The other night, I was chatting with someone. As the conversation went on, we started chatting about NFTs, art, and royalty payments for creators. Mostly, it was them speaking, and me listening. Listening to people's opinions and perspectives on web3, especially those who are not involved with any meaningful parts of web3, changes frequently and is fascinating to observe. The things being said today are saying totally different from a year ago, and even more different from four years ago.
The first topic we touched on was royalties. The topic of royalties is a very difficult one in the present climate. Many marketplaces have made royalty payments optional upon purchase of an NFT, whereas before they were enforced. The number of marketplaces enforcing royalties are unfortunately now the exception, not the rule. Making royalties optional has hurt artists' ability to make a sustainable income, which is one of the huge benefits of using an NFT as a medium for distributing artwork. The power of this in building a creator economy is huge. You only have to browse Farcaster or look at artist royalty wallets to see the number of independent artists who are now making a living thanks to the sale of NFTs and the ongoing royalties from sales. Thinking back to a year ago, this was not a topic of conversation or even on the radar of people who were not involved in web3. So, the fact that they were being talked about during a random conversation is as a huge positive.
We then touched on how the value of NFTs is derived. The perception here was that anybody who creates an NFT is going to make a lot of money. As the conversation moved forward, I was told to create a random NFT, and that would be my ticket to being successful. Their justification for this was the assumption that projects that hold significant value now have always held significant value and were released with the intention of making money. This viewpoint highlights a lot of misconceptions about creating within the space. To me, this highlights the fact that many people outside of the space assume that when a piece was created, it was immediately sold and intended to be sold at a high market valuation. A quote from Exit Through the Gift Shop comes to mind:
"It's not about money, it's never been about money." ~ Banksy
In the relatively short amount of time I have been in the digital creative space, I have experienced quite a lot. When talking about projects with an intention to just make money, the only projects that come to mind are ones that were total rug pulls. The projects that set out with a specific purpose, goal, and vision are the ones that are are still around today, with most forming into companies. If you're reading this and you're like "duh," then great. However, after my conversation last night, it seems outsiders are combining the meaningful projects with the rug pulls, assuming the meaningful projects were created to generate huge income, and this is staining people's perspectives on the space. However, people now know about web3 projects and are talking about them, and no publicity is bad publicity!
As I am writing this, we have some of the most important innovation in the web3 space happening. It genuinely feels like the future is being created right before our eyes. Despite being a global community, it feels local. It feels purpose-driven, goal-oriented, and value-aligned.
To name a few significant events from the past few months: Consensys is suing the SEC, Farcaster is now a worldwide decentralized social media protocol, Gnosis has launched Gnosis Pay, a self-custody bank and decentralized payments network, Highlight has created a platform that empowers creatives and is intuitive to use, and Bright Moments has connected artists and collectors in a way that has never really been done before. The core principles and values of web3 - ownership, security, transparency, and verifiability to name some - are being made accessible to the masses through thoughtful design work and engineering.
Okay, so this has been part rant, part story, but what am I working towards? By this point in the conversation, we had covered royalties and big projects in the space, and the ongoing support for artists creating in the digital arts space, specifically with NFTs. Now to touch on royalties and give some of my opinions here. My experience from the last 24 hours has contributed to these being drafted.
While we were chatting, there was a DJ playing on the television, quite a big DJ playing a Boiler Room set. The music was good. When asked if they would pay 1 cent per listen or play, they immediately said no. Pressing for reasoning on this, it turns out they pay for a Spotify and YouTube premium subscription, and that they are happy to pay for those. These combined currently run at $24 per month.
This got me thinking, how will subscription models work in the future? They need to appeal to the masses and be understandable without a huge gap between what we currently have. Think of the release of the iPhone. Had we just slapped an iPhone 15 in front of people in June 2007, it would've been incomprehensible.
Artists currently get screwed on royalty rates from subscription models; this is something that is widely known thanks to the publicity given to it by significant artists (looking at you, Taylor Swift, for removing all your music from Spotify in protest). So, artists need to get paid fairly for their work being consumed by people. What if the subscription model of the future became credits, almost like a SaaS model? So, if the artist received 1 cent per listen or 1 cent for the whole song listened to (for example, if I only listen to half of the song, the artist receives 0.5 cents), how would this look? A $24 per month subscription would give the listener 2,400 whole-song listens. Artists could configure their rate and charge higher for certain songs - for example, a premium DJ set could be $1 per listen. Then, as a user, I still pay my monthly subscription for access to the service, and once I have used up my credits, I can buy add-on packs or wait a month for them to renew. Some quick research shows that the average person listens to 1.3 million songs in a lifetime. This works out to 14,444 songs per year and 1,203 songs per month.
Taking this a step further, what if the subscription was democratized? From the outside, people see they are paying a subscription. However, the subscription is placed in a pot with all other subscriptions, then this pot is used to support everyone's listening habits. Some people may only listen to 20 songs per month, while others may listen to 3,000 songs per month. The subscriptions would subsidize each other and ideally work out to be equal, or net positive each month. There are some arguments here for an effective/efficient service model to save money on subscriptions, but is that really needed if people are happy to pay a subscription to a platform they only use a few times a month? From my perspective, it comes down to quality. If a platform provides high-quality content, then it is worth the subscription price, even if a couple of months go by with very low media consumption.
All of this culminates in artists being paid more for the work they are creating and contributing to this crazy world we live in. Expecting people to just immediately believe in what we are doing here is difficult; however, shaping what we are doing to suit current trends and moods is something that works. Many apps nowadays do this. This plays to my point earlier about thoughtful design and engineering work contributing to the future of the space. Hopefully, this has been an enjoyable read, and if you made it this far, thank you for reading! Happy building!
