NFTs are not a new concept as they’ve been around since the CryptoKitties wave that jammed up Ethereum blockchain in 2017. However, the NFT space has been working on itself silently, and has been improving with every passing day. This became evident when recently, musicians and artists alike began making fortunes from NFTs. What NFTs do is that they allow art appreciators and art collectors to own creative digital works from artists, and more and more artists are taking advantage of this trend.
In the past, individuals and institutions that had deep pockets, long histories or existing connections had massive influence over who would participate in the system. However, new decentralised market platforms welcome buyers and artists regardless of their art establishment’s approval. So, can artists sell their work as NFTs, and how can artists benefit from NFTs? In this article, you will find out the benefits that NFTs have to artists and consumers.
Which Artists Have Benefitted from NFTs?
Among the artists that have sold their work as NFTs include Grimes, Beeple, Ozuna, Kings of Leon, 3LAU among others. Canadian-based musician, Grimes, auctioned several pieces of digital artwork using the NFT platform, Nifty Gateway. She made $6.6 million in the auction. Also, Latin music sensation Ozuna recently sold is album as an NFT, and made $800,000. The American DJ “3LAU’ sold 33 NFTs that were related to Ultraviolet album’s third anniversary and made a whooping $11.6 million. The Kings of Leon released a tokenised album which was released recently. The album so far has raked in $2 million so far.
Benefits to Artists and Consumers
NFTs depend on blockchain technology, the same technology that underlies cryptocurrencies such as Bitcoin, Ethereum, and others. A blockchain is a tamper-proof and trusted ledger that could revolutionize how artists could get paid. There are even platforms that offer their artists a particular share from secondary market sales after the original transaction. What differentiates NFTs from traditional art works is that NFTs’ consumers have little interest in the opinion of established advisors, dealers, and collectors on what to be acquired and at what cost. Here are some of the benefits of NFTs to artists and consumers.
1. Authenticity/Verification of NFTs
Basically, when you purchase an NFT, you are purchasing the ownership of the digital asset. It could be just a single edition, part of many editions, a collection, or could take other forms. What you don’t get in most cases is the copyright to the artwork and its exclusive access. This means that an NFT creator can do what they want with their digital asset.
Also, since the buyer does not get exclusive access to the asset, there could be millions of copies of the same image or gif that are publicly available, but there can only be one authentic ownership of the digital asset. A good example of NFTs authenticity is sports trading cards. There could be thousands of copies of a particular player’s card, but only one card has the player’s signature added to it. That copy is worth more than the others because it is signed.
Furthermore, the use of blockchain technology enhances transparency and traceability of provenance, and makes publicly available the information about previous prices and sellers. In turn, this eliminates the possibility of fraudulent activities in the market. It is only the buyer that can have it, and since they are on the blockchain, they have the token, which means that they have full control.
2. New and Recurring Revenue Stream for Artists
The traditional market for artwork has been limited to stock licensing, print making, and such avenues of selling intangible rights or tangible copies of a work of art. In the last decade, there has been high market saturation which has resulted in artists finding it difficult to sell their work. However, with NFTs, artists will earn their money by selling directly to their fans, instead of the going through the hassle of streaming. Consumers who are interested in technology and art can purchase scarce digital assets from their favourite artists.
Furthermore, NFTs can be a recurring source of income for artists in that they can take advantage of the secondary market by getting a commission from subsequent sales of their NFTs. The NFT format allows artists and the various platforms can include in their works a resale royalty earnings from secondary markets. Nifty Gateway provides their artists a royalty of 10% when their assets are resold. For instance, Beeple earned a lot of money when Rodriguez-Fraile resold the artwork “Crossroad” for $6.6 million than he did when Rodriguez-Fraile purchased the piece of work directly from Beeple for $67,000.
3. Immutability/Preservation of Artwork
The blockchain has all the copyright and provenance details, with even the potential to include a wide array of surrounding information that would be of great use to archivists and historians. For artists who wouldn’t like to draft their agreements, there are standard contracts to use such as the ERC-721. When intellectual property conflicts arise, the NFTs transaction history from all the way back to when it was minted can be audited. This information can provide an unassailable proof of which claims are legitimate.
Whereas physical prints and paintings can deteriorate over time if not taken care for properly, digital artwork will always be in the exact visual condition as it was when it was created. Unlike most licensing agreements, NFTs benefit an artist by retaining full copyright of their works. Because of the unique design of blockchain technology, NFTs are beneficial not only to the artist, but to the consumer as well. Every transaction is recorded on digital ledgers that is available for everyone to see, and cannot be erased, undone or misplaced. Buyers can be able to see a list of all the previous owners, and are guaranteed that the artwork is exactly as sold.
In a nutshell, NFTs have a plethora of benefits that artists and consumers can take advantage of. Artists can benefit perpetually and proportionally as their works circulate in the market over time because one can bake into the terms a percentage-based resale royalty after reselling the work. More so, the fact that the redistributive function can be fully automated makes NFTs beneficial to artists and consumers. NFTs have smart contracts, an underlying technology that has a set of commands which execute themselves without human intervention on the blockchain once the verifiable conditions have been met.
Since the cost of delivering artwork internationally is very expensive, international artists can benefit a lot from converting their arts to NFTs and earn from them without the need of delivering their products physically. Lastly, NFTs instil consumer confidence in an artist’s work and reputation because they can check the NFTs transaction history and know that the prices have not been over-inflated. Whereas physical artworks will always be valued and cherished, digital art will play a key role in the story of art.