Nike is taking another step into the metaverse by acquiring RTFKT Studios, a virtual sneaker and collectibles startup.
While the deal is already being seen by many as Nike’s way of saying “Just Do It” to the Web3 era, it’ll also likely signal to NFT startups and legacy clothing brands alike that the world of virtual fashion will further heat up in 2022.
Founded in 2019, RTFKT has becoming increasingly popular with sneaker and Web3 enthusiasts, and has gained momentum during the NFT boom that began earlier this year. In February, the startup released several virtual sneaker designs in collaboration with the artist Fewocious and quickly made more than $3 million buy selling more than 600 pairs that can’t even be worn in the physical world. In March, it partnered with Atari on a limited edition Atari-themed virtual sneaker. And just last month, RTFKT partnered with the artist Takashi Murakami on an NFT auction to sell 20,000 3D avatars that are a part of the CloneX collection.
Terms were not disclosed, but Nike President and CEO John Donahoe said in a statement that the deal “accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming and culture.”
“We’re acquiring a very talented team of creators with an authentic and connected brand,” Donahoe said. “Our plan is to invest in the RTFKT brand, serve and grow their innovative and creative community and extend Nike’s digital footprint and capabilities.”
Nike and rival Adidas have both invested in Web3 topics in recent months. In September, Nike built a Nikeland experience and virtual showroom inside of the popular game Roblox. (Long before that, Jordan Brand collaborated back in 2019 with Fortnite.) In November, Adidas confirmed a new partnership with Coinbase and the crypto-enabled virtual platform The Sandbox. And earlier this month, Adidas expanded its NFT collaborations by announcing new partnerships with Bored Ape Yacht Club, Punks Comic and Gmoney. Nike has also filed multiple trademarks and patents with the U.S. Patent and Trademark Office to have its logo used in the form of virtual footwear, clothing, headwear and other products and apparel.
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Since starting RTFKT in 2019, cofounders Benoit Pagotto, Chris Le and Steven Vasilev have raised $9.5 million, according to Crunchbase, including an $8 million seed round with participation by Andreesen Horowtiz and Shrug Capital. In a joint statement with Nike, Pagotto said Nike “is the only brand in the world that shares the deep passion we all have for innovation, creativity and community.”
“This is a unique opportunity to build the RTFKT brand and we are excited to benefit from Nike’s foundational strength and expertise to build the communities we love,” Pagotto said.
Since the Recording Industry Association of America introduced the idea of “going platinum,” the milestone of selling 1 million albums has been coveted by musicians throughout the evolution of formats. Now, DeadMau5 has a plan to go platinum in the crypto era.
Deadmau5—whose real name is Joel Zimmerman— has collaborated with the rock band Portugal The Man on “This Is Fine,” a new single minted as a non-fungible token (NFT) that debuted today. The project also poses somewhat of a public challenge to the music industry: Can an NFT song go platinum if all 1 million copies are sold? While RIAA has a set of standards for streaming and downloaded music, NFTs are new territory.
“I’m excited to see how the RIAA recognizes it,” Zimmerman told Forbes in an interview. “If things go the way of the DAO, then the RIAA is going to have to do something about it. They’re going to have to track something. It’s going to be the new contender.”
The musicians’ NFT, which went on sale today, was minted on the NFT platform Mintbase using the Near blockchain, an alternative to blockchains such as Ethereum. Each “This Is Fine” NFT costs .25 NEAR each—or around $2.19 USD as of this week—with 750,00 available this week during Art Basel Miami. Others in the million will be sold as individuals or as bundles. For example, one “Ultimate Bundle,” will total 50,000 units and include artwork, a limited edition NFT, merchadise pack and a spot on DeadMau5’s guest list. Another 200 will include 1,000 NFTs, with each pack having their own unique artwork.
To support the NFT drop, DeadMau5, Portugal The Man and Near are running an out-of-home campaign to promote both the new NFT and also market Near and blockchain technology in Miami and several key cities. The OOH ads—will will be roaming around on several buses—are in Miami this month, in New York City from late December through early January, and then in San Francisco all of next month. With messages such as “Crypto, but easy” and “Crypto without the Carbon”— along with QR code’s that direct people back to Mintbase—the ads are an attempt to make the world of crypto easily understood and accessible to people who are perhaps not as familiar yet with the space.
