NFTs are not ready for indie music
There has been so much hype and activity centered around NFTs that I felt compelled to dig in and lay out why NFTs are not ready for indie music.
OK, I’m going to just come out and say it: NFTs are bullshit.
Alright, I feel better already. Now, let me explain why I feel that NFTs have no value for independent music artists. I’ve got 13 reasons for you.
1. You don’t understand them
That’s right, the artists whose content would be attached to the non-fungible token(AKA NFT) don’t understand what they are, how it’s done, or why anyone would want them. Sure, artists are interested in selling NFTs, but they’d never buy one!
2. Your fans don’t understand them
Your fans don’t know what an NFT is, where the value is, or why they should own one. They don’t know what to do with an NFT. In general, NFTs are viewed by the marketplace with huge skepticism.
3. NFTs are confusing!
Do you know how they actually work? How you create one? I’ll admit, I don’t know, and I’ve been trying to figure it out for a while.
4. NFTs are hard to buy
There are many marketplaces where you can buy NFTs: OpenSea, Binance, Nifty Gateway, Rarible… the list goes on and the marketplaces are all different. For most, you need to buy the NFTs with crypto, which most of the world doesn’t own and doesn’t know how to get. And different marketplaces accept different crypto currencies. Many marketplaces don’t accept credit cards.
5. NFTs are inconvenient to buy
Most NFTs are sold as timed drops — a limited quantity are released at a particular date and time and you need to be there at that time in order to buy one — it basically works like an auction. In fact, I’ve tried on a few occasions to buy an NFT, but was unsuccessful. Not to mention, I couldn’t find anything I was interested in owning.
6. NFTs are technically complex
7. NFTs today are all bought as speculation
It’s ridiculous. In May of 2021, this collection of Nine CryptoPunks sold at auction at Christies for $16.9 million! Yes, these little bitmapped images.
8. Your fans aren’t buying music NFTs
When I look at the marketplaces, most NFTs being sold and resold go for four, sometimes five, and sometimes even six figures. Who’s buying them? Not your fans! Most music NFTs today are bought by crypto bros who got into crypto early and rode the wave up. So, buying stuff with crypto to them is like buying with found money — or play money. For an early crypto investor, it’s no big deal to buy an NFT for six figures, because they didn’t actually work to earn that money. The crypto they own just blew up in valuation. Are your fans crypto bros? Probably not, right?
9. There’s a huge potential to lose
Like any speculative asset, your fans could lose big bucks on NFTs. Let me give you an example of the volatility of NFTs. You may be familiar with the NBA’s Top Shot NFTs. They functioned basically like digital trading cards and were cooler than most of the NFTs I’ve seen. A friend of my son’s bought some Top Shot NFTs cheap, then rode the wave up until, at one point, his Top Shot NFTs altogether were worth around $9,000. But today those same Top Shots have crashed in value and are worth only $600. And you don’t really want your fans to buy in at a high price and then lose a bunch of money, do you?
10. Crypto can come with huge fees
There’s a concept with crypto transactions called “gas fees.” If you want to transact in the more popular currencies — like Ethereum — there are a bunch of transactions, calculations, and logs that have to be executed on the blockchain. Computers on the network have to do all that work, and they extract a toll for that work — called a gas fee.
Basically, you have to pay the owners of those computers a fee for them to do the work required to let you mint, sell, or buy an NFT. With big cryptocurrencies like Ethereum, where there are lots of transactions to be done, the network can get very congested, and that drives up gas fees big time if you want to get computers on the network to execute your transaction. It can be hundreds of dollars to mint and buy a simple NFT. That means the gas fees alone can cost more than the NFT you just won at auction.
11. Scammers abound
Right now, NFTs are like the wild wild west. There are lots of scams out there, like people selling NFTs to which they don’t own the rights. And lots of scammers are looking to take advantage of inexperienced crypto buyers. There’s a good chance a buyer — or a seller — can get taken for a ride.
12. It’s a money grab for folks who’ve already got it
NFTs today are mostly an easy money grab by established names. If you’re Steve Aoki or Snoop Dogg and you create an NFT, there will be plenty of folks lining up to buy it in the hopes that they’ll be able to resell it for much more money in the future. Frankly, there’s not much value to the content of those Aoki or Snoop NFTs — it’s mostly a money grab during these wild west times.
13. NFTs are in their infancy
For all the hype about NFTs, we are really in the infancy of the NFT era — we don’t even know where this is all gonna go. It reminds me of the early days of the Internet. I’m so old that I was around when we used our dial-up modems to chat with each other via Compuserve or message via AOL. Eventually, viewing static web pages on a Netscape browser seemed like a huge revolution… and look at where we are now. I expect the same will happen with NFTs.
Which is why I’m actually really excited about the potential of NFTs. They may be bullshit right now, but I expect they will become a significant revenue driver for artists of all sizes in the future.
So now you know why NFTs are bullshit for artists today. But, there’s more! Check out my follow-up video, “NFTs Are The Most Exciting New Revenue Opportunity For Artists In A Decade,” where I discuss why I am genuinely excited about the potential that NFTs hold for independent artists.