Innovation oftentimes signals value generation. The value can be in any form. Of course, it mostly translates to financial value. As it concerns NFTs, it is a collection of values where financial benefits are one of them. Unfortunately, some participants might not be so lucky to be among those who profit the most from it. Understanding why some participants are least profitable will help you to realign yourself and avoid being on the losing side of this new industry.
It is evident from the different stages of innovative development since the invention of the internet in 1983 that not all market participants will profit from it. As it concerns NFT in recent times, it is evident that while owners of Cryptopunks and Cryptokittens have seen crazy profits, other NFT creators and buyers have still not gotten their fair share of the billion-dollar profit. If you fall under this category, this article will provide you with some of the reasons why you are not yet profiting from your NFTs.
The insights below consider various reasons why NFT market participants are at the bottom of the profit pyramid:
Unknown Artist
Similar to several other industries, new or relatively unknown participants may not get the patronage they deserve in the NFT space. Although the different platforms that mint NFTs display different artworks from different creators, there is a high chance that buyers will pass over a new artist’s work. Believe me, it is not you. It is a classic “chicken and egg” problem. Irrespective of whether your piece of art is the best on the platform, people will look for individuals with widespread popularity all over the internet.
However, this is not always the case. Art collectors are very quick to spot good art and are always looking for a way to buy low and sell high. If your art is great, you have a great chance of cashing out big time and becoming popular in the process.
If you are struggling to get traction with your art, one of the ways to get people to notice you is by doing some giveaways. This is a great attention puller and a signal to the broader community. Several big names were able to build the profiles they have now by simply doing some noticeable services, airdropping their art in exchange for recognition. This is one of the strategies of the Cryptopunks before they were able to gather the popularity they now enjoy.
Communities and Social Media
The fear of losing out is one of the several reasons why people are getting into using new technologies. While some benefit from it, others lose greatly. In the NFT space, social media and communities that continually go on and on about the validity of a project help to drive the success of such progress. No doubt, social media is a great marketing tool. Coupled with a motivated community, the job of driving the success of such a project is 50% done.
For most people, Twitter and Discord are the top information sources that they believe in. These two social media spaces are channels through which consumers directly communicate with artists. You will be surprised by the number of people you can directly contact by simply sending them a direct message over these platforms.
The community-building aspect is also an important aspect of being visible on social media. In a world where everybody connects over the internet, people want to feel like they are part of a community. Engaging with potential customers in a community is a way of getting their support and increasing their excitement about the project. One thing you can bank on to increase your NFT sales is word-of-mouth marketing.
Take your community one step further by using bots to send welcome messages to new members. You can create a personal message that new members will receive once they join the community. Once you can build a community on a social media platform, you will notice how easy it is to draw attention to your project.
Late Adopter
As the saying goes, “early birds catch the worm”. Adopting innovations in their early stages garners some level of advantage, rarity, and the best portion of the pot before the rest of the population discovers it. Back in 2017, early NFT adopters got Cryptopunks for free without paying a dime. Now, Cryptopunks are selling for millions of dollars.
Why do these particular Cryptopunks have such high value? The short answer is their rarity. Because of their unique figures and because they were among the first NFTs to be minted, they can command such high value. Although there is no fault in adopting a new piece of innovation late, there is the risk of not enjoying the best value until late into its adoption stage. Innovation around NFTs is still ongoing and at its earliest stage. As it expands into other fields and garners other uses, individuals can reap its full benefit by simply adopting earlier.
Physical Art Collectors
If we are very honest, little understanding or unwillingness to learn new information can deter people from benefiting from innovations like NFT. Of course, we are not forsaking the doubts that may arise from adopting new technologies. The real loss is when you try not to key into innovation coming into your space. The growing use of NFTs as a store of ownership creates a layer of value and uniqueness that increases the value of physical art. This benefit is especially useful to creators who now have a stronger claim over their content via the blockchain. Physical art collectors who are not able to comprehend this innovation may be missing the profit of using NFT to maintain ownership of their art.
