Picking the right NFT platform
A growing number of brands are considering how to build NFTs into their 2022 strategy. Most NFTs are exchanged through platforms, requiring not only an understanding of NFTs, but how NFTs work within the context of digital platforms.
As the number of NFT platforms grow — over 150 now and counting — there are a growing number of questions to consider:
What is an NFT marketplace?
What kinds of marketplaces are out there?
How can a brand engage with the market?
What does the future hold for brands and NFT platforms?
Will we see a winner-take-all NFT platform outcome or something else?
Pavel Kireyev and I teamed up to explore how to determine which type of platform is the best fit for a business seeking to take advantage of the many opportunities that NFTs are creating. Pavel is a professor of marketing at INSEAD and on the cutting edge of researching NFTs and marketplaces. Our discussions resulted in an article published in the Harvard Business Review this week. See:
Not everything you submit gets into the final publication, of course. Below is a graphic that didn’t make it. It shows the range of NFT platform types with some examples of how they fit across a spectrum ranging from ‘streamlined’ to ‘augmented’. This highlights the difference between broad NFT platforms that are focused on building broad transaction marketplaces verses others that are building the capacity to offering a wide range of additional services.
Writing an article often surfaces a host of other questions. Not surprisingly, this is exactly what happened with this article. For example, some have characterized NFT platforms as part of a new emerging “web3” landscape. Is there a meaningful distinction between how '‘web2” platforms operate and “web3” platforms? If so what are the distinctions?
This pushes into an exploration into how blockchain enabled platforms influence centralization, decentralization, and trust. Some scholars have started to explore this area. For example, last week two well-known platform economists, Andrei Hagiu and Julian Wright, published an article on substack titled: Is OpenSea any more decentralized than eBay?
If we go further, it also pushes into questions about incentives and network effects. Through digital ownership and gamification opportunities, how do the ownership and transparency afforded by NFTs shape network effects. Do NFTs weaken or strengthen the flywheel effect that companies and investors seek with platform business models?
Finally, writing this article has spurred a lot of thinking about how NFT platforms enable new ways to deliver IRL (in-real-life) as well as metaverse experiences. It is hard to keep up with the deluge of announcements. There is clearly a wave of innovation underway with broad implications for how companies will engage with customers and creators in the future.
In short, there is plenty to explore in future posts.