The new digital era is one of innovation and possibility. For most organizations, adapting will mean emphasizing digital ventures rather than physical ones. As we enter a digital-forward era, the role of physical merchandise and memorabilia has to change, says Nila Lê of Dibbs.Â
Society has remained more or less the same for thousands of years, but the technology surrounding human interactions has changed dramatically, enhancing — or at least intensifying — the ways we engage with each other. For some, the internet as we know it today has seemed like the culmination of technical advancement. But just as steam gave way to electricity, the first digital era is birthing its successor.
In a world where the lines between digital and physical are blurred, what does that mean? You might be spending more time designing digital experiences, but that doesn’t mean you should empty the contents of your warehouse into a landfill. Instead, it’s time to analyze how treasured physical collectibles can be leveraged in a digital environment and how an open mind can lead to success.
The Internet Is Evolving Beyond Web2
If you’ve been on the Internet long enough, you’ve seen it progress from AOL Instant Messaging to MySpace, Facebook, and Twitter. The next transition is happening, but it won’t be quite as “in your face†as the last shift. In fact, the average person may not even realize what’s happening.
Web2, often referred to as the “social web,†emerged in the early 2000s as a response to the static nature of Web1. This second iteration of the internet enabled users to interact, collaborate, and create content on platforms like Facebook, Twitter, and YouTube. The rapid adoption of smartphones further accelerated the growth of Web2, as mobile internet access became a ubiquitous part of modern life. However, the Web2 model has several drawbacks, including data privacy concerns, centralization of power, and an advertising-driven revenue model that often prioritizes profits over user experience.
Web3, on the other hand, aims to create a decentralized internet that empowers users and fosters innovation. At the core of Web3 is blockchain technology, which allows for secure, transparent, and tamper-proof record-keeping. By using cryptographic techniques and a distributed ledger, blockchain enables trustless peer-to-peer interactions without the need for intermediaries.Â
Non-fungible tokens (NFTs) are one of the most notable innovations emerging from the Web3 ecosystem. NFTs are a technological class often used in unique digital tokens, such as art, music, or virtual real estate, and are authenticated and secured on a blockchain. They represent a new form of digital ownership that allows creators to monetize their work directly without relying on centralized platforms. This has the potential to democratize the digital content industry, as creators and consumers can interact directly without intermediaries, creating an environment that fosters creativity and new business models.
As one example, buying tickets to events online has long caused frustration and even potential rifts between popular artists and their biggest fans. The first-come, first-serve nature of the experience makes longtime supporters feel like they’re no more important to the artist than ticket scalpers out to make a quick profit. But Ticketmaster’s new Ethereum NFT token-gating serviceOpens a new window lets artists set tickets aside specifically for NFT holders, setting up a virtuous cycle within communities where true fans get to enjoy the best access and become even bigger fans in the process.
In this sense, NFTs are to Web3 what smartphones were to Web2: a revolutionary tool that reshapes the way we interact with digital content.
In this new era, the boundaries between the physical and digital worlds are blurring, with technologies such as augmented reality (AR), virtual reality (VR), IoT (Internet of Everything), and blockchain converging to create seamless, interconnected experiences. By leveraging these technologies, brands can deliver personalized, immersive, and engaging customer interactions that drive loyalty and growth.
As consumer behavior shifts towards an increasingly digital lifestyle, businesses that fail to adapt will risk losing market share to more agile competitors. Physical-to-digital transformation enables companies to reimagine their products, services, and business models, unlocking novel opportunities for revenue generation and value creation. For instance, the rise of NFTs and virtual goods has opened up new possibilities for brands to monetize digital assets and engage with their audience in innovative ways.
See More: How to Build Tech and Career Skills for Web3 and Blockchain
Web3 Brings New Business Opportunities
Technology has seen these major shifts before, and each one has brought new opportunities for entrepreneurs and enterprises to capitalize on. Web3 is no different. Each element will help businesses in some respect, whether it’s connecting with a new audience or managing their supply chain.Â
Audience engagement is one of the most prevalent factors in business today, and the new digital age is perfectly equipped to allow brands to engage with and reach new market segments. The blockchain is a global, 24/7 record-keeper, so brands can expand their market reach by tokenizing physical items on it that represent their products or services.
This global reach allows for increased exposure and brand recognition, as well as the potential for greater financial returns. Brands can offer digital tokens as incentives or rewards for user interaction, which encourages consumers to participate actively in the digital ecosystem: Dolce & Gabbana’s collaborationOpens a new window with inBetweeners and UNXD led to an OpenSea exclusive NFT collection, with 2,000 digital bears wearing one of 21 unique D&G products. Holders of those tokens even received exclusive garments and prints to match their bears. This heightened engagement can lead to increased loyalty and revenue.
In the Web2 ecosystem, that kind of scale is difficult to achieve and nearly impossible to master due to the logistical limitations of existing network architecture. Even if a Web2 strategy is executed well, broader reach opens up a higher possibility for security issues, which can have significant ramifications. However, blockchain’s decentralized nature allows for increased transparency and security because all transactions are stored on a public ledger. There will always be a record of who owns what.
Expanded reach and better engagement are far from the only benefits of Web3, though. Tokenization can help brands automate various aspects of their operations, from supply chain management to royalty tracking and payments. By leveraging smart contracts and other Web3 technologies, brands can improve operational efficiency and reduce the time and resources required to track inventory or manage distribution networks.
Transitioning To Web3
All of these elements are interesting, but where do they leave physical goods? The truth is that physical items still have an important role to play in the new digital age. For example, Nike’s RTFKT initiative creates NFTs of the brand’s popular shoes, which can be “worn†in AR/VR environments and redeemed for a physical version. Traditionally, the buyer-seller relationship would end once the consumer has their physical shoe. In Web3, things are a bit different.
The buyer can trade or sell their NFT whenever they want to. However, the original NFT creator — in this case, Nike — will earn a royalty every time the NFT is sold in the secondary market. The larger the number of NFTs Nike sells, and the more incentives they offer to frequent traders, the more revenue the channel is able to generate. It’s an excellent example of how brands can leverage digital merchandise while maximizing the potential of their physical items.Â
Brands that implement their own physical-to-digital strategies will find that their Web3 footing has improved significantly, setting them up for stronger business outcomes in the coming years. While history has proven that we can only guess what comes next, it’s safe to assume that brands of all sizes will be more prepared to face tomorrow’s challenges by remaining dynamic now.
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