Never mind FTX – Art institutions should still be on the blockchain
The reality is that blockchain technology can still bring significant benefits, especially in the arts. And for those who have been following, 2022 has been a year of incredible normalization for non-fungible tokens (NFT). Simply put, large institutions across various sectors have dipped their toes into Web3.
In November, Instagram announced that creators would soon have the functionality to create and sell NFTs. Apple similarly announced in September that NFTs could be sold in the App Store. Altogether, there are 3.5 billion people (2 billion from Instagram and 1.5 billion from the App Store).
While each of these major institutions has its own quirks and rules, especially the fees associated with using their platforms, the reality is that they are still some of the biggest platforms in the world and will bring millions into Web3.
Related: From the NY Times to the WaPo, the media is wondering about Bankman-Fried
It’s not just the technology sector. Starbucks and JPMorgan Chase recently partnered with Polygon, one of the leading blockchain infrastructure companies, to power their services. While both partnered for different reasons—Starbucks to launch a loyalty program and JPMorgan Chase to facilitate financial transactions—the variety of legacy enterprises boarding the blockchain in serious, multimillion-dollar ways signals that something is afoot.
It is all too easy to throw the baby out with the bathwater and dismiss crypto just because of the fraudulent activity of bad actors, such as FTX and Terra, in recent days. But they presented problems with governance, not crypto or blockchain. Any technology can be misused and abused: We wouldn’t want to hold fiat currency or other asset classes to the same standards, would we?
The arts, especially the performing arts, have not yet recovered from almost two years of theater cancellations and closures — and neither have the artists. Also, the sector was already struggling and in decline ahead of 2020. Artist wages have been falling, not even taking into account the higher costs they incur as a result of changes in the price of education and the supplement. costs they incur just to do their job (eg voice lessons and auditions).
These are serious challenges the sector must tackle if it wants to change its economic and social trajectory. But even beyond the fiscal challenges it faces, a new generation of consumers is emerging with an appetite for different kinds of experiences, from digital assets they can buy and display in their social network to the authenticity and heightened personal connection they want. with the brands they buy from. Just consider a recent Roblox survey of 1,000 Gen Z community members: 73% of Zoomers said they spend money on digital fashion, 66% said they were happy to use virtual brands on Roblox, and nearly half looked to digital fashion brands and designers for clothing that they can experiment with that they wouldn’t otherwise have worn in real life.
This does not mean that consumers want purely digital experiences, but rather that digital becomes a complement to personal goods and services. And that should come as a surprise – that’s how music already is with the combination of streaming and concerts. The differences here are the expansion of digital asset types and the fact that the asset lives on the blockchain rather than a centralized customer relationship management software.
Secondly, the job market for artists has struggled. Although detailed data on performers is difficult to collect, my research using data from the United States Census Bureau’s American Community Survey finds that real wages for performing artists have declined over the past decade. International evidence indicates that a similar pattern holds across countries.
What’s worse, artists have absorbed more costs over these years as well, meaning their disposable income has suffered. Although many artists may stick to their craft because of a love for what they do, the sector will eventually implode if the business model is not changed.
These factors significantly reduce artists’ bargaining power when negotiating contracts. This is why they are generally forced to give up their intellectual property when they sign with a label – giving up their creative content for the benefit of a larger audience. But unfortunately, these deals rarely deliver the economy they promise.
Related: 5 tips for riding out a down market this holiday season
Therein lies the opportunity for arts institutions: to use digital assets to simultaneously expand their consumer base and innovate the way artists are rewarded, giving them economic power.
NFTs are only a means of establishing a line of communication between consumers and institutions with a digital paper trail around intellectual property that ensures remuneration based on agreed terms.
While many art galleries are already starting to work with digital artists, other types of art institutions, such as theaters, can also use NFTs.
The easiest place to start is with ticketing: an opera house can offer tickets as NFTs, and patrons can perform the transaction in a similar way with email and password, but now the NFTs live on the blockchain.
It offers a handful of benefits, such as the ability for patrons to showcase their support for the opera on their digital wallet, while reducing fraud and/or piracy.
Furthermore, the use of NFTs establishes a two-way line of communication between holders and the institution, so that an opera house can provide participants with additional benefits (e.g. photos from the event).
Web3 is not a panacea. It’s just another technology, but it offers the potential to fundamentally transform the way we interact and do business with each other.
It’s easy to get caught up in all the new languages and buzzwords, but an effective implementation of Web3 architecture should ultimately look and feel as simple as what you’re used to. The only difference is that now the technology lives on the blockchain.
Art institutions have much to gain from the strategic use of these technologies. It just requires an open mind and a willingness to put in the hard work with the right partners.
Christos Makridis is the chief operating officer and co-founder of Living Opera, a Web3 multimedia startup rooted in classical music, and a research partner at Columbia Business School and Stanford University. He also holds doctorates in economics and management science and engineering from Stanford University.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.