Wednesday, April 28, 2021

NFTs in the news. Case studies. (updated 12.17.21)

 NFTs were in the news in April. The Los Angeles Times had a front-page story. Several articles appeared in the Wall Street Journal. (links included in this post).

In this blog post, I’ll give excerpts from these sources to provide some basics on NFTs and these case studies. (scroll down for most recent additions to this post... UPDATE 12.17.21 -- added commentary by Karla Ortiz... 11.24.21 -- added video clip and cartoon... 5.30.21 added Case Study #11)

What are NFTs?

Let’s start with the basics..

This definition of NFTs is from a page on the Graphic Artists Guild (GAG) website

NFT: Non Fungible Token

“Non-fungible” means something unique which cannot be interchanged, and “token” means something which represents something else. As with the cryptocurrencies bitcoin and ether, NFTs reside in the blockchain. However, similar to real currencies (and unlike NFTs), cryptocurrencies are interchangeable in divisible units. NFTs exist as unique, whole tokens. While each NFT contains a non-transferable identity that can’t be altered, they are extensible – two NFTs can be combined to create a third unique NFT.

Since they are unique, NFTs can “tokenize” digital assets, like artwork, animations, music, digital real estate, and even the first-ever tweet. NFTs permit transactions that are simplified and efficient. Since the data about the NFT is permanently encoded within the blockchain, there is a lower risk of fraud in the NFT purchase transaction. For artists, NFTs permit transactions directly with art buyers, eliminating the middleman. The blockchain metadata fields for an NFT can contain information the artist may want to include, such as their signature, licensing terms, or copyright transfer. Many NFT marketplaces also permit artists to set a resale fee so that as their artwork is sold from buyer to buyer, they receive a passive income.

What is essential to understand about NFTs is that the digital artwork itself does not reside within the blockchain with the NFT.  Instead, the NFT functions as a frame that points to an address for the artwork. Independent reporter Amy Castor writes on financial fraud and cryptocurrencies. As she puts it, “Really, an NFT is simply proof that an object exists.” Unless the artist has explicitly included usage rights or a transfer of copyright as part of the transaction, the NFT does not transfer any rights to the artwork. The buyer of an NFT can’t prevent other people from viewing the artwork, downloading it, or otherwise control that work outside whatever safeguards exist on the server on which the artwork resides.

So, what exactly is the buyer getting when they purchase an NFT? Essentially, the buyer purchases proof of ownership and authenticity – or “bragging rights” – to an original piece of digital artwork. The purchase includes whatever terms or information the artist decides to include within the blockchain data fields. Some artists include copyrights, licensing options, or even printed, signed copies of the artwork to sweeten the deal.”

The GAG website page on NFTs includes sections on “Buyer Beware,’ “Artist Be Aware,” and “To Tokenize or Not,” as well as a link for an NFT resource list.

UPDATE 12.17.21

Concept art Icon Karla Ortiz shared these comments on her public Facebook page... and granted me permssion to add them to this post. Karla has collaborated on film franchises that have shaped pop culture for the last decade. She's also a sought after instructor at workshops and seminars. Esteemed by her peers, she's on the vanguard of aritists raising awareness about fighting for creative rights.. especially as new platforms like NFTs emerge.

(photo portrait of Ortiz below by Greg Preston)

Concept art by Karla Ortiz for Dr. Strange...

Here's Karla in her own words on Dec 15, 2021..

"tl;dr. Are you an artist in the entertainment industry and are being asked to work on an NFT for an IP or project? If you hate em’ just say no. If you want to work on em’ or can’t say no, payments in the nft space are very different. NEGOTIATE for a cut on primary sales (about 70-90% for the artist is the norm atm) and secondary sales/royalties (rates are about 5-15%, and the artist cut is anywhere between 2.5-10 even all 15%).

Ok now for full post.

So I wanna talk about something that I know is heated, but I deeply believe it’s an important conversation for our industry and it’ll help someone eventually. Nft pay breakdowns.

Now I’m not interested in sharing my own personal thoughts on NFTs at the moment. These were exhaustingly discussed a plenty earlier this year, especially on twitter for me. And no, I haven’t done NFTs yet. I’m still learning, still observing, still thinking.

