An idea entered my head the other night. Why take any advertising money at all, when you can instead sell NFTs associated with your content?
You might be thinking, 'but Juan, NFTs don't produce anything, they are not worth anything. Advertisers are trying to move real products".
It may be true that you can't eat an NFT. But if you've read my previous work on this asset class, I don't think NFTs are entirely meaningless. In fact, I'm starting to wonder if they are a solution to a problem that has plagued content creation for ages.
How do you monetize your content, without compromising its authenticity?
The advertising crisis
For as far as I can remember, there's been a conversation online about the role and influence of ads on content creators. At first, Youtube and Google lead the way with targeted analytics and wide reach.
All the social networks grew by data mining their users and selling that data to advertisers. And for a while, it worked great. In fact, it worked so well that it basically destroyed print advertising and almost killed the legacy media.
This was in the early 2000's I believe and editorials like the NYT had to pivot hard to keep up with the speed of the internet and the ROI of digital ads.
There's a really good book called Merchants of Truth that tells this story reasonably well. Albeit with a bias for the legacy media.
Now I'm no expert in this market but, I'm old enough to remember a time when advertisers were not attacked for having their promotional content displayed on 'problematic' Youtube content.
In fact, I'm old enough to remember an internet era where censorship while occasional, was very rare. That time is long gone, and the advertising model seems to be a crucial vulnerability at play.
You see, at some point, this past decade, 'respectable' media outlets realized that they could effectively cancel their competition, by slandering them in various ways and then using that slander as blackmail against their advertisers.
In other words, If someone made weird content that was popular, and youtube put say, Cocacola ads on it. The competition could potentially get in the middle of that relationship by stirring the online mobs against Cocacola and thus cancel the content creator.
My cultural bias is showing here obviously but it could work in any direction. The strategy is simple:
- Identify a competing content creator, especially one who is disrupting your lead narrative.
- Identify advertisers showing up on their content, as delivered by Youtube, Google, etc.
- Paint the competing content creator as a radical of one sort or another, as unpalatable to the mainstream, as unworthy, and even dangerous to society in some way.
- Then go to those advertisers who were unintentionally funding this content via the mass media platforms, and tell them they need to pull their ads or be slandered as co-conspirators in this radicalism.
- Then, simply profit.
This worked quite well, against Youtube with what's known as the ad-pocalypse. It was tried multiple times and optimized, especially around political news and culture war content.
This, in turn, allowed the 'respectable' legacy media to regain advertising market share, as they had modernized their companies and infrastructure to compete in the digital age. It also allowed this censorious culture to infiltrate social media, installing a lever of power that can be moved whenever necessary to get rid of the problematic plebs.
All of this was possible thanks to the absolute destruction of privacy brought on by the internet, but not simply the internet, the advertising business model of social media.
You see, in order to sell an ad delivery service to corporations and compete with traditional advertising, you need to be more successful in delivering customers to corporations. And what better way to leverage the internet to that end than to know everything you can possibly know about the users of your platform?
This has been Facebook's business model for a long time now. And sadly, it worked.
Privacy was destroyed, (and so was freedom of speech in the digital age as a result.)
To deal with this ever-encroaching surveillance society, people started developing and using ad-blockers. In fact, I'm using one right now that's fairly good. It even stops ads on Youtube. It's more than just an ad-blocker, it's a whole browser, Brave browser.
While it may not be perfect, it's actually quite good. And there are much more hardcore ad blockers out there that strip websites of all kinds of adware crap.
Ad-blockers deliver privacy to users again but have an impact on content creators, legacy or otherwise, who now lack a business model that they can rely on.
Damned if you do, damned if you don't
My main concern here is with content creators. Largely because I believe citizen journalism is the only salvation in this age of corporate collusion and "the great narrative" (said in a Dr. Evil accent).
In other words, the only antidote to lies and propaganda is truth and journalism.
And in the era of Goliath grade of propaganda, it is the small brave, bold content creators that will have to throw the final stone.
But to do that, they need a runway, they need to be able to fund their operations and grow. I've made a lot of content over the past decade. It's a pain in the ass, and if there's money to be made in it, then I didn't get the memo.
Some content creators are very successful, most give up.
The subscription model
Currently, the go-to solution for content creators, if they don't have a product to sell, be it books or T-shirts, is to try and get people to give them money directly.
Unfortunately, donations are simply not reliable. They come and they go, people get passionate about a cause and then forget about it entirely a week later. But subscriptions via debit cards etc work. People forget to unsubscribe or decide not to when they remember. This provides content creators a reliable source of income, independent of advertisers.
However, it has another point of failure, which in some cases has been attacked, and that's the need for banking sector involvement.
Without a bank in the middle, currently, it's not possible to automate payments from thousands of users at a time.
You'd think crypto would be able to solve this, but so far, it has failed. In part because crypto is simply not a currency yet. Not even Bitcoin who's literally legal tender in El Salvador, really functions as a currency in most other places and environments. It is a savings account. And this might continue to be the case for a while.
This model also means that creators need to save the good stuff for the paywall. Containing their best content behind close walls and limiting their growth in exchange for revenue from their top fans.
