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Soon, buying an NFT on Instagram might be no different than purchasing a pair of shoes or a new dress on the platform. And that NFT might be able to grant its owner exclusive benefits. That’s what the Meta-owned platform is shooting for with updates that let creators create, buy and sell “digital collectibles”, in the hopes that it will help to normalise and scale NFTs and open up a new revenue stream.
Instagram has given a trial group of creators with NFT experience access to a new end-to-end toolkit, which enables them to make, buy and sell NFTs, as well as connect a crypto wallet to display those they already own (the display feature was trialled in May and rolled out in August). These creators can offer additional token-gated perks, from exclusive content to products reserved for holders. A wider release date is as yet unconfirmed.
The new NFT capability could be a welcome boost for Instagram parent company Meta, which has announced plans to lay off 11,000 employees amid a contraction in e-commerce sales, economic downturn and loss in advertising revenue (the company said at the beginning of the year that it stood to lose $10 billion in 2022 following Apple’s privacy changes). Instagram could eventually charge a percentage of each NFT sale, providing a lucrative alternative source of revenue. The move could also help push forward Meta’s metaverse ambitions, which have so far failed to attract a mass number of users. Instagram won’t take a cut of NFT revenue until at least 2024, in a bid to get more of its 2 billion monthly active users on board.
“Creators are natural educators and have the ability to spread the importance and opportunities of blockchain to their communities,” says Besidone Amoruwa, global innovation partnerships lead at Instagram.
Mainstream adoption is no sure thing. Many creators have no prior experience of blockchain, and there is growing scepticism of NFT hype and cryptocurrencies — especially in the wake of last week’s crypto crash. Uptake will depend on the value proposition for buyers: NFTs that place utility and community at the forefront have been the most successful.
The social side of Instagram may help. “It roots collectibles in a pre-existing story and human exchange of value,” says Chris Cantino, co-founder of venture capital VC firm Color Capital and founder of Web3 platform Club CPG. “This will go a long way in moving past the perception of crypto as a stark and monolithic technology, giving it a face and reinforcing relationships between creators and their superfans.”
Potential for reward
The new functionality allows creators to maintain ownership of the content they produce, because the NFTs are stored on the blockchain. “This differs from branded content because it is connected directly to the creator, versus a brand the creator does not own,” says Amoruwa. “This is where the opportunity of ownership and entrepreneurship gets really exciting for creators. It gives them full control in providing a product offering to their community.”
Influencers have long sought control over their businesses and destinies from the platforms they grew to fame on. As the founder of activewear brand Outdoor Voices and Web3 community management platform Try Your Best, Ty Haney, recently told Vogue Business: “We’ve been sold on this concept of direct-to-consumer, which ultimately is not all that direct,” referring to the dollars that go to digital landlords such as Instagram. Some creators have started subscription services via the Patreon membership platform, to earn money from followers who support their work. For fashion influencers, launching their own brand either independently or with a retailer is a way to grow their empires, but it takes a lot of work to make a dent in a saturated market.
Now, creators might make and sell NFT artworks, or launch and sell their own tokens that unlock access to perks for followers such as Close Friends stories, exclusive in-person events and limited edition products. The key value — and appeal — lies in this potential for reward, says Cantino. “Once creators recognise NFTs as a lever for rewarding fans, improving marketing and retention while they’re at it, the sky is the limit.”
Digital fashion artist Stephy Fung is testing the toolkit because she wants to reward fans, noting that she can track who has bought her work via blockchain. “I am able to directly chat to my collectors and gift them certain perks for collecting, whether that is physical outfits of my digital fashion pieces or access to behind-the-scenes footage of my design process,” she says. “It gives a lot of control to the creator but also helps to build a more natural and genuine relationship with collectors.”
Influencing wider Web3 adoption
Offering NFTs in the familiar context of everyday Instagram feeds makes the concept easier for people to digest. “Everyone has Instagram, everyone has social media — but not everybody has an NFT, or is on an NFT marketplace,” photographer Sophia Wilson says. The familiarity will help onboard users as it removes the complexity of extra steps that are now a hindrance; attaching [cryptocurrency wallet] MetaMask to Chrome, heading to unique NFT marketplaces, figuring out ETH conversions.
Individual creators are also a draw. Users trust the people they follow, so their endorsement holds weight. “If you’re following an individual on the internet, you feel like you know them. You can trust them,” Wilson says. Fung notes that the growth of the creator economy was due to people, rather than brands.
