Did you hear about the $208,000 US LeBron James dunk? What about the digital art piece that sold for $69 million? How about the fact that someone bought the first-ever tweet for $2.9 million, or that $500,000 digital house…or the online sale of a literal fart?
By now, you’ve probably heard about non-fungible tokens, or NFTs, likely from a clickbait headline about some absurd sale.
Short for non-fungible tokens, NFTs are a crypto-based format to sell goods or works that don’t necessarily exist in the physical world. They’ve exploded in value and notoriety in the last few months. They’ve also become a firebrand for discussions about artistic value, ownership, environmental impact, and capitalism in an increasingly virtual world.
“It’s very interesting that something as rote as a digital auction house has evolved into such a philosophical crater,” Toronto-based electronic musician Jacques Greene says.
Greene is one of many local artists dipping their toes into the new market and asking: Is this a viable new source of revenue for work that has been increasingly devalued? Or is it the latest about-to-burst tech bubble?
An alternate reality art market
The first thing Trudy Elmore did after she made her first NFT art sale was go to the dentist.
“I can’t tell you how good it felt to be able to go to the dentist and not have to worry about it,” the Toronto digital artistsays. “Not having health or dental insurance and being scared of getting sick [beyond basic coverage], that’s a mindfuck most artists live with every single day.”
Elmore, who also works under the name TRU, has been surviving solely off her art career for about six years now and won the Governor General’s Award in 2016, but she says she only started to make a decent living after selling her work in the NFT market this year. You can check out her work on Foundation.
Visual art is likely the field where NFTs have made the biggest impact. Beeple’s $69-million art sale in March has been viewed as the watershed moment for the rising format. The American artist’s mosaic, The First 500 Days, is a monumental collage that represents 14 years of digital images by the artist.
Like Beeple, Elmore has chosen a medium that many, including her own art instructors, had discouraged her from as a viable career path. It’s a tough style of art to present in the gallery system or sell to art buyers.
“The prospect of them handing me a cheque or sending me an e-transfer and me sending them a USB or a WeTransfer—most people aren’t down for that,” Elmore says. “They want the sacred art object.”
That “sacred art object” mentality has been at the heart of a lot of the debate around NFTs. Many people bristle at the fact that, when you buy an NFT, you aren’t actually buying the thing. Instead, you’re buying a token—a unique, traceable file that lives on the blockchain. Essentially, it’s a way of verifying ownership, somewhere between a digital certificate of authenticity and an encrypted ledger that traces a chain of buyers.
For a digital artist like Elmore, it legitimizes the work in a strangely traditional “sacred art object” way. For work that can be endlessly duplicated, an NFT signifies that, no, there is a limited number of “true” versions—and you can buy, sell or trade them.
There are a number of NFT art markets like Rarible, SuperRare, Foundation, Zora, and hic et nunc. There are communities of crypto artists and buyers there and on social media platforms like Discord, creating an alternate art market divorced from the established gatekeepers.
That’s one of the things that appeals to Elmore. Her recent work is inspired by tattoo culture, outsider art and pop art. Her most successful crypto series is a series called Super TRUper, a cultural mashup that plays off of Star Wars.
It’s a popular style on NFT sites, but it’s not the kind of thing that holds weight with Canadian granting bodies or the gallery system, Elmore says. But she’s found a number of people happy to bid on it on Foundation.
“It’s so validating that strangers online are buying art that it feels like so many people didn’t believe in before,” she says.
The Super TRUper works have been selling on Foundation for 0.8-1.5 ETH, a cryptocurrency used on the Ethereum blockchain. Though it tends to fluctuate rapidly, 1 ETH is currently equivalent to about $2,271 CAD, so her sales have been around $1,800-$3,300. And she retains royalties in perpetuity, so every time the work gets re-sold, she gets a 10 per cent cut.
Musicians get involved
That question of royalties is a big one for Jacques Greene.
Greene recently sold his new song, "Promise", as an NFT. It went for 13 ETH, the equivalent of about $28,000 Canadian. That’s around three times as much as he expected it to sell for, he says, and exponentially more than anything he’ll ever earn in royalties for the song on the streaming market.
Musicians have been dipping their toes in the NFT world, with Kings of Leon recently making headlines for releasing the first NFT album. Buying one came with perks like exclusive art, packaging and concert tickets, but those are technically add-ons. The thing fans are buying is the token—it is permanently encrypted on the blockchain, but is not the actual file itself.
With "Promise", Greene took the concept of ownership one step further. Though the NFT he sold was a one-of-one, it came with the song’s publishing rights. That represents the copyright of the songwriting, including music and lyrics (though in this case, Promise is an instrumental). So beyond the digital bragging rights, there is some extra inherent value: the buyer could theoretically license the song to TV or movies and make money from it. (Lest the buyer do something terrible with it, Greene does retain veto power.)
Music is an especially interesting arena for NFTs. Ever since music started getting recorded and sold, there have been questions about ownership, devaluation, and the rights of artists. And with the concert market disappearing during the COVID pandemic, there’s been an awakening to the paltry royalties musicians make from streaming services like Spotify, with some even organizing unions and protesting for fairer payouts.
