Name, Image, and Likeness (NIL) went live on July 1, 2021.
The industry has been booming ever since.
College athletes are becoming NIL-ionaires, brands are netting insane ROI’s, and businesses are being formed behind it.
There seems to be a new NIL marketplace popping up everyday.
There are over 20 companies operating in the NIL marketplace business.
That’s a lot for an industry with limited scalability.
What is a NIL Marketplace?
Name, image and likeness (NIL) – a person’s personal brand value
Marketplace – an open exchange for buyers and sellers
Example marketplaces – Amazon, eBay, Uber, AirBnb, Craigslist
A NIL marketplace is where a person sells their personal brand value to a company that buys the benefits of it.
An example is a restaurant buying the benefits of a promoted social media post from the star quarterback at a nearby university.
It’s an exchange:
- athlete gets paid $10,000 and 3 free meals a week
- restaurant gets a social media post every week that 1000’s of potential customers see
And in the middle of all of this – the NIL marketplace that brokers the deal between brands athletes/agents.
How do NIL marketplaces make money?
Every NIL marketplace makes their money in different ways.
Some charge the brand, others charge athletes, and a few charge both.
Some operate through a subscription model, while others stick to percentage fees.
At the end of the day it all comes down to volume.
Any revenue model can work, but only if brands and athletes/agents are active in using the platform.
Both sides of the market must be equally engaged. There needs to be a nice balance between brands and athletes/agents looking for NIL deals.
This leads to my next point…
How many NIL marketplaces will survive?
Not many – and the companies that do will offer more than just a NIL marketplace.
Why do I say this?
Uber and Lyft. AirBnb and VRBO. Apple Music and Spotify.
In most industries, only two marketplaces thrive.
NIL also has limited scalability. Let’s assume the marketplace caters to HS, college, and pros – there are still only so many athletes in the world.
Where as there are 7 billion people on this planet who like to listen to music or want to hitch a ride from a stranger on a DAILY basis.
Which NIL marketplaces will thrive?
The companies that have offerings beyond just a marketplace.
I say this because the reality is that only a small percentage of athletes have any true NIL value at all.
And the big ones don’t need a marketplace to find deals. All they need is an agency.
Go look at the profile of any athlete signing notable NIL deals – they all have their agency email listed so companies can directly reach out to their agent.
But aren’t the agencies using the NIL marketplaces?
Some of them – but not a lot of the big ones.
Agencies and NIL Marketplaces
At AIR, we’ve done over 350 NIL deals with college athletes.
We’ve had no problem completing deals without a marketplace. We either message the athlete directly or get in contact with their agent.
Do you think when Archie Manning gets to college he’s going to need to use a marketplace to find, broker, and sign NIL deals?
Of course not. He’s going to sign with an agency that will provide him a flow of deals that match with his brand identity.
The brands, athletes, and agents want to avoid any extra costs as much as possible.
Why pay a marketplace a 10% fee when they can do the deal without them?
Hence my original point – very few NIL marketplaces will survive.
Companies that will stand a chance:
- have offerings beyond just a marketplace for athletes/brands
- been successful before July 1, 2021
- reach a unique audience
- engage users (brands/athletes/agents) on a daily basis
Two that fit these criteria are Opendorse and INFLCR.
End Thoughts
I hope I’m wrong. The more brands and athletes being able to do deals the better.
However, I talk with a lot of people in the sports industry and the conclusion among most is that these NIL marketplaces will have a tough time staying above water.
I’m one of the few willing to make this prediction publicly.
It’s all speculation based off my observations, research, and prediction of the future.
NIL is a bright, shiny object at the moment – the hype will die down.
The top athletes, and ones with a large social media following, will be the main beneficiaries – everyone else will be in similar predicaments pre-NIL.
Like anything, time will tell!