But what I thought would happen back when this blew up early this year is happening little by little, and I suspect will escalate in the near future. More entertainment companies (film, games, etc)  are joining the NFT space. And as artists whose work prospects rely on these companies, we must prepare for what it looks like when these companies join the NFT space. In my opinion, sooner or later we will all be asked to work on an NFT project.

Of course one can turn down a project if one is morally against. But let’s say nfts don’t bother you, or you simply can’t say no due to finances. What do pay structures even look like?

Traditionally we all sign work for hire contracts for the projects we work on. We get paid a fairly small sum up front ( small in comparison to profits) and we never see a dime from initial sales , or any sale of the product in general. Considering the immense impact visuals are to any product, this set up isn’t very fair to workers.

However that is NOT how it works in the NFT space and this is VERY important.

It is important because, however one may feel about the space, it IS very new and extremely malleable. Precedents are being set left and right. And one good precedent being set in the NFT space is how profits are shared. As companies enter the space we want to keep that fair profit share!

In current NFT spaces where art is the only product, the sales happen in two ways:

First you have the primary or initial sale. This is the first sale to the first person that buys your nft. This sale is usually broken down about 70-90% to the artist, the rest to the platforms/team.

Then you have potential secondary sales. Depending on the strength of the smart contract, if your work is resold, folks get automatic percentage cut of that sale. Basically automatic royalties. Now this varies wildly from platform to platform but generally the break down is between 5-15% with the bulk, or sometimes, all of it, going to the artist.

For example, someone sells your nft to another person. You and the platform/team you worked with get 15% of that sale. That 15% is then divided amongst people+team/platform. An acceptable cut for the artist from 15% is 10%. Do note some platforms like SuperRare give artists full royalties too (VERY good precedent)!

Of course all of this varies and is negotiable. You can also ask for upfront money if its a game/IP so you’re paid while you create the artwork. But its still VERY important to get a cut of primary and secondary sales. This pay structure should be the case for any team projects as well, as I believe everyone involved in creating artwork/game/film/whatever, at the very least must get a fair cut of both primary AND secondary sales. Blockchain technology allows for profit sharing to be done easily and automatically, so there’s no excuse for any company to not do so.

These companies are gonna make a killing from your work, and will continue to make a killing out of your work from automatic royalties. That alone is a massive game changer. If all the artists/laborers needed to make these projects happen, set precedents early on, not only can they collectively make the share of profit more equal, it’ll be really hard for companies to keep all the profits later, like how it is now.

In all honesty I doubt any massive corporation will accept such high

rates for artists, even if the project is solely an artist’s paintings. However, we should always push and negotiate for some cut in primary sales and some cut in secondary sales/royalties. A good example for this practice are actor’s unions, who negotiate residuals, basically financial compensation for repeated use of their work. In my opinion, all commercial artists and all entertainment related unions must advocate to get something similar to residuals in any NFT project and do so right away.

So that’s it. Hope this was helpful. Tho I won’t lie, I’m nervous for the potential of online backlash for talking about this. However, I deeply believe, that regardless of one how feels about NFTs, major companies will eventually jump in. As entertainment artists whose sole work relies on these companies, we need to ensure that we are informed on pay, and IF we decide to join, to be informed so we can properly negotiate, advocate for each other and set as many good precedents as we can here. Fairer pay structures would be an incredible thing for all, both in NFT and non-NFT spaces now and in the future.

Alright that’s that. Thanks for making it all the way here. Not much else to say except please be kind to each other, have fun painting and Happy holidays everyone!"

Five Case Studies

Case Study #1


“Who Can Sell a Wonder Woman NFT?”

by Matt Pearce APRIL 14, 2021

Artist José Delbo worked for decades drawing superheroes for Marvel and DC. Now in his late 80s, he had been making money at conventions selling “fan art” of favorite characters. It’s not just for fun.. it’s often the retirement plan for indie artists in comics. Covid shutdown conventions and this income stream. Delbo’s grandson introduced him to NFTs. Here’s an excerpt from the article about what happened next…

“NFTs, or nonfungible tokens, are unique pieces of code that work like electronic certificates of authenticity. NFTs make it possible to buy and sell things like JPEGs of Major League Baseball cards, video clips of NBA highlights, virtual sneakers or even an NFT “flavor” of Pringles crisps using cryptocurrency. Think of it as an electronic deed for an electronic house.