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DeadMau5 is no stranger to crypto. Over the past year, he’s done a number of other crypto and NFT projects. In April, Deadmau5 collaborated with the fellow Canadian DJ REZZ to on an NFT drop around the song, “Hypnocurrency,” which now has more than 14 million streams and is currently both DJs’ most popular hit on Spotify. In August, he launched a second blockchain card collection on the Worldwide Asset eXchange (WAX). And just last month, he helped launch an NFT music streaming platform called MODA DAO.
“When we wrote the track, it was really just kind of something to put on the album and nothing more. And then over the next year was when we started to delve into all our other blockchain and crypto projects.”
Other Web3 project that DeadMau5 projects include collaborations with Roblox, the blockchain-based gaming platform Mythical Games, Sandbox and Decentraland. He also recently worked with music producer Richie Hawkin to launch Pixelynx, an augmented reality gaming platform. Zimmerman has also sold DeadMau5 art on platforms such as SuperRare, an Ethereum-based digital art market. (Portugal The Man has also been experimenting with crypto this year: In January, the band debuted its own coin as a way of building a new kind of fan club.)
The bands are working with Mintbase and Near to also make NFTs more accessible beyond just the cost barrier. Rather than requiring people to download a crypto wallet to buy the NFT or pay in crypto, fans will be able to buy the NFT through Stripe making it easier—and more accessible—than many other NFTs.
“People like Joel have to be those flag-bearers and sledgehammers,” Wilson told Forbes. “That’s what we’re doing. It’s the first step through the door.”
Zimmerman also see NFTs as a strategy against to overall music industry, including music-streaming giants. And rather than sell something for the highest bidder for millions of dollars or let someone bid on the only copy of a Deadmau5 album, he said “music is different” than other types of NFTs in the art world or elsewhere.
“We want to use it as a social utility for governance over our property basically and having better control over it,” Zimmerman said, acknowledging that, in five or 10 years, he may not have to rely on companies such as Spotify. “There’s a reason why these companies have billions and billions of dollars, and it’s not from viewers like you, you know? It’s from out of the back-end dividends that the artists provide.”
It was actually Wilson that got Zimmerman into NFTs in the first place when they took the DeadMau pins from vending machines at shows and made them into a digital trading cards on WAX.
“We took what was happening in the physical and brought it to the digital, and it really took off at that point,” Wilson said. “And for the first time in any artists’ life, there’s a secondary market income—which we’ve never seen apart from our tickets be sold by scalpers forever and watch them make incredible amounts of money while we never saw a cut of any of it. Now, any IP owner now has new income stream and life forever, which is pretty amazing.”
When “This Is Fine” was written back in February 2020—long before the current NFT craze began, but right in the middle of the broader momentum with blockchain and cryptocurrency. However, the origin story for the song had nothing to do with Web3. However, during the past year, DeadMau5 and his manager, Dean Wilson, started to dive into a variety of crypto and blockchain projects, and yet wanted to better understand the ecosystem and also the legalities around it.
Working with DeadMau5 and Near on the project is Mintbase, an NFT startup based in Lisbon that began as an NFT ticketing platform on the Ethereum blockchain back in 2018. Nate Geier, CEO and cofounder of Mintbase—which raised $1 million last year led by the Chinese venture capital firm Sino Global—said the fees were “going to murder us” last year, prompting the company to switch over to Near.
Geier first got connected with Deadmau5 after the company did a burning beers NFT at the Berlin Beer Festival, where they used Apple Airdrop to send digital beers to people who could then “burn” their NFTs in exchange for a real-life beer at the festival.
“People like Joel have to be those flag-bearers and sledgehammers. That’s what we’re doing. It’s the first step through the door.”
DeadMau5 also has experimented with other emerging technologies. In 2016, he created an interactive virtual reality game in collaboration with Absolut Labs, an incubator run by the vodka brand, Absolut. Along with releasing his own NFTs, Zimmerman is also collecting them and now has between 20 and 30. However, for the ones he owns, the DJ said he treats them more like art than utility.
“I like the art and a lot of the artists, because as much as everyone loves to put ‘NFT artist’ in their bio now, a lot of them have always been digital media designers,” Zimmerman said. “Like Justin Maller and Steven Baltay and a lot of really talented GGI artists that have just been doing it before the NFT craze, and then when the NFT craze slammed down, it was just all of a sudden everyone’s biography changed. Which is good for awareness and stuff like that, but kind of leaves me a little salty.”
