership from that cohort.
Having a group of regularly engaged and active blockchain fans automatically fills the funnel with potential NFT buyers for future drops. But rewarding NFT holders for their one-time purchase can have inadvertent effects on other revenue streams, including ticket sales, subscriptions and product licensing.
Communities form themselves
Blockworks — an online crypto news publication — created a core group of super fans during its Permissionless conference this past May in which 555 VIP ticket holders stayed in touch after the event wrapped, said co-founder Jason Yanowitz.
Yanowitz’s team turned those VIP tickets into a limited collection of 555 NFT avatars called Permies, priced at a starting point of 1.1 ETH (or $3,300 at the time), to add value to its ticket revenue through ticket resale royalties.
What it ended up helping to do was identify the fans of the brand who were willing to pay over $1,000 more than the price of a general admission ticket to gain access to more parties and exclusive events at the conference as well as a lifetime pass to Permissionless as long as they own the NFT.
“A very strong community has formed around the Permies and they basically became our earliest product testers,” said Yanowitz.
The NFT holders, affectionately known as Permies themselves, also gained access to a private Discord channel, where many crypto executives and significant investors tend to workshop ideas before taking them public. Beyond that, Permies were given access to Blockworks Research, which typically costs users $2,500 per year and filters various stats and information about cryptocurrencies in the market into one platform.
“Permies are the most aggressive users of the research product and they give us a lot of feedback. It’s honestly just like having a very core user group, which is nice,” said Yanowitz.
Whether this feedback is worth the nearly $1.4 million being left on the table every year from what those 555 NFT holders would have otherwise paid for the access to Blockworks Research is up in the air. Blockworks earned $1.8 million from the initial sales of the Permies and 7.5% in royalties from every subsequent sale in the secondary market. But the resales of Permies that took place in the past week (four sales, according to OpenSea) range in sale price from 0.6 ETH to 1.59 ETH.
Blockworks does not have plans to release any additional NFTs in the Permies collection going forward, according to Yanowitz, which would keep this membership exclusive and likely keep the price point of Permies on the higher side.
Connecting the virtual with the physical
Playboy has always championed exclusivity and VIP culture with its infamous Playboy Mansion, it is opening up those doors with Web3 by giving its fans the chance to purchase access in the form of “Rabbitar” NFTs.
The company launched nearly 12,000 animated rabbit NFTs in the collection last October, the most expensive of which sold for 10 ETH (about $42,000 at the time), according to OpenSea records. In total, 2,600 ETH worth of transactions have taken place in initial and secondary sales of Rabbitar NFTs per OpenSea, equivalent to $4 million today, and there are currently 5,200 owners of Rabbitars. In 2021, Playboy earned a total of $12 million in NFT revenue, about $10.7 million of that coming from the Rabbitars collection, according to the company.
With the purchase of a Rabbitar, holders are able to attend free, exclusive events both in-person and in the metaverse, such as the ones that took place adjacent to Art Basel in Miami Beach, Fla. last December. As a result, it negated potential ticket revenue that could normally be earned from these events.
While Playboy wants to get its audience to collect NFTs in the same way fans collect bunny merchandise and its magazines, Ben Kohn, CEO of PLBY Group, said creating a community from these collectors is a core part of the company’s Web3 strategy as well. It’s not just about collection of the digital asset, but also about “what else do you get?”
This month, Playboy also announced its collaboration with The Sandbox, a metaverse platform that sells virtual real estate, to build a “MetaMansion.” Rabbitar owners will be able to visit the virtual mansion (which features pixelated women in the iconic bunny costumes) and play games, interact with other NFT holders and attend events.
Time has similarly entered into The Sandbox metaverse with its virtual TIME Square, which gives its NFT holders access to discussions, events and screenings within the metaverse space. NFT holders also have the perk of a free subscription to Time, which go for $4 per month or $39 a year.
The publisher has been one of the more bullish media companies in the NFT space, earning $10 million in profit alone from the sales of NFTs in its TIMEPieces collections.
The approximately 4,000 NFT holders it has are not the only members of the community it’s built around TIMEPieces. At large, TIMEPieces has more than 50,000 members across Twitter and in its Discord channel, the latter of which acts as a platform for virtual events and gives members the ability to engage with Time’s reporters and editors, as a benefit of being a part of the group.
Using tokens as incentives for membership
CoinDesk is still working to create a community of its most engaged audience members but plans to do so by taking the participation reward system it built for its event businesses and applying it to the rest of its editorial portfolio.
In June, CoinDesk tested DESK at its marquee conference Consensus, which took place over four days in Austin, Texas. The token was built to reward the 20,000 in-person attendees for sitting in on panels, talking to sponsors and interacting with other various activities. After completing one of the 500-plus activities, those attendees could scan a QR code and have DESK tokens deposited in their crypto wallets, which they were then able to spend within the confines of the event on food, drinks, merchandise and other activities.
Now, the team that built the token economy in-house — the CoinDesk Studios team, headed by svp Sam Ewen — wants to replicate that model across the publication’s portfolio of products to get its readership of 1.5 million monthly unique visitors (an average from May 2021 to May 2022 per Comscore) collecting and spending DESK as well.
Readers will be rewarded with DESK after reading articles, listening to podcasts, watching videos and more, according to Ewen, who is still working out the ultimate model that’s expected to go live later this year. DESK holders will get access to exclusive events, receive discounted or a free ticket to Consensus in 2023 and also be able to purchase NFTs in CoinDesk’s marketplace with the token, among other things.
“It’s not cheap to build this stuff and frankly, you learn a tremendous amount about the complexity by building the tokenomics itself. But we are trying to build a rewards-based ecosystem that we can actually run across the entirety of CoinDesk,” said Ewen, making the investment to build the technology hopefully worth it in the long run. He declined to disclose how much has been spent on building the project to date but did say it took approximately eight months to build it.
At Consensus, 20% of attendees, about 4,000 people, participated in collecting and spending DESK. If that rate of adoption translated to CoinDesk’s online readership, about 300,000 people would be expected to participate in using the token across the publisher’s online presence as well.
“We are looking less at whether we are revenue positive [or] break-even on DESK alone, and more on, are we creating more utility, more value [and] more connection with our readers in ways where they feel like they’re actually a part of the CoinDesk family,” Ewen said.