You hate the word “phygital,” but what if it’s from Louis Vuitton?
The decidedly not-cool word, which mixes “physical” and “digital”‘ to describe real-life products related to NFTs, describes the soon-to-be-released Louis Vuitton-branded “Treasure Trunks.”
It also makes Jason Yanowitz cringe. “Oh god. I hate that word so much.”
Although it tends to provoke deep discomfort among those in the know, the Empire podcast host admits in a recent episode (Spotify / Apple) that he remains intrigued by the luxury brand’s take on pricey physical-to-digital NFTs.
Co-host Santiago Santos seems equally interested, saying “I don’t think I’ve ever bought anything from there, but maybe I will now.”
While “phygital” is uncanny on a similar scale to a certain “#WAGMI” video, it seems that holders not being able to sell or give away the rare “soulbound” tokens can generate sufficient coolness, especially when paired with exclusive goods from the luxury brand.
Percolating in the background
In an otherwise subdued market, “these are the catalysts,” Santos says.
It’s the kind of headline that, under better conditions, would stir the stage into an animated buzz. Instead, the story continues largely unnoticed in today’s bearish climate, he says.
“Remember this is the largest luxury conglomerate in the world.”
Santos recalls a previous highly successful foray into NFTs with Tiffany’s CryptoPunk pendant – another luxury brand owned by the LVMH conglomerate. “Louis Vuitton is doing this, it’s a big milestone” pushing the space forward, he says.
“When you have a brand like this that starts doing this, it makes a big splash.” Other luxury brands are forced to pay attention, he says.
Why not just use a member’s club?
From a consumer storage standpoint, Santos says the blockchain approach “makes a lot of sense.”
The value proposition of this special “phygital” is exclusive access to unique future products.
Playing devil’s advocate, Yanowitz questions why Louis Vuitton bothers to make this product an NFT, is that it is not transferable. “Couldn’t they have just done this with a members club?”
“Sure, they could,” Santos replies. “They could very well.”
While customers may not yet appreciate the idea of recording ownership on a public blockchain, Santos says the concept is poised to become more important.
He contrasts the benefits of NFTs and blockchain as a “Switzerland in the sky” with the obvious flaws of current loyalty programs – something anyone familiar with the pitfalls of earning airline points already understands.
“There are partnerships between certain airlines and you can use those points, but I think it was this week where United or an airline reduced the value of your points on a whim.”
United Airlines decided to significantly devalue its award miles, with inflation as a likely culprit.
It’s all about having options and expanding consumer preferences, according to Santos. Issuing tokens in the neutral environment of a public blockchain “allows you to do other things down the road,” he says.
Santos points out that the portability of NFTs can provide access to a range of opportunities, as LVMH has a broad portfolio of high-end brands. “If you have this NFT, maybe you can transfer it to other things.”
It’s not about the money – it’s about the money
Yanowitz suggests that it’s not really about the money – although the digital tokens are very expensive.
“I think these are the ones who are trying to meet this new group of very affluent, younger digitally native people where they are.”
Santos interjects, “What’s the whole point of luxury goods?”
“Bending,” Yanowitz replies.
“Exactly. What better way to flex than to have it on a public record where everyone can see it?”
“If you have this NFT, it’s a flex. It’s free marketing.”
So it’s not about money. It’s about showing off the money. As far-reaching bragging rights, maybe a “phygital” can be cool, after all.
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