According to Geier, the exciting part of the project is printing NFTs en masse rather than doing a limited collection that sells for a lot. He referenced the now famous NFT by the artist Beeple that Christie’s sold back in March for $69 million, adding that people aren’t getting excited about NFTs because of the money, but because of “what they’re going to do in the future.”
“Selling one NFT for $69 million to me is a yawn,” Greier said. “It’s like who cares…There’s no innovation there. Selling a million NFTs to me is next-level. This is real innovation. This is something for the masses. This is something that I think is just really starting to prove this whole idea of what we’re getting excited about.’’
Near, founded in San Francisco last year, isn’t as popular as other blockchains such as Bitcoin or Ethereum. However, it’s selling point is lower fees compared to some other more popular protocols. Last year, Near raised nearly $22 million in funding from A16Z and now has 1,600 active developers building within the ecosystem.
“In 2017, it was come to crypto, stay for crypto,” said Near CoFounder Illia Polosukhin. “Now it’s come to learn about crypto, but open up this new world of interactions. The future is every single new startup I’m seeing in the consumer space is embedding crypto into their strategy.”
As cryptocurrency companies seek to reach mainstream audiences, some platforms are spending hundreds of millions of dollars to sponsor sports teams, stadiums and even leagues in a bid to woo new fans.
On Sept. 22, Crypto.com struck an eight-figure deal with the Philadelphia 76ers to sponsor the jersey patch and have visibility in the arena. The crypto trading app will also work with team management to develop non-fungible tokens (NFTs) and create a way for fans to use cryptocurrency to pay for tickets and other products. The Hong Kong-based company will also show up elsewhere alongside the NBA franchise—including on TV broadcasts and various other digital platforms.
Crypto.com Chief Marketing Officer Steven Kalifowitz recognizes that in order to build the brand, he has to also educate consumers about this new asset class.
“Crypto is not just another shoe,” he says. “It’s not a commodity thing or a suitcase or something. Getting into crypto is very much a cultural thing.”
Flush with money from eager investors, a growing number of crypto brands are spending big to reach a mass audience through sports sponsorships and mainstream events. Other deals this month include the cryptofinance company XBTO sponsoring the Major League Soccer team Inter Miami, the cryptocurrency exchange FTX sponsoring Mercedes-AMG’s Formula 1 team and the nonprofit Learncrypto.com sponsoring the English Premier League team, Southampton F.C.
Perhaps sports arenas are not a bad way to go when it comes to finding new fans for a new—and still largely unregulated—asset class that some critics dismiss as gambling and proponents say is the future of the internet as well as the economy. And in a fast-growing and cluttered market, the fight is to get not just recognition but market share.
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“To me it looks like an arms race for user acquisition,” says Keith Soljacich, VP/GD of Experiential Tech at Digitas, a leading digital advertising agency. “It’s kind of like if you have a crypto wallet on a platform, it’s a lot like holding a Visa card, too.”
The 76ers deal is just one of many that Crypto.com has landed in the past year while it’s on an aggressive sponsorship spree totaling more than $400 million in deals. Earlier this month, the company became the first official crypto platform partner for the famous French soccer team Paris Saint-Germain. Crypto.com is also a sponsor of a wide range of teams including the NHL’s Montreal Canadians, Fox Sports’ college football midday coverage, UFC, and Aston Martin’s Formula One team—just to name a few. Each of these also includes various other integrations far beyond a logo.
The 76ers have been looking for a new jersey patch partner for a couple of years and spoken with hundreds of companies, according to Chris Heck, the team’s president of business operations. He said the jersey patch is the most important partnership a team has, which requires brands and teams to be “completely aligned.”
“As the world woke up to the crypto space a little over a year ago, we got a chance to venture down that road,” Heck says. “Think about it this way: Sports are entering into the crypto era world, and we get to the at the front of the line with Crypto.com. These are folks that are partnering with gold-standard brands like UFC, F1, PSG, and we get to be their brand and their of choice in the United States with major sports teams and that’s pretty cool.”
All this to go beyond the current crypto user base to reach the masses: A study Crypto.com conducted in July found that total global crypto users have doubled year-over-year from 106 million to 221 million. However, just a fraction of those are currently the company’s customers.
