Image Courtesy of USAToday.com
By Caroline Morris
For only $11.99 a month for YouTube Premium, anyone can watch unlimited basketball highlights sans ads. Or with Top Shot, the newest money making endeavor by the NBA, fans can pay upwards of $100,000 for one highlight. What a deal!
In essence, NBA Top Shot is a service that allows consumers to buy crypto-collectibles, in this case being NBA player highlights and digital art. But in practice it’s a lot more complicated, involving blockchains, scarcity of goods, and trading.
Back in 2019, the NBA partnered with the Canadian company Dapper Labs by handing over the licensing of the reels of the game in order to create Top Shot. Dapper Labs digitizes the clips from the basketball games and creates a limited amount to then be sold as a product by Top Shot, creating scarcity.
Consumers can then buy these collectible reels on the Top Shot website as a non-fungible token (NFT).
An NFT is basically a piece of digital content on a blockchain, a type of digital ledger, that cannot be replaced or interchanged as it is unique, almost like a thumbprint.
For Top Shot, each collectible “moment” is an NFT, a unique video or piece of art that could not be exchanged for a replica. The website really pushes this concept, explaining on their Common Questions page that “every Top Shot has a unique edition number and size, verifying its rarity.”
Thus, with each NFT, aka highlight clip, a consumer buys, they can build a collection of valuables and put them on display online. This is the idea the NBA is really pushing, that these clips are a hot commodity and that collecting Top Shot Moments is akin to art curation, using phrases like “a top collector” and “curated Showcases.”
Through Top Shot, the NBA has basically brought baseball cards into the digital age. But the issue with commodifying this kind of digital content is that despite the NBA’s best efforts, basketball highlights can still be accessed, viewed, and downloaded for free in countless other places on the internet. Realistically, there is no need to buy Top Shot moments.
Despite all logic, these glorified trading cards have grossed over $230 million in sales. Rare clips are selling on the community marketplace for hundreds of thousands of dollars. The starter packs of clips are constantly sold out. How?
It’s all about the marketing. In spite of the fact that Dapper Labs could create countless Moments to sell to consumers, they limit the number they make to create a scarcity of goods. This creates an illusion of exclusivity—and yes, it is an illusion because basketball highlights are all over the internet for free—that drives consumers to buy these products that should have no real value.
But at this point they do have value, as the exclusivity of the moments drives an increase in the perceived value of these moments. The rarity of Top Shot Moments differs, so the desire to own what is special and show it off to others drives up the price of the Moments and makes this new highlight market profitable.
Top Shot is a masterclass in capitalism. There was a constant demand for basketball highlights that was being filled free of cost, so the NBA found a way to commodify and profit off of this demand with some crafty marketing.
So is Top Shot a scam? Maybe. But everyone is entitled to spending their money however they choose. Plenty of people still have binders of baseball cards or boxes of Beanie Babies stuffed in the back of their closets. So maybe in a few decades those NFTs will be worth all the trouble; only time will tell.