The Nu-Normal #05: WTF is an NFT?
Bursting bubbles with the future of music copyright.
If you haven’t been living under a rock for the last few weeks, I’m guessing you’ve heard some chatter about this ‘NFT’ business. And if you have been living under a rock, well, how is it? Is it nice there? Can I join you? Please. Help me.
But okay, look, I know what you’re thinking. What does an N-F-T have to do with skateboarding Tik Tokkers (damn, is that really the plural?) and utopian dreams of monolithic Cranberry Cocktails?
Well, dear reader, please allow me to explain. But first, some context.
In December of the Year of Our Lord 2020, aka the Global Gas Leak Year, visual artist Mike Winkelmann—better known by his online handle @Beeple—broke the record for the most valuable artwork auctioned off on the blockchain-based platform Nifty Gateway. In the sale, Winkelmann sold twenty of his visual art pieces as ‘NFTs’ for over $3.5 million.
For over a decade, Winkelmann has been adding to a vast and demented online portfolio of mind-blowing aesthetic work, populated by graphic—literally and figuratively—3D renderings of pop culture ephemera like cybernetic Star Wars characters, alien landscapes, severed Toy Story heads, futuristic urban vistas, sexually explicit political figures, and pretty much anything else topical or funny that can be ripped from the daily headlines. Case in point: skateboarding Tik Tokkers and Cranberry Cocktails.
Building on this hype, the celebrated Christie’s auction house quickly jumped on the digital art bandwagon, and auctioned off Winkelmann’s first collage piece, “Everydays – The First 5000 Days,” on March 11th for over $69 million.
Yep, that’s not a typo. Here’s Winkelmann's reaction:
Things have gotten so out of hand that Elon Musk took to Twitter, as he is wont to do, to announce that he would be making an NFT that was itself a song about NFTs. Ah, yes. Very meta. Much wow, Elon.
Then someone else created an online Beeple Generator tool that generated hilariously shitty imitations of Winkelmann’s art for the express purpose of making new NFTs. And then someone else decided to sell that tool as an NFT.
Because, fuck it, why not? Time is a flat circle and life has no meaning.
Okay, cool. We got that out of the way. But now you’re likely asking yourself, ‘WTF is an NFT though?’
Well, there are plenty of explainers available online, like here or here or here, but I’ll try to break it down for you now in “non-tech bro, amateur stonk fan” lingo.
NFT stands for Non-Fungible Token. Fungibility of a good or asset is the ability to be interchanged with other individual goods or assets of the same type. Essentially, they can be used as an item of 1-to-1 exchange or trade. So, in a barter economy for example, one apple is equal to another apple, a stone brick is equal to another stone brick, etc.
In our current economy, both physical and digital currencies are made up of fungible assets. So, one US dollar is equal to another US dollar. Same for euros, yuan, pounds, etc. Similarly, in the head-spinning world of cryptocurrency and blockchains, things like Bitcoin and Ethereum are also fungible assets. Fungibility just makes things easy by equalising the inherent value of certain assets.
Now, as you might have guessed, if something is non-fungible then it cannot have equivalent value with another asset. This makes it a unique asset with unique value that cannot be exchanged 1-for-1—it’s essentially a one-off, a rarity.
NFTs currently exist on the Ethereum blockchain as individual tokens with additional information stored in them. This allows an NFT to take the form of art (say like Winkelmann’s digital collage piece), music, video, etc., in the form of JPGs, MP3s, videos, GIFs, and more.
This storage of information is what generates market demand for NFTs by essentially locking in fixed value that can then be traded as a rarity: owning an NFT means that you hold the individual digital record on the blockchain for that unique piece of art, music, video, etc.
However, just like physical art, illegal copies and theft are still an issue. This is why my use of a Beeple Everyday above isn’t a real NFT—it’s just a screenshot I pulled off Google (with the use of free Creative Commons, of course). Much in the same way that a sick bootleg tee isn’t the original piece of band or artist merch. It’s all digital simulacra unless you own the actual rights to the thing.
While Winkelmann has been turning the world of art history on its head, curious NFT-related things have surfaced in the music community. High-profile acts like Kings Of Leon, Lewis Capaldi, Grimes, Lindsay Lohan, Aphex Twin, and M.I.A. have all thrown their hat in the NFT ring, announcing exclusive tracks, album releases, and rare merch items for dedicated fans.
Others got totally weird with it. HMLTD announced the release of an entire song in pieces as individual NFTs—a sort of “Gotta catch ‘em all,” type deal to hear the finished product. Ja Rule wants to launch his own NFT marketplace platform called Flipkick and is selling off the infamous Fyre Festival cheese sandwich tweet as an NFT to help drum up attention (current bid is $80,000 USD if you’re interested). Azealia Banks sold an NFT sex tape with her artist boyfriend, Ryder Ripps, for $17,000 and it’s now up for resale for $260 million. Suffice to say, this is all a little insane. So why talk about NFTs in the first place?
Like any new tech innovation, there’s a massive difference between the hype and the fundamentals. NFTs actually do have the ability to revolutionise the music industry. While storing information on the blockchain allows for clear traceability, it remains uncertain just how the rights and ownership of original creators—songwriters, producers, session musicians, etc.—apply in an NFT sale that includes music.
As this Guardian piece notes, one songwriter behind tracks that have racked up tens of millions of streams has found themselves lodged right in the middle of this debate around ownership and digital rights. Meanwhile, other entities have already realised the potential and acted on it. Bluebox, a blockchain-powered platform owned by Ditto Music, has already sold split music copyright as a digital NFT sale for multiple clients and they’re not stopping there.
One can almost imagine a utopian world where streaming giants like Spotify and legacy holdovers from the days of corporate label giants don’t exclusively own the rights to an artist’s musical catalogue. Instead, each track, album, or release could be minted and traded as an individual NFT asset, with carefully calculated royalty splits going to each creative hand in the process, locked in for perpetuity as the asset changes hands and mediums.
It’s just one way we might move towards enacting more democratic control over our art and creative processes, instead of mindlessly throwing them into the gaping maw of corporate capitalism.
But until then, we’ll always have our “Dreams.”