Earlier in September, FTX—a two-year-old startup also based in Hong Kong—announced a $20 million ad campaign starring football legend Tom Brady and his wife, the model and businesswoman Gisele Bündchen. And like Crypto.com, FTX is sponsoring a wide range of teams and leagues in rapid succession including a five-year deal with the Major League Baseball announced this summer.
“If we just stop at one deal and we’ll wait and see how it does and wait to see how that does before doing another one, the best opportunities might be gone,” says FTX.US President Brett Harrison.
According to Harrison, FTX founder and CEO Sam Bankman-Fried asked for ideas of how do something “that’s big.” Someone then came up with the idea to buy the naming rights for a stadium, and a few months later they won the rights to rename the Miami Heat’s arena FTX Arena in a $135 million deal approved in March.
“There is a group of tech companies that know it in their bones that if they don’t become brands quickly, there is a time in the future where there will be just a few left,” says Jamie Shuttlesworth, chief strategy officer of Dentsu Americas, which became FTX’s agency of record in June.
Traditional advertising methods are important for building trust in crypto brands, according to Harrison—especially since it deals with something like taking care of people’s money.
“When’s the last time you saw an ad for maybe a bank pop up on the top of your Google search and said, ‘Time to move all my money from my Chase account or Citi account?’”
Major stadium and team sponsorship are often named after brands that are already well known, but the crypto sector’s aggressive land-grab feels in some ways like people playing a game of “Risk” or “Monopoly” where people can either wait for the right properties or buy everything they can as fast as possible.
When asked about the Monopoly metaphor, Harrison joked that “we’re trying plant our pieces on as many Park Places as possible.”
There’s plenty incentive for sports organizations to team up with crypto companies. Mike Proulx, a Forester analyst and marketing expert, said many sports leagues want—and need—to attract the next generation of fans.
“These kinds of deals look to tap into crypto companies’ young skewing userbase with NFTs that are, in a way, a modern/virtual take on old school baseball cards,” he says. “And the benefit to crypto companies is, of course, getting to leverage the league IP that legitimizes their platform with trusted brands while also growing their users.”
The crypto industry has exhausted its original market, says to R.A. Farrokhnia, a professor at Columbia Business School professor and Executive Director of the Columbia Fintech Initiative. However, blockchain technology isn’t something that’s easily explained to the average person—it involves cryptography, complex networks, and other concepts—and also still aren’t to a point where users can easily navigate.
According to Farrokhnia, there are still questions about whether the foundations and interfaces are advanced enough to warrant the aggressive push toward mass adoption. Or, he asks, “are we putting the proverbial cart before the horse?”
“These are all the moving parts in this ecosystem and it seems the pace for innovation has accelerated,” he said. “But are we doing things in the right sequence?”
Farrokhnia also points out the irony that despite all of cryptocurrency’s new innovations, the companies are still using classic marketing models. However, he adds that little for athletes to market unregulated digital economies than to pitch things like CPG products or other brand categories.
“What kind of reputation risk could this have for teams or sports figures or influencers or actors who are engaging in this kind of marketing campaign or activity? Most likely they have good lawyers that would protect them against such things, but you never know.”
Coca-Cola is harnessing its history of collectibles with a first NFT as marketers continue experimenting with the intersection of cryptocurrency and culture.
The Atlanta-based beverage giant is selling a series of four NFTs—known as non-fungible tokens—that will be sold as a single asset with proceeds benefiting Special Olympics International. NFTs are digital assets backed by blockchain technology and have seen quick adoption this year by artists and cryptocurrency enthusiasts alike. Interest in the sector has prompted companies ranging from Pringles to the entertainment brand Superplastic to create NFTs with the hope of tapping into the crypto-cultural zeitgeist.
For its digital asset debut, Coca-Cola partnered with Tafi—a Utah-based startup that makes avatars and other virtual content—to resurrect a pixelated version of Coke’s classic 1956 vending machine. However, instead of cans of soda inside, the “Friendship Box” is meant to be like a “loot box” in video games. Coca-Cola’s own NFT loot box includes a metallic red bubble jacket wearable that is inspired by the company’s old delivery uniforms—but that illuminates with fizz. The series also includes digital versions of Coca-Cola’s 1940s trading cards and a “sound visualizer” that features classic Coke sounds such as a bottle opening and a drink being poured over ice. (Coca-Cola’s auction will begin bidding on July 30 and run through August 2 on OpenSea, online marketplace for NFTs and other crypto collectibles.)
