Forget breaking the internet: NFTs might just be breaking research firm Gartner’s famous ‘Hype Cycle‘ theory.
It feels like we’re experiencing its first four phases – the innovation trigger, peak of inflated expectations, trough of disillusionment, and slope of enlightenment – all at once.
Does that mean the plateau of productivity is in sight? A panel at our Sandbox Summit Web3 Special conference yesterday investigated, moderated by Music Ally editor Joe Sparrow.
Cirkay co-founder Simon Scott and Fanaply CEO Grant Dexter were joined by Global Rockstar head of international Goran Andersson and terrible* CEO Tersha Willis for the panel.
Scott offered a cheerfully gloomy prediction for the near future of the crypto market.
“This is about to come crashing down, which is quite exciting! There’s money to be made, and when things are falling down,” he said.
“All the people who got into it because they were currency speculating – those words DO mean something, and that IS what those people were doing – that’s not seen as being not really relevant.”
“Bitcoin’s at $20k, I reckon that will go to $12k. Ethereum’s at $1,000, I reckon it will floor at $250. We’re about six months before the real crash, and as soon as that happens, for anyone who’s building any real value, it’s going to be great!”
This is a theme that would crop up later in the event, with reminders that while a crash in cryptocurrency valuations may be bad news for the resale value of NFTs bought during earlier boom times, the silver lining is that it could bring down the costs of minting NFTs and developing other web3 things – thus spurring more experimentation.
“The lower the price of Ethereum goes, the better for developers: contract costs, transfer costs,” as Dexter would put it.
The panel was refreshingly blunt about the current demand from NFTs from fans, mind. “I don’t think anyone’s buying from the fan perspective to be honest,” said Willis.
“It still doesn’t have an application in our post-pandemic world… live [music] is too exciting to sit online right now. It’s got some time to go for it to become really easy, really accessible and actually useful. And then we’ll see it become part of the ecosystem of music, with fans and labels and artists.”
Andersson offered another thought that became a running theme of the event: contrasting web3 with the existing music streaming services, portraying the latter as places to find listeners, but the former as (potentially) the way to make sustainable incomes.
“In the beginning of an artist’s career, what’s more valuable is actually to have listeners, and at some point you want to turn those listeners… you don’t want to profiteer, but you want to pay the rent. So when do you manage to turn that to actually generate money?” he said.
“Streaming platforms are not really built for this. You have 100 million tracks on some of these platforms, but there’s no way for an artist to say ‘just listen to me please, and when you like me, start paying me’. That’s one of the things we will soon figure out.”
Andersson also mirrored Scott’s belief that the current negative headlines around crypto and NFTs are no bad thing for the longer term.
“In five years, looking back this will be a correction that was needed because there were people speculating: people that didn’t understand copyright, people who were just profiteering and didn’t have a serious interest in it.”
What, then, will be the realistic use cases for NFTs? Willis talked about the idea of replacing physical products, and tying into live music.
“To mark that you were at a show, you could have an NFT made of you being at that show! I think those kind of things will really captivate fans and bring it into the mass-market,” she said
“We’re just waiting for the hook. We’re waiting for the ‘hit song of NFTs’ to happen that everyone wants. I think that might exist in live… It’s the selfie showing you were somewhere, and in it, and it’s your moment and it belongs to you… but I’ve yet to see someone do it.”
Andersson and Dexter talked about another kind of NFT: fractionalised ownership of rights or royalties from songs. However, both framed it as something that fans would be doing to show (and later prove) their support for an artist, rather than with the expectation of making lots of money.
In his label days, Dexter worked on early Taylor Swift releases, remembering the struggle to get support from radio and media (“country hated it, sort of, pop wouldn’t get involved in it”) but also remembering the devotion even back then of what would become known as her ‘Swifties’ superfans.
“There were a lot of fans that believed in her. Imagine owning an NFT for 0.001% of one of those songs, and owning that NFT and knowing ‘I believed in that artist before anyone else: I understood that artist before anyone else did’.”
The conversation came back to Willis’s suggestion that the music NFTs space needs some ‘hits’, with Scott saying that these ideas will come from music people.
“The hits are going to come from the people in the room who understand the artists and understand the managers,” he said.
“Combine what Tersha’s talking about with a tour pass that follows someone like Fontaines DC on their North American tour, with photos of the setlist, 30 seconds of the soundcheck, all of that bundled into a thing. I think a lot of people would buy that.”
“Give me fractional ownership of ‘This Charming Man’, of that five seconds clip… Or following Ariana Grande backstage at the Grammys live with a camera. I recon a couple of hundred thousand fans around the world would want to do that. The hits live within the creative minds of the people in this room!”
“And Gen-Z!” added Willis, with Scott nodding agreement. “My daughter tells me everything and I just repeat her words,” he joked.
The panel were asked for their advice for an artist, manager or label who wants to get started experimenting with NFTs, but in the right, appropriate way.
Scott said they shouldn’t be daunted by some of the current roadblocks in the process of buying NFTs, offering a vignette from the early days of digital music as evidence.
“When I first downloaded an MP3, it was in three parts as a hex file, and you had to recompile it! Time solves that. 1995 the MP3, 2001 the iPod,” he said, pointing to the six-year gap between the technology’s introduction, and its popularisation.
“2020 the NFT. Probably the world’s running a bit quicker. 2023, 2024?”
Willis pointed out that “not a single artist we work with – over 600 of them – has come to us and asked about NFTs to date” but offered some advice for any that decide to change that.
“It starts with knowing what your fans want and engaging with them on that level. There’s no point making something your fans don’t want. That’s the first thing,” she said.
“A great way to do it is to tie it to a physical product. It alleviates the concerns they [fans] have about owning something. They can have both. They can be the fan in real life and be the fan online, wherever that exists for them.”
“It needs to be coaxed into the mass-market in formats that they’re familiar with, with the same ease. Clicking Apple Pay and three-step buying something and it arrives at your house the next day,” she continued.
“That kind of ease with an NFT, without them having to think about it at all, is what it needs… Fans still haven’t got over the line with trusting it yet. It has to be irresistible to go mass-market.”
Both Cirkay and Fanaply have been trying to tackle this challenge: Cirkay with its digital box sets sold from Shopify stores and paid for using fiat currency, and Fanaply with a few-steps process.
“Phone number, verification code, claim, and a fourth step if you want to use debit or credit to purchase it,” said Dexter. “From the get-go, we saw if you make the experience frictionless and really easy to use, that fans will really enjoy this.”
The panel finished with a question about how to price music NFTs, with a consensus that they should be affordable for the most part.
“There are a few things you can price more expensively for superfans, but it should be fair, and affordable for your fans. It is the first real cementing of your relationship between artist and fan,” said Willis.
“Until then they’re just renting your music on streaming platforms or YouTube. When they make a purchase that’s the first time they invest in you, so for me it has to be really fair.”
Dexter agreed. “Our average price is $30 over three years of sales,” he said. “It should really be within your comfort zone of what you’re [already] offering and what other items you’re selling.”
Andersson too. “This is so new, so we don’t even really know. The crazy prices are probably not going to be leaving any good memories for anyone,” he said.
“The creator of the content needs to be a part of that decision-making. We need to remove the technology from this. We are not selling NFTs: we are selling music experiences, collectibles… that just happen to be part of an NFT.”
Music Ally’s Sandbox Summit Web3 Special was held in association with Cirkay, Fanaply and Global Rockstar, and supported by Tuned Global. You can read all our coverage of the sessions here.
Lead photo by Choong Deng Xiang on Unsplash
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