Nike’s ‘virtual creations’ is a rebranded NFT marketplace that can profit from user designs

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Source: Unsplash/Kristian Egelund.

Nike recently announced its very own digital trading platform, .SWOOSH, where fans can buy virtual branded merchandise. But it’s essentially a rebranded NFT marketplace that’s light on details and buries the part about Nike owning user’s designs.

This isn’t the brand’s first foray into the metaverse or Web3. Over the past couple of years, it has been a prominent brand in Fortnite and more recently, Roblox with NIKELAND. This allowed users — mostly kids — to participate in virtual events and games. Virtual merch drops and purchases have also enabled the brand to create digital ambassadors within the Roblox metaverse as users walk around in its gear.

The company even launched a CryptoKicks NFT collection on the Web3 marketplace OpenSea.

All of these toe tips into Web3 seemed to be in preparation for Nike launching its own user-focused platform.

Nike is light on the details

There’s not a great deal of detail surrounding .SWOOSH yet. What we do know is that the plan for the marketplace is to drop its first virtual merch run sometime in January. And despite the Web3 marketing attached to the platform, items can’t be bought with cryptocurrency – just US dollars for now.

The platform is currently in beta testing with select users who have been granted access codes. According to the site’s blog, some of these have gone to participants of .SWOOSH sessions that are currently happening in select cities across the US.

Collaboration is at the forefront of Nike’s messaging for .SWOOSH. It’s even created a fresh tagline for the marketplace — ‘It’s not you, it’s us’.

While .SWOOSH will begin as a marketplace for users to buy digital versions of shoes, jerseys, etc, Nike promises that, eventually, the ‘community’ will be able to co-create virtual products as well.

“That’s right. In this world, some of you will get the chance to learn how to build virtual creations that can be worn in video games and experiences.” a .SWOOSH blog post reads.

“And, for the select few creators who win our community challenges, you can earn a royalty from the virtual products you co-create with us.”

Nike also claims that the virtual merch will be usable in video games and other online experiences at some point, but provides no further details.

.SWOOSH is a rebranded NFT marketplace

If this all sounds vague and like a PR spin for launching an NFT marketplace — yes.

The prolonged crypto bear market of 2022 has seen NFTs become a dirty acronym. And there are a few reasons for that: severe market downturn, scams and how easy it is to commit fraud.

That’s before you get into the complexity of intellectual property disputes, particularly between countries. As per usual, laws are unable to keep up with new technologies, which provides ample opportunity for bad actors.

Less than 12 months ago they were being promoted as the hottest new way to get rich quick in the crypto space. Even celebrities and brands were getting in on the action by launching their own collections or utilising their purchases for further profit.

For example, Seth Green bought one of the infamous Bored Apes and used his newly minted IP to create an entire TV show around the character. He also lost it for a while after being scammed, which is a whole other story.

Less than a year later and brands in particular are distancing themselves from NFTs due to the negative connotations.

But that isn’t stopping them from launching with a cheeky rebrand. Reddit even did this a few months back with its ‘Collectible Avatars’.

In the case of Nike, you won’t find the term ‘NFT’ on the core .SWOOSH website, in its blog posts or in marketing collateral. Instead, you’ll see terms like ‘interactive digital objects’ and ‘virtual creations’ being thrown around.

In the media .SWOOSH products have been reported as being ‘similar’ to NFTs. But here’s the thing — they’re not similar. They’re NFTs. Nike even admits to it if you take a gander at the site’s terms of service. There you’ll find the buried term used a total of nine times.

“Each “Digital Collectible” is a digital asset comprised of an NFT together with the license rights to an associated digital work of authorship or other content,” the Terms and Conditions read.

Most people won’t make money from virtual Nike merchandise, but Nike can profit from user designs

Nike has said that some creators who win community challenges will be able to earn royalties, but that’s probably the only way you will be able to turn a profit on the .SWOOSH platform.

This is important because profit has been a driving force in the current NFT space that tends to focus on items and artwork. While there are non-profit uses for NFTs in the future, such as smart contracts, that isn’t particularly prominent in most people’s minds at the moment.

The .SWOOSH T&Cs make it very clear that these virtual items cannot be resold.

“You are acquiring Digital Collectibles solely for consumptive use in connection with the Services or for your own personal collection, use, and enjoyment, and not for distribution,” the .SWOOSH T&Cs read.

“You are not acquiring Digital Collectibles as an investment and you have no expectation of economic benefit or profit as a holder of Digital Collectibles.

“You are acquiring Digital Collectibles for your own use and not with a present intention or view to sell the Digital Collectibles to anyone else.”

Speaking of economic benefit, Nike is spruiking the idea that it will help teach users how to create virtual items, which is where the potential royalties come in. But it said it will only be for a select few during community events.

That got me wondering how the general ‘creation’ ecosystem is handled on the platform. If a regular person creates a hot design, who owns that IP? Can Nike put it into production in the real world and turn a profit without paying the creator?

Yes, it can.

“As between you and Nike, the ID Design is owned by Nike.  You hereby assign to Nike all right, title and interest in the ID Design and all intellectual property rights in or to the ID Design,” the terms and conditions read.

That’s quite the motivator for teaching regular folk product design.

You won’t be able to do much with it at all, yet

Despite ‘owning’ the virtual merchandise, you won’t even be able to move them to a crypto wallet of your choice. While Nike has said on the site that it plans to roll out this functionality eventually, for the time being users will have to set up a wallet managed by BitGo to store their Nike NFTS.

Even if third-party wallet functionality is rolled out further in the future, users would have to be careful that it’s compatible.

Despite the term ‘blockchain’ being thrown around as a singular (much like ‘metaverse’) there is more than one. While interoperability is improving, there’s a long way to go.

.SWOOSH is built on Polygon, which is a layer 2 Ethereum solution. In very simplistic terms, it’s built on top of the Ethereum blockchain. So trying to transfer to a wallet on a different network could potentially cause problems.

Think of it like trying to stick a Nintendo Switch cartridge in a PlayStation 5. It just doesn’t work. And in the case of NFTs, sending it into the ether could mean losing it forever if you don’t know what you’re doing.

“The Digital Collectibles are currently available only on the Polygon Blockchain. In the event that you transfer a Digital Collectible to a digital wallet that is not compatible with the Polygon Blockchain, your Digital Collectible may be lost, destroyed or otherwise become unavailable to you.,” the .SWOOSH T&Cs read.

So that leaves the .SWOOSH platform itself. Surely there’s no need to remove the NFTs if there’s plenty to use them for there. Perhaps, but we simply don’t know what that looks like yet.

Nike has been incredibly vague, even admitting to ‘progress over perfection’ as it takes baby steps on the project. While ‘video games’ and ‘events’ have been thrown around as future possibilities, it’s difficult to work out what that means.

Unlike Roblox, .SWOOSH isn’t a metaverse with a 52.2 million active daily users to potentially tap into. And if Nike were to even launch its own metaverse, we already know they’re fraught with issues.

Just recently the world got a peek at Meta’s own Horizon Worlds, which was laughably bad. You know things are grim when Mark Zuckerberg, one of the richest men on the planet, can’t get legs to work in his metaverse just yet.

And while the world of NFTs promises a future where your personal items will be swappable between different titles – this isn’t very realistic if you know anything about game making.

That being said, perhaps Nike will utilise its current collaboration with the wildly popular NBA 2K franchise to integrate .SWOOSH. I see that as a real possibility that could actually attract users.

But in the meantime, the future is looking foggy for the platform. It’s difficult to see it as more than a rebranded NFT platform to flog virtual items that may only have real world value for Nike in the long run.

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