What We Might Learn From the Controversy Surrounding NFTs for Artists
By: Juliette Rolnick
Tags: Music Industry, Nft Collectibles, Music, Nfts, Creator Economy

By Mix.Mag

As both a music enthusiast and someone who works in tech, it’s fascinating to witness various artists either release NFTs or voice their opinions on why they refuse to ever. Though I happen to be quite bullish on web3 and all that it might do for the music industry, from enabling better fan engagement to securitizing IP to allowing artists (and fans) to cash in on their ability to be great tastemakers, the controversy surrounding NFTs is neither unsurprising nor unwarranted. I do believe that there is much to learn from creators’ unease towards these things, as we attempt to ensure that the “new” music industry, powered by web3, is not only ambitious but rightfully so.

For some artists, an NFT release seems like a natural extension of their brand and thus may not elicit the kind of growing pains expected during the initial phases of any sort of tech adoption. I’d like to think of these artists as the early adopters.

In beginning with the mainstream (or those with hefty followings), artists like 3LAU and deadmau5 come to mind, both of whose brands are pivotally centered around technology itself. First and foremost, the art that each creates is powered by music technology in some of its rawest forms (i.e., a focus on synthesizers as opposed to other instruments, a propensity towards quantizing everything and eliminating much of a human feel, etc.)

Beyond that, tech as an ~idea~ bolsters the stage personas of these artist types; this includes the visualizations used during live performance, album art, and more. Therefore, it is no surprise that in addition to releasing NFT songs and collections, many of these “early adopters” are riding the waves that allow us to envision a future of the music industry in which web3 plays a major part. With deadmau5’s involvement in numerous VC-backed metaverse projects and even joining venture, in addition to 3LAU’s Royal which last raised a $55mm Series A led by a16z, these folks, in addition to others in a similar sphere, leverage and adopt web3-powered music technology seamlessly. With that, however, they seem to be driving everyone else towards a music industry that many artists don’t seem quite ready for.

Two artists, which happen to be amongst my favorites, illustrated this industrywide polarization back in March. Lane 8 tweeted that he would not be releasing NFTs nor would he be “pandering to the ultra rich” — rather, he’d release his music “the normal way.” Rufus Du Sol replied to this tweet:

Then came some child’s play, like Dillon Francis minting Lane 8’s initial tweet as an NFT, but that’s not worth getting far into. Now, what’s interesting about this particular example is that we’re discussing two artists who operate within a very particular niche of alternative house / electronic music — their fanbases, I presume, are uniquely shared. It’s not unlikely that their shared fanbase was left confused about how to perceive NFTs following this dispute, which therefore puts a significant damper on visions of a world in which artists can be compensated via this type of asset. I think that this is objectively bad.

So let’s break down a few of the most likely concerns implicated within Lane 8’s initial tweet, which seem to need industrywide addressing for the marriage between web3 and music to have any hope:

NFTs are bad for the environment

2. They’re conducive to scams

3. They’re pointless

The first two points here require only brief addressing — the nascent market for NFTs means that we just haven’t quite yet figured out all of the logistics. Environmental concerns surrounding minting NFTs and crypto are not new, as these concerns have driven the Ethereum blockchain to declare that they’d switch to proof-of-stake vs. proof-of-work block production. There are necessary improvements to come, though it should not be ignored that producing nearly anything that a fan might buy doesn’t exactly come energy-free. In terms of the scams associated with NFTs, the market’s unregulated IP environment, mixed with its speculative nature and a particular class of eager consumers, has caused tokens like Squid Game and influencer-pushed SaveTheKids to disappoint and establish less faith in a market with already-wavering uncertainty.

The last point, however, that NFTs are pointless is worth spending significant time on. The production logistics could be there — NFTs could be carbon negative — but if the product itself is pointless? Well, then, let’s not waste our time.

In stripping away any notion of web3 for web3’s sake, what’s left? The value proposition is either pure ownership of something worth owning (one of a kind or not and static or not), or it’s the potential cash flows associated with the future value of the digital asset (what Royal.io is aiming to accomplish). The “point” of the latter seems self explanatory —as a fan, I feel that I am being appropriately compensated for my taste in music and my propensity to tell my friends to stream this music.

But ownership as it relates to NFTs that artists might release as strictly collectibles (excluding IP rights here) is more nuanced. What’s the point? There doesn’t seem to really be one, or one worth selling to those who are not accustomed to “just enjoying” a stamp collection in the solitude of their basements (aka the majority). I believe that collectible digital assets (in the form of audio or otherwise) which disclude IP ownership and its associated positive financial implications do have a place in this world. But if so, very few industry players seem to be focused on true value creation here.

Utility is subjective, but there are certain things that people generally agree are useful — personalized content, 1–1 interactions with the people we look up to (artists), access to likeminded communities, etc. NFTs as collectibles have the potential to unlock these things that really mean something to fans and that fans are willing to pay for.

The true exclusivity factor of NFTs as collectibles is an interesting topic of debate, as the creation of often false scarcity is off-putting to fans and artists who view these things as tools for “pandering to the ultra-wealthy.” I will not dive deeply into this here, however it’s important to note that time and energy is scarce — there are human limitations to just how much good content an artist might release via their NFT-locked Discord server, etc.

I’ve seen companies which make NFT release processes easier for artists or NFT exchanges between fans swifter and better. But I’ve only seen a few companies focused around strictly the utility piece of the NFT — or stop and truly think about why it might be valuable to create this sort of collectible / undergo this endeavor anyway.

I believe that there are incredible opportunities here — but players in the ecosystem (artists, fans, founders, and VCs) must have open conversations and address many of these (warranted) concerns. Only then might we reach an industry-wide consensus on what is and isn’t worth minting and subsequently enable better ways for artists to be appropriately compensated for their work.