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NFTs for the Rest of Us

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Since my last swipe at NFTs, the hype and debate have skyrocketed. Thankfully, some are looking into the ecological concerns (beyond the band-aid of buying offsets) where solutions would ultimately benefit all blockchain technology applications. And others are exploring how to use the malleable format of NFTs to create or enhance a new kind of art.  

Unfortunately, many see eight-figure sales of a digital collage, and their eyes become dollar signs out of a Looney Tunes cartoon. The overwhelming conversation around NFTs is driven by monster-sized auction results and incredulous “she got how much for what?” takes. This chatter drives the motivation of many artists getting into NFTs: it’s all about making loads of easy money.

Of course, I believe that deserving artists and musicians should be paid handsomely for their art. Duh. But if you’re looking at Beeple getting $69 million for his NFT (and a lot more is going on there) and thinking, “I need to get in on that,” you might want to examine why you’re creating art in the first place.

I’m an idealist, and I think that using the hope of an NFT payday to guide your artistic process is no different than letting a soft drink company change your song lyrics for an ad. That’s cool if you’re cool with it, but don’t fool yourself into thinking that your money-making scheme is anything else just because it’s attached to hip technology.

Seth Godin and Bob Lefsetz have written wise words on NFTs with varying levels of criticism (or realism). But I think that MusicREDEF’s Matty Karas has written the most useful critique so far on what NFTs mean for the music industry. I’m going to quote it almost in full because more people should read it:

Show me this works and I’ll believe NFTs really, truly work: Put an album up for sale as an NFT, straight up, with no bonus content, no scarcity, no exclusivity. A simple $9.99 token available anytime to anyone who wants it. Why would anyone do that?, you ask. For the same reason anyone would sell an MP3s on BANDCAMP or ITUNES, I’ll answer, with the bonus that everyone, from the artist to the songwriters to anyone else who needs to get paid, can get paid instantaneously, no waiting weeks or months, no need to ever wonder if the numbers are being reported accurately, no need to worry about someone pirating the music, and if someone wants to resell it at a discount (because that’s the only way you can resell something that’s readily available) or at a markup (because maybe one day you’ll put it out of print), the artist can get a cut of the resale either way. I get the fun of auctions and the allure of exclusivity and the dream of seven-figure transactions, and there’s a place for all of that of course … But if you’re telling me NFTs are important because they’re a way to authenticate ownership and control distribution and streamline payments, then show me they can do that without raising the price of an album from $9.99 to $9,999.99 and without creating one more experience your average fan can never have.

That’s the rub. There’s a ton of promise in NFTs and blockchain for artists and labels. The technology adds personalization and ownership to digital music and might be a path for fans to move away from the mess streaming’s gotten us into. But before that can happen, we’re going to have to stop looking at NFTs as a high-dollar fad, a get-rich-quick shortcut, or patronage from the crypto-affluent. It’s time to get into the bones of what the technology means for everyday fans, artists, and recording artists and steer the conversation toward the future.

Update → Via a recent post on David Gerard’s Attack of the 50 Foot Blockchain blog:

Put a large price tag on your NFT by buying it from yourself — then write a press release talking about your $100,000 sale, and you’re only out the transaction fee. Journalists who can’t be bothered checking things will write this up without verifying that the buyer is a separate person who exists. Just like the high-end art world!

The Hidden Value(s) of Digital Art

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Bitcoin Mining

My Twitter feed (among the type of accounts I follow) is filled with chatter about NFTs, those “non-fungible tokens” that are all the rage among music’s early adopter set. NFTs, as defined here, are digital representations of art (visual, audio, etc.). Though the art itself isn’t exclusive, ownership of the NFT can be. Ownership is tracked and verified on the blockchain. 

We can look at this as similar to buying a skin or virtual item in a video game — a digital totem that broadcasts status within the game. Likewise, an NFT would elevate an owner’s status among an artist’s community of fans. The buyer of an NFT might also simply want to support the artist as a patron as NFTs, often auctioned, can have large pay-outs. Or, an owner could hope to turn a profit — one can resell an NFT at a higher price, adding a speculative aspect.

