The concept of subscriptions can be traced back hundreds of years to a fire insurance scheme patent approved by King Charles I of England in 1638. Thirty years later, various fire and life insurance companies launched using subscriptions, a model followed by charities, trading companies, publishers and more. Now, nearly 400 years later, subscription models represent a significant portion of the average human’s expenses and are still being innovated thanks to non-fungible tokens (NFTs).
Web2 has proliferated access to a range of subscription services, from niche manufacturers providing shipments of physical products to massive big tech platforms delivering Saas products. Our entertainment, phone contracts, meal plans and business tools are accessed via subscription.This model is tried and true, fueling revenue at companies of all shapes and sizes.
NFTs have the power to deepen the value of subscriptions for both businesses and consumers. As blockchain technology proliferates, we will see an influx of companies with Web3 initiatives exploring NFTs as a delivery method for product and service subscriptions.
What’s a Subscription NFT?
If you’re reading this, you’re probably somewhat familiar with NFTs. The mainstream perception of these digital assets is skewed, as most just see a new medium for digital art. While animal artwork and Adidas sneakers for the metaverse can be very cool, this is just the tip of the iceberg. NFTs are on pace to completely transform most industries. These assets and their underlying smart contracts can be applied to content, engagement, products, and services on the internet.
Subscription NFTs are a prime example of this potential, functioning as a pass to any service that offers access for a recurring fee. This utility shifts the NFT value dynamic as most currently see it, with users paying for the services provided instead of “ownership” of the NFT itself. This is not too far from Web2 subscriptions, with the NFT adding granularity, community, and deeper access functionality compared to a typical monthly fiat payment.
Using NFTs, Web3 companies can unlock strategies behind their business model while delivering incredible products to their users. But what exact value do NFTs add to subscription models?
Why are Subscription NFTs Valuable?
The technology is brand new; thus, Web3 companies are still finding their footing. These early adopters have the challenge of being a first mover and uncovering business strategies that are lucrative and sustainable. The subscription model strategy is common to Web3, but clearly provides value to those that understand how to implement it alongside a great product or service offering.
Not only can NFTs act as a tool for subscription access, but they can deepen the value of subscriptions overall.
Eliminating the Friction of a Paywall
Paywalls are currently the go-to option for gated content accessed via subscription. The number of people accessing media behind a paywall is growing, with 17% of global readers saying they had paid for news online in 2021. The amount of paywalls to access with fiat and a Web2 email address is unfathomable, creating a lot of friction for users. The number of accounts, passwords, terms and conditions can become unwieldy.
NFTs make it possible to streamline this process for those seeking gated-media. What if one NFT could unlock multiple gates? When this key lives in a user’s private wallet, access becomes more secure, more transparent and more personalized. The team over at Unlock Protocol are already delivering this functionality, enabling access to content from various ecosystems and platforms using one simple NFT.
Adding Self Custody
Self-custody is a major pillar of decentralization, and thus Web3. This term is applied to Web3 wallets accessed with a private key, that only the owner has possession of. The responsibility to protect and remember this key falls solely on the owner, enabling real-time access without a financial intermediary.
A self-custodial wallet allows users to have direct control over their assets, from cryptocurrencies to NFTs. Subscription NFTs fall right into this functionality, empowering users to own their subscription instead of publishers that control access within Web2 models. This unlocks a world of new revenue potential for subscribers, where there was previously none.
Creating Secondary Market Value
True “ownership” of subscriptions enabled by NFTs creates an entirely new market for subscription resellers. Where subscribers were once forced to simply stop paying and forfeit their access, now value can be retained and access can be sold to the highest bidder.
Subscription NFTs can retain value for users, or even add value should the access become more desirable or exclusive overtime. Maybe a certain NFT has properties that deliver additional access, or a user pre-paid the subscription for a year and wants to resell after two months. These factors impact the secondary market value of the NFTs, something that we’ve never seen before from subscription models.
Subscriptions are one of the many proven business models that can be adapted by Web3 companies. NFT infrastructure and tooling elevate this concept by eliminating friction, enabling self-custody, and creating secondary market value. As businesses continue to explore revenue models in Web3, subscription NFTs will undoubtedly play a significant role.
We are such ardent believers in NFT subscriptions, that we are developing our own NFT subscription model. Our customers will be able to purchase our NFT, and pay their monthly subscription fee to access our Web3 infrastructure solutions.
Are you interested in this type of solution for your business? Reach out to us here at Liteflow to discuss how we can help you deploy robust subscription NFTs and bring your Web3 ideas to life! We bring the flexibility of building Web3 projects according to your needs while helping you own your revenue model for the internet’s next era.