Open3 Collective Updates 2/20/23-3/5/23: Using IP as a platform for consumer brands, what can brands do to leverage this concept?

This post includes updates to the Open3 Collective knowledgebase and sent via email to members.

Feature image created using generative AI with prompt “an image with a bunch of men’s ties in different shapes and colors in rich detail and deep colors”

The one takeaway for this update

Using IP as a platform for consumer brands, what can brands do to leverage this concept?

IP as platform is a nice description I found to define how consumer brands can turn over their intellectual property to customers to let them create and profit from it.

This is not new by any stretch, as the gaming industry has used this for a long time.

We are seeing infrastructure development and early testing by Nike to leverage its IP for its customers. We would expect this from Nike because they have to resources and are a technology-forward brand.

For most other brands, it’s still too early because the web3 infrastructure to do this is not yet developed enough.

Here’s two things I recommend brands be doing now to leverage their IP as platform in the future:

1. Learn web3 and start collecting ideas around how to use web3. This is easy with resources published on the web3 best practices page.
2. Become an ultra-brand with an engaged and loyal customer base that likes you and stakes their identity on who you are and what you stand for.  Without this, consumers won’t want to leverage your IP to create products and profit-share with you.  I think the future for consumer brands is two options: (a) a no-brand or weak brand which will only exist if they can provide the cheapest product in their category; (b) the middle gets fully hollowed out; (c) an ultra-brand that can leverage IP as platform.  Each brand needs to decide where they want to be and plan accordingly for how to get there.  I estimate the age for IP as platform has begun with Nike, will start to gain traction in 2027-ish and achieve mainstream use in the 2030’s.

To see all weekly takeaways published to one document, click here.

Notable Market Intelligence Updates

1. Cryptocurrency is the main factor in web3 that adds massive and needless complexity, unfortunately.   While consumer brands will continue to shoulder the complexity and manage it on the back end, there are innovations that are removing this barrier to entry for consumers. A few recent ones as follows:
   • Redeem is a startup working on connecting a consumer’s mobile phone number to their web3 wallet in order to make it easy to send and receive NFTs. The company has not released anything and it is unclear from their website how this will work.
   • Polygon, a major and market leading Ethereum Layer 2 blockchain has released standards for account abstraction, which enables users to utilize smart contracts as their accounts. The non-technical benefits include:
     1. support for different kinds of account access like biometrics;
     2. recovery of accounts if private keys or seed phrases are lost (this is really significant);
     3. withdrawal limits on accounts (another significant improvement);
     4. withdrawal limits that are time-bound (for example, a gamer who wants to allow for transactions to take place in the next hour without them having to approve each transaction every time it is prompted);
     5. and, performing multiple transactions at once rather than having to approve each transaction.
   • Polygon has released a consumer identification product that is powered by zero-knowledge cryptography, which means that the consumer can prove who they are and what they own without revealing the details that substantiate that proof.  Think of every time you go to a bank or a doctors office and they request to see a drivers license; with ZK proofs, you can prove who you are without them seeing it (or in case of doctors, copying it).  Consumer IDs that are decentralized powered by ZK proofs are really needed to advance web3 so this is an important, although early first step by a the market-leading blockchain.
2. Starbucks web3-enabled loyalty program already has small secondary marketplace activity for consumers buying and selling their Starbucks’ rewards. See it on Nifty Gateway marketplace.  Starbucks is an important brand to watch because they are technology-progressive and the first major brand to shift into web3 with their massive loyalty program.
3. Spotify is testing NFT-gated playlists.  This means a playlist is gated with an NFT rather than a password. To utilize, the consumer would connect their wallet which holds the NFT to Spotify which would grant them access.  Some benefits to this include:
   1. No passwords required and the consumer data is not revealed in the connection, since wallets by nature are anonymous.  It is just like using Google to sign into a service that provides this functionality, but in this case Google nor the service knows it is you, just that your wallet connected.
   2. Another consumer brand can use the knowledge that the wallet has this Spotify NFT to also offer benefits to the consumer to their product/services without needing to partner or connect with Spotify in some way. All the customer needs to do is connect their wallet to the companies website or app and the app would recognize that the wallet has the Spotify NFT.

The above are key updates to consider.   Go to the web3 market intelligence database to see all.

Testing and Experimentation

Here’s a simple idea that popped up from a somewhat vintage ski hat I am wearing.

I purchased this black Pearl iZumi ski hat in 1994.  I use it regularly and it has really stood the test of time. I will never get rid of it or stop using it because there are a lot of  memories attached to it and I will repair it as needed to continue its useful life.

Pearl Izumi is a long-time iconic brand and I am sure there are a lot of people like me with old gear.  The company can spin up a simple web3 NFT minting solution on their website that they hide from Google search, contact a select group of customers, email subscribers or social followers and invite them to mint photos of old gear. 

This is a cheap, fast, easy, targeted, relatively non-public method to test web3 with the existing customer and fan base.  Basic goals are to test response, see what people think and do, get people submitting images via NFTs of old gear (which the company can reuse in other market channels and tactics), and see where it goes. 

There’s an untold number of ways where the company can take this depending upon response and where there might be traction.  The goal is not to succeed, but to test web3 and see what works for the brand.  

Web3 offers so many possibilities that each brand can craft their own unique strategy around the technology paradigm. Maybe Pearl iZumi’s is about vintage gear, that expands into secondary markets for resale, and/or web3-enabled social interaction between and amongst customers and the brand around vintage gear.

Forward Guidance

• None this week

See all forward guidance published to one document here

Questions, Feedback?