Phoenix Rising: How web3 is Redefining Memberships and Subscriptions
Phoenix Rising: How web3 is Redefining Memberships and Subscriptions
“From the ashes, a fire shall be woken, a light from the shadows shall spring.” – J.R.R. Tolkien
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2022 has been the year of NFT-based utility. The recent embrace of NFT utility is blurring the lines between what is defined as a subscription vs a membership. This article is going to break down what the differences are traditionally, how relationships with customers are changing, and how web3 is being used to change those relationships.
This piece is geared towards those who have a piqued interest in web3 and want to learn more. If you’re feeling a bit lost as to why people are using NFTs for memberships, and are perplexed by NFTs chameleon-like nature, this is the article for you.
Web2 and Subscriptions
While I certainly have a Netflix subscription, I wouldn’t necessarily think of that subscription as a membership. Savvy SaaS-based companies often make a point to refer to their customer subscriptions as memberships, and with good reason — having a membership can lead one to presume that there are perquisites that go along with paying for it. What, then, are the differences in 2022 between memberships and subscriptions?
We can think of a subscription as a revenue agreement. It is financial. A subscription business sells services or products and customers pay weekly, monthly, or yearly. You don’t have to re-engage with consumers on a regular basis because (ideally) the service you're providing will suffice, and engagement usually happens when there’s a problem or if the consumer desires a change in service.
Because of the changes that are happening within the nascent web3 ecosystem, we can think of web3 being more strongly associated with memberships, and web2 being more strongly associated with subscriptions. Subscriptions and memberships are now outperforming most legacy-based business models. Companies are increasingly moving to subscription-based models, and the strongest subscriptions are memberships.
Traditional Types of Subscriptions
Let’s break this down. As we proceed, think about how versions of traditional types of subscriptions are being replaced with the usage of programmable NFTs.
Fixed Usage Subscription - A set price for a fixed quantity of goods over a set time frame. The best example would be a magazine subscription.
Unlimited Use Subscription - A set price for an unlimited quantity of goods or services. A great example would be Spotify.
Pay-As-You-Go Subscription - Commonly referred to as no-commitment billing, this model allows for periodic usage with the potential for saving money when the service isn’t used. A traditional example of this would be a pay-as-you-go phone contract subscription.
Freemium Subscription - The initial tier of service is free, but limited. Additional features are only available to subscribers. This is popular with SaaS-based products and services. A good chunk of games on mobile stores live and die by this model.
How Memberships ≠ Subscriptions
We can think of a membership as a contract between you and an organization. It is a relationship. While a subscription-centric business might be focused on the product and customer satisfaction, a membership-centric business places a greater emphasis on community to build a stronger network. The relationship is social, so membership-centric businesses must publish and release content frequently, with exclusive content, access, and perks. Subscriptions can stay static, memberships cannot. The more engagement that can happen for those that have opted into membership, the better.
Values, thoughts, and interests matter when creating a membership – they do not matter when creating a subscription. By creating a membership, members are sharing an ethos, and ideally a culture. The best companies and DAOs (Decentralized Autonomous Organizations) nurturing healthy, active memberships understand this. Effective memberships draw higher valuations from investors, and can offer better analytics down the line. A direct relationship is correlated with higher value, and less attrition. Sometimes a product or business doesn’t have what is necessary to foster a healthy membership ecosystem. Our economy is based around attention, and people only have so much of it. How are you going to capture attention?
NFTs as a Multi-Pronged Membership Tool
We can agree that memberships certainly sound like a higher value opportunity and investment for businesses. If you can make it work, the value flywheel can truly do magical things. But how do we get there? Where do NFTs fit into membership?
NFTs are used for:
Access to premium or gated content (via ticketing)
Discounts on products or access to exclusive products
Access to IRL or virtual events
Early access to digital or physical products
NFTs can be seen as an evolution of many of the core ideas posed above surrounding membership. They allow members to embrace everything above, and have added functionality in ways that supersedes the usage of simply paying monthly for a subscription. They can act like VIP access, a membership pass, a club card, or all of the above. They are truly multi-pronged, and are largely desired because of their verifiability for authenticity on the blockchain. A business can use NFTs as a perpetual membership, tickets into an event (both IRL and virtual), gated access (token-gating) into certain merchandise within an online store, and a vote in an organization (like a DAO). The usage of an NFT to unlock value within a business is limited only by that business's creativity and knowledge.