Supply and Demand
Digital art collectors have one huge problem – supply exceeds demand. NFTs thrive on the concept of rarity and scarcity. Trust me, an over-flooded market with NFTs will leave several pieces in a collection unpurchased. Several buyers might ultimately decide to leave since the price of their possessions might not rise. A signal that seasoned collectors look out for when going after a particular NFT collection is how a few purchases could spur up a floor price. To ease art collectors’ doubts, artists and content creators use roadmaps as a way of reassuring collectors of the exclusive quantity of art pieces in a collection. This is, in fact, a strategy for controlling any form of increase in supply while demand is diminishing. A strategy that seems to work is to release artwork when there is a demand for new pieces of NFTs. Releasing a small portion of the artwork pieces will make NFT owners feel special and increase the value.
Minting Exercise
If you aim to play big time in the big leagues to earn a big profit, you have to learn to play the game properly. Do not get confused, allowing your collector to handle the minting exercise is to your benefit. Consider this: placing a value on your artwork might be counter-profitable for you because you might not be valuing it properly.
Minting is what guarantees royalty even after you sell your digital asset to a buyer. As a new entrant, you should consider allowing your buyers to mint the digital asset by themselves. This will allow them to determine the value to place on the token and recommend your work when it does well. Afterwards, you can piggyback on the value that your buyer places on your initial work to set the tempo for your other collection.
Art Collection Continuity
A collection is a group of things that share a unique feature or characteristic. This is also true in the NFT space. People viewing different artworks should be able to understand the relationship between each piece to determine their value. It is more desirable to conclude on the value of a collection by their unique relations in comparison to their differences.
Effect of Marketing
Marketing is an effective way of announcing your collection to people that may have an interest in it. Involving the right amount of marketing pressure is essential to get the word out to potential buyers. As an artist, imagine having to reply to threads on social media with the same message repeatedly. This marketing strategy will only make people wonder if the project is in demand or has merit. Although you can think of it as a way of self-promoting your artwork, it is better to promote it organically to select collectors.
On the other hand, doing minimal level marketing is not advisable. As much as word of mouth can get you some level of attention, advertising your collection will get the right people to notice your effort. In the case where there is a high demand for NFT, doing the minimum might get you the attention you desire. The difference between a collection selling out a few minutes after it drops and a collection that does not receive the patronage its creator is hoping for might be down to the marketing.
Some of the NFT collections that are doing well in the marketplace do understand the use of appropriate marketing tactics. The ability to maintain a buzz of excitement around your collection and maintain it for a given period will do the work. You can add some vagueness and something that piques the curiosity of your buyers to keep them on their toes on what to expect.
Blockchain Choice
Art collectors prefer to perform their trading activity on a familiar blockchain that they are comfortable using. For most of them, this is the Ethereum blockchain. Although Ethereum comes with the issue of a high gas fee for minting and unsustainability when there is pressure on the network. However, other blockchain protocols solve the issues that plague the Ethereum blockchain. The only other barrier is how users will bridge their payment tokens from Ethereum to other platforms. Choosing a common blockchain is key to how profitable your NFT collection will be at the end of the day.
Niche and Interest
Your art style and the niche you find interest in will determine how well your artwork finds interest in the NFT community. If you are lucky, your interest may be something new and fresh that will set a new trend for the world of NFT art. However, your interests may not exactly align with what your collectors might be looking for at that time.
In situations like this, the pool of art collectors that may have an interest in the same niche that you create may be small. This reduces the value that your art gets and the amount of attention it can gather. However, you should not let this discourage you from creating the art you genuinely have an interest in creating.
Lack of Hodlers
Another reason why you might not be making decent profits from your NFT collections is if your buyers are not holding on to their investment. People flipping your art almost immediately to get some profit from it is probably not the best thing to happen to your collection. This situation would be great if there was a demand for your art pieces. In situations where there is no such thing, your collection price will drop.
Cryptopunks and other art that collectors are holding are in this category. Their uniqueness and rarity drive their value up. A community of people holding a particular NFT collection makes it exclusive and a wanted commodity. If you do not have a holding commodity, chances are you might not be making a profit on your work of art.
Wrapping It Up
NFTs are a completely new industry. Based on past pieces of evidence, market participants stand to profit the least for various reasons. The article body aims to explain some of the reasons why this occurs and the solution to get out of this spot. Applying some of the recommendations in this article will help you avoid several pitfalls that will hinder you from making a profit in your foray into NFT assets.
