Strong partnerships “in the creative space,” she says, leads to creative expression and fuels a “democratic system” where not only the company’s own designers but its fan community help inspire new products.
Beyond the movies are Lego Star Wars TV specials and product collaborations with Ikea and Adidas and others. “Every time,” Goldin says, “it’s really based on helping us reach kids or reach our target audiences in new ways and really bring in more value through the collaboration.”
Leaving money on the table
That sort of thinking, while innovative, overlooks the fact that brand extensions into apparel, NFTs or elsewhere in popular culture can absolutely be profit centers, says Gary Vaynerchuk, CEO of VaynerMedia. He’s also founder of VeeFriends, the eighth largest NFT collection currently, according to DappRadar, with nearly $72 million in sales volume since May among more than 4,700 traders.
Though Vaynerchuk is giving 1% of VeeFriends royalties to charity, he makes no bones about being in this to make money off his 268 drawings in the collection. When they’re resold, VeeFriends gets a 10% commission. Beyond art, owners also get access to a VeeCon event that will be held regularly starting next year.
Vaynerchuk says he is pushing clients into NFTs as a way to make money, including Anheuser-Busch InBev. Or at least that’s his advice. He sees Budweiser art alone as a potential goldmine. “I saw $34 million upfront and $17 million in secondary sales in 70 days on VeeFriends,” Vaynerchuk says. “It’s pretty remarkable. It’s something I made up out of thin air.”
Fortune 500 consumer brands could undoubtedly do even better, be it in NFTs or apparel or other licensing, he says. He points to General Mills’ Wheaties, whose cereal boxes featuring sports stars long have been collector’s items. Essentially, anything that could be a collector’s item could be an NFT–something that Topps has grasped with its NFT collection for Major League Baseball offerings, he says.
Clearly, the National Basketball Association also had an inkling of the commercial value of NFTs well ahead of the market. The NBA and NBA Players Association in 2019 formed a deal with Dapper Labs to create NBA Top Shot, a digital platform for basketball fans to collect, trade and own great moments from league history on blockchain via NFTs. NBA Top Shot languished at fairly low trading levels for almost two years until the NFT craze broke out in earnest in February, per DappRadar data. NBA Top Shot now ranks as the No. 2 NFT collection on DappRadar, with more than $637 million in sales volume.
Getting the cast right
But while sports leagues are used to licensing for profit, consumer brands usually aren’t.
“Most Fortune 500 CPG brands or other consumables don’t tend to have remarkable DNA on how to build an apparel or an NFT business,” Vaynerchuk says. “That doesn’t mean it’s not there for the taking. It’s just the casting in these organizations."
The creative marketing vs. profit center mindset are not mutually exclusive, says Brad Jakeman, senior advisor to Boston Consulting Group and former president of the Global Beverage Group at PepsiCo. “There’s no rule,” he says, “that it has to be either-or”—marketing or moneymaker.
“When I started the Creative League at PepsiCo, probably five years ago now, one of the key strategies we had was that we believed many of the brands had equities bigger than the bottle, bigger than the bag,” Jakeman says of the creative studio he launched. “If you take Pepsi, it’s a brand with a long history of participating in pop culture, particularly in music. And the question is whether there are ways to monetize those equities while at the same time deepening them and deepening people’s relationships with the brand.”
The answer, Jakeman believes, is yes. And even if the revenue from licensing isn’t seen as a separate profit center, it still can meaningfully offset other paid marketing, he says. “You can easily imagine a world where the revenue that brands generate from appropriate licensing could actually fund a lot of marketing for the core product,” he says. NFTs, he says, just create a new vehicle for doing that, arguably with fewer middle players to take a cut of the brand’s action.
Despite that, Jakeman says, “strategically, I think a lot of this can backfire as well for the brand. If you go into categories of business where you don’t have any equity and dilute the equity, it can be harmful.”
If you don’t, someone else may
Brands that don’t get into artistic or cultural licensing of their brands may find someone else will, potentially with the brand having no control and getting no revenue. Campbell Soup Co. never commissioned Andy Warhol to do those paintings, for example, although a product manager famously wrote the artist that it heartily approved of his work.
Be it T-shirts, sweatsuits, shoes, or home goods – it’s pretty clear using someone else’s registered trademark will be seen as infringement under the law, says Oliver Herzfeld, chief legal officer at Beanstalk, an Omnicom-owned global brand licensing agency. But when it comes to works of art, the law gets a bit fuzzier, and there’s been no legal challenge yet over an independent artist incorporating a brand into NFTs without a license. Realistically, trying to shut down unauthorized NFT sales at this point may simply look too uncool for brands to bother.
“The reality is that there’s rampant infringement going on right now if you go into NFT marketplaces,” Herzfeld says. “The tension is that you have a First Amendment right to create art. The counterbalance is that you’re not allowed to commercially exploit someone’s trademark under the guise of art.”
The most recent test of that came with rapper Lil Nas X and streetwear company MSCHF releasing a “Satan Shoe” earlier this year, built around Nike Air Max 97s but customized with human blood and pentagrams. Nike wasn’t amused, filed suit alleging trademark infringement, and got the shoe collaborators to back down. A single work of art is one thing. Selling 666 shoes using Nike’s trademark in part is another.
Herzfeld notes a court case in which an artist was permitted to sell individual paintings of great moments in Alabama Crimson Tide football history but prohibited from selling derivative merchandise like coffee mugs or shirts bearing reproductions of the painting.
Of course, the reality is that going after every infringement isn’t very cost effective for big brands, Herzfeld says, so some infringement falls through the cracks. Procter & Gamble Co.’s Tide has inspired T-shirts for a long time, with Neil Young famously wearing one in a 1995 concert. A Google search shows many Tide T-shirt options, some clearly not authorized by the brand. The company declined to comment on how vigorously it works to shut down renegade apparel.
“You have to weigh the costs and benefits,” Herzfeld says, in addition to the PR. The U.S. Army, a Beanstalk client, has hundreds of licensees using its logo, many of them “former infringers” who are Army vets, contacted by the service, who agree to minimum guaranteed royalties, approval rights and quality controls. But the Army isn’t out to sue enthusiastic vets selling Army T-shirts.
“You don’t want to start a dispute with a former service member who did something in good faith,” Herzfeld says. “The U.S. Department of the Army isn’t making large amounts of money at it, but it’s a favorable way of resolving the issue of unauthorized use.”
