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How should Licensors approach the closing of an NFT Partner platform?

By NonFungibleTalking | NFT Theory | 24 Feb 2024


 

Recently a few NFT platforms that deliver and manage the ongoing delivery of various Licensed NFT Assets have closed their digital doors.

By an NFT Partner Platform, I am referring to the primary mechanism in which customers interact with the Licensor’s IP in digital web3 format. Essentially the Licensor’s chosen Web3 Partner.

Post the announcements of a platforms ceasing to trade, there have been efforts to move these assets and have them live on (which is great) but largely there has been an absence of information as to how of if these assets will continue to be developed. They enter a uncertain stasis.

Photo by the blowup on Unsplash

Issues if the Licensors do nothing or place responsibility elsewhere:

 

Lowered perceived value of their IP in a web3 setting.

If an asset of a widely popular IP and they have a failed implementation of any size, there could be a perception that the IP and their audience isn’t suited for web3. There have been many experimental NFT collections dropped and dependent on the level of involvement from the licensor they may be able to just put it down to a speculative project. The issue may increase if they have invested heavily or promoted a project using their own platforms, essentially exposing the web3 product to a non web3 audience.

Decreased trust in the ability of that IP to have successful implementations irrespective of who is at fault.

If the Licensor through their channels has stated some deliverable within their marketing they may be perceived to not be able to deliver. Regardless of where the actual issue lay (i.e. between the web3 partne or licensor).

As above there are many new web3 buyers that enter the web3/nft space because of the IP and nothing else. I think if there were analysis on who are buying Licensed NFTs they would be predominantly non web3 buyers. Web3 natives are more anti-establishment and would be as a whole less likely to by from a licensor particularly when some licensors will not allow for non custodial or perpetual ownership outside their web3 partner/ launch Platform.

If they do not provide for a pathway for non custodial and perpetual to the assets images, continued trading ability and the like.

Consumers will feel taken advantage of if they don’t have perpetual access to an asset they may have paid an original premium for. This access can be more limited but it must be present, some hidden fine print in terms and conditions won’t overcome public sentiment.

Photo by Don Agnello on Unsplash

What Licensors could do for NFT Holders:

 

Provide a pathway for non custodial and perpetual ownership of these assets.

This has been done in most if not all cases so far, which is great. The asset doesn’t die it is just diminished until someone reinvigorates it. The licensor is incentivised through royalties to have these assets to continue to exist (i.e. holders being able to trade and the images being online).

Publish a status document essentially outlining what the summation of the assets will be ongoing, such as utility, development etc.

This will allow for holders to effectively market their assets ongoing and exit if they wish. The licensor gains perpetual royalties this would aid additional revenue. This option is probably unlikely to be used as it would potentially focus discontent back on the Licensor or precipitate legal action between the Web3 Partner and the Licensor, i.e. a blame game.

Publish a Roadmap if the assets will continue to be developed upon.

If the licensor chooses a new Web3 Partner and wishes to kick off a rejuvenation of the assets (which in the authors opinion would be preferred), a roadmap could do this and provide a future revenue stream and enhanced goodwill.

Provide owners with real world value slightly exceeding the original purchase price.

This is where owners could choose to burn their owned NFTs for real world value such as digital subscriptions, or even physical goods from existing product offerings. This option essentially gives the owner the opportunity to be made whole and would work for situations where the asset is valued at the same or below the mint price. Hyper inflated NFT prices would unlikely be appropriate or used option by these owners.

Consolidate the affected NFTs into a different collection

Holders that wish to can burn their NFTs and be rewarded with a like offering on a new or existing platform.

If the Licensor sees a future in web3 for their IP either they will have existing other assets or be looking at pivoting their assets away from the current platform. A new platform (even on a different blockchain) could achieve this.

This would involve offering to swap or essentially burn and re-mint assets to a new asset.

This would also potentially onboard existing holders onto a new platform and community merge essentially. This is particularly relevant when Licensors have sharded their IP (see other article on this blog RE IP Sharding). At some point if a licensor is operating with enough web3 partners one or more will fail and it would be good to have a strategy to do right by the holders.

Drop a few bonus NFTs

One trick to raise goodwill has been to drop additional NFTs to holders. This however has to have meaning and purpose. A subsequent PFP project of a different character could work in smoothing discontent. A generic participation video is unlikely to.

Overall, licensors need to take cessation seriously as they can’t afford to burn their most loyal buyers if they see a future in web3.

Originally Published on my medium Blog.

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