People are hailing NFTs as an answer to some of the scene's biggest problems. But, as Ray Philp explains, the path towards this possible new future is far from straightforward.
It’s one of the truisms of the past 20 years that people no longer value music, or at least the idea of owning it. Sales of CDs famously nosedived in the early ‘00s thanks to peer-to-peer file sharing software like Napster. In the subsequent decade, the success of streaming giants like Spotify and YouTube continued to offer consumers a limitless supply of virtually free music. Then also consider the rise of Ableton and Fruity Loops, which has made music easier to make and effortless to copy. The story of the past two decades has been the abundance (and some would say disposability) of music and the technology that made it happen.
The latest innovation, however, may spell the end for cheap digital art. NFTs, or “non-fungible tokens,” promise to restore the value of music and the gloss of ownership by cultivating digital scarcity, and the idea is beginning to catch on. NFTs are changing hands for enormous sums. Earlier this month, the digital artist Beeple sold a JPEG at Christie’s for nearly $70 million. Sales of music as NFTs have also made artists such as Grimes and 3LAU millions. Aphex Twin, Richie Hawtin, deadmau5, Disclosure and Yaeji have also made inroads into selling NFTs as music, merchandise, digital art, or some combination of all three.
Some NFT sales have also tested conventional definitions of art. Some of the most high-profile goods sold on NFT marketplaces include an image of Lindsay Lohan’s face, a Twitter post, the Nyan Cat gif, and a highlight clip of LeBron James.
But what is an NFT? First, it might help to define the difference between a non-fungible token and a fungible token. You could say a dollar is like a fungible token because it’s interchangeable with other dollars. By contrast, non-fungible tokens are unique or rare assets. An NFT is also something like a certificate of authenticity. If you decide to, say, sell a track you’ve just produced as an NFT, the sale will transfer proof of ownership of that NFT to the buyer, though not necessarily the rights to the track—the seller can set those terms through an attached smart contract.
Unlike file formats such as MP3 or WAV, NFTs enable more robust metadata storage. That track can hold the names of all the people (besides you) who participated in its creation—the songwriter, the mastering engineer, the author of the sample used, and so on—which could make royalty payments far simpler. The appeal of NFTs also comes from the Ethereum blockchain technology in which it’s embedded. In simple terms, blockchain is a permanent ledger that can’t be tampered with or harvested for data because it isn’t run on a centralised platform like Facebook or Google.
The applications for dance music could be game-changing. One longrunning industry complaint has been the imbalance between what top DJs earn from playing gigs (a lot) and what producers earn from their music (not nearly as much). How might NFTs help here? One way is to sell a single on an NFT marketplace, as Jacques Greene did recently. The Canadian artist made more than $20,000 auctioning the track “Promise” and the associated publishing rights.
While the income was welcome, he expressed unease about the wider implications of NFTs. “I don’t know if anyone should be putting their publishing on an anonymous marketplace to the highest bidder, if only because the framework isn’t really in place yet,” he told Shawn Reynaldo’s First Floor newsletter. “I don’t know that this is the last time I will ever interface with NFT stuff, but I definitely won’t be tokenizing my community anytime soon. Those kinds of ideas of turning your fans into shareholders are really distressing to me.”
Greene points to a major source of discomfort about NFTs as a new technology operating under a familiar stock market logic. “The doomsday scenario,” said the artist and researcher Mat Dryhurst, “which I think is real and will happen, is pump-and-dump schemes.” (A milder version of this, as Dryhurst told me later, would be an artist who felt nudged towards conservative choices by the perceived expectations of investor-fans.)
It’s reasonable to assume that crypto speculation is driving at least some of the fees commanded for a “vintage” Vine or a livestream of a burning Banksy, whose aesthetic appeal will be unclear to the casual viewer. Most NFTs are being bought by crypto-wealthy individuals with Ethereum to burn. And they’re spending lavishly on digital art that seems indistinguishable from their free and widely available equivalents on the internet. Last month, for example, the designer David Rudnick sold an NFT artwork for nearly $20,000, then shared the high-res download soon after. (“It won’t detract from what was bought, nor its value,” he said.)