Serious comics fans have spent hundreds or thousands of dollars for Delbo’s superheroes drawn on paper, so why not try the same thing online with NFTs?

The experiment paid off. This spring, as the rest of the world was scrambling to understand the NFT phenomenon, fans paid the equivalent of nearly $2 million for a set of NFTs by Delbo and the two-person artist team Hackatao featuring DC Comics character Wonder Woman.

“I have been able to take my art to a whole new place,” Delbo said on Twitter of his late-career pivot. Delbo’s latest drop, featuring a new, original hero, netted more than $1 million.

Comic artists dreaming of similar NFT paydays may not be so lucky. Especially if their images include highly profitable intellectual property controlled by DC Comics, Marvel or other studios. As the initial thrill of this spring’s NFT craze recedes, the new technology has started exposing age-old tensions between rank-and-file creatives and powerful entertainment corporations over who gets to prosper from a new market. In the comic book industry, that’s not been a fight that many artists win.

Shortly after Delbo’s sale, DC — which like Marvel long has allowed artists to sell original ink-and-paper drawings used in comic books — sent a notice to artists forbidding the minting of NFTs with DC characters.

“As DC examines the complexities of the NFT marketplace and we work on a reasonable and fair solution for all parties involved, including fans and collectors, please note that the offering for sale of any digital images featuring DC’s intellectual property with or without NFTs, whether rendered for DC’s publications or rendered outside the scope of one’s contractual engagement with DC, is not permitted,” said the letter from Jay Kogan, DC’s senior vice president for legal affairs.

Marvel sent a similar notice after artists auctioned NFTs of their original artwork of Marvel characters.

The warnings landed heavily in an industry where crossing Marvel or DC can hobble an artist’s ability to work on high-profile projects.

Popular comic artist Kode Abdo, known as BossLogic, canceled an NFT drop for art themed on the movie “Zack Snyder’s Justice League” after DC became concerned that “NFT projects have made substantial revenues without permission or consideration for studio IP,” he wrote on Instagram.

Jason Schachter, a comic art dealer whose NFT sales of current Marvel artists’ NFT art is thought to have prompted the company’s crackdown, said both Marvel and DC had written letters “asking us to put a pause on selling any NFTs with their licensed properties.”

“It’s not in our best interests to bite the hand that feeds us,” said Schachter, who halted NFT sales to maintain what he says have been good relationships with Marvel and DC. Marvel and DC declined to comment for this story.”…..

…This article also goes into some of the history of IP and comics…

“DC and Marvel have made billions and dominated the comics world by protecting their rights to characters like Batman and Wolverine, marketing the images to millions of fans through comics and movies as well as toys, T-shirts and video games. Those projects, however, are made possible by an army of artists — many of them contractors who don’t receive health benefits and have struggled for decades for greater recognition and creative rights.

“It’s tough to make a living doing comic book art,” said Jimmy Palmiotti, a comic publisher, writer and artist who has worked for Marvel and DC Comics. “There’s no union. There’s no retirement. There’s no parachute. You have to constantly hustle. The companies know there’s a ton of talent all over the world willing to draw comics for next to nothing, and they’re willing to take advantage of it.”

As the first Superman movie began development in the 1970s, it was revealed that the Man of Steel’s creators from the 1930s, Jerry Siegel and Joe Shuster, did not initially stand to cash in from the comic industry’s expansion into a lucrative new market. Industry activism in that era resulted in artists winning the ability to sell their finished pages to fans as collectibles after the publishers put out the comic book.

Some Marvel and DC artist contracts appear to strictly limit even those rights, according to recent agreements reviewed by The Times. One contract said the original “physical” (not digital) art remained the property of Marvel, “but shall be returned to Talent as a courtesy” and allowed to be sold according to Marvel’s art-return policy, “as determined from time to time by Marvel.” Translation: Marvel makes the rules.