That’s probably a naïve explanation of what’s going on here. I’m hardly an expert or crypto-savvy. But what I do know doesn’t leave me bullish on the mass adoption of NFTs. It’s not the digital-ness that throws me off. I’m fascinated by the potential of intangibility and decentralization. However, I see NFTs, in their present execution, amplifying some age-old problems within the music industry.

News of NFTs reaping multi-thousand dollar sales makes them enticing to artists. This model seems a solution for those struggling under the streaming economy, as a single NFT sale could pay more than millions of streams. And plenty of unknown-to-me musicians have recently done well with NFTs, boosting the platform’s independent-friendly appeal. However, as many hopeful emerging artists learned through failed Kickstarter campaigns, the success of an artist’s NFT will depend on the size (and intensity) of a pre-existing fanbase. And as soon as known and established artists catch on, it’s likely music’s 1% will dominate, just as they do on Spotify. 

There’s also the inherent class-separation of fans able to participate. It will get easier to create and bid on NFTs (right now, you’ve got to be technically in-the-know), but those strapped for cash will continue to be left out. I realize patronage has always existed in the arts — the rich funding culture — but we should examine how this tradition’s preservation is not exactly a radical move forward.

I’m also alarmed by the environmental impact of NFTs (and crypto-tech in general). Just before COVID-times, we started to see a reevaluation of a touring musician’s carbon footprint, notably by bands like Massive Attack and Coldplay. That was encouraging, as was the quick acceptance of live-streamed concerts early on in the pandemic, pointing to an alternative to exhaustive tours. But NFTs, if widely adopted, could regularly expend the same amount of energy as hundreds of ongoing tours. Duncan Geere published an informative blog post that explains this in detail: 

A single cryptoart NFT involves potentially dozens of transactions. [Computational artist Memo] Akten analysed 18,000 of these tokens, finding that the average NFT has a footprint of around 211 kg of CO2 equivalent. That’s the same as an EU resident’s electric power consumption for more than a month, driving for 1000km, or a return flight from London to Rome. And that’s just for keeping track of who owns it — it doesn’t include the energy consumption used in the creation of the work, its storage, or the website it’s hosted on.

If you’re wondering how this amount of energy is possible from a digital token, check out this video from The Guardian about crypto’s effects on the environment:

Also linked in Duncan Geere’s piece is this blog post from digital artist Joanie Lemercier — she explains why she canceled a planned NFT sale and proposes some solutions to make the technology more sustainable. And Memo Akten, mentioned in the above quote, has created cryptoart.wtf, a tool to help us “get a sense of how much carbon is being emitted by the buying and selling of different digital artworks.” 

I do think there are possibilities in the NFT model. The attraction is that there are few rules, and the medium is ripe for creative tweaking and innovation. That’s exciting. It’s young (as is crypto), and we’re all still learning. But we shouldn’t let the glow of promise blind us when there are lingering systemic problems to solve. The application of new technologies should help us find our way out rather than digging us in further. 

Creating Scarcity in the Digital Marketplace

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In the latest Water and Music newsletter, Cherie Hu notes a startling development in music monetization. Utilizing the blockchain, a pair of electronic music acts auctioned digital artworks — “short-form, looping videos soundtracked by original music” — earning close to $40,000. Using non-fungible tokens (NFT), the buyers can own (or control) these pieces despite the content’s digital replicability. 

Cherie’s article then considers scarcity, a fan-driven quality of music and collectibles that, in the digital age, rarely exists outside of touring. As Cherie says, “In a capitalist economy, artificial scarcity creates the conditions for discovering culture’s true market value.” In old school (but still existent) terms, think of limited edition albums, the hand-crafted numbered cassette, or that t-shirt you can only buy directly from the touring band. But applying this to the digital marketplace is a tough nut to crack. Cherie writes:

… artificial scarcity could not be more antithetical to how the streaming economy works today, because we expect digital music to be as close to free and ubiquitous as possible — i.e. the opposite of scarce. In a noisy online media landscape, many artists also feel pressured to achieve the same level of ubiquity as the services that monetize their work, constantly churning out content in order to keep up with “the algorithm” and maintain fans’ attention — a burden that is ever more amplified in a world without touring. 

