Welcome to the Sociology of Business. If you are not subscribed, join the community by subscribing below and share it with everyone you think may find it useful. You can find my book, The Business of Aspiration, on Amazon, and you can find me on Instagram and Twitter. For those new here, I last deconstructed Zara’s strategic shift that is taking Zara from being synonymous with a category to becoming a brand.
A drop is a seemingly random release of a limited-number of products with a goal of creating perception of scarcity and urgency. Drops have proven to be a successful brand-building tool, as they reliably drive word-of-mouth, FOMO, create insta-communities and use wait lines as their advertising. Drops command for a person to be at the right time and the right place, with the right information. A decade or so ago, product drops ventured out of streetwear and into fashion at large. But aside of randomness, drops are not much different from traditional fashion schedule of seasonal collection releases, where products are released at once. Current retail market is made around this all-at-once-release dynamic.
A drip is a continuous stream of products, signals, content, incentives, rewards, tokens, points, interactions, events or access. Perennial newness gamifies the brand experience and makes it more individual and unique. The mechanism of drips is accumulation and collecting. Collect enough tokens and unlock an auction or use it as a membership card for future promotions. Drips reward long game over short-term gains. Drips also galvanize communities, incentivize collaboration and membership, and decrease competition. Drips are the opposite of the winner-takes-all: they are decentralized and governed by activity in their communities. Current retail market is not yet made for drips.
Drips are not micro-drops. They are a new cultural, social and economic paradigm.
As a strategy, drips mean shifting budgets and actions from seasonal campaigns and product releases to investing in the continuous interactions with customers, across all touchpoints. In this scenario, FOMO and excitement are not given, but earned.
Drips represent “play-to-earn” model, where individual and group engagement is continuously and randomly rewarded. This continuity and randomness creates a layered experience, where access is granted based on the individual activity, and varies in difficulty. Rebag’s Infinity Program is based on trading high-end bags for site credit for customers to shop from new collections. Or, a brand’s freebies and perks can exist in the form of digital assets or crypto currency, and are continuous and free of physical limitations. Moving through a waitlist can be accelerated by buying just the right token. A special NFT can unlock a higher tier of membership and a different brand experience. Other tokens act as invites to secret clubs. The most active collectors are offered special, more expensive items first, creating an ascending series of price tiers for the same item (pay more to have it first, pay less and have it last).
Drips reward users through scarce and immutable assets that can be traded in secondary markets and used in different scenarios throughout a brand metaverse (in physical stores, on social media, in games). Every interaction is a potential treasure hunt. Access leads to ownership and ownership leads to access. A person with the right NFT gets invited to pre-purchase something. Or, buying a product gets a person an NFT that is an invitation to an event.
With drips, randomness is not limited to time and location, as it is with drops. It is deployed either to create the conditions on which a person will act (input randomness) or to manipulate the outcome of a person’s actions (output randomness). Examples are geo-localization, or content and service personalization. Alternatively, the same action, like subscribing to an email or making a product purchase, leads to a different reward. In the physical world, randomized rewards can get expensive quickly and this is the reason to complement them with a metaverse, tokens and NFTs.
Drips capitalize on the multiple ways to make a relationship valuable, as they combine the collectible art component with community membership through gamification. In the extreme version of this scenario, MSCHF recently bought Andy Warhol’s drawing, “fairies,” then made 999 copies of it. Now, the collective is selling the original together with the copies, without being able to tell them apart. The initiative is aptly titled “museum of forgeries.”
From physical to virtual
Drips provide social stratification by giving community members ways to build their creative identity and taste. Everyone has something of a distinct value. Drips don’t increase prices if demand rises; instead, they diversify the offering, systemically creating virtual rarity. By combining physical world with metaverse, brands can protect and gain pricing power. By creating both a physical asset and its multiple digital counterparts in the form of NFTs or fungible tokens, brands multiply their margins. Products gain magic regardless of the number sold, removing the constraints created by the rarity principle that block the growth of luxury brands in the physical world.
From brands to metaverses
Drips turn brands into metaverses. By gamifying brand experience and connecting it with blockchain and NFTs, drip model creates DAOs. Fans become decision-makers. An example would be a brand creating a community like Red DAO, which pools capital from its 40 members to buy fashion NFTs and invest in crypto-related fashion startups. Drips create brands’ own micro-economies, by mixing physical products with NFTs and tokens that customers can use, own, trade and collect. Drips also grow brand networks faster than drops, and reduce the need to spend money on customer acquisition. Gamification of rewards and NFT give users financial utility and incentive to build a brand’s network.
From access to ownership
Drips align the audience to work toward a common goal. Through gamification, trade and barter, and a potential fractionalized ownership of NFTs, brands enables new communities that are co-owners of a brand. Thanks to digital assets, users can create their own rewards, content and games, which they can then trade and sell to others, earning them secondary sales revenue. Users can also tap into digital assets to invest in products or content they like. Dolce&Gabbana’s cripto community, DGfamily’s, top membership tier is Gold and consists of buyers of DG Genesis collection. In another scenario, if a brand that sells a physical good - a pair of sneakers, for example - can have a number NFTs associated with it. When this pair of sneakers is sold, NFT holders earn a revenue, creating an incentive for them to stay loyal to this brand.
From monetizing trends to making trends
Modern brands build the classics of tomorrow, not the hits of today. Drips create many simultaneous bets and allow brand to amplify and capitalize on the most promising ones. Through drips, modern brands promote taste; they don’t follow it. In the past, brands created trends by spending inordinate amount of money on advertising or celebrity partnerships or both. Now, a community attracted by drips creates icons. Traditionally, an iconic product was used to create social and economic distance; here, it is a sign of access, belonging, shared meaning, and an expression of creative identity. Anyone who puts in time and effort can have it.
From investing in stuff to investing in oneself
Drips fuel a shift from buying stuff, like that sold in drops, in the hopes that others will admire us (conspicuous consumption) to investing in oneself through access, belonging, ownership, experience, self-actualization. Drips - through a steady stream of content, references, products and tokens - make social signifiers that convey status. The best drip strategies create and trade on social and cultural capital, and turn brand customers into fans, hobbyists, influencers, taste-makers and collectors.
Drips are a new and more engaging mode for creating reward programs and galvanizing brand communities. They are infinitely more complex, but also infinitely better positioned to keep the brands relevant into the future. Drips shift a company’s operating models: they make companies less hierarchical and more heterarchical, move them from long-range planning to short time horizons, and from top-down to bottom-up governance. In reality, drips take shape through: 1) a continuous and controlled year-round physical and digital product releases, where every day there is something new; 2) a strong and versatile content strategy, curation, collaborations and invested community management that keeps the network fresh; and 3) organic versus paid comms plans for a continuous cultural conversation.
Mind-expanding, thanks for writing Ana. Feels like the expansive video games such as Warcraft and Destiny, that rely on community collaboration and 'the grind' to access features and artefacts has parallels to this.
Hi Anja, thanks for a great article. However, I don't understand the point on how Drop's currency is 'Monetary' but Drip's is 'Time & Attention'? Ultimately, the boardroom's job is to ensure profit $ not views, so please could you elaborate? Thanks in advance