The Stages of Membership (web2 → web3)
Our friends at Unlock Protocol recently outlined many of these ideas into a membership journey. I highly recommend checking out their recent webinar here. Because Unlock has outlined this journey so well, I’m going to use their five-step journey here and add a bit to it.
Stage 1: Traditional/Pre-NFT (web2)
No membership or purely subscription-centric
Utilizing traditional web2 systems for tickets (Eventbrite/Ticketmaster), or Facebook Groups
Stage 2: Experimental
Experimenting with lifetime (perpetual) NFT memberships
Stage 3: Value Ramp
Time-based NFT memberships & certifications (NFTs that expire)
Tiered NFT memberships (bronze, silver, gold, platinum, etc)
Implicit motivation from members within project/community
Reoccurring “rituals” members participate in and value
Stage 4: Value Flywheel
Group identity within membership
Value begins to be shared in some way with/including members
Complementary projects and services emerge that leverage and support the core project
Members contribute to project/company success (creating and attending events, code, content, etc)
Stage 5: Membership Ecosystem (with positive feedback loop)
Membership is self-sustaining and decentralized
Original members do not drive all aspects of the project/product
New directions are organically driven from membership
Part of the brand is tied to the membership and community
All or some of the traits from previous stages
There’s a lot to take in from the above. As time goes on, the more successful and positive a membership is, the higher chance the project, program, or organization will become self-sustaining. Greater value at earlier stages creates the backbone necessary for group identity to occur within membership. A great degree of complementary projects usually indicates a greater degree of value and collective interest for a core project. For many traditional businesses, many of the ideas in stages 4 and 5 will feel foreign, because value begins to be distributed or increasingly decentralized. Remember, this membership is also a form of investment for members. Great video game communities understand how to utilize and unlock the potential of a membership ecosystem. The membership journey can end at any stage, but membership growth and participation will correlate with the last steps that have taken place.
Source: Future.com and Peter Yang
Web3-centric memberships are becoming increasingly popular. Here’s a list of a few projects and companies that are using NFTs to drive value. Think about how the membership journey might apply to each of these:
The above are great examples of (mostly) web3 native memberships. I encourage you to take a look at each project and think about how each is doing things a little differently, and truly offering value. Many will not be your cup of tea, and that’s fine! Just like you’re not going to purchase every shirt in the store, you’re not going to purchase every membership. Each of these programs resonates with different people, and it is important to recognize why. Connection and exclusivity are increasingly valued in a world that is overly saturated with content and options.
Pivoting Into web3 Memberships
If you’re a business, and you’re wanting to pivot into using web3-based NFT memberships, the best way to proceed is to start with the end in mind. Perhaps you’re looking for increased customer loyalty, or want greater brand engagement. Consider what key use-cases posed above might apply to your business, and learn from other major players in the space to make a more informed decision on how to pivot into using NFTs.
Three steps to pivoting:
Create the NFT membership by defining the details of that membership and recruit a team to make it happen (art, smart contract, website).
Introduce the membership to your customers, explain why it is valuable, and build the new community (consider Discord).
Work with the community to generate increased value, provide ongoing utility, and embrace partnerships and collaboration.
Exploring recurring NFT subscriptions/memberships is a must. I highly recommend checking out Cask.fi and Unlock Protocol. These tools, along with some creative thinking, can take NFT subscriptions to the next level.
NFTs are slowly and steadily gaining popularity, and have the potential to be embraced by your customers and fans if the right utility is attached to them. Do something exciting that really gets people talking, or create an NFT collection with so much usefulness that ownership is a no-brainer. I will leave you with a quote by Niccolo Machiavelli:
“All courses of action are risky, so prudence is not in avoiding danger (it's impossible), but calculating risk and acting decisively. Make mistakes of ambition and not mistakes of sloth. Develop the strength to do bold things, not the strength to suffer.”
Need help with your web3 go-to-market strategy? Eager to dive into web3 and NFTs, but not sure how to approach it? Reach out to immutablelabs.io and schedule a chat with one of our experts!
Learn More:
https://rechargepayments.com/blog/nfts-and-access-memberships/
https://unlock-protocol.com/blog/recurring-subscription-nft
https://www.sumup.com/en-gb/invoices/dictionary/subscription/
https://dev.mirror.xyz/Jn62zF5n62BfowdaFgm3uIx3Fgp2vIR7b-HTSxKVXqk
https://www.cask.fi/nft-subscriptions
https://wedevs.com/blog/420093/subscription-vs-membership-business-model/
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