NFT.Paris: Community, Culture, Brands
NFT.Paris: Community, Culture, Brands
Last weekend, the Web3 community gathered at NFT.Paris for one of the most anticipated events of the year. Here's the inside scoop of what happened in Paris and the take-aways for brands and creators.
“Progress, not promises”.
If there's one sentence that stuck with me most, it’s this one.
NFT.Paris, one of the biggest Web3 events of the year at the majestic Grand Palais Éphémière, was packed and buzzing with over 10’000 artists, builders, creatives, branders, and curious souls from all walks of life.
Among them: trailblazers from brands such as Adidas, VW Group, Salesforce, l’Oréal, Chanel, among others and many of the Web3 OGs, such as G-Money, Greg Solano (Co-founder Yuga Labs), Erik Calderon (Founder & CEO, Artblocks), Sébastien Borget (Co-Founder, COO, Sandbox), Punk 6529, and many more.
Crypto winter? Not a bit of it!
While the crypto-finance folks still cope with their post-FTX depression, the Web3 is alive – and thriving, but not without challenges.
I was there for you. Here’s your inside scoop with first-hand impressions, take-aways and what this means for brands & creators.
Let’s go!
The eagle has landed
Web3 is more than just technology. It’s an entirely different paradigm that requires new infrastructure, tools and mindsets. Outsiders may still think it's cute, weird, a fad, or a mixture of those things. However, once you dig deeper, you'll find that there's much more going on.
In fact, almost 40% of Interbrand's best global brands 2022 have already entered Web3. After most of them experimented with NFT drops (with a few notable exceptions such as Nike, Adidas, Gucci, Louis Vuitton), they are back at the drawing board.
They might not be actively announcing, but they’re connecting and learning with the community, building up internal infrastructure and know-how, and are trying to identify real-world utility and business models.
The challenges for big brands?
First, convincing the C-suite that Web3 is the next generation of how their brand will connect with consumers, instead of a bunch of weirdos trading ape-jpegs at absurdly high prices.
Marc Mathieu, SVP & Co-Founder Web3 Studios, Salesforce:
“Consumers want to be co-creators, co-collaborators and co-beneficiaries. This is a very big paradigm shift and unless you don’t have the c suite of your company behind you, it will not scale.”
Entering Web3 successfully is not a marketing stunt. It needs top-down support, bottom-up teams and experiments, and includes a steep learning curve for the whole organization. “It all started with education”, said Erika Wykes-Sneyd, the face behind Adidas’ freshly formed Three Stripes Studio.
Once a course is set, the Web3 transformation needs to happen. This might take longer than expected. “Be patient. Don’t underestimate the internal complexity of big brands”, said Benoit Rigaut, Director digital technology Innovation at CHANEL.
Nevertheless, when it comes to big brands entering Web3, it’s not a question anymore of if, and when, but how.
Community is everything
If there was a word most said and heard during those two days, it would be “community”. "Community first”, “community driven”, “building with the community” – however you name it: Community is everything.
No one summarized this better than Frank Degods, Founder of y00ts & Degods:
“When I first started with NFTs I thought community was bullshit. Now I think everything except the community is bullshit.”
And he’s not the only one.
Web3 started with NFTs that morphed into collections that morphed into communities. Today, you’ll see tightly knit groups of like-minded people identifying themselves as “Punks”, “Pens”, “DeGods”, “Moonbirds”, “Apes”, or other famous community brands. Each of those communities has its own culture and lingo.
Virtually, Discord serves as their central community hub. Physically, many of them have their own token-gated events and community meet-ups. Most of the action at NFT.Paris happened within those communities, away from the official program. 1
This community-first mindset defines the Web3 space.
From communities to media brands
Many of the top collections have recognized the opportunity to use their communities and existing IP to build media franchises.
Recently, Doodles launched “Doodles V2” on the Flow blockchain and to expand its franchise into music, animation, consumer products, live events and more. We want to “connect digital identity with animation and storytelling”, said Doodle CEO Julian Holguin. Bryan Pellegrino, CEO of LayerZero Labs, added:
“A lot of utility at the moment is very short-term. What really rewards everyone long-term is to build a whole brand universe and ecosystem around brand IP.”
Naturally, the best NFT collections will become brands and communities that transcend the Web3 bubble and go mainstream.
