Minted: NFTs unlock new doors for independent musicians. Are they worth opening?
In late March, London ON rock band Blu Bones released a video for their new single “She’s Got a Way with Love.” It’s not a long video – three minutes of colourful cartoon characters on a trippy adventure in California.
The video is readily available on the internet. I’ve even embedded a link in this article.
But on a different site, in a different format, that very same three-minute video is up for auction.
The asking price? Almost $15,000 at the time of this writing. That’s an important disclaimer when writing about cryptocurrency, the value of which is in constant motion.
On May 11, the video was worth over $25,000.
No takers yet, by the way.
We’re talking cryptocurrency here — more specifically ether — the only form of payment you can use to purchase a version of the video stamped as one-of-a-kind.
“I minted the video as an NFT. I don’t think anyone else had really done that before as far as full-length rock videos go,” said Gord Prior, the group’s lead singer. He’s right. Blu Bones was the first Canadian band to release a music video as an NFT.
“It kind of took off from there because the subject is new,” he said. “A lot of people are still trying to figure out what this all means.”
You got that right, Gord! Maybe let’s start with that mysterious acronym “NFT,” which has already begun to stray from its humble origins in the English language.
NFT stands for non-fungible token.
Those with one foot in the crypto sphere might think of big headlines associated with those three letters: a collage by digital artist Beeple selling for $69 million, Twitter CEO Jack Dorsey selling his first ever tweet for $2.9 million.
For those with two feet planted on solid ground, a non-fungible token might sound like a coupon for Lamisil, redeemable at your neighborhood pharmacy. Either that, or something vaguely to do with mushrooms.
In fact, fungibility is an economic term that essentially means interchangeability, like units of currency. You could trade a loonie for a loonie without thinking twice because the value in your pocket hasn’t changed.
Non-fungible thus refers to value assigned to unique objects not so easily exchanged. An 1868 two-cent Large Queen postage stamp — priced at around $30,000 — holds a much different value than a 1979 Wayne Gretzky rookie card.
Their respective values are based on factors like physical condition, provenance and rarity.
While purists might argue this system only works with items that you can hold in your hands (very, very carefully), non-fungible tokens essentially apply this valuation to the digital world.
So, what sets the Blu Bones token apart from the video on YouTube? Not much, other than the knowledge that the creator had direct contact with this version, leaving an unseen fingerprint or signature through the minting process. It’s a passing of the keys to a singular sliver of the internet, a transfer of ownership. The token is the key, the deed.
Gord uses the master recordings of The Beatles’ Abbey Road as an old-world analog.
“That album was made on a one-of-a-kind master that can’t be replicated. In the record industry, the ownership of that master was key,” he said. “You can print off thousands of copies of that record, but there’s only one master copy. So, they have value, don’t they? They’re rare, and they’re very popular.”
It’s an apt example, considering the copies are sonically identical to the original. We all hear the same sound — just like we all see Van Gogh’s brushstrokes in a cheap print of Starry Night — all while accepting that the original has more value.
In digital stone…
Blu Bones’ music video is readily available online for anyone who wants to see it. For most of us, that is enough. We are happy to listen to the billionth copy of “Because” just like we’re happy to look up pictures of that rare postage stamp.
But that isn’t the point, is it?
It’s about ownership.
“The ownership is basically written in digital stone,” said Hamilton NFT collector Jay Iceberg, explaining the appeal of these virtual assets. “If I was going into an art gallery, I would have to worry about whether there’s a copy. Is this real or is this forged? When it comes to the NFT, there’s a record of where it came from.”
“Once you get past the technical knowledge, it’s all very cut and dry,” he said.
Understanding this new level of security involves unpacking some of that technical knowledge, namely the blockchain.
While it may sound intimidating and inaccessible — a compound of two words that both connote restriction — the blockchain can really be understood as a comprehensive digital ledger, recording every transaction of a given cryptocurrency. All coins — whether Bitcoin, Binance Coin or Ethereum — have an associated chain, like an ever-expanding Excel spreadsheet.