More fans have been mindful about supporting their favourite artists by buying music on platforms like Bandcamp, which pay more directly to the musicians without going through tech company middlemen. NFTs could potentially represent an even more profitable version of that. Other local artists like rappers Sean Leon, Killy, and Shan Vincent de Paul have recently sold work on crypto marketplaces.
For Greene, it’s less compelling to think about the financial implications than the technological ones. Outside of art, NFTs are often used to create smart contracts, a sort-of automated version of rights that exist on the blockchain.
“Rights organizations and publishing rights are an archaic system, and if anything could use a shake-up outside of streaming royalties, it’s that,” he says. “There’s room for improvement, and there’s room for a technological upgrade.”
He sees the possible criticisms of NFTs, including environmental ones (more on that shortly) and the notion that it could either create a “libertarian casino” or just replicate the current systems of power and exploitation that already exist in the music industry. For now, though, he’s choosing to approach it with optimism.
Greene sees the possibilities in one-off audio-visual collaborations made specifically for the medium, and decentralized autonomous organizations (DAOs) that handle publishing or act as a record label or even a nightclub.
“There’s a lot of questions still unanswered and it’s still at a fever pitch,” he admits. “We need to give it some time to see where the chips fall.”
The first Oscar-nominated NFT
The people most active in the NFT world so far tend to already be in the crypto world, especially those who would already have a crypto wallet to spend on art or collectibles. People from more traditional art worlds are testing the waters, but it’s very experimental so far. Each NFT sale seems to be grasping at the possibilities of what the medium could actually do.
Adam Benzine sees an opportunity to get in on the ground floor. The Toronto-based director is auctioning 10 tokens of his 2015 short documentary, "Claude Lanzmann: Spectres Of The Shoah", as a digital “first edition”. It’s the first Oscar-nominated film to be sold as an NFT.
It’s been slow so far, he says, but it will have historical value no matter what. If NFTs take off in the film world, his doc will always be the first.
Benzine was a music journalist at the turn of the millennium and remembers the record labels bungling the rise of Napster, hoping that the internet would just go away, even suing their fans instead of finding a way to adapt to the new digital world of music. “If you don’t embrace the tide of history, you get swept away by it,” he says.
It’s possible that people will look back at his film sale in 10 years as a quaint way to use NFTs, and that the potential will be unlocked in different ways. It’s also possible this is a bubble that will collapse soon. It’s hard to imagine the high valuations continuing, but it’s also unlikely the technology is a fad. More likely, it will establish itself in ways we haven’t quite thought of yet.
The way Benzine predicts NFTs will be used in the film world will be a perk for crowdfunding campaigns or a digital version of rich Hollywood types paying to have their name in the credits as an NFT.
Or, he theorizes, there could be a movie version of NBA Top Shot, the crypto market of basketball gifs that’s taken off recently as a digital version of trading cards. The most valuable thing in the movie industry, currently, is intellectual property, and the film studios have an abundance of that. Could they soon start selling the ability to “own” an iconic clip like Scarface saying “Say hello to my little friend” or Jack Nicholson yelling “Here’s Johnny”?
People want to show off their taste, and there’s still value attached to the concept of ownership. A physical collection is a way of displaying your bona fides as a fan or expert. But there’s been a shift away from physical ownership, which opens up the possibility of online galleries or collections that showcase your taste.
For all the hemming and hawing around the ephemerality of an NFT, it’s actually not that different from the current collector mentality. People spend huge sums on limited edition sneakers, for example, without any intention to actually wear them. The value is created by scarcity.
Greene comes from the electronic music world, where limited edition records are big commodities. He points to the online database of physical records, Discogs.
“It’s way closer to Foundation and Zorah than we probably want to admit,” he says. “There’s financial value ascribed to every record with the lowest it’s ever sold for, the highest it’s ever sold for, how many are in circulation. And there’s total asset speculation going on with every piece of music sold there.”
“The actual record itself is worth maybe three dollars in real world costs, and so what am I buying when I’m buying a record that I could stream on the internet? It leads to questions of: why do we value the things that we value?”
We’re increasingly living online, especially over the last pandemic year, so it makes sense we’d move that instinct into virtual worlds. But just because it exists online, doesn’t mean it doesn’t have real-world consequences.
Right now, NFTs carry a major environmental footprint. Some estimates have said each Ethereum transaction takes as much energy as it does to power a house in the United States for two days. The tech world is trying to account for that with huge carbon offsets, now building that into every mint. And there has been talk of a newer version of Ethereum that would have much lower emissions.
Elmore says the energy projections were way overblown and erroneous, and that artists like herself have even gotten death threats over it. It is possible that the new medium is being held to a different standard because it is new. The servers that power Google, YouTube and streaming services like Spotify and Netflix also have a huge carbon footprint, not to mention vinyl record processing plants and physical mail-outs. So does flying around the world to play shows and do publicity.
The art, music and film worlds could stand to get a lot greener in general, and quickly. But the energy issue is one that’s shouldn’t be overlooked amidst all the techno-utopianism.
Until it’s addressed, Greene says he’s cautious not to flood onto NFT markets. But he also doesn’t want to ignore the potential of the new technology. Benzine agrees.
“Regardless of whether NFTs are here to stay, the technology that underpins them is definitely here to stay,” he says. “What we have now is an opportunity to figure out how best to use it.”