nft – Terence Eden’s Blog

How do artists get paid?

@edent — Fri, 21 Jan 2022 12:34:43 +0000

NB: The bit about NFT and smart contracts is at the end.

As I discussed yesterday, being able to resell digital art via an NFT means that the price of art falls to zero. Let's assume that I'm correct and, through a combination of technology and changing social attitudes, no one wants to pay for music, books, films, or art any more.

What are the ways that art and artists could get funded? Here are a few sketched out ideas - they all overlap a little. And then a brief discussion about how smart contracts could solve this - but probably won't.

Patronage

I commission someone to paint a picture or write a book. I can then release it to the public if I want. This is how a lot of public art and statues are funded.

This generally means that art caters to the very rich. This may reduce the choice and inventiveness of the art as it is specifically designed to appeal to an individual patron.

Sponsorship

"And then Harry and Hermione celebrated with a refreshing glass of Coca-Cola."

*shudders*

Of course, product placement is already used to subsidise movies.

Private Works

Lots of performers do "private" gigs. My previous employer once paid Elton John to serenade staff at a private party.

Could I pay James Patterson to write me an Alex Cross book? Or get Jane Campion to make a movie just for me? Sure, if I had enough cash.

This locks other people out of the experience - which, in itself, may be worth paying for.

Elitism

Perhaps only independently wealthy people will be able to afford to create art. If you have no need to make something profitable, you can dedicate your time to making something which appeals to only your tastes.

For a long time, art creation and appreciation was restricted to the wealthy. Do we want to go back to those days?

Hobbyism

The cost of generating art falls to zero, so anyone who wants can do it in their spare time. People may not even care about being paid for what they create.

Is flooding the market with self-published fiction and badly recorded songs a good thing? Does it mean people rely more on taste-makers and trend-setters?

Fan Collectives

The 1,000 True Fans theory states that if you can get a large enough group of dedicated fans, you can make a living. Having 1,000 fans pay £30 per year, would give someone an average income. It then doesn't matter if no-one else pays.

But there's a limit to how many artists one person can afford to be a fan of.

Libraries

An extension of the above. A group of people pay for a library to buy and maintain a collection of books, music, and films. We all pay a small amount, the library tracks what is popular, and pays out on that basis.

This is how Netflix works. And Spotify. And, indeed, regular book libraries.

UBI

If we all have Universal Basic Income, we can spend our time creating whatever art we want. And, if we have spare cash, we can join with others to commission larger works.

But would we choose to create art if there was no profit in it? Would we bother paying artists if we knew they weren't going to starve?

NFTs and Smart Contracts

Suppose you buy a piece of digital art - be it a stupid picture of a monkey, or a book about cheese. Embedded in the smart contract is a clause that a percentage of the resale price goes back to the original author.

For example, a smart contract could say "If you sell your copy of this work, you must pay the author the higher of £1 or 10% of the sale price."

This sets a minimum price for "second hand" digital goods. If the price is set higher than buying directly from the author, it may incentivise people to buy direct.

Limited Releases

The Wu-Tang Clan released a limited edition album - Once Upon a Time in Shaolin. It was a limited edition of just one CD. The buyer is not allowed to play the album to the public - although private listening parties are allowed.

The music industry is in crisis. The intrinsic value of music has been reduced to zero. Contemporary art is worth millions by virtue of its exclusivity ... By adopting a 400 year old Renaissance-style approach to music, offering it as a commissioned commodity and allowing it to take a similar trajectory from creation to exhibition to sale ... we hope to inspire and intensify urgent debates about the future of music. http://scluzay.com (Archive of the original)

Perhaps the final "Game of Thrones" book will be limited to, say, 1,000 single readers at a time. And you'll need to wait for someone to finish reading their copy before you can buy it off them!

Brilliant!

Brilliant?

The central joke about NFT is that they try to impose artificial scarcity on inherently fungible good. My copy of your JPG is bit-for-bit identical in both appearance and utility.

It is often said that the downfall of MP3 piracy was the convenience of iTunes and Spotify. Lots of people are happy to pay a modest sum for music - if it is convenient and reliable.

Could I go to some dodgy torrent site and get a cam of the latest Spider-Man? Sure - or I could pay £6 per month to Netflix and have unlimited everything.

Everyone in the UK has access to a taxation-funded library which gives them access to most books. Or they can pay a subscription to a private company like Amazon.

The key with all of those is breadth of choice, low price, and ease of use.

