NFTs aren’t just an exciting new invention for collectors and speculators — they also provide some promising benefits for digital creators
In a previous article, I wrote about how NFTs enable the market for digital collectibles. I’ve also covered how people’s desire to collect in the digital world can be explained by all the same emotional and cultural factors that make us collect in the physical world. Digital collectibles are arguably so similar to physical ones at a fundamental level that there’s no reason why they wouldn’t become an integral part of our lives in the years to come. People wanting to truly own their digital assets just makes sense.
However, for all their similarities, digital collectibles are also different from their physical counterparts in a few key ways. The formats are obviously different, and you can’t hold and touch a digital collectible as you can a physical one.
It’s also important to note that an artist’s work, skillset, and how they express themselves won’t necessarily just “translate” into the digital medium. I’m by no means suggesting that all creators can or should start creating digital work. For the ones who already do or want to, however, but have so far been unable to realize or monetize their work, the digital medium does introduce some interesting benefits.
Most of these new benefits to digital creators already exist in writing, music, movies, gaming, and more, but have only now with the introduction of NFTs become available in the art and collectibles space.
1. Lower barriers to entry
Much like it did for musicians and authors, the digital medium significantly lowers the barriers to entry for creators of art and collectibles. They don’t have the same gatekeepers to deal with as in the analog world. What’s more, they avoid the enormous hassle and upfront investment required to set up the manufacturing and distribution of a set of several thousand physical collectibles, for instance.
From this perspective, digital isn’t just an improvement of the analog counterpart. Being able to sell their work at scale is a completely new opportunity that the vast majority of creators and artists simply didn’t have before. This is proven by the myriad of “generative” NFT projects that have come and continue to come onto the scene, typically with a few thousand unique items for people to collect. Think CryptoPunks, Bored Ape Yacht Club, MoonCats, and Autoglyphs, and go browse OpenSea for many, many more of these kinds of projects.
The natural concern in this regard is that there will simply be too much supply, too many projects fighting for people’s attention and wallets. It’s a legitimate concern and most experts seem to agree that many, if not most, of the NFT projects currently entering the market, won’t be relevant in the future and thus won’t make for good investments.
Tweet from Gary Vaynerchuk, a leading figure in the NFT space
Aside from speculators, this mostly hurts the creators themselves, as even the very best ones will have a hard time getting the attention they deserve. Just as in the book publishing world though, where eBooks and self-publishing have enabled a lot more people to become authors, creators will have to become great marketers as well. However, any creator who puts in the work will get direct access to a huge market, unlike in the traditional world of art and collectibles guarded by publishers, art galleries, retail chains, and other gatekeepers.
2. Easy access to a global market
As with all things digital that are traded online, it’s easy to reach a global market. While you may not be able to market your work to all jurisdictions in the world due to regulatory issues, you certainly have a much bigger market than what you’re limited to based on your local community. Not everyone has easy access to conventions, exhibitions, galleries, or even like-minded people nearby, and even for the ones who do, it doesn’t come close to the scale of the Internet.
Sure, traditional art and collectibles are also traded online, but the prospect of shipping a piece of art worth millions of dollars across the globe is likely to unnerve both the buyer and seller. Furthermore, a physical piece is just more likely to attract buyers who have the chance to see it as it’s meant to be seen, i.e., in person, whether in someone’s private collection, at an exhibition, or at a convention. The digital world levels the playing field and makes art and collectibles equally accessible to everyone, regardless of their location in the world.
3. Automatic royalties
Artists typically have their payday when they first sell a new piece but miss out on any profits made when it’s later traded on the secondary market. Since art typically only gains its true value long after its creation, the lack of royalties has historically left artists with just a fraction of what their work is worth, while making collectors and speculators rich. Many people are surprised by how little even the most well-known artists have actually made in their careers.
Now, instead of that, imagine that artists automatically get 10% or 20% of all future sales of their work. If a piece of work is originally sold for $10k, then later for $100k, and after that for $1 million, the creator who makes $10k in the traditional market now makes $120k with a 10% royalty or $230k with a 20% royalty in the digital market.
This is easily achieved by programming such a royalty directly into the NFT from the beginning, creating much better conditions for creators and artists. The effect of this is further compounded by the ease with which digital artwork is traded on the secondary market, and how active this market already is. Each sale means money in the artist’s pocket, regardless of how much their work is appreciating in value.
4. Convenience for collectors
One of the key selling points, whenever something from the analog world goes digital, is the convenience factor. Not only are digital files are way easier to create, mass-produce, sell, and distribute for the creators, they’re also easier to acquire, exchange, share, store, and bring with you as a collector. And convenience for collectors directly benefits the creators.
Example of a digital collection of various collectibles and artworks (source: Gallery.so/kevinrose)
Think about music on your phone vs CDs, eBooks vs paperbacks, digital notes vs notebooks, etc. The same is true for digital collectibles and art of all kinds. No need for storage space and the right equipment to store your assets correctly. You always have your collectibles with you, directly accessible on your phone or laptop. When you buy or sell an asset, both the transaction and the transfer happen effortlessly, all online, from the comforts of your own home.
Digital and physical collectibles have a lot in common and their popularity can largely be explained by the same fundamental human emotions and cultural drivers. They’re also different though, in some interesting ways that may make the digital versions even more interesting for creators and artists of all kinds.
Lower barriers to entry enable many more aspiring artists and creators to bring their ideas to life and monetize their creations — if their work is well received by their target audience, who creators can now reach directly on a global scale without having to go through the traditional gatekeepers from the analog world.
The NFT technology enables built-in royalties which bring about a much more financially rewarding market than most creators are used to. Combined with the convenience inherent in the digital medium, creators seem to have a much better shot at turning their work into a viable career path.
This article was originally published on Medium.