On February 28, Grimes auctioned off $5.8 million worth of digital art pieces within 20 minutes. More specifically, she sold NFTs. Short for “non-fungible tokens,” these cryptocurrency-adjacent virtual collectibles have recently attracted vigorous debate in the music community and beyond. The same weekend as Grimes’ sale, electronic musician 3LAU sold $11.6 million in NFTs, while Latin-trap star Ozuna sold out a batch of NFTs for about another $800,000. Now Kings of Leon are getting in on the action.
The NFT sales boom has touched off a mainstream music industry gold rush, which some proponents argue could become a long-term boon to artists who have suffered economically under the streaming-era status quo. But the frenzy also raises difficult questions about class and the value of art in the age of digital reproduction. Here’s a brief rundown of what music NFTs are, and why they’re sparking conversations about more than just chasing money.
What are NFTs, exactly?
To over-simplify, an NFT is sort of like a digital certificate of authenticity. Digital artwork, by its very nature, can be copied and distributed instantly all around the world. But buying an NFT gives the customer proof of ownership for whatever they’re collecting, regardless of how many digital copies exist. Born out of the visual art world, NFTs create a sense of scarcity that’s inherently artificial—the token is rare, not the artwork itself. Accordingly, the story of NFTs is about commerce as much as music. What happens with them will have as much to do with the whims of financial markets as artistic ingenuity. The range of applications to music seems widespread but also tangential: Grimes sold images of babies toting spears through space, occasionally with snippets of her music attached, while other NFTs confer their buyers with distinctive album packages or live show perks.
NFTs rely on the blockchain, the same energy-intensive technology that underlies bitcoin and other cryptocurrencies. Blockchain basically amounts to a trusted, tamper-proof ledger, which advocates in the music industry have for years maintained could revolutionize how musicians get paid. Part of the idea is that if you buy an NFT, you’ll be able to see a list of all the previous owners and be assured the item is exactly as sold. Another advantage is that artists should be able to earn money by making sales directly to fans, rather than through the rigamarole of streaming. Certain platforms also offer artists a guaranteed share in any secondary market sales of their work, after the original transaction.
Where did NFTs come from?
NFTs have been around for several years as an idea. In 2014, artist Kevin McCoy sold a GIF to tech evangelist Anil Dash via the blockchain for a whopping... $4. The format took off in earnest in late 2017 with the debut of tradeable cartoon cats known as CryptoKitties, which were so popular that they slowed down the Ethereum blockchain platform; they were, as Wired explains, “like Pokémon cards for the bitcoin era.” Today, there are a growing range of NFT marketplaces, such as OpenSea, where Grimes held her auction, and Nifty Gateway, which hosted Ozuna’s (and is backed by the Winklevoss twins). At the heart of the phenomenon is the NFT-ization of visual art, led by a graphic designer known as Beeple, who has sold NFTs worth millions. Even sports highlights have NFTs.
Why are NFTs so popular right now?
First, it’s worth pointing out that investments of many types have been at or near all-time highs recently, though some have come back down just as quickly. Yields on U.S. Treasury bonds have been at historic lows for years, which makes stocks and other asset classes more attractive to inventors, pushing up prices. Bitcoin, too, has been setting records. Day traders are driving up the prices of stocks in companies like GameStop and Rocket Mortgage as if simply for the LOLs, though these gains too have mostly been short-lived. Even trading cards are appealing to investors again these days. NFTs could be another indication of market euphoria and volatility.
Another factor uniting some of these trends is the ongoing effect of COVID-19. In the music world specifically, artists unable to tour have extra incentive to seek out new sources of revenue. Songwriters’ catalogs are selling for hundreds of millions. And their listeners are spending more time staring at screens at home, including those fans with the impulse toward status-seeking and the money to afford it. From the forces of the market at large to the concerns of individual musicians and listeners, conditions were ripe for NFTs to break through.
Which musicians are doing this?
The people from the music world doing best with NFTs so far have pre-existing ties to the fervent crypto community. But many others have been testing out the format. Last year, Deadmau5 started selling NFTs for virtual stickers. Other mainstream figures such as Kings of Leon, Linkin Park’s Mike Shinoda, and Shawn Mendes have also climbed on board, while Portugal. the Man recently proclaimed that “cryptocurrency is the new rock’n’roll.” Also this week, Disclosure debuted a song on Twitch and sold it as an NFT. Testing the limits of this platform further, Canadian electronic music producer Jacques Greene auctioned the publishing rights to a new single via NFT.
Isn’t owning tokens really beside the point of appreciating art in the first place?