If prices go up, or services become too fragmented, people return to piracy.

If an piece of art is locked down, it will be trivial to copy it and then either give it away or sell it. And so the cycle continues.

What's the solution?

I want more art by more diverse artists. I think the world is moving to a model of collective micropayment patronage clustered around a few big players.

Small-time artists will benefit from the discovery of being on the big platforms. Maybe they'll go viral and make money - but most likely they'll get dribs and drabs of income. People will still steal their content.

Dedicated fans of small-time artists will buy direct. Better profits for the artist, and a sense of satisfaction for their fans. Some fans will still steal their content.

Extremely large artists will, eventually, become annoyed by the limitations of the big platforms and try to go independent as well. The network effects will be too strong, and the non-dedicated fans will just steal their content

The future ain't what it used to be!

NFTs means the future value of art is zero

@edent — Thu, 20 Jan 2022 12:34:00 +0000

At the moment, it is not possible to sell a 2nd hand eBook or MP3. This seems fairly reasonable because a re-seller might keep copies of their original files after selling them. This would allow the re-seller to undercut the original publisher and sell the file multiple times.

We tend to label this "Piracy". Someone buys a DVD, rips it, then either sells or gives away copies.

The Blockchain book that I'm reading suggests NFTs as a way to combat this (stop giggling at the back). Let's say that we replaced every MP3 player with an NFT player. You load your file onto your NFTman, sign in with your wallet, and it checks whether you have the rights to play that piece of music.

Later, you decide to re-sell the digital album. Your NFTman refuses to play the files because the BlockChain says you're no longer the owner.

Hurrah! We've created a second-hand market for digital goods!

But, here's the thing… you can only listen to one album at a time. That huge collection of music you have is mostly sitting idle. So why not turn your library into a tradeable asset?

With a CD or vinyl collection, this is impractical. It is physically and logistically difficult to sell things. And if you decide that you want to listen to an album you sold, you have to go through the effort of buying it again.

Digital makes this easy. The digital world is about reducing and removing the friction of the analogue world.

I can buy an NFT album, listen to it, and then immediately sell my copy. The minute I want to listen to it again, I find someone else to buy it from.

People will want to recoup some of the money they spent, and they will probably charge less than a "new" copy. Otherwise, there's no incentive to buy 2nd-hand.

What if, with a click of a button, my music player could find the cheapest seller of The Best of The Beatles, buy it, play it, and then re-sell it afterwards?

The same goes for my Kindle. An NFT eBook reader can go online buy a book and then sell it the second I finish it.

At the moment, I buy a hardback book for £15 and then sell it for £5. So it costs me a tenner over all.

In the future, I could buy an eBook for £15 and then sell it for £14.99.

Given enough competition, this means the price should drop to zero.

Digital copies don't degrade. A second hand MP3 sounds as good as a brand new one. If you want someone to buy your NFT/DRM music, you'll have to charge less than the original seller if you want to recoup any money. You will also have to charge less than all the other resellers. Sure, maybe there's a natural price floor. But it only takes one person to decide that they want to sell their copy for free - and the floor becomes zero.

Think about it this way - you don't charge your friends when they borrow a CD, do you? When you donate a CD to a charity shop, you don't take any payment. Why should it be any different with digital files?

What happens to art when NFTs drive the price down to zero? That what I'll cover in tomorrow's blog post.

An NFT without a Blockchain. No gas fees. No Eth. No gatekeepers

@edent — Sat, 18 Dec 2021 12:34:38 +0000

This is a small proof-of-concept. It relies on PGP - but you could use Keybase, GPG, or any other hard-to-use encryption program.

Background

Suppose you want to support an artist and give them money. That's easy. Most artists take PayPal, bank transfer, or cash. But how can you prove that you've paid an artist for a specific piece of work? That is, in essence, all an NFT is - the seller signing a statement that the buyer has sent them money related to a thing.

Whether that claim can be meaningfully sold on to someone else is outside the scope of this discussion.

The artist's signature

Most cryptographic schemes let a user digitally sign a file. Essentially, all this says is "this string of bits was seen by this user". It cannot say whether the signer was the person who originally created the file.

Here's an example.

