Are NFTs The Future Of Digital Music Or Just Crypto Snobbery?
The electronic producer 3LAU (pronounced “Blau”) makes bubbly, melodic EDM that packs stadiums; next month, he’s set to headline one of Red Rocks’ first concerts since the massive Colorado venue’s closure due to COVID last year. But despite his outsized fanbase, the 26-year-old musician made headlines last week not for his music, but for its mode of distribution and the enormous payout he received as a result. In one of the first exchanges of its kind, 3LAU “minted,” or released, music on the Ethereum blockchain as a non-fungible token, or NFT.
Selling 33 tokens redeemable for a variety of special goods, including limited edition vinyl pressings and unreleased music, the Las Vegas-based artist brought in over $11 million in sales. The highest bidder, who paid over $3 million for a token, will get to collaborate with 3LAU on a brand new single. Already, other musicians have begun to take note: “huge congrats to @3LAU — changing the entire music game,” Disclosure tweeted on Feb. 27. Two days later, the British duo teased that they too would be exploring NFT releases.
If you’ll think back to your high school economics class, a “non-fungible” good refers to anything that cannot be readily exchanged for a similar good at the same price; you can’t simply cash in your 2003 Toyota Solara for a 1967 Cadillac Coupe DeVille (much to my chagrin). Conversely, money, even cryptocurrency, is highly fungible — a dollar is a dollar, a Bitcoin is a Bitcoin. An NFT, then, is meant to represent an item’s uniqueness, as well as details about its ownership and provenance. Sure, you can stream the entirety of 3LAU’s 2018 LP Ultraviolet for free; but for the low price of $3 million, you can purchase an NFT that proves that you own the original master.
In the future, NFTs could allow music media like concert videos, livestreams, interviews, and behind-the-scenes footage to be bought and sold as collectable items on the blockchain. In the world of sports, this has already taken off in the form of NBA TopShot, a kind of digital trading card that allows users to buy and sell game highlights from their favorite players. Just as baseball cards gain value from their rarity and symbolic importance, TopShot aims to make the same true for, say, videos from Zion Williamson’s rookie year.
Paying outrageous prices for rare and exclusive music media is nothing new. The convicted felon and former pharmaceutical CEO Martin Shkreli famously paid $2 million for the sole copy of the Wu-Tang Clan album Once Upon A Time In Shaolin. An obscure single from the UK DJ Scaramanga Silk recently became the most expensive vinyl sold on Discogs, selling for over $40,000. But for its proponents in the worlds of art and technology, NFTs have the ability to change the very nature of digital media, allowing artists to eliminate financial middlemen and make a profit from their work outside of the demands of mass popularity.
Digital media is notoriously replicable, shareable, and stealable: Torrents and leaks have undoubtedly cut into the profits of the music industry as a whole and threatened traditional models of distribution and monetization. By investing in NFTs, creators, curators, gallerists, and other stakeholders in the art world are attempting to create and capture the value of “digital scarcity.” The value of a 3LAU .MP3 released as an NFT is not necessarily its sound, but that consumers can claim a unique ownership of that song’s file, transferred directly from the artist himself via Ethereum’s blockchain. For a superfan, those bragging rights might be enough; for the hundreds of speculators who have flooded the NFT market, driving up the prices of .GIFs and .JPEGS, they’re hoping that, like an original pressing of a Wu-Tang album, the novelty of NFT media will cause it to accrue value in secondary markets over time.
This experiment in digital ownership played out in real-time last week at a digital art auction featuring original works from Mura Masa and Yaeji, along with other digital artists like Whoopi and Clare Gillen. The exhibit was a collaboration between the digital arts agency IAMSOUND and the NFT start-up Zora, which allows artists to create NFTs without taking a cut of its profits. Though previews of the art can easily be downloaded as local files for free, the complete works — which included a series of “glyphs” from Mura Masa and a “digital pet” from Yaeji — were only available to buy and sell as NFTs.
Much like an auction of physical media, bidding quickly took off — Yaeji’s piece grew exponentially in value within minutes, from an initial bid of 0.1 ETH (about $155, at the time of publishing) to a final bid of 18.88 ETH (worth over $29,000). The winning bidder? A venture capitalist. Watching the buildup to the final bid, so high that it was an almost certain trump card, was thrilling, if a bit disappointing — for a technology that promises to “disrupt” the world of digital art, it is tremendously efficient at replicating the most inaccessible paradigms of its physical predecessors. Despite the blockchain’s decentralized, supposedly more democratic nature, NFTs seemed to quickly re-concentrate art ownership in the hands of the extremely wealthy.
The venture capitalist has yet to resell Yaeji’s digital fish. But Mura Masa’s glyphs, which sold to an anonymous bidder for nearly $1,000, are again for sale, with their new digital “owner” taking bids starting at around $23,000. It was strange watching someone spend a month’s rent on a series of digital images, but it was more dizzying still to see them put the artworks back on the NFT market in less than 20 minutes. Did the original buyer view the art as intrinsically valuable and enjoyable, or merely as a commodity to immediately resell? Once the dust had settled on the bidding wars, the artworks’ new owner appeared closer to a ticket scalper or algorithmic sneaker bot than a collector or curator.
For those who missed out on the first auction, or simply don’t have an extra $20,000 lying around to spend on a series of digital images, Zora and IAMSOUND will be hosting another art exhibit this coming Friday, featuring art from Toro Y Moi and a collaborative piece from Guapdad 4000 and 88Rising.