Ben Horowitz, a venture capitalist with a stake in NFT marketplaces, told the New York Times, “You’re buying a feeling.” Marc Andreesen, another venture capitalist, suggested that folks who resist the siren song of NFTs are the truly “cynical” ones. But a recent email newsletter from Real Life’s Rob Horning notes that by this logic, having a string of characters on the internet attesting that you “own” something beats experiencing whatever that something is. It’s a profoundly empty worldview, as nihilistic as the brand of politics that venture capital’s largesse has bred.
The idea that a digital certificate of authenticity is valuable, but the infinitely replicable artwork itself is not, may raise interesting questions about what “art” and “authenticity” truly mean, but it’s a conversation for philistines, privileging financial worth above all else. There’s a reason that great art is often called “priceless.”
Isn’t this just another bubble?
How many collectors will pay thousands of dollars for digital collectibles, and for how long? Even those with vested interest in NFTs are wondering. Dee Goens, co-founder of the crypto marketplace Zora, told Stereogum, “there’s a bit of a craze and hype that’s happening with NFTs.” It’s also possible that those driving the craze have incentives to make it look viable in the long term. WhaleShark, a pseudonymous collector who had the second-highest bid in 3LAU’s recent auction, is believed to be one of the world’s biggest owners of NFTs. The winner of Jacques Greene’s sale, Trevor McFedries, is one of the creators of Lil Miquela, a virtual influencer that already minted an NFT last year. The current publicity around NFTs may or may not make the rest of us money, but it clearly seems good for people who already own NFTs.
It’s impossible to know if and when the fervor will die down, and it seems safe to say that we’ll see some attempts to cash in before it’s too late. “As long the music’s playing, you’ve got to get up and dance,” as a banker during the financial crisis famously put it. There’s some reason to believe it won’t last forever. The “initial coin offerings” that dazzled the crypto world in 2017 have already lost their luster. Regulatory skepticism could be another risk factor. Meanwhile, as Treasury bond yields have begun to rebound slightly in recent days, tech stocks like Tesla have been leading Wall Street downward, suggesting rough seas ahead for riskier assets like NFTs.
What precedents do NFTs have in music?
Music, unlike visual art, doesn’t have a strong historical basis in the sort of sales NFTs encourage, with a single buyer paying top dollar for a single rarefied object. But in recent years, as widespread streaming has made it harder for many musicians to make money from their recordings, a vanguard of artists, especially in hip-hop, has experimented with artificial scarcity. The most notorious example was Wu-Tang Clan’s one-of-a-kind album Once Upon a Time in Shaolin, which was released in 2015 and bought by pharmaceuticals honcho Martin Shkreli before his seven-year prison sentence and government order to forfeit the record. Other rappers, such as R.A.P. Ferreira and the late Nipsey Hussle, have charged premium prices for limited-release physical copies of albums that are freely available on streaming services. There was also a whiff of Kickstarter and Patreon in 3LAU’s NFT auction, whose offerings included a chance to collaborate with the DJ, recalling the way musicians have used crowdfunding platforms to charge money for access to their working processes.
How can people afford to pay millions for a digital token, anyway?
As much of a stir as NFTs are creating, the splashy sales making headlines are obviously beyond the reach of people waiting anxiously for their COVID-19 relief checks. At least to date, NFTs are luxuries for the wealthy who can afford them. The NFT space inevitably reflects the socioeconomic dynamics of the art and tech worlds, which combined to create it, with all the class, race, and other baggage that may entail.
Despite all this, could NFTs help point the way toward a better economic future for artists?
For music lovers, the most optimistic scenario for NFTs might be that they will give musicians the economic clout that they lack in the internet’s most recent iteration. Digital artist Mat Dryhurst has been making these sorts of arguments on his podcast with Holly Herndon. Graphic designer David Rudnick, who has sold NFTs, recently tweeted: “i fully respect the view of those who want nothing to do w the space, but the idea of assets on the blockchain isnt going away. there is a small window to try [to] establish some norms or values that might have real value moving forward. doing nothing now lets the predators define it.” But despite the optimistic argument that NFTs are democratizing access to wealth for musicians, all they have done so far is create a few more individual winners, not change the rules of the game. Does it mean anything to the average struggling artist that Grimes is now $6 million richer?
Technologists like to talk about “Web 3.0.” Let’s hope that whatever the future internet holds is better for recording artists than Web 2.0 has been, with its economics of virality and attention. For now, NFTs look less like the antidote than a way for venture capitalists and their friends to buy feelings.