After reading this piece, I checked out Shawn Reynaldo’s latest First Floor newsletter. Shawn speaks with electronic musician Jordan GCZ about his embrace of the Patreon platform. Jordan suggests that he may release music only through Patreon — that is, not on vinyl or Bandcamp or the streamers, but only to his 36 (as of right now) supporters. And these won’t be cast-off tracks or outtakes — the artist promises to release some of his best songs this way, delivered only to his most ardent fans. 

Unless there’s something like incorporating tokens as Cherie writes about, there’s nothing non-fungible about Jordan’s Patreon-only music releases. These fans are free to copy and pass on these music files, and they might end up on piracy sites and YouTube. The scarcity is only in the files’ initial distribution. But I am intrigued by this idea — albums and releases distributed only through ‘fan clubs’ as an alternative to the corporate outlets. I just wonder if the status of membership and being the first to receive the music is scarce enough. 

🔗→ Digital Music’s New Drop Culture
🔗→ Patreon Creeps into Electronic Music

Foretelling a Future of Artist Autonomy

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In a guest column for Billboard, VC friend and SXSW 2019 roomie Brian Penick has some illuminating thoughts about the future of music tech. He’s bullish on the growth of the music industry and points out several ‘key indicators’ that have him excited.

His first indicator is how artificial intelligence will redefine how we approach the creative process:

Imagine, without any prior training, creating a song via AI software with a single click. Now imagine leveraging that song to create a worldwide audience or, even better, a YouTube star pushing that song out to their already-established following.

I’ve spoken to Brian about this, and I believe we agree that, rather than threatening musicians’ livelihoods, AI music — as described in the above quote — creates promotion paths for a personality-driven celebrity outside of the traditional music economy. Your feelings on this probably are in line with your general outlook on celebrity culture, but the activity is nothing new. ‘Stars’ and brands (California Raisins, anyone?) have been promoting themselves with manufactured music projects for ages. And yet culturally meaningful bands and musicians continue to make an impact.

What’s even more impressive is AI as a tool for emerging musicians to exploit. Consider the technology’s application as a fan-interactive tool (different versions for different sets of fans), a creative assistant pushing the artist out of her comfort zone, or a tool that is itself manipulated and pushed to its limits. The ‘recording studio as instrument’ innovation revealed new subsets and styles of genre. In the hands of skilled producers and artists, AI will do the same. Musicians — or those purporting to be — who use AI merely as a crutch will be identified and called out, much like DJs who use ghostwriting teams today.

Crystal Ball Into The Future by Garidy Sanders on Unsplash

Brian’s next indicator is blockchain as a tool to tighten and standardize metadata, and delves into how this affects the tricky calculation of venue royalty:

A 2016 study conducted by my former music recognition company, Soundstr, surveyed almost 3,000 songs in 12 businesses over 2 weeks and found that more than 80% of the music played in public establishments such as bars, night clubs and coffee shops was not properly accounted for. On a national scale, this leaves hundreds of millions of dollars or more on the table for songwriters and publishers, all because of a lack of metadata and tracking methods.

The tracking methods are more important here as metadata can sit within an audio recognition platform like Soundstr or Shazam. PRS and GEMA are currently experimenting with song tracking in venues (something I’ll write more about in the next couple of days). But PRS and GEMA are the only interested parties in their respective territories, those being the United Kingdom and Germany. In the US we’ve got ASCAP, BMI, SESAC, and GMR — four performance collection societies that don’t necessarily see eye-to-eye.

Proper venue tracking requires the installation of a passive microphone to do audio recognition. Will US venues have four separate receivers installed, one for each PRO? Will the four agree on one company to handle this and trust that the company won’t reveal tracking info to competitors? Will blockchain somehow make that last question moot?

As I wrote about previously, accurate tracking of song performance in public establishments is new and essential. This type of monitoring hasn’t been a possibility until recent technological developments. I agree it’s a significant growth area in music publishing. But the fractured nature of the US PRO system will require a complementary solution based on appliance and accord, not technology.

The last three indicators that Brian lists go hand-in-hand: innovations in direct-to-consumer delivery, artist brand empowerment, and on-brand investment as part of artist identity. These factors create a more independent artist as income reliance shifts away from third-party platforms. There’s also an increased measure of control. The artist develops and strengthens a brand identity that encourages fans to interact and support via the artist’s hub of engagement. This shift diminishes the necessity of social media platforms for fan outreach.