It is a functional model, but really not ideal.
NFTs: A new business model for content creators.
With all that context behind us (waw, that took a lot of words), enter NFTs.
So first things first. What the hell is an NFT? Ok I'll give you a quick and dirty but functional definition.
NFTs are a new kind of 'thing'. They are effectively a digital object that humans can manipulate, control, trade, and destroy.
These properties are granted by open blockchain systems, mostly Ethereum and Bitcoin. NFTs are tokens, aka units of account on top of a blockchain system, often with a mint of 1 of 1. Making them 'non-fungible tokens' aka NFTs.
These objects are real for all intents and purposes and are by definition associated with content of some sort, often images or 'jpegs', sometimes gifs, or videos. But really it could be any kind of digital art.
The link between the NFT token which lives on any of multiple blockchains, and the content itself can be strong or weak depending on the laziness of the artist.
My NFTs for example are all linked to the art via IPFS (a distributed storage and hash based system), with copies of the original content in multiple places, hashed and authenticated with OpenTimestamps on top of Bitcoin.
NFTs are not, titles of ownership of art, or necessarily a bearer asset to the copyrights of a piece, though they could be.
NFTs are simply (in my opinion) a digital object that's associated with art, and really often part of the art itself.
That's right, NFTs are art.
I really see it this way and I think it will continue to be experienced as such. Especially if the utility and realness of NFTs continue to merge with the digital world and the various platforms. Like Twitter's profile picture NFT service.
NFT collectors buy pieces, sometimes because they love a piece and want to feel like their bought a copy, or want to brag about their control over a piece of limited supply. They also want to know that there might be a global market of potential buyers for the piece, be it now or later on, when its value may be recognized.
While the chances of this happening are low relative to the vast amount of shameless money grab NFTs out there, eventually niche, cult classics, and other truly brilliant pieces will probably be NFT-ed, and thus continue to have a market.
NFTs And Virality
Something that strikes me as a beautiful synchronicity of NFTs is actually the fact that the content itself can be 'right-click saved'. In other words, the fact that NFTs are actually not at all digital rights management solutions is a very, very good thing.
The fact that anyone can screenshot your monkey JPEG and post it anywhere, even their profile picture to troll you with it, is actually an aspect of virality.
In other words, the easier the content of an NFT can spread, the wider its potential market. Thus, the higher the potential price of the NFT token it is associated with.
Do you see what I am saying? The content in this case benefits from the profits that its NFT enables, letting the creator create without concern for advertiser sensitivities. While the NFT benefits from content that is more authentic and true.
And possibly, the more authentic content is, the better it reflects the unconscious unexpressed will of consumers and collectors out there in the world. Thus being more effective as art.
The price of an NFT can grow as a reflection of the virality of its art.
That's my theory about NFTs right now. I may be wrong but, I think we are gonna see a lot more experimentation, especially from content creators.
As a crypto nerd, here are some thoughts on the economics of NFTs, which might benefit creators going forward.
The Economics Of A Valuable NFT
Alright, this part is juicy. Having been there early on in the invention of NFTs, and as a collector of rare frogs myself, I am somewhat of a connoisseur now.
While NFTs are supposed to be non-fungiable, this doesn't actually have to be the case, exactly. For example, you could mind a 2 of 2 NFT. Meaning there are two units of the piece, one to sell now, one to sell later.
In fact, you can successfully mint a few dozen units of an NFT, though the less supply there is, the higher a price you can expect for each. In my experience with Rare Pepes, which really explores this aspect of NFT economics, anything above a couple of hundred units is too much.
The market simply loses trust in the issuer and fear that as the artist you might try to market sell, to cash out actually kills buyer confidence.
Too much supply in the hand of the artist is a buzzkill. So tighten it up, but I think, it doesn't have to always be a 1 of 1.
A supply higher than 1 also gives you some room to experiment and do better price discovery, though there will always be limits to this, by the very scarce and unique nature of NFTs.
In fact, NFTs seem to benefit quite a lot from auction systems, especially thanks to their low supply and low liquidity. Again it is quite difficult to achieve price discovery with a low supply of an asset that moves very rarely. Auctions serve NFTs very well for these reasons.
If I was a content creator looking to explore this, auctioning pieces related to my art would be the way to go without a doubt.
How long of an auction and what kind of auction? good question.
Scarce.City is the way to go, for now, no doubt. They are on the cutting edge.
They do two 2 day auctions and do very effective marketing beforehand.
Blind auctions have their benefits, but so do public auctions that cause bidding wars.
Also, meme-based NFTs are I think, a gold mine, in a way. As a news reporter or content creator in general, memes that are relevant to your audience are going to have a particular kind of pull and power. They are going to be meaningful to a certain audience.
Turning these memes into NFTs is in my opinion a no-brainer. Forget all the generative art NFTs, while their tech is cool, their art is also randomized.
I think as a vehicle to monetize content that's about something other than the NFT itself, NFT memes are probably low-hanging fruit.
Look at rare pepes, after all. They are simply, memes.
Ok, that's enough words for today. Cheers! Let me know what you think.