Since their emergence just three months ago in February 2021, NFTs - “non-fungible tokens”, or blockchain-based certificates of ownership for virtual or physical assets - have taken off in a way we haven’t seen since - well, the previous crypto boom in 2017.
Non-fungible token, NFT - Explore - Google Trends
On 10 March, a digital artist named Beeple sold an NFT for $69 million, making him the third most valuable living artist, behind only Jeff Koons and David Hockney. The work, ‘Everydays: The First 5,000 Days’ is a collection of crude, satirical gross-out cartoons and sci-fi style illustrations from an artist who had not sold a work for over $100 until late last year. It was bought by Singapore NFT production studio and crypto fund Metapurse, with elevated claims that “This is going to be a billion-dollar piece someday. This has the potential to be the work of art of this generation”. (The artist himself often refers to his illustrations as ‘crap’.)
The response was mixed - and highly polarised. VCs and digital marketers praised NFTs as part of a shift to a “creator economy” of influencers, substacks, and self-productification. Tech-skeptics point out that NFT sales do not exchange ownership of the asset itself, only a link towards it - and are thus ripe for fraud and bitrot. People asked if the exorbitant ecological footprint of blockchain-based technologies was really what we want to be the future of creative production? Was it about art at all: or was it just an asset bubble: thousands of crypto-rich with unfathomable digital wealth seeking something - anything - to spend it on? NFTs weren’t the only strange asset bubble during the corona crisis, as - bored, stuck at home, and extremely online - a generation pumped penny stocks and frantically traded Pokemon cards.
Anil Dash, who created one of the earliest non-fungible tokens, wrote that NFTs Weren't Supposed To End Like This - but of course they were long out of his control.
"So who's winning the battle to define what NFTs mean?"
I got talking to the Audiense team about this question. So many competing narratives circulating - but what did this look like quantitatively? What communities were involved?
We used Meltwater to collect English-language Twitter conversation for two time periods:
- Early adopters: 1 January 2021 - 28 February 2021
- Early mainstream: 1 March 2021 - 1 April 2021
Then used the Audiense tool to visualise the communities present using social network analysis - and dig into their characteristics. Here’s what we found.
A few things to note:
- The first creatives involved are visual artists (23% of the total). It’s a distinctively digital cohort: one community of self-defined “crypto artists”, a little older (age 25-34) who have been involved in crypto for some time - plus cohorts of videogame artists, graphic designers, and people working professionally in a design & illustration.
- The creatives aren’t a ‘contemporary fine art’ audience - with degrees from the RCA gallery representation and coverage in Frieze and Artforum and so on. Instead, their work has a distinctively digital aesthetic informed by videogames and sci-fi movies: neon-lit environments, smooth gradients, and pneumatic curves.
- The investor class is in the discussion from the start (17% of the audience) with two crypto developer & entrepreneur segments (one more bitcoin-focused than the other). The capital for the bubble to inflate is there early on.
- There’s also a substantial proportion of freebie hunters (27% of the audience), looking for “airdrops” (crypto giveaways). These audiences use #NFT hashtags but do not appear actively involved in making or discussing NFTs: instead, it’s a developing world audience (Nigeria, Indonesia, Philippines) looking to benefit from a wealth bubble.
- Overall the audience is very young (47% or nearly half age under 25) and very male (77%)
By late March, the audience has significantly changed.
There were 110,489 members in this online audience that we examined, and new communities had arrived:
- Musicians & Music Fans start talking about NFTs, following the entrance of some big names into this space in March (Calvin Harris releasing an NFT collection; Kings Of Leon generating $2M in NFT sales for their new album)
- Sports Fans also join the discussion. Sports collectibles have been another coronavirus boom sector, as trading cards sold for records of $5.2 million and $4.6 million - and NFT video highlight clips generated more than $150 million in sales in February alone.
- Contemporary Fine Art is now visible as a community - as a more ‘traditional’ art audience who follow institutions such as MoMA, the Tate, the Guggenheim, and art media such as Artnet, Creative Review, and artforum, join the NFT discussion. On 28 March, GQ publishes a feature on how “NFTs are here to stay and the art world is having to catch up fast”
The international giveaway seekers have now exited the NFT conversation, perhaps not having found it as an efficient source of income. The Nigerian tech community present in this audience is a professional one, made up of people working in software, entrepreneurial & marketing jobs similar to the US-focused “Tech Biz & Marketing” segment.
But what’s the story?
What really strikes me about the NFT conversation is how substantially it’s being driven by “indie creatives”. The illustrators and fan artists, the self-published writers, the animators and games artists. Their presence in the NFT conversation indicates that this possibility of finally being able to make real money from their creative work excites them. But is it really happening for them?
As Kimberley Parker pointed out on Medium on 19 April, it’s crucial not to get distracted by the big Beeple numbers: “Most artists are not making money off NFTs.” Noting the lack of robust transaction data from the main NFT marketplaces, she scraped data from OpenSea, the biggest NFT marketplace, to find out what was really going on. “Most NFT sites will recommend you set your sale price at 0.5 ETH,” she reports, “which was about $894 USD on March 19th. The number of Primary Sales that ended up selling for the recommended price was a whopping 1.8%.”
Instead, a third of NFTs sell for $100 or less, and 76% sell for under $500. With transaction fees easily coming in at the hundred dollar mark, the margin of profit is tiny. Her analysis also reveals that the prospect of making art “collectible” is also over-sold: a substantial majority of transactions are first purchases.
For Parker, this is political: “These numbers do not show the democratization of wealth thanks to a technological revolution. They show an acutely minuscule number of artists making a vast amount of wealth off a small number of sales while the majority of artists are being sold a dream of immense profit that is horrifically exaggerated. Hiding this information is manipulative, predatory, and harmful, and these NFT sites have a responsibility to surface all this information transparently. Not a single one has.”
In a gold rush, the vast majority of miners never strike it rich. The money’s in selling them shovels.
But it depends of course what “success” means for these illustration and fanart communities. If lured in by the hope of achieving Beeple-like riches, they’re almost certainly be disappointed. But that may not be the case. Fanart communities have long operated as active and closely-knit groups on Twitter - facilitated in part by the platform’s more tolerant approach to NSFW content! They already had a micro-economy based around commissions and tipping: artists would draw you a custom user icon, or an illustration of your favourite TV or anime character. Price-points are typically at an affordable, <$200 level.
Has this activity just moved online? Is the volume in the NFT space coming not from transformative contemporary art, but sexy pictures of anime girls and humanised animals? Our audience analysis suggests this is likely.
The influx of new crypto money into digital art, then, may not transform the art world in quite the ways that people are expecting. Obviously, it is undeniably impacting the fine art world - particularly galleries like Christie's, who are needing to adapt quickly to sell this new asset class. (Investment and speculation have long been driving forces in the fine art market, of course). But it also seems likely that a lot of volume is occurring in a parallel but quite separate digital art market: one of the individual creators making character-driven digital illustrations and fan-art adjacent work. As on Substack, very few creators may be making a living from it, and only a tiny handful getting rich. But thousands are likely making a few hundred dollars a month. Is this a monetised side-hustle or can it grow into a full ‘Creator Economy’ with a digital middle class? That’s the open question.
About the Author:
Jay Owens is a research director and strategist who works particularly on audience insight, trends and innovation. She works as a freelance consultant helping brands and audiences navigate the volatile media landscape, and leverage emerging consumer needs, behaviours and passions.