-----BEGIN PGP SIGNED MESSAGE-----
I, Terence Eden, created "monkey.jpg" with a SHA512 hash of
123a887f3d5e7f246077eee40d0c073fa5ecad85d5b9bd130a87eb07408…
This token was created at 2021-12-25T01:02:03.5Z
-----BEGIN PGP SIGNATURE-----
Version: 1.2.3

456aae68585c9b176e06792396a08ad9ab92e335940e33c79ab69053a55e4f19…
-----END PGP SIGNATURE-----

Hey presto! Now the seller has a token - the above file - which offers strong proof that they were in possession of that exact monkey.jpg file.

(In reality, this would be a formal schema - JSON, ASN.1, XML, whatever - with lots of metadata. But for these examples, let's keep it simple and human readable.)

The transaction

The sale can go via any medium. Cash in hand, PayPal, bank transfer, or even unregulated cryptocurrency. The problem with Blockchain is that you cannot guard against off-chain transactions. There's nothing to stop me buying an NFT for 100ETH and the seller immediately returning that to me in cash.

Here's how a buyer can create their own "receipt" saying that they purchased the above token:

-----BEGIN PGP SIGNED MESSAGE-----
I, Luke Skywalker, have purchased "monkey.jpg" with a SHA512 hash of
123a887f3d5e7f246077eee40d0c073fa5ecad85d5b9bd130a87eb07408…
And signed with
456aae68585c9b176e06792396a08ad9ab92e335940e33c79ab69053a55e4f19…
For 100ETH
This payment was sent at 2021-12-26T02:03:04.5Z
-----BEGIN PGP SIGNATURE-----
Version: 1.2.3

798a42cec24ff0cc40a9270a645f115c137625e1868563044adb139a1d0a3050…
-----END PGP SIGNATURE-----

The seller can verify the transaction once they have received the money:

-----BEGIN PGP SIGNED MESSAGE-----
I, Terence Eden, have sold "monkey.jpg" with a SHA512 hash of
123a5887f3d5e7f246077eee40d0c073fa5ecad85d5b9bd130a87eb07408…
And signed with
456aae68585c9b176e06792396a08ad9ab92e335940e33c79ab69053a55e4f19…
For 100ETH
To Luke Skywalker
With transaction signature
789a42cec24ff0cc40a9270a645f115c137625e1868563044adb139a1d0a3050…
This receipt was generated at 2021-12-27T02:03:04.5Z
-----BEGIN PGP SIGNATURE-----
Version: 1.2.3

000a7324409938862ff8006291b5471aef8c7ba4732a60e6823e77284d42cf17…
-----END PGP SIGNATURE-----

Ta-da! The buyer now has a chain of cryptographically signed, Non-Fungible Tokens, which shows that an artist claims to have created a file and claims to have received funds from the buyer.

Sure, you can pad it out with a bit more back-and-forth, adding promises to sell, more thorough metadata. You could even use a publicly agreed-on Merkle Tree to add a bit more "trust".

And that's how you mint an NFT with none of the baggage and none of the fees. Easy!

Problems

But there are a few drawbacks with this.

Without a published chain of transactions, there is no guarantee that the artist hasn't sold the same item multiple times.

Without a verified on-chain transaction, there is a risk that either the buyer or the seller may be lying about the transaction price.

Because there are no third-parties involved, there is no opportunity for escrow or complaint resolution.

To be clear - all of these problems are also present in "traditional" NFTs. Buyers have no idea of the provenance of the piece, there's nothing stopping multiple sales of visually identical artworks, scams are rife and smart-contracts are buggy.

But if you want to create an Non-Fungible Token - there's no reason to pay inflated "gas" fees. You don't need any centralised brokers or platforms. You can own your own ledger and be completely decentralised for free.

Web3 should be about you being in control - not endlessly paying micro-transactions to hundreds of gatekeepers.

Update

Siyuan Ma has built a Proof of Concept Chainless NFT

Investing In People

@edent — Mon, 11 Oct 2021 11:34:16 +0000

David Bowie invented the NFT in 1997⁰. The "Bowie Bond" allowed you to directly invest in an artist's catalogue and receive royalty payments based on their sales.

Here's how it worked¹:

You pay money to the artist (Bowie)
Artist uses that money to buy the rights to their back catalogue
Every time one of the songs from that catalogue is sold, or played on the radio, the artist gets paid
Investors receive a share of that payment

It's a primitive "smart" contract². Money flows back to the individual investors.

Imagine if you could do this today. Let's say you want to invest in The Rolling Stones. You can't.

You can invest in Warner Music Group. Which is the corporation which owns the label which controls the rights to the music of the Rolling Stones³. But that means you'd also be investing in bands that you don't like - or may even hate.