So what’s in it for NFT collectors? Is what’s being bought, as the venture capitalist Ben Horowitz recently put it, just “a feeling”?
The blockchain entrepreneur Benji Rogers pointed out that digital goods are more precious than IRL equivalents in particular contexts. “What are some of your most valuable digital artefacts? For me, it’s photographs of my daughter when she was just born… ironically, the idea of printing them, and having that be the original, doesn’t hold value because I want a big high-res version that will eventually sit on the screen.” But, as Rogers himself later said, is it possible—or even fair—to expect artists to make something that could speak to an audience in that same way?
Dryhurst, meanwhile, admitted that it’s not easy to grasp the inherent value of an NFT; the digital artist Beeple, for example, sold NFTs with physical goods to make them more covetable. Then again, dance music is replete with tactile assets that are bought, stored and forgotten. “With the exception of a few very, very committed people,” he said, “people buy things all the time that they don’t play. There’s a great stat—I’m gonna botch the stat, but it’s something nuts—about how much vinyl has never been opened.”
Maybe there’s another way to make sense of NFTs’ appeal. In the novel Neuromancer, William Gibson calls cyberspace, his fictional precursor to the internet, a “consensual hallucination”; much like the concept of “common myths” Yuval Noah Harari discusses in his book Sapiens. “Large numbers of strangers can cooperate successfully by believing in common myths,” he wrote, “that exist only in people’s collective imagination.” He argued that laws, nations, currency and corporations are the result of agreements built on fictions, however complicated or longstanding.
Rudnick recently echoed this idea, referring to “digital primacy” as the way in which a generation reared online can more readily give a digital world meaning. It’s easy to see how NFTs operate on the same principle—all it took for them to accrue value was a critical mass of people who believed they were, or would be, worth something. Consider the social dimension, too. Going to a record shop isn’t just about buying vinyl. You might also be friendly with the owner or other regulars, and think of yourself as part of a community. Since you can’t hang an NFT on a wall, talking about it on Discord might produce a similar sense of belonging.
For an industry whose artists and labels seem endlessly consumed with science-fiction themes, dance music can be deeply conservative about new technology. For a long time the orthodoxy was that “real DJs” played vinyl and only music produced on hardware would cut it. Those attitudes have changed, partly because the cultural emphasis has shifted towards making DJing and production more accessible to previously excluded groups—women, the LGBTQIA+ community, and people of colour. If owning NFTs remains the preserve of a (mostly white, mostly male) crypto-wealthy elite, then it’s understandable if the response from many in dance music is “no thanks.”
But the space is evolving rapidly. Many artists see NFTs as an opportunity to haul themselves out of a financially disastrous year. “My interest in making my thesis project into an NFT was because of the way I’ve become more serious about personal finance and alternative business models,” said the Canadian artist Debby Friday, who is about to mint her first NFT, an audio play called “LINK SICK.”
“I don’t believe in the ‘starving artist’ myth; I think that’s a really damaging idea, that we need to struggle as creative people. I feel that it’s important for creatives to make a real living, and also to be aware of, ‘Where is my money? What is my money doing?’ I feel like crypto is one of the possible answers to that. I don’t necessarily think it’ll solve world hunger or anything like that, but I do believe it’s the beginning of imagining a different world, and a different way of engaging with money, with art, with all sorts of things.”
Selling NFTs comes with obstacles. Many marketplaces, such as Zora, are invite-only; others screen applicants, like Nifty Gateway. To create, or “mint,” an NFT also requires a “gas fee”—a charge meant to reflect the effort and energy expended by NFT-making. Because the price of Ethereum is so volatile, gas fees are unpredictable. Greene paid $150, an amount that might not make sense for a struggling producer taking a punt on an unfamiliar market.
