A few days ago, a LeBron James highlight was sold for a whopping $200,000. These are virtual collectables for consumers, which have apparently earned over $230 million in sales. Over the past few months, the entire collecting market has somewhat gained attention, various pieces selling millions.
The NBA are currently partnered with Canadian-based Dapper Labs, so that they have their own digital collectable assets. NBA Top Shot is a collectable item, which is purchased by consumers as an NFT (Non-fungible token). The collectable item is in turn connected to a blockchain. The blockchain is a digital ledger, which is somewhat similar to something there for bitcoin.
The blockchain remains necessary, giving every NFT a unique as well as non-hackable authenticity certificate. While a copy of the highlight video can be made by anyone, the fake will be recognized due to the virtual ledger entry. The current packs are also available for $9. However, they can be sold out most times.
🚨 TOP COLLECTOR ALERT 🚨— NBA Top Shot (@nba_topshot) September 29, 2020
This is 1️⃣ of 4️⃣9️⃣ LeBron James Moments that can ever be minted in our Cosmic packs. Scooped up by user rapid_goji_berry2079 via the #NBATopShot marketplace 📈
Start collecting Moments like these before the beta opens! https://t.co/S4XvtARyar 🏀⛓ pic.twitter.com/Lqm8grEIF1
As per reports, Caty Tedman, the Dapper Labs' head of marketing and team partnerships, said that they have garnered more than $230 million from sales. While most income comes from traders exchanging collectables, some revenue is also generated from new NFT packs and other transactions. Experts like Tom Richardson (Columbia University's digital media proffesor) has spoken about the same, adding how the whole system is fascinating.
It is also a new source of revenue for the NBA. The license agreement between NBA and Dapper Labs was formed in 2019. While they do not get a major portion, the NBA earns around 10% to 15% from the sales the company makes. The players too, reportedly earn a portion of the money from the highlight they focus on.
The NBA gives Dapper Labs the reels. The footage is then digitilized with only a few being sold. Some will have different angles and digital artwork, warranting a high price. There are some listed for over $200,000.
In January, Dallas Mavericks owner Mark Cuban also spoke about the same, comparing it to old trading. However, Cuban believes there is no loss or theft risk. "And the value is still set by the same laws of supply and demand".
Now, James physical merchandise and memorabilia is already worth thousands. Recently, a highlight of his was sold for $200,000. In the future, a James (or Michael Jordan) NFT might be worth millions. People from Dapper Labs look at it as a 100-year product, something like rookie cards – which are considered worth thousands (even millions) in the future.
On the other hand, Dapper Labs raised $250 million. The company is now valued at $2 billion, something which is a result of NBA Top Spot's popularity. As popularity grows, so is the revenue Dapper makes.