Artists weigh in on the risks and rewards of hopping the crypto art bandwagon
Artists are striking it rich with NFTs. But in practice, is it truly a game-changer?
On Thursday, Christie's sold a work called Everydays - The First 5000 Days for $69 million US. Beyond vaulting the creator, a digital artist known as Beeple, into the Most Expensive Living Artists Club right behind Hockney and Koons, the sale made history because the piece, an NFT, is the first of its kind to be moved through an old-school auction house.
Over the last several weeks, that term — NFT — has become as unavoidable as it is confounding, as sales in crypto art have boomed, making people millionaires in as much time as it takes to scarf down a grilled cheese. There's the story of an artist from Thunder Bay, Ont. (Mad Dog Jones) earning more than $4 million in one drop — a sales record that was then topped by pop star Grimes, who made around $6 million in a drop days later. Maybe a friend of a friend won't stop bragging about the 800 bucks they made flipping NBA Top Shop packs. And while many an explainer has spelled it out already, here's a slapdash primer on what the heck they are.
NFT: the letters stand for non-fungible token — an item that is, by its literal definition, wholly unique. Ordinary money is fungible; one loonie is worth the same as them all. But trading an NFT of a cartoon cat is not necessarily an equal trade for another. On the surface, it can theoretically be anything digital — maybe a GIF or a song or a screencap of the first tweet ever. But the NFT-ishness of the thing is more than what you can copy/paste in an instant. What's being bought and sold at confoundingly high prices is entirely virtual. It's a bit of information stored on a blockchain — a network that records transactions made with cryptocurrencies (such as Ethereum). And in theory, there it will remain in perpetuity, untouched in all senses of the word. So while anyone could rip a Beeple for their profile pic, this bit of code, an invisible one-of-a-kind sales slip, can never be duplicated. And therein lies its value.
For artists, there's further potential appeal. They can sell directly to a buyer, no gallery (and all its intrinsic strings) required. And when an NFT is added to the blockchain, or "minted," the creator can bake in certain conditions, such as setting a royalty. Every time the piece is re-sold, they get a cut. (Beeple, for example, will earn 10 per cent from future re-sales of The First 5000 Days.) Sounds fair maybe, and yet in the traditional art market, it's virtually unheard of. So for creators, the incentive to hop the NFT bandwagon is more than a bid to get rich quick. It might look like a promise for a whole new paradigm, one that empowers the artist — so long as they can break in.
"At first, I didn't really get it," says Sean Mundy, a Montreal-based photographer and digital artist. In December, he began Googling crypto art when his friends started talking about the boom. The concept really clicked for him when he started thinking of NFTs as certificates of authenticity. But moreover, he saw an opportunity. "If you get your art in with the right collector in the right space, you can basically have another income stream for the rest of your life," he says. "I think it's the most amazing part of this entire thing."
But jumping into NFTs requires more than hitting an "upload" button. There are factors to consider, starting with one practical concern: you've got to pay to play.
So what's the literal cost?
"To mint a piece, it's not the cheapest process ever," says Mundy. When making an NFT, the creator must pony up for something called a gas fee. In broad terms, it covers the cost of the blockchain transaction, but the price isn't fixed, instead fluctuating depending on how many people are using the same network at once (more transactions equals more expensive gas). Factor in the changing value of Ethereum (which is what you'll need to pay for the gas), and the cost is unpredictable. Of the four NFTs Mundy's minted, the first set him back the equivalent of $40 US, he says. Tabitha Swanson, another Canadian artist (typically based in Berlin), entered the NFT space earlier this year; much like Mundy, she was intrigued by the long-term earning potential. Her most recent NFT cost nearly $200 US. "A lot of artists don't necessarily have that disposable income," she says, "and it's not a sure sale either."
But should a piece eventually sell, many platforms will take a commission. SuperRare, for example, the platform where Mundy sells his work, is due 15 per cent. That cut, however, is less than he would give a gallery, which might claim half. "With any investment, you just have to make sure you're not putting yourself in for more than you can afford to lose," he says.