“The big takeaway is that, yes, there’s a barrier to access,” said Dryhurst. “Part of the reason why I’m trying to talk to so many people about this is to attempt to remediate that. There’s a barrier to access in terms of cash—although I think there’s also a lot of hyperbole about how cheap it is to release and produce music, too. With a lot of these points on accessibility, the great paradox to me is that, actually, this is the most accessible development of the web that there’s ever been, not necessarily because other webs didn’t try to be accessible—the first one certainly did —but just because of the media environment we live in. You can find information about this for free online, on YouTube, on the web. There’s people on Twitter who will come and talk to you about it.
“The big challenge is that because it’s happening so publicly, and people are at very, very different stages of understanding, paradoxically giving them access at a stage where where they’re completely baffled as to what’s going on, and they’re seeing someone sell a gif for a million dollars, paradoxically, that can make them feel more left out.”
By “other webs,” Dryhurst is talking about three eras of the internet. There’s the beginning, or web 1.0—Tim Berners-Lee, Geocities, and so on. Then there’s the present, or web 2.0, dominated by Facebook and Spotify. Web 3.0 is the decentralised future, the roadmap for artists to bypass big-tech platforms.
For crypto optimists, moving to blockchain is the long-term goal—a way to interact with fans and communities directly without the mediation of what’s been called “the GAFA stack.” And there are other NFT applications, such as DAOs, that have nothing to do with outrage-generating gif auctions. DAOs, or decentralised autonomous organisations, are what Dryhurst calls “digital co-ops” that could represent the structures around which organisations such as labels, unions or magazines operate more equitably.
“I lament the fact that profit splitting—the ability for groups of people to all publish an artwork together, and you see that the proceeds being split between them—that kind of emphasis wasn’t prioritised from the beginning,” Dryhurst said. “But it’s coming… There are already experiments with tokenized Discords. So, for example, you buy a token. When you stake that token, you keep it in your wallet. As long as you keep it in your wallet, you have access to this Discord. And these are Discords with hundreds of channels; they’re commissioning their own articles from writers that are members of Discord. They’re commissioning new artworks. You’re seeing the very, very early embers of building a label-cum-publication out of the Discord infrastructure, which to me is really interesting.”
Whatever its promise for better economies and governance, NFTs can still pose a “yuck” factor. As Arielle Gordon reports in a piece for Stereogum, a recent auction of work by the electronic music artists Yaeji and Mura Masa was won by a venture capitalist; another successful bidder bought work for 0.6 WETH (around $1,000) then within minutes relisted it for 15 WETH (a little over $26,600). “Once the dust had settled on the bidding wars,” wrote Gordon, “the artworks’ new owner appeared closer to a ticket scalper or algorithmic sneaker bot than a collector or curator.”
Beyond NFTs’ market-replicating excess, what’s no less distressing to crypto sceptics is its energy consumption. In a Medium post, the digital artist Memo Akten wrote that a single NFT was equal to the energy consumption of a month’s worth of electricity in an EU household, and the emissions of a two-hour flight. The reason? “Proof of work,” the energy-intensive process by which Ethereum verifies itself against fraud or error. To create or “mine” Ethereum, a miner earns fees by solving complex mathematical proofs in competition with other miners; as more coins are minted, the proofs get harder, which computers expend yet more energy solving.
It’s a winner-takes-all process—all miners consume the same energy figuring out the equation but only one is rewarded. The wastefulness of the method is reflected in the estimates for cryptocurrency’s energy consumption. The Cambridge Bitcoin Electricity Consumption Index recently reported that Bitcoin outstripped Argentina’s electricity demand; Ethereum reportedly consumes about the same as Libya. In a widely shared blog post, the digital artist Everest Pipkin concluded that “The only viable option [with crypto] is total moral rejection.” Taken together, this does sound alarming. Crypto’s inefficiency is acknowledged even by the currencies themselves; Ethereum says it plans to transfer from proof of work to proof of stake, a more energy-efficient system that randomly selects a single miner to crack the code.