Utilizing a coherent brand to inspire investment opportunities is also a novel idea:

The real opportunity comes when celebrities realize that, while single or minimal recurring payouts from sponsorships, endorsements or licensing deals are good in some scenarios, the bigger returns come from investing. What better to invest in than products and services you associate and market with your brand?

Our age is entrepreneurial. Artists not only participate and (hopefully) make wise decisions with their earnings but these investments potentially tighten relationships with fans. Brian’s example of Beyoncé’s investment in the vegan lifestyle is an instructive illustration.

That reminds me of this brilliant New Yorker profile of Iggy Pop. Pop is undeniably an artist who does what he wants, an epitome of ‘independent.’1In attitude, vision, and identity, if not label affiliation. I wondered how he maintained his autonomy, and then I read this part of the article:

“The phone rings; I get offered work. And, you know, there’s always my Apple stock,” [Iggy Pop] said, and laughed. “I have taken pains to diversify outside of the music industry.”

This example has a different angle than Brian’s observation. But Pop would not have mentioned Apple if it didn’t fit his identity. More importantly, it reveals a savvy road to independence. And that’s ultimately what these five key indicators foretell — a future of autonomy for the artists who want it.

🔗→ Five Music Tech Investment Areas You Need to Know
🔗→ The Survival of Iggy Pop

Blockchain: Anchoring Music in Time and Space

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Benji Rogers (dotBlockchain Music) via MIDEMBLOG:

Blockchains represent the opportunity to anchor a digital event – in this case, music – in time and space. To say “at this time, in this place, these are the people that own the work.”



Today, in 2017, if I’m a songwriter or an artist, I have nowhere in which I can digitally express my rights. As an artist, I come out of the studio, I put that recording on a 20 year-old format like a FLAC or a WAV or an mp3, then I send it out into the world. And I rely on all these other architectures and databases to link together, talk to each other, and get me paid. The problem is that you usually only find issues after they’ve happened, and I just don’t think that’s a modern way to converse machine to machine, using these old formats.



If you’re going to create a new system to digitally enscribe rights, do you do it in a centralised way? That is, do you want to rely on one entity to be the holders of the keys, and therefore give them the ability to overwhelm the system? And if so, you have to trust and rely on them being good people and not wanting to screw artists or performers. If we consider that many centralised systems have been attempted before and have failed, what blockchains represent is a decentralised system, where you are equal among all peers within the system.



That’s powerful because today, if we put our rights into mp3s or WAV files, they’re all alterable. Wherever they go, there’s no way to talk to them. You have to talk to the service providers that administer them and pay out on them. What I think is a much simpler path is if you create a smart, modern digital asset, which is the music with the metadata, and you write that music & metadata to the blockchain, then what you have is a decentralised way of looking at 360°s of the rights of the asset itself. Therefore, wherever I send that asset, if changes are made at the blockchain level, they will express themselves outwards to the asset.



So the obstacles to overcome are that a bunch of the music industry does not want the transparency that this would engender; and a bunch of the music industry is highly invested in payments not reaching the right people in the right way. But that said, what those parties and players are seeing is that if they’re holding a thousand euros under the table, they’re losing out on a million over the table. This system would allow for massive speed in sync licensing, and in confirming who owns what, as opposed to who we think owns it. And I think the other obstacles are ideological: “we’ve already built everything we need, and we’re going to carry on with that, so you take your fancy blockchain somewhere else.” I think that’s a head-in-the sand attitude. It wouldn’t be the first time; hopefully, it’s the last.

Blockchain and the Rights Management Renaissance

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Mediachain Labs blog, one year ago:

The problem is simply that no central database exists to keep track of information about music. Specifically, there are two types of information about a piece of music that are critically important: who made it and who owns the rights to it. Right now, this information is fiendishly difficult to track down, to the great detriment of artists, music services and consumers alike.



If we want to enable maximum value flow and creation, we’ve got to solve the data problem first. Given that context, we should view a blockchain solution as a simple metaphor for shared, networked, media metadata.



