NFTs suddenly burst onto the scene and grabbed our collective attention when some of them started selling for millions of dollars. Naturally, the public wanted to understand what they were about, how they worked and if they were just another internet scam. NFTs started popping up, especially in conversations among content entrepreneurs and content creators.
In this article, I’ll share how NFTs work, how some content creators are already adopting NFT business models, the risks involved and the opportunities that abound in the future.
Even though some people believe, wrongly I might add, that we are in an NFT bubble and that NFTs aren’t really valuable things, experts agree that NFTs could be on the precipice of a brand new business model for content creators.
However, before that can happen, more entrepreneurs and creators need to actively participate in the NFT conversation and understand how it could potentially become a valuable business model for them.
What is an NFT?
NFT stands for non-fungible token.
Non-fungible refers to the fact that the token is one of a kind. NFTs represent the digital rights to assets such as audio, video, photos, and more. In this instance, the word “represent” is a crucial part of the definition. For example, let’s say you buy an NFT for an MP4 on Opensea, the biggest NFT marketplace. You’re not really buying the JPEG; you are buying the token, which may include the rights to the artwork or the information inside it. After the transaction, you receive a certificate of ownership which can be verified publicly on the blockchain.
To differentiate between fungible tokens (also referred to as social or community tokens) and NFTs. Fungible tokens can be traded in for one another, and they both possess the same value. An easier way to explain it would be to consider fungible currencies like dollars, yen, or bitcoin. A dollar is a dollar. A yen is a yen. A bitcoin is a bitcoin.
One US dollar in your pocket in Washington is the same (i.e has the same value) as one US dollar in South Africa. Technically, all currencies are NFTs, but we treat them as fungible. For example, all dollars have a unique reference number. However, we don’t find it worthwhile to trade dollar bills with someone.
So you might be wondering, why would anyone pay for an NFT when they can just right-click, save, and use the JPEG however they wish? Because they consider it an investment – they can sell their rights to that digital asset (the picture, audio, or video), which could increase in value in the marketplace. Sometimes, the NFT just has some form of utility important to the buyer.
Unlike other investments, NFTs are usually accompanied by a “smart contract”. This implies that the token is programmable and can actually perform a task. For example, the NFT creator might add in the contract that they collect a royalty every single time the NFT is sold. Such a contract is embedded in the NFT and can be carried out the moment the NFT is sold, depositing the money straight into an account of the creator’s choice.
NFTs provide content creators with more autonomy when it comes to content rights and generating income, therefore enabling creators to maximize their earnings. NFTs also imbue digital creations with extra value courtesy of their limited nature and the fact that they possess unique codes, making them a really lucrative opportunity for creators. Apart from the actual sale, creators can stand to earn more if a buyer resells their work.
One quality that makes NFTs even more special is that the creator is able to decide on the “scarcity” of said NFTs. For instance, an artist might decide to mint just five NFTs. Even though these five might have some similarities, each one is still imbued with its own unique identifier. Therefore, a creator has the capacity to create scarcity for their tokens; they’re also able to establish the demand for their creations.
NFTs Change the Game for Creators
NFTs change the game for artists, musicians and all kinds of creators. At last, they can sell their works directly to a global community. Their new business model eliminates the distributors who are middlemen that typically get a commission and it allows the artists to deal directly and easily with their fans and customers through marketplaces such as Foundation, OpenSea and SuperRare.
Trevor Jones, Beeple and other artists like them, have made millions selling NFTs. Musicians such as 3LAU are developing business models where fans and ultimately NFT owners can access exclusive services such as new music along with tickets to events. Kings of Leon, a popular musical group, earned millions of dollars selling their new album as an NFT.
In the Caribbean, Barbados’ own Singer and Songwriter Shontelle Layne has co-written for fellow Barbadian international artist Rihanna, and other hit-makers like Jason Derulo. In April of 2021, she was the first Black female musician to issue her own high-tech collectables, including a one-of-a-kind single with blockchain-verified authenticity. We had the pleasure of interviewing Shontelle in our studio about the revolutionary work she’s doing with creativity and NFTs in the Caribbean.
Watch the teaser below:
So what about other content creators like authors, podcasters, Twitchers, and YouTubers?
What Creators Need to Know About NFTs Before Getting Started
Given all the information above, breaking into the NFT industry might seem simple and straightforward, however, there are a few things you need to consider:
1. Getting Started
Let’s say that you’re already aware of everything required to mint an NFT. What are the next steps to take? Where do you go from there, particularly if it’s your first time? Your creation might already be a part of the Ethereum blockchain, however, more than putting your work out there, ensure that you look into the NFT community. If you’re an artist who’s looking for guidance, and a place to learn the ropes, there’s no better place to do this than NFT communities.
2. What Can You Offer?
Even though it may be tempting to join the latest NFT art trends, it would be wise to exercise some caution. You need to decide what you can offer. Are you going to go against the tide or not?
With NFTs becoming a new avenue for creativity for both established and new names, more and more people are enthusiastic about joining the industry. However, this also means there’s a lot more competition.
Understanding what you can offer and remaining authentic can help you succeed. Ask yourself these three questions:
- What is it that you’re trying to convey?
- Where do your strengths lie?
- What is your vision?
3. Counterfeiting and Infringement Also Exist With NFTs
Although blockchain technology makes it nearly impossible for an NFT to be tampered with or duplicated, the content that’s connected to it may be subject to infringement.
Unfortunately, some artists have experienced seeing NFTs they didn’t mint, connected with their content. With the prevalence of NFTs and all of their positive possibilities, there will also be scammers and hackers who make use of artists’ works without their permission and place it up for sale on a variety of platforms. One of the most problematic things about NFTs is that the system does not need its users to own a copyright of a work before they can be able to mint the work, leaving the system open to fraud.
Although, you should bear in mind that Ethereum claims that after a transaction has been confirmed, there’s an extremely slim chance that an NFT’s data can be tampered with in order to steal ownership of the work.
How Creators Can Use NFTs for Their Benefit
Content creators can choose to mint an NFT for every separate deliverable such as merchandise discounts, event tickets, insider access, and other perks. It’s also possible for them to bundle these services into NFT memberships and mint several for each level.
For instance, if you’re a podcaster, you could sell an NFT that gives access to exclusive shows. An author could sell access to a book or audiobook. If you’re a YouTuber, you could make a membership package available for sale. A writer could, in theory, sell the rights to their articles. For example, a writer can set up a blog and sell the rights to all the individual articles on the platform. If there are multiple writers or contributors, they can create a page to deliver royalties on every page.
What do Tom Bilyeu, Beeple, 3LAU, Trevor Jones, and Gary Vaynerchuk have in common? They are creators who have used various methods to sell their digital intellectual property, but all in a way that can be scarce and easily proven.
Why is their digital IP considered scarce? They’re scarce because on each project a limited number of NFTs are minted. Once they’re sold, that’s it. They are gone. If anyone misses out, they then have to buy them at a higher value on the secondary market. They’re easily proven because ownership can be easily verified on the publicly accessible blockchain by matching the digital wallet address.
All these features make the new business model for a creator’s intellectual property possible. Never before in history have people had access to a technology that can easily be used to sell intellectual property rights to their fans.
If you still have any doubts or questions, the answer is yes, NFTs are a real thing, and no, the bubble isn’t going to burst. Even though only a small percentage of creators have even experimented with NFTs so far, adoption of the technology is growing rapidly and the opportunities are numerous for content creators.
You do not want to miss out.