Say I wanted to buy the Blu Bones NFT. Millions of computers would then scour the ledger to determine whether I have the necessary stores of ether (units of Ethereum) to make the purchase, either permitting or rejecting the transaction.
The idea is to cut out the middlemen who typically make these calculations — like traditional banks — allowing for speedier peer-to-peer commerce constantly monitored by machines.
It’s the ultimate peer-review system.
The decentralized nature of these networks makes the blockchain virtually impenetrable from hackers. Each block on the chain represents an immutable record of crypto transactions in a given day, sealed off like a time capsule for the computers’ future reference.
The same stands for non-fungible tokens, certificates of ownership woven directly into that unbreakable chain.
Closing the distance…
It’s this sense of certainty, this digital stone, that appeals to collectors like Jay. He primarily buys visual art but is looking to extend his collection to the world of music NFTs.
In spite of all the hype, Jay is pretty practical about it all.
“I’m focused on owning things that I can be proud of, things I can show off,” he said, typically purchasing pieces for fractions of an ether — five, 10, maybe 20 dollars. He has no intention of cashing in on a hot ticket token, only to offload it at the zenith of Ethereum’s telltale fluctuations.
For Jay, NFTs present an opportunity to support artists directly.
“It’ll cost me maybe 100 bucks to get some nice pictures with some frames. Why don’t I buy an NFT that I will actually own?” he said. “I’m not just buying some random print. I’m actually buying from an artist. I’m actually supporting this small business.”
Much like the blockchain functions to eradicate financial middlemen, NFTs ideally collapse the space between artist and audience. Profits go directly to creators, identified alongside owners in that original contract.
While that initial sale is cause for a shriek or a shrug depending on the hour, given the volatility of cryptocurrency, artists can also demand a percentage of every subsequent sale. This could mean running residuals, cascading compensation, flowing back to a flag planted directly on the blockchain.
Blu Bones, for instance, will receive 10 per cent of profits every time their NFT is resold.
“If Babe Ruth owned a baseball card that he sold, and then it changed hands 12 times over 50 years, his estate would continue to receive a commission on that,” Gord said. “There’s always an element of reciprocity there, which you don’t see in the other collectible world.”
But not all baseball players are Babe Ruth and not all bands are The Beatles. Is this just another revenue stream reserved for the world’s biggest acts? Is this a viable approach for independent artists?
Costs of crypto
Besides basic technical know-how, there are a few barriers to entry in the NFT world. Artists looking to mint a token — inserting it into the blockchain — need some form of cryptocurrency to initiate the process. Again, one unit of Ethereum — known as ether — costs almost three-thousand dollars at the time of this writing, the result of more people buying into the crypto craze, clamouring for coins.
There are also fees tied to every operation on the blockchain, known as “gas,” essentially payments made to the computers for completing the necessary calculations. It’s a fee for the computational energy required to do the math, a technological toil known as “mining.”
While there are costs attached to minting, buying and selling NFTs, certain third party operators — like auction site OpenSea — cover these expenses in exchange for a percentage of profits. Gord used a program called Pinata to encode the video file, which included an $80 service fee.
Gas might be an appropriate term, considering the sheer amount of energy involved in the process. The mining of Bitcoin alone accounts for an estimated 116.56 terra-watt hours per year, according to the Cambridge Bitcoin Electric Consumption Index, more energy than the annual output of countries like the Philippines and the Netherlands.
Plus, for independent artists, there’s always the question of reach. NFTs appeal to a corner of an already niche market: a burgeoning class of crypto collectors. Considering whether this approach is even worthwhile might start to sound like a textbook math problem.
“Is it better to find that one person who’s willing to spend $10,000 on your NFT when you’re an independent artist? Or is it better to try to find a thousand people willing to spend $10 on your next album?” said Eric Alper, a Toronto-based music publicist.