Platforms like Spotify and Soundcloud have an incentive to find a reliable, long-term solution to the fractured data problem in order to avoid future lawsuits. Spotify seems to be leading the charge, having recently committed to “fix the global problem of bad publishing data once and for all”. They also have the scale and technical resources to ensure the availability and operation of the network.



Mediachain Labs is leading the open source development of Mediachain, a decentralized data network that aims to make it simple for organizations, creators, and developers to share and reuse information about creative works. As a shared metadata network for music, Mediachain offers a uniform interface to data contributed by multiple participants with no central authority. Because Mediachain is open source and decentralized, all participants remain in control of their data and there is no central point of failure.



TechCrunch, today:

Spotify has acquired the Brooklyn-based blockchain startup Mediachain Labs, whose team will join the company’s office in New York where they will work on developing better technology for connecting artists and other rights holders with the tracks hosted on Spotify’s service.



This is an area where Spotify can use some help, as it turns out. Last year, Spotify settled a licensing dispute with the National Music Publishers Association (NMPA) in the U.S. over unpaid royalties. Spotify had claimed that it didn’t pay out the royalties because it simply didn’t have the necessary data to help it figure out whose claims were legitimate, or even how to locate the parties. It said it lacked an authoritative database that covered all existing music rights. This opens it up to litigation, which is obviously not the ideal way of managing these payments.



With Mediachain, Spotify potentially has a solution on its hands – but instead of building out a centralized database with music rights information, it looks like it will build a decentralized one. Mediachain says it will turn over the technology it had already built to the open source community as it moves to Spotify.



There’s this announcement – and the dotBlockchain Music Project’s recent alliance with SOCAN, Songtrust, CD Baby, and FUGA – and ASCAP, SACEM, and PRS for Music collaborating on a blockchain-powered “shared decentralized database of music work metadata with real-time update and tracking capabilities” … could we be on the cusp of a rights management renaissance?



Previously and Previously.



Update: CMU Daily once again with the definitive take:

How do you convince the music industry that you’re taking the data issues that continue to hinder the streaming business seriously? Tell em you’re going to fix it via the blockchain and ‘boom’, no one knows what you’re taking about, but boy are they impressed.

That Music Rights Shell Game

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Routenote:

With the release of iOS 10, song lyrics are now displayed within Apple Music. Apple have received incredibly positive feedback from members, who can now follow along during playback of their favourite songs. To ensure songwriters are paid Apple is obtaining the licenses required to display lyrics in Apple Music. Apple rely on accurate songwriter and composer data to efficiently obtain these licenses.



O RLY?

Music•Technology•Policy:

Apple says to “make sure the ownership of your song is registered with a publisher, and that they have registered ownership with relevant publishing agencies such as ASCAP, BMI, PRS, Harry Fox and Music Reports.” That obviously is misleading.



First of all, we can’t be that surprised that Apple has this impression because as we all know, it is frequently lost on HFA and MRI that neither of them is in fact the government. However, given that Amazon, Google, Pandora and others are sending millions upon millions of NOIs to the Copyright Office claiming to have no idea who owns songs by very well known artists, it should make it obvious that the one place you need to “register” your song copyright ownership is with the U.S. Copyright Office.



It’s also misleading to state that you have to have “the ownership of your songs…register[ed] with a publisher” which may happen frequently, but is not required to enjoy ownership rights.



That unified music metadata database (Blockchain, etc) that keeps getting bandied about can’t come soon enough.

The Music Industry Isn’t Ready for the Blockchain

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Medium:

Every day there are headlines about companies in the banking industry employing blockchain technology. Technologies like this could make the music industry more fair and transparent, and reduce a lot of friction around rights and payments, leaving more money to flow from fan to creator. The biggest obstacle, however, is the music industry itself.

The problem in getting the music industry to adopt the blockchain for anything beyond metadata is that there are competing interests. For instance, if you’ve invested a lot of money into marketing a sub-licensed work in a certain territory, you wouldn’t want everyone to be able to see when your right expires… because then you’ll have a lot of competitors who might try to secure those rights.

There’s a lot of interest in making payments transparent, so that it becomes clear how much a party like Spotify actually pays to certain labels, and what happens to that money along the chain to the creators. Creators are likely to have privacy concerns about having their income being public though.

Other organisations have a risk of redundancy — although they might secure a new role for themselves by participating.