NFTs: Reimagining the Streaming Model for Web 3.0
Posted on Jan 4, 2022There’s a new revolution in digital art, and specificity is at its core. But first, a little history: The notable rise of Napster in 1999 ushered in a revolutionary era of content distribution. Digital content could be shared instantly and infinitely to anyone with sufficient internet. Along with a host of imitators, this peer-to-peer online streaming application forever changed the way digital creators shared their work with the world or, rather, how their work was pirated and shared illegally. Monetization naturally followed, with leaders such as Netflix and Spotify giving fans easy access to their favorite content for a modest subscription fee or a few ads.
But, as creative director and founder of tech PR and communications firm Studio Self Joan Westenberg explains, “The economics of streaming are tough. Platforms like Spotify operate under a business model where the platform operator takes a cut for each stream [and] 70% ends up with the music rights holders.” Add in that pricing for Spotify, Netflix and so on must be aggressively low to attract subscribers and fend off the threat of piracy, and the result is that each play of a piece of content yields only the tiniest trickle of revenue for the creator.
Top performers are still able to make a substantial income through sheer volume, but as long as artists’ original creations are indistinguishable from their digital copies, they’ll never sell for a high price.
What would you pay more for: An original Claude Monet or an incredible forgery so perfect it can only be distinguished by an expert armed with advanced technology? Sure, the forgery looks the same in your wall, but the original is the original! Even if you’re personally happy with the copy, you’d pay extra for the original simply because there’s surely some future buyer willing to pay a premium for the original
For digital art, this is where Non-Fungible Tokens (NFT) come in. Built on the Ethereum blockchain (a cryptocurrency platform whose strength is its ability to do more than financial transactions), an NFT is a unique (non-fungible) label (token) that is perfectly traceable to its origin. To harken back to the art example, I could buy, say, a favorite work from digital artist Lulu Chen along with an NFT created by her to go identify my piece of art. Like the expert Monet forgery, it would look indistinguishable on display, but the NFT would prove that mine was the true original direct from the artist herself. Sure, some people probably won’t go in for the NFT since it doesn’t add any visual value, but a few fans and collectors will surely pay extra for that ironclad guarantee of originality.
To get down to the core, the NFT makes digital art specific again. A copy is a copy and an original is an original.
New Technology, New Revenue Model
The most obvious purpose of NFT-produced specifity is the one we’ve focused on here: identifying the true, original work. As Westenberg puts it, “If you are a diehard fan of the Canadian DJ and producer Deadmau5, you would probably want to own the #1 release of a given track or an album. Or then the #10 release, or #50 — something with a higher intrinsic value that showcases your love for a given artist.”
But content creators and digital enthusiasts are dreaming up new revenue models as well. For example, Mitchell Clark points out in The Verge, some NFTs are structured to pay an artist a percentage every time the NFT is sold or changes hands, ensuring that if the work gets trendy and increases in value, the creator will get their share.
NFTs could also cause a comeback for collectibles. Back in the day, a strong brand could drum up more revenue through special collectible products such as a 20th anniversary re-release DVD of the original Star Wars trilogy. “Streaming effectively put an end to special edition DVD products as one-size-fits-all subscription models were introduced,” says Lawrence Wintermeyer writing for Forbes Magazine. “Today, we consume most of our movies and TV shows via streaming services such as Netflix, Disney+, or Hulu. NFTs offer the opportunity to reintroduce collectible movies and TV shows.”
Everything Old Is New Again
The digitalization of music, TV, and other art gave rise to streaming and made content more accessible than ever before. But something was lost in the process: art was no longer specific. There was no original, first edition album. The song was the song was the song. Today, NFTs change that. Built on blockchain technology, NFTs link unique IDs to digital content, giving ironclad proof that the work is the true original. Just as in the old world of physical art, fans and collectors can once again purchase the artist’s singular original work. Just as in the glory days of albums, VHS, and DVDs, fans and collectors can once again purchase specific, collectible editions of their favorite works.
On the back of the newest of new technology, NFTs are revolutionizing the world of digital art by taking the specificity that historically made physical art special and applying it digital art. The only question now is how far the revolution goes.