It’s a question of an expedient exchange versus extended exposure.
For many, locking their sound away for select listeners is simply counterproductive, a barrier to reaching broader audiences. But Eric says independent artists could always explore a mixed approach, reserving certain content for the NFT space while streaming the rest. After all, music fans have always been divided into different tiers.
“The NFT really allows those same traditional type communities — the people who would pay 10-times the ticket price for a front-row seat, or those that collect all the different covers for the same album — to have that meaningful relationship with the artist in a technological way,” Eric said.
Just like a front-row ticket comes with a special experience, artists can program certain perks into the NFT contract, whether that’s exclusive merchandise, rare liner notes or other benefits that bridge into the physical world.
When Kings of Leon released their new album When You See Yourself as an NFT in March, they minted eighteen as unique “Golden Tickets,” which included front-row seats at any show anywhere in the world (once they can tour) and VIP interaction with the band.
Six of those sold for about $100,000 a piece.
Indie artists are not likely to see that type of money, but NFTs can still be used as a promotional tool, especially in a time when the tokens are dominating the headlines.
“I think it’s always viable to put excitement out there to the general public,” Eric said. “The great thing about the music industry, the media and the world in general is that they get to decide if this is cool or not.”
And given the global scale of the NFT marketplace, someone is bound to find your stuff cool.
Siahna Im, an independent artist from Seattle WA, minted a three-second promotional video for her new single “Mother” in April.
It was her first NFT. It sold for $200 on the auction site Foundation.
“I think it’s an awesome opportunity,” she said, adding that this could be a lasting trend attached to conventional distribution, akin to album art. “If you put an NFT out with your song, I think it would open up so many more doors. It would be exposed to different people who might not hear your music, people who are just interested in art or cryptocurrency.”
It’s ironic in a way, marketing an exclusive token to reach broader audiences. Part of that might be hitching a ride on the hype and the headlines. But it’s also about branching out into a variety of markets, which inevitably involves forays into the crypto sphere.
“If you’re only focusing on doing live shows, and not putting out any music, you’re really limiting yourself. If you’re only putting it on Apple Music and nothing else, you’re limiting yourself,” Siahna said. “I think any opportunity to attract people that may like your stuff is one you should take.”
Siahna worked in conjunction with Indiependency, a Seattle-based platform that helps artists set up NFTs to promote their music. They handle all the fees associated with minting in exchange for a percentage of the profits.
Giuseppe Marci, the platform’s founder, sees NFTs as one part of a multi-faceted strategy for musicians to make a living in today’s landscape, an alternate source of income to offset the costs of production and promotion.
“Artists spend so much money on marketing and then they publish their music on Spotify,” he said. “What happens is they get 20,000 or 30,000 plays, and they don’t even get that money back.”
On Spotify, 20,000 plays comes out to about $60.
Two-hundred dollars for a three-second video suddenly takes on new meaning, and that’s on the cheap side of the NFT marketplace.
“If you get something really low like $5,000 back from an NFT sale, you’re getting way more money than you would get in three, four years as an independent artist,” Giuseppe said.
But again, this is not the be-all end-all for smaller acts looking to build an audience. It’s just one more tool in the box.
“I think for me as an independent artist, and just genuinely wanting to share my music, it would be counterproductive to limit to one person hearing this thing that I made,” Siahna said. “I think music is intended to be shared.”
For Gord and Blu Bones, the decision was less about marketing than marking a moment in time, posting their NFT for posterity over profit.
“We did it more out of the love of our music. Now we have a permanent, undeniable record of that video and that song, created in this time in history. It’s been minted in the blockchain, so it’s there forever,” Gord said. “It definitely wasn’t to make money, if that makes sense. It was to leave a record of this song in a way that’s different and new and non-replicable.”
It’s a fine sentiment, staking a flag on a new digital frontier. Regardless of whether it ever sells, the video is a small piece of Canadian history. It may never become a collectible, but it will always be a souvenir.