I get it.
Of course the prices associated with some successfully auctioned non fungible token (NFT) artworks are nutty. Buying a tweet for a few million bucks is silly in the extreme — it doesn’t even have the use case of smelling like a fragrant Darwin Hybrid or Kaufmanniana tulip. And yes, sports clips of bold-but-not-historic dunks you can see for free on YouTube shouldn’t cost more than a year’s tuition at a leafy university. Some are saying the whole NFT space is one gigantic pyramid scheme and that influential people like
I can understand why sober-minded people might arrive at this assessment. But I believe that the NFT movement is the real deal, price action notwithstanding. In fact, I think NFTs are the first truly killer app for blockchain tech. Advisors who cater to people in the arts, support or consume them, take note: in the years to come your practice may be significantly affected by NFTs.
In saying this I mean no disrespect to the fintech entrepreneurs working on enterprise blockchain applications with the worthy goal of streamlining trade settlements, bookkeeping systems or compliance processes. But let’s face it, if you put aside the hyperbolic rise of Bitcoin, the general public hasn’t had a reason to care about blockchain until now.
And, in the wider cultural arena, it’s especially heartening to see how NFTs are shaking up the creative arts. Despite their profound importance in nourishing our souls and helping us to make sense out of life, the arts are housed within some of the most distorted, intermediated industries within our economy.
The biggest reason for this is that artists don’t have a powerful enough voice in influencing the policies that govern their professions. There is no SEC to govern how galleries price items. There is no oversight commission created by a firebrand regulator to make sure young musicians aren’t exploited by wily music powerbrokers. Photographers don’t have a muscular PAC on K Street making sure that senators are sensitive to the copyright issues they face.
The result: Economic rents accrue to powerful, entrenched interests who control marketing and distribution of the arts largely free from prying eyes. Most musicians, for example, earn next to nothing from the music they create because record labels, streaming services and publishers all get to wet their own beaks very generously. Unless you’re a big name, the best chance for a performer to make a decent living is to sell merchandise and do lots and lots of live shows, which in the past year, of course, has not been an option.
Harvest’s micro-saving and investing technology is designed to turn spenders into savers, and eventually into investors.
But thanks to NFTs, creators like 3Lau, Kings of Leon, Grimes and ARC can not only connect directly with their fans by selling their works online, with platforms such as Nifty Gateway, Foundation, SuperRare and OpenSea, but also they can provide eager fans with special features if they’re willing to pay. For music, those can include a physical album, backstage passes, rare remixes or the right to buy concert tickets before the general public. With artwork, NFTs can include a signed physical print of the digital image. In both cases, the creator can embed governance rights into the NFT (which is a smart contract) to enable their fans to have input on their work.
But perhaps most significantly, NFTs can include resale royalties that enable the creator to receive a cut every time a work changes hands. Just think how that can change the economics over the lifespan of an artist’s career. It’s the difference between sticking with one’s passion and going to work for Dad at the family’s insurance brokerage.
Those out there who missed the stratospheric rise of NFTs will have their chance to gloat during the NFT correction (which is only just beginning). They will scribe “I told you so” essays that tisk-tisk all of those foolish dreamers who thought they had found the New Jerusalem.
But the schadenfreuders shouldn’t celebrate for too long because, now that the NFT genie is out of the bottle, creators aren't going to forget about the power of NFTs to sidestep the gatekeepers, rent-seekers and beak-wetters.
Moreover, it won’t be just individual creators who embrace the NFT era. Along with athletes, real estate agents selling properties in the metaverse (Fortnite, Minecraft and Roblox) will build on their early momentum.
So, yes, prices will drop significantly. But no, NFTs aren’t vaporware and this isn’t a repeat of the dot-bomb era. It’s not tulips, either. It’s blockchain. And its promise has finally arrived.
Gregg Schoenberg is an investor and board member in a stealth mode startup comprised of 3D animators, musicians and blockchain experts. Its first single will be released next month.
