The Best Case Scenario for NFTs
Drake Merch, Fair Use and Fixing the Female Algorithm Problem.
In an age when everything is partisan, it should come as no surprise that NFTs have been declared equal parts savior and destroyer of the creative economy.
And while it’s easy to wince at the “works” being perpetrated by the likes of Elon Musk and the LOLz Nation in the name of NFTs, we also know that theoretical debate about things like, “What is value, anyways!?” can be equally impotent.
The truth is, nobody knows what is possible when a new market for artists is suddenly created out of thin air (and we’ll address all of the carbon being spewed into that thin air by NFTs in a future essay).
For now, we thought it would be useful to present a vision for NFTs and the music industry that is both overly optimistic and quite plausible. After all, imagining the best case scenario is the first step in making it a reality.
The Best Case Scenario for NFT
NFTs are the most recent chapter in the 20-year history of the music industry seeking to capture value in an era when technology has rendered principles of supply and demand moot.
With music sales unmoored from the basic underpinnings of capitalism, artists were forced to pivot to secondary revenue streams—most obviously live performance and merch—where scarcity still exists.
COVID has forced a reevaluation of that model, but whatever changes occur as we approach the end of the pandemic pale in comparison to the potential presented by blockchain technology to switch the basic economic model of scarcity to that of abundance. A reality that more closely resembles the lived experience of music fans in 2021.
THE SCARCITY MYTH
Much has been made of the artificial scarcity created by the one-of-one premise of NFTs. The idea being that fans will find value in being the verifiable “owner” of a piece of content, regardless of the fact that the content can be infinitely replicated in the digital sphere.
This framing of NFTs is a natural extension of the established use of cryptocurrency as a store for value and an easy explanation to justify markets in the same mode as fine art and collectables. But this view is limited and only accounts for the motivation of a small group of investors and collectors.
Rather, we believe that the vast majority of NFT purchases are driven by the feeling of abundance that cryptocurrency offers. The past decade has been an unmitigated gain for those holding crypto assets. Money for nothing that many are eager to spend.
If the supply in your crypto wallet feels limitless, why not spend it on the limitless supply of music? Both are on your phone.
FROM PIRACY TO PRINCIPLE
Twenty years ago, the music industry faced an existential crisis when long held cultural mores around piracy were washed away by the technological tsunami of MP3s. Streaming services have largely tamped down on outright theft, but at a price point that doesn’t fool anyone into thinking their meager subscription makes a fair compensatory structure for creators. Consumers pay for the platform, not the content it holds.
For some of the financially devastated music-making middle class, a partial recovery has been made via sites like Bandcamp. But that model is back-looking and has obviously limited scaling. However, the kernel of truth that more principled consumption is possible opens the door to as-yet unrealized compensation for artists’ work. Enter NFTs!
NFTs offer a device for normalizing compensation for music that goes a long way in rebuilding the social contract between creators and fans.
MUSIC’S ADVANTAGE
Because of its visceral effect on listeners, music holds a unique value proposition amongst all other media. Nobody sits through music they dislike for long. This goes a long way in explaining so many youth personas—from mods and rockers to goths and ravers—were anchored in music genres.
The prevalence of these music-centered modes of self-identification have been largely eroded by limitless access to music (you can be into hip-hop and country and techno these days), but as the success of Spotify’s genre-less Pollen playlist has proven, listeners can still commune via a shared point-of-view found in an artist’s aesthetic.
BUILDING A POINT-OF-VIEW
The language of building a point-of-view is similar to most modern branding (which is itself derived largely from music-driven subcultures of the past). This is what makes many musicians particularly well-suited to forge these connections with an audience—and why moving into NFTs is a natural fit, as long as the artist remains true to the project. Some guidelines include:
Be Authentically Invested
The current goldrush will not last, and any artist who just grabs a shovel is digging their own grave. Use NFTs to stimulate your creativity and use the opportunity to fund artistic endeavors that might not otherwise make sense. Or you’ll just be selling cheese like Ja Rule.
Understand Your Aesthetic
The title “Peter Saville of NFT” is still up for grabs. Develop your own visual language in the same way album art and video directors have done in the past. Following digital art trends in pursuit of that existing market will not sustain in the long run.
Overcompensate Consumers
Take advantage of the “smart contract” capabilities of etherium as they develop to offer a stake to fans in exchange for their principled support. Remember that it functionally costs nothing to over-compensate consumers.
Reconsider Ownership
One step further, allow the collectivism enabled by smart contracts to fundmentally redefine existing business arrangements along the entire supply chain—from artists to industry professionals to consumers.
CONCLUSION
It might not be coincidence that some of the first use cases for NFTs have been found in the music space. It makes perfect sense that the art form most overwhelmed by business concerns would be one of the first to discover opportunity in more novel financial arrangements.
Regardless of happenstance, the opportunity for the music industry to thrive in the NFT space is vast. But success is not a forgone conclusion. It will require activating creators and fans in new ways, but still driven by old feels that music gives us.
TAKEAWAYS
Salient statements from this week’s industry articles.
1. Music recommendation algorithms are unfair to female artists, but we can change that
Gender inequality in music is systemic. Could streaming services start to correct it?
Takeaway: In a simulation, we studied how our re-ranked recommendations could affect users’ listening behaviour in the longer term. With the help of our re-ranked algorithm, users would start changing their behaviour. They would listen to more female artists than before.
2. NFTS: WHAT SONGWRITERS AND MUSIC PUBLISHERS NEED TO KNOW
President and CEO of the National Music Publishers’ Association, David Israelite, considers NFTs from the songwriter’s perspective.
Takeaway: There is uncharted and lucrative potential when negotiations for NFTs go beyond a unique copy of a work for personal enjoyment and into commercial use. Depending on what’s being sold, deals could include upfront payouts or a percentage of all income down the road.
3. A History of Drake’s Merch
High fashion collabs get the press, but true music fans know the real heat is in the merch both.
Takeaway: With all of the hype surrounding the upcoming Certified Lover Boy collection with Nike, we decided to take a look back at some of Drake’s most memorable tour merch.
4. An Appeals Court Rules That Andy Warhol Violated a Photographer’s Copyright by Using Her Image of Prince Without Credit
Ten years after Shepard Fairey punted the issue of fair use by settling on his famed Obama poster dispute with Associated Press, The Warhol Foundation’s legal overreach has backfired in a way that could set the doctrine on its head.
Takeaway: [The judge] compared Warhol’s distinctive silkscreen aesthetic to filmmaker with an easily identifiable style turning a book into a movie—that doesn’t mean the film is no longer a derivative work.
5. The Met Wins a Case Against a Photographer Who Claims It Posted His Image of Eddie Van Halen Online Without Permission
Meanwhile, a separate ruling affirmed the ability of institutions like The Metropolitan Museum of Art to use photographs without licensing the image.
Takeaway: Because the museum employed the photograph for educational purposes, it did not violate copyright law, according to the judge.
People Mover
Simon Rust Lamb has signed on as COO of Bulldog Digital Media while being named to Billboard’s Top Music Lawyers of 2021 list.
Insomniac Event has named its first VP of Fashion Operation, Andrew Luft. The job description includes, “Must be able to tolerate loud noise levels & busy environments. May work in drastic temperature climates.”