That's not the only toll, though
A single Ethereum transaction requires energy — energy that powers a computational network that ultimately mints a fresh NFT ... and winds up farting out some serious CO2. One frequently cited stat from the Ethereum Energy Consumption Index pegs the average Ethereum transaction at nearly 60 kilowatt hours, or two days of power for an average North American household. That gives Mundy pause. "I'm aware of it," he says. "I try not to mint lots of stuff." Swanson, too, wonders how long the boom can last, considering the environmental question. The platform she uses, Zora, says it paid for a 50-ton carbon offset last week.
About platforms ... how does an artist choose one?
Each marketplace has its own quirks, and depending on what you're looking to mint, the decision is partly a practical one. Looking to tokenize a piece of audio? SuperRare, for example, won't support that kind of NFT — but platforms including Yellow Heart and Zora list work by musicians.
Then, of course, there's the question of whether those platforms want you. While some are open to anyone (Rarible being a popular example), others are more selective, acting as gatekeepers to who, and what, will get attention from collectors. Swanson is using Rarible in addition to Zora, and says she's applied to list on many more, including Foundation and SuperRare. Submitting a request is free, she says, so there's nothing to lose. "Some of the platforms are putting in a lot of effort to highlight artists, which I think is quite cool," she says. "With some artists, maybe they don't have a big following, but the platform will give them some visibility."
Like Mundy, Joren Cull was accepted to SuperRare earlier this year. The Toronto-based illustrator's known for his slightly bent cartoons — digital line-drawn work that's appeared in Pitchfork Media and the New York Times. The platform's curated roster grabbed his attention. (Seeing their artists' massive paydays lured him in, too.) Since joining the marketplace, he's minted six NFTs, and as of March 8, he estimated his total sales at around $20,000 US. One item, a red scribble titled The Million Dollar Line, is being offered at the Ethereum equivalent of exactly that much. As of writing, the current bid is roughly $999,650 shy.
Beyond the lulz, Cull says there's a sincere message behind the stunt. "To me, the line represents the power an artist now has. [...] A single stroke can now change a life and a piece now has a fighting chance to find its biggest fan."
Speaking of putting power in artists' hands ...
While there's always the risk a collector might retract their bid, it's up to the artist when they sell, or if they sell, for that matter; they call the shots on an NFTs initial value. When Swanson spoke to CBC Arts earlier this week, she was holding out for the right bid, an offer large enough to justify her investment. In Mundy's case, he's also represented by galleries (including Galerie Youn in Montreal), and considers the sale price of his non-digital work — limited edition prints of his photographs, for example — when calculating a value he's comfortable with. As of writing, none of the four NFTs he's listed on SuperRare have sold. "I think my work is good," he says, "so I'm just going to let it ride."
What does it take to get noticed?
While Swanson waits for the right buyer, she's doing what she can to put her art in front of collectors. "There's so much on there, it's hard to stand out," she says. And most of the players making headlines entered the space with a significant pre-existing fanbase, whether because they'd been building an online community for years — or because they're already famous. Notoreity, on some level, seems to be crucial.
"I think when an artist mints an NFT, so much of it is just about promoting," says Swanson. (She launched a Twitter account specifically for pushing her NFTs and engaging with the crypto art crowd, for example.) "As someone who works for themselves, we have to not only make the work, but be our accountants, be our promoters, be doing all of the administrative work."
If you're not raking in the megabucks, what makes it worth the investment?
"If I were never to sell anything, obviously I would be disappointed," says Mundy. "But I would say it's a risk worth taking." Like a lot of other artists — photographers, writers, you name it — he's a freelancer working gig to gig, commission to commission. "This basically opened up a completely new income stream," he says.
"As artists, it's difficult sometimes to feel like what you're doing is sustainable," says Swanson. "I'm curious to see how it plays out."
"I could drive myself crazy thinking about how to make a billion dollars on the thing," says Cull. But what he's earned so far has been a welcome spot of compensation. "I've always looked at being a freelance artist as having your hands in a lot of different pots." This pot just has the potential of multiple paydays. (One of his sales is currently listed for 15 times the original price — or nearly $41,000 US.)
"I feel like it's a real blessing in this time with COVID happening and all the bureaucracy that I've had to deal with as a freelance artist," says Cull. "It gives a lot of power and respect back to the artists."