This is also what Luca Schnetzler, CEO of Pudgy Penguins, one of the most successful NFT projects, is trying. A few days ago, Pudgy Pengunis announced its partnership with Retail Monster to launch its Pudgy Toyline on retail shelves globally. Retail Monster is a renowned name in the industry, with its network spanning several major retailers worldwide, representing giant brands, such as Dreamworks, Hasbro, and Disney.
Community value creation
Thus, traditional brands who enter Web3 need a 180-degree turn in how they do marketing. Instead of shipping products and market them in one-directional brand-to-consumer relationships, Web3 is all about building with and for the community in a bottom-up, bi-directional approach.
Tim Walther, Metaverse & NFT at VW Group, highlighted that “the direct connection that is enabled between the brand and the customer is an incredible opportunity.” “What matters to us is reconnecting with our customers. All our customers”, added Eva Assayag, Head of IS & Organization Project at Panerai-
Instead of “shareholder value creation” taught at business schools around the world, brands in Web3 need to think about “community value creation”. Consumers not only want to be co-collaborators, but also co-beneficiaries. They become the most important stakeholders in a brand.
“We are the muscle steered by the brain that is powered by the community. It’s not my company, it’s our company”,
said Luca Schnetzler, CEO of Pudgy Penguins.
Community value creation does not necessarily mean that NFT holders must receive part of the revenues or profit from a token appreciating in value. The expectation of profit might deem NFTs securities. Projects are instead experimenting with alternative setups, such as setting up DAOs (a blockchain-based, organizational governance structure for a community) and allocating part of their revenue to the DAO treasury fund, which is governed by the community.
Erika Wykes-Sneyd from Adidas, referring to her brand’s collab with Kanye West, aka Yeezi, or Ye:
“We don’t want to work with the Yeezys of the world, we want to work with the community and bring out the next-generation Yeezys of the world.”
It marks a fundamental shift of power from brands back to the consumer. Not only in the way products are built and marketed, but also what brands and consumers can expect from each other. Marc Mathieu from Salesforce:
“Loyalty is nothing that you expect from the client, but something that you continuously serve to justify the trust that the client gives you. It’s not just here to stay.”
In its essence, loyalty is belonging, identification, and human connection within a community. “Being human is about connecting with others. How do we bring these connections on-chain?”, asked G-Money, a famous NFT collector. Luca Schnetzler added:
“If we want this space to succeed, emotional utility will have to trump transactional utility.”
Greg Solano, Co-founder of Yuga Labs who owns the CryptoPunk, Bored Apes and Meebits brands, added:
“Crypto is an attention economy. NFTs are about consistently creating moments for people to come together.”
The most successful brands bring those connections to life. Now they have the opportunity to supercharge that with digital ownership.
Inclusivity & the power of creators
Community is also about inclusivity. After a friendly beginning, Web2 platforms such as Spotify, Instagram, or Youtube, have become more extractive and less cooperative, marginalizing artists and creators.2 Most creators can’t sustain themselves with their work alone. a16z often speaks about the “take-rate” in this context: 3
The take-rates of web2 giants are extortionate; web3 platforms offer fairer economic terms. In 2021, primary sales of Ethereum-based NFTs (ERC-721 and ERC-1155), plus the royalties paid to creators from secondary sales on OpenSea, yielded a total of $3.9 billion. That’s quadruple the $1 billion – less than 1% of revenues – that Meta has earmarked for creators through 2022.
This is why so many at NFT.Paris have voiced the importance of artists and creators. Yat Siu, Co-Founder and Exec Chairman of Animoca Brands, a Web3 gaming and venture capital behemoth, argued for protecting the ownership rights of creators:4
“Nothing in life is free. In Web2, you paid with your data. In Web3, you pay gas fees to use the underlying infrastructure. Royalties to creators is the gas of the NFT world. You have to protect the ownership rights of the creatives, otherwise you’re going to destroy the exact thing you’re trying to create. We’ve been there.”
He added:
“Like classic capitalism, this ownership encourages innovation, entrepreneurship, and risk-taking but, unlike classic capitalism, the outcome can benefit all participating stakeholders. Better property rights lead to higher economic growth.”