But it’s difficult to take the claims of non-experts about carbon footprints at face value. Akten, for example, went on to acknowledge his analysis was “one-sided” (he took down his website, CryptoArt.wtf, after revelations that its estimates were being used to harass and abuse artists). The environmental impact of cryptocurrencies, while sizable, is far from clear-cut. As energy experts like Jonathan Koomey have pointed out, mainstream reports of the aggressive electricity consumption of Bitcoin, another proof-of-work cryptocurrency, were often based on modelling stacked with faulty assumptions. There is also a lack of accurate data for the output of the world’s Bitcoin and Ethereum mining centres—most of which are located in China—which emit the bulk of crypto-related emissions.
Further complicating the issue, many Bitcoin mines in China, where two-thirds of the world’s mines operate, draw from energy surplus that would otherwise go unused. But in regions like Inner Mongolia, where many Bitcoin mines are concentrated, the power grid runs on coal. The problem, for now, is with wasteful infrastructure. But a reasonable worry is how miners will respond when the government curbs their operations, by, for example, moving to places where surplus isn’t so readily available.
What’s clear is that better data is necessary to build an accurate picture of crypto’s ecological impact. In a recent tweet, Telefon Tel Aviv, AKA Joshua Eustis, expressed a position typical of crypto optimists well-versed in these sorts of arguments. “We can enact change for the better *now* if we act quickly,” he wrote. “Abandoning new technology will result in large capitalist forces being in policy control forever. Toothpaste out of the tube, do you want to brush your teeth or waste it?” NFTs will be messy and conflicting, the thinking goes, but if artists don’t set the terms now out of moral vanity, they’ll regret it later.
“This technology is not going to overthrow capitalism, to my everlasting dismay,” Eustis told me, “but it’s a step in the right direction. We are in a unique position to shape policy—specifically with ecology, accessibility, education and outreach. Ensuring that anyone who wants skin in the game can get skin in the game. I feel like we have a moral obligation to set those standards now.
“These large companies are gonna have a hard time moving as quickly or as effectively as we can. Because right now, for instance, the engineering behind Ethereum isn’t profit-based—it’s safety-based, it’s best use-case-based. It’s not based on, ‘How can we extract the most amount of money from this technology?’ It’s, ‘How can we make this technology the most useful for the most amount of people?’ If we abdicate this right now then these big companies will come in and take over and they’ll ruin it, as they always do. So I feel like taking a hardline approach on backing away from it… it doesn’t really align with my ethics. I feel like we’ve gotta shape this thing now and set standards that can’t be broken later.”
To earn money from music played by DJs at a club or festival, a producer like Telefon Tel Aviv has to rely on a system with lots of holes. Speaking to Resident Advisor in 2019, Liz Muirhead, a board member of the Association For Electronic Music (AFEM), said that performing rights organisations (PROs) typically collect data from venues either from representatives who visit clubs and report what was played or DJs who self-report their setlists. The flaw in the first method is clear. Even the most dedicated dance music heads would struggle to ID every single track in a DJ set.
In the UK, a DJ can only submit a setlist to PRS if they’re a member. But registration to PRS requires having a music catalogue, which DJs who don’t make music don’t have. In either case, this leads to incomplete data sets—and lots of unclaimed royalties, estimated by AFEM to total $160 million. The music-monitoring organisation BMAT, which Muirhead also represents, is leading remedial efforts by automating the process with a proprietary system. (This is a question Pioneer DJ also attempted to address with its Kuvo technology in the recent past.) But take-up has been slow. Only 700 clubs worldwide are part of BMAT’s venue network. PRS operates a similar scheme, but as of late 2018 only 28 clubs had signed up.