“There’s a bit of a — I don’t want to daresay tulip mania, but there’s a bit of a craze and hype that’s happening with NFTs,” Zora co-creator Dee Goens told Stereogum. He acknowledged the risk of oversaturation in the NFT market, but chalked it up to a learning curve: “I think it’s actually greasing the top of the funnel and making all of the stuff that we’re working on easier to adopt,” he added. “In the midst of this renaissance, there’s still a lot of learning that has to happen.”
That education in part took place last week over a similarly “disruptive” social media platform. On Clubhouse, essentially a VC-backed conference calling app, Grimes hosted an information session about the nascent technology with several leaders in the fashion world, including the founder of popular streetwear brand The Hundreds and a creative director for Revlon. The hosts had a similarly wide-eyed view of NFTs, speaking about “democratizing patronage” and comparing it to historic shifts in the art world, notably confusing Marcel Duchamp and Rene Magritte during a particularly lofty conversation about physical representation and value.
Grimes, who promoted her last album Miss Anthropocene via a digital avatar standing in for her physical form, is perhaps the most obvious candidate to popularize and profit from the arguably symbolic value of NFTs. Last year, the artist “sold” a percentage of her soul to the highest bidder as part of an online art exhibit. “The idea of fantastical art in the form of legal document just seems very intriguing to me,” she said at the time. In a sense, NFTs are precisely that, determining art’s value solely from contractual exchanges.
On Clubhouse, Grimes recalled the “anxiety” she felt about the soul-selling project, which perhaps caused her to add an extra clause to the sale’s contract: The buyer must “accept the obligation to be a kind, good and ethical person.” But unlike her art experiment, NFTs don’t typically contractualize their buyers’ morality. The only stipulation, other than the artist’s willingness to accept a bid, seems to be the buyer’s willingness to spend exorbitant sums of money. Case in point, Grimes sold over $6 million worth of digital art via NFTs later that week, temporarily crashing the NFT platform NiftyGateway. The most expensive sale, for a one-of-a-kind video file called “Death Of The Old,” went to a mononymous user, Aito, for over $300,000. Like a hunter displaying their trophies in their living room, Aito shared a low-resolution snippet of the video via Twitter three hours later.
Digital scarcity seems to mean something slightly different for each of NFTs’ proponents. Grimes envisioned a world where creators would be contractually obligated to destroy their original files after selling their tokens. For her, the value of digital art seemed to be, somewhat ironically for a platform as allegedly robust as blockchain, its impermanence, and the ability of its owner to obliterate the original work.
But for Goens, the Zora founder, the value of NFTs come from their uniqueness, almost as if literally capturing lightning in a bottle: “It can’t be a 500,000-edition run. It has to be that Grammy Award winning performance, that moment when [Lil] Uzi [Vert] dove off the stage for the first time, that Travis Scott concert at South by Southwest when he first performed. It’s these memories that we find scarce in both time and value and scarce in the fact that like those are moments that we won’t get from these creators again.” Rather than valuing consistency across mass markets, then, it seems like companies like Zora are hoping that creators identify “high value” moments in their career, typically early on, before mass exposure essentially depreciates each performance in value.
That selectiveness isn’t just for the creator’s benefit; it might be the only way that NFTs remain sustainable. As it stands, writing a new transaction to the Ethereum blockchain is incredibly energy inefficient. In order to ensure the blockchain’s security and fidelity, massive networks of computers compete to be the first to solve complex algorithms to add new transactions, or “blocks,” to the chain. These current “proof of work” processes value computational effort, which has led to somewhat of a cold war among servers. In 2018 alone, Ethereum used as much energy as the entire country of Iceland to validate its blockchain. Though engineers are working on a new consensus algorithm which instead rewards Ethereum investment rather than computational power, that upgrade is likely at least a year away. In the meantime, that purchase of a Travis Scott concert video might consume enough energy to power an entire neighborhood.
Despite its many drawbacks, creating and selling art on the blockchain has some theoretical benefits for artists. Because the art is encoded within the blockchain, it has a permanence that arguably exists outside of any media platform. Once a file is encoded as an NFT, it becomes extremely difficult to take down, and will likely persist as long as the blockchain remains viable. Rather than capitulating to the changing regulations of platforms like Spotify or YouTube, or even government censorship, creators can feel relatively confident their art will remain available and uncensored in perpetuity. It also allows creators to ascribe value to the original creation of an artwork, selling it to collectors who prize novelty, while still sharing it widely. And in a best-case scenario, artists can now easily profit from secondary markets, earning a predetermined share of the profit from future resales of their digital art. It theoretically also encourages investors to seek out undiscovered talents, treating artists almost like stock, to be consumed at their lowest possible value to be cashed in after they’ve achieved mass popularity.
But it’s worth questioning the use cases for NFTs outside of megafans and speculators. Does art thrive in a space where fans can literally monetize knowing about something “before it was cool”? Or does it breed rampant speculation while simultaneously devaluing the aesthetic, emotional, and social properties of the art itself?
With even slight skepticism, it’s easy to see NFTs de-incentivizing new art; if art’s value is purely its scarcity, we’re likely to see more limited releases and more restricted access to artists. Does creativity flourish when a new A$AP Rocky single is treated more like a Yeezy drop than widely shared promotional material? Do we only want a Björk album if it’s worth $3 million? Will /mu/ become a lucrative secondary market for early Death Grips .MP3s? NFTs are still in their infancy, but if early adopters are any indication, the technology is little more than an unfathomably expensive, ridiculously inefficient way to be a music snob.