“It really gave us an opportunity to explore the robust space the digital space gives you. This really cool convergence of form and function and aesthetic,” said Joshua Schwarber, senior director of global digital design at Coca-Cola. “So the ability to do things in motion and have artwork come alive or be able to reimagine our assets in new and unique ways to create these multi-sensorial kind of opportunities.”
Coca-Cola has a long track record of creating and selling collectibles in the real world. On the company’s website, a limited edition Norman Rockwell set of four Coca-Cola prints is priced at $400 while a vintage German Trink plastic cooler can be bought for $550. There’s also a Steuben Crystal 125th Anniversary bottle for $275, a 1970 Chevrolet Hauler set for $34.95 and a “First Hundred Years Collector’s Book” for $25.
“We were struck by the fact that the Coca-Cola brand has generated collectability and love over three centuries,” said Tafi President Matt Wilburn. “It’s 1800s, 1900s, and now we’re looking at how do you create an NFT that reflects that brand love over such a period of time. You’re literally creating an NFT which is totally appropriate that it’s timeless—it does not exist in the real world today, but if you’re looking forward to the next century, what does that look like?”
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According to Oana Vlad, Senior Director of global strategy for Coca-Cola’s Trademark division, the NFT space is changing so quickly that the company’s work had to evolve “almost on a daily basis—maybe more quickly than it would on another project.”
As culture moves toward digital worlds, Tafi Chief Operating Officer Ty Duperron thinks people don’t want the same kind of apparel they can already get in real life. The company had already been working Coca-Cola’s physical product team on other digital wearables for Coca-Cola for other brands and platforms. And while they had planned on doing a variety of wearables for the NFT, he said they decided to something “more meaningful than just a fashion piece.”
“We really wanted that beautiful show piece and it evolved into this wearable that reveals another one that generates its own fizz and has its own fluid inside,” Duperron said. “You didn’t have reference points because stuff didn’t exist so we couldn’t just run particle system and call it fizz. There are clear moments and clear ways that fizz needs to react.”
Coca-Cola is just one of numerous notable brands experimenting with NFTs this year. On Wednesday, Campbell’s commissioned the artist Sophia Change to create its first NFT collection that celebrates the soup company’s newly designed label. And while Taco Bell was among the first to jump on the NFT wagon when it released a series of “limited edition” taco NFTs, even luxury brands like Dolce & Gabbana have released their own high-fashion NFT collections as recently as this month.
Interest has also prompted marketing agencies to create NFT divisions. Earlier this month, VaynerNFT—a new agency created within VaynerMedia—launched with Anheuser-Busch InBev as the beer giant’s NFT agency of record. (Stella Artois auctioned several NFTs earlier this summer even before its parent company began working with Vayner.)
The stakes are high for branded NFTs because people are more likely to buy one from a celebrity than a company, says Gary Vaynerchuck—the cofounder and CEO of VaynerMedia known for his quick adoption of digital platforms. That means companies will have to compete on merit by having the right assets and the right “cultural cachet.” And while he’s bullish on NFTs overall, Vaynerchuck predicts that most branded projects could be “a disaster” without the right approach.
“I know brands, and they’re going to compromise on something that is good for the consumer but not good for them,” he said. “And they’re going to come from a place of selfishness—‘I want this,’ ‘I want that,’ ‘This is important’…They’re going to come from politics, not from consumer-centricality, and it’s going to hurt them.”
The tight-knit fan communities of crypto enthusiasts and artists create a high bar for marketers that want to play in the space. Boye Fajinmi, cofounder and president of The Future Party, says companies need to “have that cultural co-sign in the NFT space” to pull it off. (The Future Party created an NFT for Dole in collaboration with the artist David Datuna—who in 2019 famously ate a banana during Art Basel Miami.)
Fajinmi said some brands seem more focused on creating an NFT than on connecting with the right audiences, adding that NFTs should be taken seriously rather than released as jokes. (Earlier this year, the P&G-owned brand Charmin sold a toilet paper-themed NFT.)
“There’s a really, really strong NFT community,” Fajinmi says. “And I think most of the general population will cool off to it, but I think that community will continue to drive hype. And it’ll be a world where NFTs are just something everyone just does, like ‘Oh we have to NFT it.’”