Calling them “digital collectibles” instead of NFTs also avoids NFT stigma. “‘NFT’ has a bit of a negative connotation due to the recent hype cycle,” says Web3 artist Olive Allen, who is trialling the new tool and dropping her first Instagram-based NFT collection on 17 November. Allen is thinking about how to reward early collectors with digital and physical experiences. It also might point to a maturation that places emphasis on the value rather than the tech itself — in the same vein that Apple Pay quietly onboarded millions to NFCs (near-field communication chips), noted Gucci’s VP of metaverse ventures Micael Barilaro when Instagram’s NFT update was announced.
However, wider uptake will require engagement on the part of creators who don’t already use NFTs, says Martha Bennett, VP and principal analyst at market research firm Forrester. Projects like Influenc3, an education platform developed by influencer management company Digital Brand Architects, that are geared towards educating creators and talent on blockchain technology will prove useful in bridging the Web3 community with the creator economy.
“It’s all about making things easy, making things familiar. Then people will see that other people are doing it, and it’s like a chain reaction,” Allen says.
Learning from creators
Amid predictions of a metaverse cooldown, brands should be watching how creators monetise NFTs. “Brands execute and innovate best when they embrace what’s working with their customers first and build a strategy off of that,” says Kassi Socha, director analyst at research firm Gartner. “We view the initial rollout of this [feature] with creators as a customer-centric approach that’s better poised to succeed.”
The update is on brands’ radars. To Japanese beauty brand DamDam co-founders Giselle Go and Philippe Terrien, the opportunity to experiment with NFTs in a space they’re already active in is a draw. “We frequently collaborate on products with artists and artisans, so the idea of offering digital versions is appealing.” The loyalty element is especially intriguing to the pair. Rewards could include: “Travelling to see how our products are made in our lab; visiting the farmers we work with that grow our ingredients using regenerative agriculture; and generally experiencing what daily life in Tokyo is like.”
Steven Perkins is brainstorming how to apply this capability to his eyewear brand Dezi (co-founded with his influencer wife Desi Perkins). He envisions releasing a virtual style before the physical launch, which users can wear on their avatars, and later claim the physical product. Here, a gamification element is introduced: holders can decide if they want to redeem the physical glasses, or sell the token (for a profit) to a keen buyer. He also wonders about the potential for token-gating via Instagram Shopping in the future, noting the ease and appeal of having these NFT perks on a single platform.
Sponsored NFTs aren’t on the cards — yet. But, there’s potential for brands to use this tool for marketing. Perkins envisions brands seeding out NFTs to talent, either for them to gift to followers, expanding the brand’s network, or for the talent to hold to mark their status as a trusted brand ambassador; a bullet point on their blockchain-based resume (which can offer utility as well).
Creators agree that they’re equipped to lead the charge. “I see a lot of brands trying to make their own NFT projects and have everybody purchase them the same way that they would a product,” Wilson says. “It would make a lot more sense for them to tap into more individual creatives to create and collaborate with.” This points to the same reason brands engaged independent creators in Web2: consumer trust. “You’re not going to be able to sell your NFTs without the backing of a community in that space ready to support it.”
Significant headwinds
Not everyone is convinced, due to both technical and cultural resistance.
“I don't think this will be a catalyst for mass adoption of blockchain,” says Forrester’s Bennett, noting that crypto wallet requirements will limit uptake. “It’s worth remembering that most consumers don't really care about NFTs,” she adds.
Currently, the feature is only supported by the Polygon blockchain, adding another potential friction point. Photographer Wilson’s NFTs to date are in Ethereum. Having participated in an initial trial, she’s not joining this one, in part because of this limitation. Discussions about expansion are underway, Instagram’s Amoruwa says. Forrester’s Bennett doesn’t see an issue here: “[Polygon] is where the centre of gravity is at the moment,” she says. Polygon tokens surged approximately 40 per cent after Meta announced it will use the blockchain for Instagram digital collectibles.
There’s also uncertainty about whether Instagram is the right forum. “What we don’t want is a repeat of Web2, where the autonomy of information and data is driven by big corporate brands,” says digital artist Fung, who is still open to minting on Instagram. “I just hope that power and ownership stays mostly with creators and communities.”
Musician and artist Aluna says that Instagram might not require the learning curve of Web3-native platforms; education has been “essential” to her ability to navigate the space, she says. “If we keep pushing education, we can find a balance.” That said, she thinks it’s a win in that more people will be able to take their first step into the NFT space. “One of the essential developments needed was accessibility, and this is a big step in that direction.”
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Creators can now make and sell NFTs on Instagram
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