The NFT bubble has burst, but the value for creators is only heating up – Rolling Stone
The start of The NFT craze was primarily fueled by the new discovery that digital assets could be scarce. The very idea that digital art could be collected and appreciated in value prompted early adopters to bet big in the hope of even greater returns. At the time, CryptoPunks – a collection of unique pixelated punk rock heads and CryptoKitties – a series of digital cats with rare traits – sold for as much as $170,000 each.
People bought NFTs based on speculation, but as in any market, if there is no real tool, it will crash, and it did – hard. The trading volume of NFTs plummeted from a peak of $17 billion in January this year to $466 million in September – a staggering 97 percent drop. Of course, the plunge occurred in the context of post-pandemic inflation and rising interest rates, the same macroeconomic factors that also crushed stocks and crypto.
While the hype cycle has died down, creators, investors and brands continue to invest in NFTs. For creators, it’s all about aligning their own incentives with the fans’. Here are three ways NFTs can unlock real value for creators in 2023 and beyond.
NFTs enable fans to share proof of loyalty
The novelty of discovering an artist or being one of their earliest fans in an effort to show loyalty has always existed, but with NFTs, proof of discovery and attendance now becomes commodity. On platforms, such as Sound.xyz, musicians can debut their music as a set of NFTs, and fans can purchase a song’s NFT stipend to prove they were an early supporter.
Similarly, Ticketmaster has partnered with Dapper Labs to experiment with NFT tickets. These give fans proof of attendance – the modern equivalent of saving your ticket slips. And with social media companies like Meta recently announcing that select creators will be able to sell NFTs directly on Instagram, creators and fans alike now have a way to showcase and sell their collections.
For musicians, NFTs increase the value of music reminiscent of the physical vinyl or CD era that was diluted in the pivot to digital streaming. Only this time, the profits go directly to the artists who can build ownership into an NFT when it is minted – this means that artists can continue to receive compensation in perpetuity after an NFT is sold.
NFTs are creating new paths to independence for artists
NFT ownership can go even further to reward fan loyalty – fans who invest in an artist’s NFT can be rewarded with exclusive benefits such as access to token-gated communities where they can engage in behind-the-scenes dialogue with artists (a virtual backstage pass ) or previews of new songs and cover art. This ability to monetize the artist-to-fan relationship opens up new opportunities for creators to find independence outside of record labels, studios, and middle management.
While major artists have made waves with NFTs — from Kings of Leon to Steve Aoki — independent artists are also finding success with NFTs. For example, indie artist Young & Sick sold an NFT for $865,000 despite only having 27,000 followers at the time, according to Cointelegraph.
According to Stilt findings, Gen Z and Millenials make up 94 percent of crypto buyers and are more likely to store their money in digital assets. As this data-savvy generation comes of age, I expect we’ll see more artists and fans build decentralized economies on Web3.
NFTs provide new financial rewards for players
When we think of creators, we often think of social media entertainers or musicians, but games make up one of the largest verticals in the creative economy. As of 2021, there were 2.7 billion gamers worldwide and 404 million subscribers following the top 10 YouTube gaming influencers.
On Twitch, a popular streaming platform for gamers, 2 billion hours of video gaming were streamed on the platform alone during the pandemic. With so many eyes watching players as they play, they’ve usually been able to monetize their craft through traditional paid sponsorships, product placement, and advertising.
Despite a decline in active users of metaverse games such as Decentraland and Sandbox, we are seeing a new type of game revenue emerge. Unlike Minecraft and Roblox, which have in-game currencies that allow players to access features, Web3 games allow players to access NFTs, which can be bought, sold, and traded on the blockchain. This creates an economy that can benefit the player outside of the game. We see Bored Ape Yacht Club – who launched one of the largest NFT collections in the world – bet big on the gaming space with the production of their own metaverse gaming platform, Otherside.
Novelty and speculation fueled the initial hype around NFTs, but the potential of this “on-chain” technology to provide value to both creators and their fans remains largely untapped. With the brightest minds from big brands from Disney to Starbucks signaling investment in NFT technology, I predict we’ll see a return to NFT hype – only this time I expect NFTs to be more than just a speculative resource.