4 Ways NFTs Can Add Passive Income Streams to Boost Your Business
“What can NFTs do for my business?”
“Can NFTs really provide unique customer experiences?”
“How can NFTs add to my bottom line?”
These are top of mind questions for any business, brand or entrepreneur looking to dip their toes into the web3 space. And for good reason!
Fortunately, generating returns using non-fungible tokens (NFTs) is a viable option …. if you match a creative use case with the right business model.
As a strategic consultant with a unique convergence of experience in blockchain and business strategy, my superpower is finding ways to monetize channels of income for any decentralized technology use case.
And you should always be looking for ways to maximize potential profits by generating as many income streams as possible; the average millionaire has SEVEN!
Together, let’s look at four ways to generate passive income with NFTs that will help unlock your potential as a business owner or content creator. But first…
A Quick NFT Primer
At their core, NFTs are digital tokens that represent a unique asset, such as artwork, music, or game items, and can be bought, sold, and traded on a given blockchain. NFTs are a great tool for entrepreneurs and creators looking to add passive income streams by selling proprietary digital content because of three special characteristics:
Uniqueness: NFTs represent a one-of-a-kind asset that can’t be replicated.
Security: NFTs are stored on a blockchain of record, which makes them resistant to fraud and counterfeiting.
Transparency: NFTs are stored on the blockchain, which allows buyers and sellers to view the complete transaction history.
The good news is that improvements to marketplace functionality has made it easier to mint and list content, products, or services for sale. At the same time, the introduction of no-code marketplaces and more user-friendly payment systems are making it easier than ever to monetize these assets.
And now for the good stuff … 4 concrete ways NFTs can add income streams to boost your business.
1. Content, Content, Content. Make More Content.
Let’s get one thing straight right off the bat. If you’re a content creator in web3, you’ll be well positioned to experiment and to innovate. The vast majority of content can effectively be minted on the blockchain and made into a digital asset.
Whether you’re an artist, writer, photographer or musician, the exciting developments in web3 enable content creators who no longer need permission or agents to build an evangelical audience to find new paths to profits.
Grant Sabatier, founder of Millennial Money believes that “2023 will be the year of the creator economy, and that 'the crypto millionaire' is going to be replaced by 'the creator millionaire.’”
For the next few years, Sabatier predicts that digital content creators and people with online businesses will do particularly well.
Great! So what are some examples to get me started printing digital Benjamins?
So glad you asked…
Scale your content with fractional ownership. Traditionally, artists might sell a single piece of content to one buyer; let’s say for $1,000. Using web3, that same artist could instead sell 100 tokens to multiple buyers for $50 and net $5,000 upon sellout.
Royalties can be automatically programmed into the NFT to pay the artist a percentage of sales - forever. Any time those 100 tokens are traded among buyers, the artist receives a percentage of that sale in perpetuity!
Increase the value of the NFT offering by linking a physical asset to the NFT. Because NFTs can represent and reflect ownership of a physical asset, artists can add value to their content by offering merchandise, prints, or even bourbon.
2. Build Better Beanie Babies w. Digital Collectibles
As a childhood collector of baseball cards in the 90s, it made total sense that Beanie Babies were going to the moon so I ended up looking very much like the gentleman in this photo. Rest assured, high quality collectibles in the web3 space have staying power and can be a lucrative option for your business if applied the right way.
Digital collectibles are similar to digital art, but instead of creating art, the business would create virtual items like trading cards or action figures and sell them as NFTs. This can be a great way to monetize unique designs, characters, and products that the corporation has created.
Many NFTs are highly sought after. Businesses that can creatively develop ways to leverage NFTs as digital collectibles are going to make a killing in the web3 space.
An exceptional example of success in this arena comes from Reddit’s entry into the world of digital collectibles. By leveraging NFT technology on the Polygon blockchain, Reddit thoughtfully created a new way for its community to engage with the platform, and to monetize user-generated content in the form of digital collectibles.
These digital collectibles are essentially unique digital assets that can be bought, sold, traded or stored in digital wallets. This transition has allowed Reddit to tap into the growing NFT market, while also creating an entirely new source of revenue from its membership of over 52 million users.
In roughly six months, a web2 company known primarily for its community-building dynamics launched a project that now has 7 million individual holders of these collectibles and a total market capitalization of more than $37 million.
From an adoption perspective, the marketing behind Reddit’s strategy is brilliant. Notice they never refer to these digital collectibles as “non-fungible tokens.” There is much debate in the web3 space over the idea that we need more user-friendly names for the technology as we move from early adopters to the mass market. But for now, the most important consideration is determining whether you have something people might want to collect. Simple is a good start, with extra points (and $$) for creativity.
3. People LOVE Getting Rewarded. Make it fun!
If your business relies on repeat customers, you could offer or sell NFTs that have a built-in rewards system so that patrons have the opportunity to earn and purchase digital collectible assets to unlock new benefits and immersive experiences.
Customers can be rewarded with NFTs for their loyalty, which can be used to purchase goods and services from the business. By offering NFTs as rewards, creators can monetize their content or services and make money with NFTs.
With over 37,000 locations in 38 countries, it makes total sense that Starbucks would make a foray into the web3 space with an innovative reward program called “Odyssey.”
The coffee conglomerate’s new experience will offer members the ability to earn and buy digital collectible stamps (NFTs). Each stamp includes a point value based on its rarity, and the stamps can be bought or sold among members within the marketplace, with ownership secured on a blockchain.
As stamps are collected, members’ points will increase, unlocking access to unique benefits and experiences that have never been offered before including:
virtual espresso martini-making class
access to unique merchandise and artist collaborations
invitations to exclusive events at Starbucks Reserve Roasteries
trips to the Starbucks Hacienda Alsacia coffee farm in Costa Rica (Yas please!)
If you want to reward customers frequenting your own coffee shop or restaurant, raise money in the process, and receive royalties on secondary market sales, creating rewards programs with NFTs can provide that opportunity.
4. Subscriptions Services Increase Customer Purchases
When I first began working with companies to develop and implement NFT campaigns, I quickly realized that the number of use cases is limited only by people’s imagination. One day, someone called asking how they could make an NFT for the members of their vineyard so that they could purchase a membership and receive exclusive bottles of wine.
Then it hit me…subscription services that leverage NFTs are an untapped potential for businesses looking to add revenue streams because they allow customers to subscribe to websites or apps for recurring delivery of products, services, or digital content.
What makes me so bullish on this trend? Online subscription market was over $120 billion in 2022 and is expected to grow to almost $1 trillion in value by 2026.
Even better, there is a compounding effect of offering subscriptions that has been shown to increase purchases from customers and overall revenue. The business model improves cash flow and also provides a more sticky user experience that drives loyalty for your product or service.
Whether it’s beauty, personal care, food and beverage, clothing and fashion, entertainment, health and fitness, or anything related to the web3 space, consumers have shown that they are willing to pay for exclusive access and experiences on a recurring basis.
Just ask me, the longest subscription holder to Zoobooks.
LFGrow!
Part of what excites me so much about the web3 ecosystem is that there are so many opportunities for businesses, brands, and entrepreneurs to add value to their bottom line while simultaneously producing enticing user experiences.
As we have seen, there are a variety of ways that you can use NFTs to unlock your potential and create passive income streams. If you’re an entrepreneur or creator looking to maximize your potential and create income streams, then NFTs may be the perfect option for you.
So, why not give it a try and see what you can create!
And if you’re not sure where to start, you can always book a discovery call with us at Block3 Strategy Group to get strategic consulting about how to earn income with your NFT project.