Erika Wykes-Sneyd from Adidas pointed to the shift in power structures and the removal of gatekeepers between creators and their fans:
“Web3 is able to decentralize power into the hands of creators that might not look like the creators in the history books”
If there was a statement that encapsulated this feeling of inclusivity, it came from Tom Sachs, a contemporary American artist who set up his Rocket Factory on site:
“I’m a world famous artist who has exhibited in the biggest museums here in Paris. But I’ve never felt part of a community like in this space.”
The next 1bn users
Even though you could feel the creative energy and the spirit of optimism that we’re on to something that could potentially change the world, cautious voices reminded about the still unsolved challenges for brands.
One of those challenges is to connect the virtual and the physical brand touch points into a coherent experience and user ecosystem. Again, Web3 is not a marketing stunt, but a business strategy. Tim Walther from VW Group:
“We don’t need 10 other big brands entering the space with NFT drops. We need to connect to the real life of our customers and deliver real life experiences and products.
It was also abundantly clear that we need a better UX, something which I wrote about extensively in my previous blog post.
Another challenge is funding. While the Web3 teams of big brands had easy access to money during the heights of the bull markets, they now need to make sure they have a solid business plan and measurable ROI for their Web3 initiatives. Erika Wykes-Sneyd from Adidas:
“We now need to identify viable business models that stay true to Web3 values, but there aren’t a lot of case studies and playbooks on how to do it.”
NFT projects have either financed themselves with fundraises (e.g. Yuga Labs) or royalties on NFT trades. This will likely not be sustainable and something big brands cannot do.
For the next phase of Web3, brands will need focus on utility, UX, and ROI. They will need to ask themselves:
What utility within my brand ecosystem can I unlock?
What do customers/users love about my brand and how can I amplify that? How can I engage and reward my most loyal fans in more relevant ways?
What stories and artefacts can I attach to digital assets that are uniquely tied to my brand to make them more emotional and personal?
How do I earn money with that?
Not a technology, but a movement
Web3 marks a paradigm shift in how we transact and connect with each other.
It’s a shift of power away from platforms back to users and creators, or from brands back to consumers.
It’s a shift from physical to virtual. Thanks to the blockchain, digital files become fungible, original, and ownable. Assigning value to digital objects is something the next generations Alpha and Z are already accustomed to. They spend large chunks of their time in virtual worlds such as Roblox.5 The next Coco Chanel is probably a ten year old girl designing skins on Roblox.
It’s also a shift in IP development that can now happen collaboratively. Web3 brands will face a choice: Am I a passive participant or do I become part of the Web3 universe by creating content that people really care about?
But not everything will change. In many ways, the notion of collecting and assigning value to craftsmanship or achieving social status that defines a large part of the appeal of modern luxury brands remains the same, whether it’s physical or virtual.
“Craftsmanship is something you cannot fake. We are inventing digital craftsmanship of today and tomorrow, and we want to be part of it”,
said Benoit Rigaut, Director digital technology Innovation at CHANEL.
The same applies to the desire to belong and connect to a community as social beings.
Eventually, a lot of the allure of Web3 boils down to digital ownership, community, craftsmanship mixed with contemporary culture. “Culture is the biggest soft power there is”, according to Yat Siu from Animoca Brands.
I left NFT.Paris inspired and optimistic about the future of the space. I’ve never been more convinced that the principles of ownership, community and decentralization will become foundational in our future virtual lives.
Web3 is not only a technology, but a cultural movement. Future brands will be built around the community and the cult around them, with ownership built in.
It's impossible to put a genie back in a bottle. The time to create is now. Here’s a sentence I overhead somewhere:
In the metaverse we’re all world builders. Now is the time to build, to be in the trenches. We’re changing the world.
Keep building.
– Marc
Here’s a sneak peak of what happened at the DeGods afterparty (ok, probably not the best example). A more fitting example from the World of Women community here. The Pudgy Penguins hosted a “Midnight in Paris” event on a stationary boat – for token-holders only, of course.
Chris Dixon described this well in his landmark article “Why Decentralization Matters”.
Take-rates between Web2 and Web3:
He also talked about the ongoing debate on royalty fees on NFT marketplaces: “Marketplaces who ignore royalty fees are infringing the rights of others. As a community, we need to stand up against this.”
Here’s an interesting graphic on that:
