Whether they are just the latest iteration of cryptocurrency speculation, or a revolutionary financial development for creators, nonfungible tokens (NFTs) have undeniably spurred a great deal of conversation about the nature and possibility of a new currency system. NFTs use blockchain technology to inscribe a type of digital seal of authenticity on a creation — anything from a work of digital art, to a piece of music or video – thus fixing its provenance, regardless of how many times it is copied or shared. So, it makes possible the online equivalent of owning an original painting (an NFT), rather than a copy or print of it.
While this has resulted in some wild speculation on some unusual — but entirely, verifiably original — digital creations, artists, designers and other sorts of creators are looking at NFTs as a viable way to retain some of the value of their creations once they have been released into the online wilderness.
A number of experts from around Drexel University have been considering some of the questions surrounding NFTs, from their technological feasibility, to their environmental impact and implications for the economy and the business of art. Here are some of the insights they shared with the Drexel News Blog (responses have been edited for length and clarity).
Michelle Lowry, PhD, TD Bank Finance Professor in the LeBow College of Business
Do NFTs have any real value?
Suppose there are two pictures that look identical: would you pay more for one than the other? In the physical world, the answer to this question is frequently yes. To provide one example, most people would value Monet’s original painting more than a copy of the same painting that was done by an unknown artist.
But would you pay to own the “original” digital copy of a picture (or video), when the “original” looks identical to the copy and the copy is free? To provide one example, SNL recently did a skit on NFTs, which anybody can watch for free on YouTube. But one person chose to buy the “original” for $365,000.
Why do you think someone would purchase an NFT?
I suggest four reasons. First, the buyer genuinely wants to support artists. For artists, NFTs provide a way to make a living from the art they are creating. In fact, the artist who created the NFT makes money not only at the time of the first sale, but with each subsequent sale as well.
Second, the buyer is gambling. This is a nascent market, and new markets tend to attract gamblers. Third, the buyer values the unique rights the NFT provides, including for example the right to post the image online or set it as a profile picture. Fourth, the buyer is a genuine collector and sees NFTs as the way to collect the latest form of art. In this scenario, the buyer predicts that he or she will be able to sell the piece for a higher price in the future.
How do you see the NFT market evolving in the future?
The fundamental question is whether the NFT market is the beginning of an entirely new way of collecting art. Or alternatively, this may be a bubble, potentially exacerbated by a pandemic that provides people with exorbitant amounts of time and leads them to buy into items with little to no real value.
At this point, we can only say “time will tell.”
Nick Jushchyshyn, associate professor of digital media and director of Westphal College of Media Arts & Design’s Virtual Reality & Immersive Media program.
How are you seeing digital artists beginning to use NFTs?
Artists are tapping into NFT technology to enhance the value of their work and take their creations to market in much the same way that a traditional artist working with paint or other real-world mediums can offer their original works for sale through a traditional gallery.
NFTs are an authentication mechanism for digital information, including digital artwork. In the way that an original painting, sculpture, print, or such, can be copied through photography and mass printing — but only the original can be authenticated and be exhibited in a museum or prestigious collection — NFTs are being used by digital artists to establish authenticity of an original creation, which can carry a much higher economic value than an arbitrary copy. This offers digital artists a relatively new means to offer their works for sale in a way that cannot be diluted through simple file duplication.
What are the challenges of monetizing and protecting creative work in digital media?
One of the biggest challenges traditionally faced by digital artists has been the ease of which their work can be duplicated and distributed over the internet without compensation. Once a file has been duplicated, there may be no distinction between the copies and the original. This can dilute the value of the original work.
Given the freedom that NFTs could grant digital artists and designers to monetize their labor, how might we see this field change in the future?
I wouldn’t be surprised to see this medium increasingly leveraged by established artists, models, writers and “influencers” that can leverage the value of their established fame and following by offering “limited edition” and original works.
This is really an important step for creatives working in nearly all digital mediums. With NFTs, now any piece of digital creativity can have an established, authenticated ownership and provenance.
What steps do you think need to happen in order to see more widespread use or integration of NFTs throughout the industry?
Currently, NFTs are not particularly difficult to generate, but it’s not something that is as easy as, say, posting a photo on Instagram or video on TikTok. There is a bit of investment in time and effort, as well as a genuine monetary cost. These hurdles can be intimidating for some artists new to the medium, particularly if they are unsure of the market for their work.
As the use and popular attention of NFTs increases, we’ll likely see more artists interested in leveraging the technology, but at the same time, the popularity can drive up the costs.
Robert Weitzner, an assistant teaching professor in Westphal College of Media Arts & Design’s Music Industry program, and founding director of the American Association of Independent Music.
Which artists are you seeing having success in using NFTs?
According to various reports, there has been over $60 million in music NFT sales since June 2020 with 92.5% of that ($55.7 million) occurring during the two-month period of late February through late April ’21.
About 150 artists and music brands have sold NFTs during the past year, so the use cases are exceptionally small and relegated mostly to artists that occupy the head of the tail. Cherie Hu, an industry analyst has done some good work compiling and analyzing the activity dataset. The following table comes from her research:
| Artist name | Total primary music NFT sales | Number of NFTs sold | Average price per NFT |
| 3LAU | $17,464,687.85 | 5,900 | $2,960.12 |
| Grimes | $6,340,645.70 | 1,122 | $5,651.20 |
| Steve Aoki | $4,265,988.88 | 1,215 | $3,511.10 |
| The Weeknd | $2,293,471.80 | 3,758 | $610.29 |
| ODESZA | $2,121,460.88 | 1,080 | $1,964.32 |
| Gramatik | $1,595,659.00 | 823 | $1,938.83 |
| Zedd | $1,526,397.71 | 1,331 | $1,146.81 |
| Snoop Dogg | $1,808,864.00 | 4,054 | $446.19 |
| deadmau5 | $1,714,365.79 | 6,944 | $246.88 |
| Don Diablo | $1,462,846.00 | 2 | $731,423.00 |
The argument for keeping streaming prices low centers around preventing piracy, how might NFTs offer an alternative?
NFTs, by the very definition of what they are, are theoretically unpiratable in that each instance is unique and not replicable. NFTs derive value from scarcity as opposed to the ubiquity of the stream or download which can be pirated at an exponential rate through digital scale. That said, incorporating NFTs, which to date have been more visually than sonically focused, could provide additional value within a streaming offering and help drive price up – laddering up price is critical to profitable streaming. Spotify, with 158 million paying monthly subscribers is still not bottom-line profitable and has seen ARPU decline to under $5 per subscriber as of its Q1 ‘21 financial results.
How might they affect the ticket sale/resale markets?
We are seeing the beginnings of experimentation with NFTs as ways to unlock or provide VIP experiences. The Kings of Leon NFT package, that included a limited number of Willy Wonka-esque lifetime Golden Tickets of four front row seats to any show, is one such example.
Moreover, the use of the blockchain and smart contracting to create a transparent ownership provenance and embed remuneration could serve to radically alter the secondary market.
Each ticket purchase would be recorded in the blockchain and the subsequent resales would provide for the artist receiving automatic payments – rather than the reseller. So, artists could potentially exert greater power over the sale of tickets and receive the lion’s share of dollars that come from the secondary marketplace.
What steps do you think need to happen in order to see more widespread use or integration of NFTs throughout the industry?
The initial cash grab and hyped level of excitement needs to find an equilibrium point, allowing for the development of sustainable business models to emerge. The fact that there is a revved-up market for auction-based NFTs implies that there must be demand and scarcity. Many of the millions of artists that think NFTs will be their new-found financial savior will likely be disappointed by that expectation. The superstars will benefit the most as they have the largest customer bases to monetize.
Youngmoo Kim, PhD, professor of electrical and computer engineering in the College of Engineering and director of Drexel’s Expressive and Creative Interaction Technologies (ExCITe) Center. (Excerpted from Kim’s “Creating at a Distance” newsletter)
On the value of an NFT…
The NFT craze is the result of applying the physical standards and conventions of high art (particularly paintings, sculptures, and installations) to the digital world. It’s going to go badly.
An original painting by an artist (of any period) is truly unique. Even good copies or prints of it will differ substantively from the original. The original is then a scarce item, which endows its value; some are willing to pay (at times ridiculous sums) to lay claim to that uniqueness. NFTs attempt to impose that uniqueness onto digital artworks — one digital copy can be authenticated as the “original” and thus someone could be the sole “owner” of a digital painting.
But the nature of digital is that everything is exactly copyable, and it is trivial and nearly cost-free to replicate the bits of a digital file (this is the driving force behind the Information Age) — this is not a bug, it’s a feature! NFTs try to graft an artificial scarcity on top of something that’s fundamentally abundant: digital bits. Thus, you may be the owner of an “original” digital painting, but I could have an exact copy of it.
On possible benefit to artists/creators…
First off, there aren’t many artists being paid adequately in the old system, so I can’t believe that sliding the values of the old system into the digital world will fundamentallychange anything.
Secondly, the fundamentals of digital creation introduce new paths to monetization. Successful YouTubers (creators, gamers, and yes, educators) have taken advantage of the infinite replicability of digital content to build large audiences and make a (good) living.
I want artists to be paid, but I want many more of them to earn a living wage. I don’t want a system where a select few get to make millions for their works. If this was the 17th century, perhaps that’s the best way to do it, but there are far more artists than patrons, and very few will find a wealthy NFT benefactor. Creating a fake scarcity bubble with NFTs further encourages the cult of the “superstar” artist.
On the environmental concerns surrounding NFTs…
NFTs impose a hidden cost to all of us: they are bad for the environment. Seriously.
They require enormous amounts of superfluous computation, which requires power, which takes natural resources. I’m not talking about your laptop, rather massive data centers run by corporations, where much computation is devoted to the number crunching required for crypto-currencies and (now) crypto-art. A large data center can match the power consumption of a small/mid-size city.
On the future of NFT/blockchain technology…
The fundamental technology of the blockchain does have many useful applications. I’d encourage creatives to look at capabilities enabled by the blockchain that could lead to different types of works. For example, I could imagine using blockchain/NFTs to invisibly connect different works; perhaps encoding a kind of “puzzle” that could be revealed by exploring multiple pieces of content — the puzzle could be visual, or perhaps link works across different media.
Reporters interested in speaking with Michelle Lowry should contact Executive Director of Media Relations Niki Gianakaris at ng38@drexel.edu or 215.895.6741
Reporters interested in speaking with Nick Jushchyshyn, Robert Weitzner or Youngmoo Kim, contact Britt Faulstick, assistant director of media relations, at bef29@drexel.edu or 215.895.2617.