Imagine a future where a fan could directly invest the The Rolling Stones. Not just by buying records, concert tickets, or merchandising. But literally buying a percentage of the Stones. When their music gets played, you get money. If their latest record fails to sell, you lose money. You could trade your shares in them just like any other share.

What perverse incentives might this produce?

Obnoxious Evangelist. You know those dudebros who derail every online conversation with how great Tesla is? Now imagine them at every gig. Ew!
Pump and Dump. Hack a load of Spotify accounts, set them all to play Sympathy for The Devil on non-stop repeat. Cash out.
Activist Shareholder. At the shareholder meeting, agitate to replace Keith Richards with Justin Bieber - that'll produce a short term price bump. Albeit at the cost of artistic freedom.

Let's go a step further. What if you could directly invest in the artist themselves? Buy a share of Mick Jagger.

Mick releases a viral video on TikTok? Your shares go up! Revelations about some dodgy behaviour in the 1970s? Your shares go down. Just like Celebdaq!

Cool! But, again, what emergent behaviour might that encourage?

Abuse. If your share price goes down, will rabid fans start harassing the artist?
Shorting. Could you intentionally reduce the share price in an artist by smearing them with malicious falsehoods?
Share washing. Jagger knows a lot of millionaires. Could he get his friends to artificially inflate his share price in order to defraud unwary investors?

Finally, what is guaranteed to send an artist to the top of the charts?

Death.

If you knew exactly when an artist would die - how much money could you make from that?

This is, sadly, the logical end-case for the NFT craze.

Someone who is emotionally invested in an artist - to the point of obsession - is a common trope. Stalker fans are an unfortunate reality for some popular artists. Now mix that with financial investment. Imagine a fan, distraught that their favourite band has broken up and financially destitute because the share price has cratered.

What might that drive them to?

Or, perhaps a syndicate of wealthy investors realise that the cost of engaging the service of an assassin is a low price to pay for a guaranteed Return On Investment. Even if one - or all - of them are caught, the smart contracts can't be rescinded. Code Is Law. As the songs climb the charts and the memorial concert is sold out, all those micro-cents will flow through a tangled network and automatically land somewhere untraceable.

The future is going to get even weirder than we can imagine.

This is a blog post, not a history book. ↩︎
Massively simplified. Go read a more scholarly work if you want more details. ↩︎
Expect backed by law, rather than buggy code ↩︎
Probably. Music rights are complicated. ↩︎

What happens if you steal someone's Good Tweet™?

@edent — Thu, 18 Mar 2021 12:47:28 +0000

Way back in the early days of the Social Web, the writer Cory Doctorow invented Whuffie. Think of it as a way to formalise "upvotes" and "likes" on social media.

Whuffie, a form of digital social reputation, replaces money and is a constantly updated rating that measures how much esteem and respect other people have for a person. This rating system determines who gets the few scarce items, like the best housing, a table in a crowded restaurant, or a good place in a queue for a theme park attraction.

On the surface, it seems like a nice idea. But the last decade of social media has shown how easily it can be gamed and abused. It is trivial to pay for positive sentiment on social media. The crowd upvotes entertaining content more than thoughtful content. Sites like Klout and Kred faded into obscurity because tracking social sentiment across dozens of sites is impractical and inaccurate. The days of getting a book deal and TV series based on your Good Tweets™ are long gone.

And yet...

One of the least useful members of Twitter is "The Numbers Grifter". The sort of parasitic user who steals a popular Tweet and passes it off as their own. Or who takes an image, mislabels it, and passes it off as something sensational.

Hardly high crimes and misdemeanours. At worse, they're depriving someone else of their 15 minutes of Internet Fame.

Except...

Techbros have found a way to monetize content theft like never before. THANKS BLOCKCHAIN! NFTs are a stupid idea - oh, wow, you own a digital receipt in a ledger - and they attract a lot of scammers. People who copy popular images, claim them as their own, and then start selling them:

https://twitter.com/CorbinRainbolt/status/1369433485086195717

And on and on it goes.

What's the solution to this? The hucksters who run various NFT auction houses have no real answers.

The monetary transactions are mostly anonymous - so good luck suing anyone for ripping off your artwork.

The magic of the Blockchain is that you can't delete content from it - so good luck convincing everyone to irrevocably delete the distributed database.

