Optimism For The Future Of Artists Through Blockchain
A look into the potential for blockchain networks to revolutionize the ability for artists to retain control over their creativity and profitability of work.
Main Learning Goal of this Article: Tokenization and Its Benefits for Artists.
An artist by the name of PAK at the end of 2021 generated over 91 million dollars from the sale of his NFT art “the Merge.” Here’s what artists need to know.
To explain how artists are capitalizing on NFTs (Non-Fungible-Tokens), let's first dive into the workings of the overarching technology that is blockchain. In today's current use of the internet. If I wanted to send you an image, I would only be able to send you a copy of that image, not the file itself. This is because the internet we know today (known as Web2), allows us to read and write, but not own.
A blockchain-based internet (or Web3) allows us as users to own and therefore assign value to digital properties by proving immutable ownership. These digital properties can be viewed as assets and one prime example of these assets in which people assign value is NFTs
Why this matters for Artists
Historically throughout the majority of industries of entertainment, young talent is forced to sell their creative liberties to tyrants of the industry if they hope to receive any public recognition and professional momentum. Blockchain provides a decentralized alternative in which artists can retain ownership of their work as well as innovative means of profitability.
One of the most blatant drivers for artists to get into the space is the utilization of smart contracts for royalties. Within the code of the digital property, can be written a royalty that says “X”% of profits from resale will indefinitely be transferred to the creator regardless of the transaction. What this means is that if a photographer sold a photo for 15$ when they’re 18 years old and just starting out their career, and then 20 years down the road became a world-renowned photographer whose picture is resold for 10 million dollars, the code would execute and 20 years later send the 15 percent of that 10 million. This creates an ecosystem in which career artists are rewarded for their creativity and the self-branding that comes with it.
Tokenization and ownership
An additional use case for creators that has a promising future is tokenization. In today's day and age, stock certificates are a close comparison to this new idea of tokens. Stocks represent partial ownership of an organization that has a value associated with it.
Tokenization involves the fractalization of ownership in a similar manner. The difference lies in liquidity that makes tokens revolutionary. Currently cashing out a stock into legal tinder can often be a task full of red tape that can take days if not weeks to fully cash out and see in your bank account. Tokens, being distributed on the blockchain have a conversion rate associated with them in the form of cryptocurrency. This means that rather than waiting an extended period of time to cash out your stock certificate into American dollars, one could almost instantly convert their crypto into whatever currency fiat they desire. To put it simply, imagine a future where you could pay for your groceries at Walmart with shares of Tesla stock.
Creators utilizing tokens to foster community support and engagement
The radical change that exists behind tokens is this idea of fractionalized ownership does not just simply apply to organizations but the ownership of almost anything. Curious how the NFT mentioned above managed to sell for over 91 million dollars, they tokenized it. Instead of one immense investment from a single entity, “The Merge” was broken into 266,445 tokens that all represented partial ownership.
A musician, upon releasing a new song, could tokenize the ownership of it and offer partial ownership to the fans that have supported them along the way. This creates an environment similar to how pokemon and baseball trading cards have been traded with fluctuating values depending on rarity and intrinsic value.
Taking this idea of fostering community a step forward, let's imagine that Drake sells partial ownership of his upcoming album with the promise of those that buy tokens to receive backstage passes into shows as well as the opportunity to listen to the album a month before it drops on major media streaming platforms. This, in turn, creates engagement with his fans cultivating a positive experience that motivates both the investor and the creator to foster community.
Conclusion
As adoption of the blockchain space continues on its journey to a global scale. Increasing numbers of creators and artists will continue to recognize the opportunity that exists within the decentralized ecosystem.
With today's crypto market cap hovering around 1.75 trillion dollars, many artists are pioneering their way into explosive opportunity. Tokens could mean a dramatic shift in the industries like art and music to see control go from centralized record agencies that maintain their vision over the mainstream, to independent artists focusing on the creation of engaging communities.
By establishing communities through tokenization, artists have the unprecedented ability to independently fundraise as well as create meaningful relationships with the fans that support them through their careers.
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