If NFTs become the widespread standard by which artists register and monetise their work, their superior metadata storage could drastically accelerate and simplify royalty payments to producers. “I see NFTs as a way to permanently etch into digital stone a royalty rate for a piece of music,” said Eustis. “The royalty situation is particularly interesting to a lot of artists, especially visual artists. Maybe they sell a work for $1,000, but maybe they blow up and then that physical artwork later can sell for $50,000, and the artist doesn’t benefit from their own profile being raised. The NFT system is a way around that; whoever mints the original token can determine, ‘Look, if you sell this again for a lot of money, I’m going to take a little sliver of it’. In the end I see this as a way of rebuilding the middle class of artists and musicians. We don’t have a consensus on it right now, and it’s a problem, but there are minds greater than mine working on a solution.”
For fans, collecting NFTs may seem like a remote possibility. But Ben Arnon, who launched the NFT platform Curio last month, is keen to make them more accessible. “We really think of NFTs as a passport to unlocking exclusive VIP access and fan experiences,” he told me. “Once the world opens up, they can bring their phones to, say, a concert. That NFT might unlock an experience at the concert—maybe front-row seats, maybe a backstage meet-and-greet, maybe some other kind of access. There’s opportunities to deliver proximity-based NFTs to people who are literally at that space at that particular time. And that might then enable those people to go online and unlock experiences there.
“We think a lot about the, ‘So what?’ There’s obviously people buying NFTs because they’re appreciating in value. But in the long run, is that going to be the reason why fans continue to get excited about NFTs? What can that fan do with the NFT? And how can that NFT bring the fan closer to the artist that he or she loves?”
Inder Phull, a cofounder of PIXELYNX, is similarly optimistic about NFT accessibility. PIXELYNX, a digital collectibles venture, intends to explore a growing crossover between music and gaming. “People are spending significantly in virtual worlds in games like Fortnite” —$1.8 billion in 2019—”on in-game skins and items. That’s a model that people can understand—owning a virtual hoodie. The interesting thing is, you never own that. If the game closes and decides to shut down, you, the user, who might have just spent £500 on in-game items, you lose those items as well. The beauty of NFTs is that the ownership is with the user.”
As an example, Phull cites a deadmau5-branded virtual sneaker that could be minted as an NFT then worn in-game, which he suggests could be “merchandise 3.0.” VR or in-game concerts—high-profile examples include Travis Scott’s Fortnite gig or Lil Nas X performing on Roblox—might also be enhanced by NFTs. “If we were to talk about our long-term vision here, we are going to be setting up virtual worlds for artists. You could buy an NFT and that can be used inside that virtual world.”
Before NFTs get to that place, the technology will have to overcome some obstacles. Besides ecological and economic critiques, there are growing concerns about fraud. Hackers recently infiltrated and stole NFTs from accounts linked to the NFT platform Nifty Gateway. It’s also possible to mint stolen art and sell it to unwitting bidders, a process that, thanks to the blockchain, permanently locks out the artist from the proceeds of that sale and any subsequent transactions. (Similar problems are reportedly affecting Audius, a blockchain streaming service.)
“There’s a lot of scammy shit,” said Dryhurst. “At the beginning of my classes, I’m like, ‘My saying that this is going to be a big deal has no bearing on the market, has no bearing on things you should be investing in. I don’t think investment is a terrible idea, but you need a lot of experience to do that properly. And there are also no guarantees that Ethereum, or whatever the top-ten coins are, is gonna be around in ten years. These ideas will persist, but we are so early…. We’re at the Geocities stage of the next internet—barely even—so people don’t need to panic.”
It’s hard to think of an issue that could be as uniquely divisive among artists as NFTs. There are questions to answer about their ecological impact and the capitalism-on-steroids of its most high-profile transactions. But equally, there is justified optimism around NFTs as an escape from the stranglehold of centralised platforms. If NFTs do offer the chance for artists to make a reasonable living from their work, then it’s possible to see NFTs like the formation of the internet—they will only be as good or bad as the people who get involved.
Telefon Tel Aviv photo credit: Corinne Schiavone