Some NFT galaxybrains suggest that artists mint every single thing they create - in order to prevent others from stealing it. Coincidentally, this makes NFT sellers a lot of money.

NFT is not about supporting content creators. If you want to support your favourite artist - send them money. PayPal, bank transfer, gift vouchers. Anything! Commission them, buy a print, promote them to your friends.

The major use-case of NFT is monetising copyright infringement. It is explicitly designed to be permissionless, untraceable, and profitable for the scammers.

Please don't buy into the lie that it democratises art collection. It's just a rip off.

Stop this digital ownership madness. NFTs are bullshit. And the stupid makes me angry.

@edent — Sat, 20 Feb 2021 12:41:48 +0000

(A hastily written and grumpy post.)

Another day, another Blockchain Bullshit project.

Someone "claimed" one of my Tweets and added it to the Blockchain. I'm not particularly happy about that. Nor am I happy with the hoops I had to jump through to contact the company and remove my work. You can read the whole sorry thread on Twitter. But, mostly, I'm unhappy with this whole scammy "industry".

Now my Tweet is an "NFT" - Non-Fungible Token - tradeable with other people for cold-hard-cash.

This is nonsense. Let's ignore the fact that some random company has taken my copyright and indelibly stored it on a 'chain. Let's ignore that someone else is claiming my content as their own. Heck, let's even ignore that someone else is monetising my content without permission or recompense.

Why can't these people see that digital ownership is a con? The only value these tokens have is in their scarcity. Digital tokens cannot ever be scarce.

What do you get if you "buy" my Tweet? You didn't write it - so you don't have copyright. You don't get an exclusive use of it. And anyone can make their own copy of it!

There are four great big problems with trying to assert ownership of a digital token.

1. Which Chain?

The first is that it is only ownership on that specific chain. What stops someone from starting a new crypto-chain and adding the tokens to that? Just like banks can print money, anyone can spin up a new blockchain project and start minting "ownership" of digital assets. It doesn't mean anything.

Anyone can start a Blockchain-of-tweets. So what's special about this one?

There are dozens of competing "Art Chains". Which one should I register my work to? All of them? One of them? My own private chain?

2. Whose Chain?

The second is that the ownership of an NFT is often tied to a specific provider. One of the examples given in the NFT Bible is that of in-game items. Magic swords and such-like.

At the moment, NFT fanatics claim, you can't sell in-game items. And, even if you could, nothing prevents the game publisher from destabilising prices by flooding the market with millions of "rare" items.

OK, fine. But what happens if the publisher one day shuts off the game? Or refuses to accept your ownership of the token? They are a central publisher. You may be free to trade items - but they are free to refuse to accept your ownership. You're sharecropping with a hostile land-owner.

3. DRM

The third problem is that's not how digital files work! Digital files can be copied. It is intrinsic to their nature. We've had a couple of decades of DRM being defeated within 5 minutes of its release. Every Netflix show is available on dodgy sites in 4K. Trying to make digital files non-fungible is like trying to make water not wet.

Whether it is art, or text, or code, or anything - digital files are copyable. Sure, you may have bought the NFT for a fabulous piece of art - but I have a screenshot of it and it is displayed on my wall. We both get exactly the same utility from it.

If you had the original physical painting of van Gogh's Starry Night - you have something unique! But if you have a JPG of a digital artwork, and I have a JPG of it, what's the difference? Yours is signed on a chain? So what!

4. What does it even mean to own a digital file?

If you own a physical thing, like a CD, you can sell it. Maybe it is an ultra-rare pressing and the price goes up and you make loads of money. Nice.

What does it mean to own an MP3? Nothing! Sure, you could sell it - but you'd also be able to keep a copy. And anyone who has a copy can distribute it for zero cost.

What does it mean to own the publishing rights to the music? Aha! The law will probably grant you a monopoly on being able to monetise the music. But as soon as you restrict supply, users will just start illegally republishing digital copies.

What does it mean to own art on the blockchain? Less than nothing. At best, it is a weak claim that the person adding it to the chain is the original creator. That's nice from a provenance point of view. But so what?

Look - I've been down on this nonsense since a blockchain certified that I painted the Mona Lisa.

In conclusion

I'm tired of this. We know that the allure of vast riches attracts scammers to any industry. But I see no utility in NFTs whatsoever.

I guess if people really want to waste their money on digital Beanie Babies, go ahead. Just know that like GameStop shares, the market is rigged and those pushing this grift are the only ones likely to profit - not you.