Read on Twitter
Sorry to be a hater but as someone who has run a business around collectibles (vinyl records) and worked for independent artists...
...NFTs are just shadow money, generated by artists, passed onto consumers.
...NFTs are just shadow money, generated by artists, passed onto consumers.
Crypto/tech’s consensus anti-DRM, anti-copyright views have boxed some people into a corner where they think the answers to sustaining creative work are financialization and blockchain.
If you’ve ever been a serious collector, you know that there are many distinct sets of buyers in the market. For example:
1. Hobbyists
2. Completists
3. Tastemakers & gurus
4. Financial speculators
1. Hobbyists
2. Completists
3. Tastemakers & gurus
4. Financial speculators
As you ascend this hierarchy, buyers turn into sellers/traders. Dude buying his favorite record on wax for $30 has no intent to sell, completists buy underpriced stuff to sell/trade, tastemakers fund one-of-a-kind acetate purchase by selling, speculators/stores = market makers.
NFTs try to skip straight to step 4, turn all participants into speculators, without any underlying non-financial value. I own a record, records are fun, physical pieces of history embedded in decades of culture. Some are worth $40 to me, worth $0 to anyone else.
Most people in any collectibles market aren’t speculators. Books, records, vintage clothes, furniture. Vast majority of baseball cards ever sold are worth ~nothing, sold to kids as a fun game. That non-financial value has to happen first for a market to be sustainable and deep.
There are, as we’re seeing right now, buyers of NFTs at $$$ prices. But a market where everyone is a speculator, and the asset has minimal underlying non-financial value, is inherently thin (even if you mask it with more financialization via derivatives or otherwise).
And so what you get is shadow money. People buy NFTs because they’re moneylike assets with the potential for returns.
But these things are instantly (well, kind of, blockchain is slow) tradeable and liquid. What is the first thing people will sell when the market crashes? NFTs!
You start to see how art gets hooked into being cyclical — not with the real economy, but with the cycle of carry trades and excess liquidity. If I make art and depend on NFTs for income, I can only earn $ as long as there is excess liquidity available to make stuff moneylike.
That’s bad! Imagine this scenario:
1. Artists get dependent on NFTs
2. Real economy booms (good!)
3. Rates rise, wealth taxes (good!)
3. NFTs crash with decline of carry
4. Less money for artists
1. Artists get dependent on NFTs
2. Real economy booms (good!)
3. Rates rise, wealth taxes (good!)
3. NFTs crash with decline of carry
4. Less money for artists
That’s how shadow money works, it couples non-financial world to excess liquidity, like a drug addiction, and makes it politically/socially untenable to reduce the slosh of liquidity.
This is the thing that all the crypto people get mad at in the first place! “MoNeY pRinTinG!” NFTs depend on the system as it is today!
Truly feel like I’m losing my mind when I read these long takes about NFTs (or similar new moneylike crypto things) disrupting the system. Such a distraction from genuinely interesting ideas about decentralization and resilient networks.
The things that help artists are mostly in the legal and regulatory system. This is not a technology problem.
Three that are top-of-mind for me:
Three that are top-of-mind for me:
1. Increased minimum royalty rates, royalty restructuring.
Model royalties as a minimum wage, with a floor that’s 10x higher than it is today.
Model royalties as a minimum wage, with a floor that’s 10x higher than it is today.
2. Reform and enforce copyright through an anti-oligopoly lens
Copyright lasts way too long (Mickey Mouse) but is only possible to enforce if you’re huge and have $$$$. Advantage accrues to holding companies and incumbents.
Copyright lasts way too long (Mickey Mouse) but is only possible to enforce if you’re huge and have $$$$. Advantage accrues to holding companies and incumbents.
3. Wealth redistribution
You know what’s awesome for artists? All 1000 fans at a show being able to afford a $70 hoodie, a $50 LP. 100 people on the Shopify store last month spending $500 on art for their wall.
You know what’s awesome for artists? All 1000 fans at a show being able to afford a $70 hoodie, a $50 LP. 100 people on the Shopify store last month spending $500 on art for their wall.
Anyways, best of luck to all the NFT holders when the economy booms. I think you will sell your digital files to go on that vacation...
Oh and I should add onto this thread...a long, long time ago in 2010 @fortyfivan and I worked on a concept to have digital purchases of exclusive content in an artist’s own iPhone app. I’m not opposed to digital exclusives! But we were thinking $5, more akin to Patreon prices.
That’s where the scale and money is, that’s where you can hit the sweet spot of the 1990s, when tens of thousands of people bought $12 CDs and net you $3 retail, $8 DTC on tour. All possible (and being done today) without NFTs.