DC’s legal rights, asserted in one artist’s contract, appeared to be even more sweeping. While paper original sales are allowed, the artist otherwise assigns ownership of the comic art to DC “and all other rights to exploit the Work in all media now known or hereafter devised, throughout the universe, in perpetuity.”

Many fans may not realize that these labor arrangements are why some comic book artists illustrate covers and major inside “splash” pages on paper, while producing less-important pages digitally. Digital art often can be easier to produce, but paper pages can be sold to collectors once the publishers are done with them. That’s why Batman might get drawn on paper while his butler, Alfred, might get drawn on a screen.

But as more comic artists’ work migrates onto the digital space, some worry this creative right from the print era might disappear.”

Case Study #2


“NFTs the Method to the Madness”

By Jason Zweig March 19, 2021 

This article gives basics on NFTs  including the sale of an NFT of this popular image:

“You’ve heard of nonfungible tokens even if you don’t yet know what they are—because the people buying them sound so crazy. In February, an NFT representing the Nyan Cat video meme, which looks like a feline Pop-Tart dragging a rainbow through outer space, sold for more than $500,000. A video NFT of LeBron James dunking a basketball sold for $208,000. On March 11, an NFT attached to a digital collage by the artist known as Beeple sold at Christie’s for $69 million.

Although such prices are baffling—and may, in fact, be crazy—NFTs could solve problems that have dogged the art world and other markets for centuries. Think of a nonfungible token as a unique digital serial number that certifies the authenticity and ownership history of an associated object.

That information, along with other data, is recorded on a blockchain. This is a ledger, or immutable record, that resides on a decentralized network of computers world-wide. The blockchain technology underpins bitcoin and ethereum, the leading cryptocurrencies. Any of the ledger’s millions of users can instantly verify that the information is accurate and complete.

By connecting the blockchain to art and other creative work, NFTs bring the objectivity of computer code to fields that are notorious for subjectivity. Artists, writers and musicians struggle to find audiences and make a living. Curators, dealers, collectors and art historians bicker nonstop about the quality and value—and the authenticity—of major works.

Consider the French artist Jean-Baptiste-Camille Corot, who was jokingly said to have painted 3,000 canvases, 10,000 of which were bought in the U.S. Is a particular Corot genuine or a forgery? Who were its previous owners? Has it ever been exhibited at a museum or previously sold at auction? Was it ever seriously damaged and extensively restored?

Until now, buyers often had to take the answers to such questions on faith. An NFT, however, can integrate reams of information about an artwork into an authoritative, permanent digital record.

Case Study #3


“Artists Jump into NFTs”

By Kelly Crow April 5, 2021

“An NFT frenzy is raging and artists want in. From museum darlings to digital upstarts, artists across the marketplace say nonfungible tokens could be a game-changer, roiling gallery loyalties and reshaping what creators can demand financially and how they work.

NFTs are tokens that amount to digital certificates of authenticity and allow images that exist only on screens to be traded and tracked.

Top-tier artists like Damien Hirst and John Gerrard already are converting some of their works into NFTs. Now, Urs Fischer is diving in. The 47-year-old Swiss-born artist will offer his first NFT, “Chaos #1 Human,” on Fair Warning, an auction app, on April 11. The animated work depicts a 3D scan of a brown egg and a cigarette lighter slowly colliding and moving through each other. It is part of a new series exploring cultural artifacts through hundreds of NFT pairings of everyday objects that will be capped with one amalgamation of all 1,000 images.

The rest of the art world is still catching up to what NFTs do and how they might transform transactions. Museum trustees said they are adding cryptocurrency to their portfolios—while dealers and art advisers are trying to pinpoint which NFT artists are trendy. Auction houses, early out of the gate, are tacking on classes to teach collectors the ropes. On April 26, Christie’s education arm will hold a three-day online course titled the “Comprehensive Guide to NFTs.”

Case Study #4


“Digital Artist Pak Sells NFT Works for 17 Million”

By Kelly Crow April 14, 2021

“(Artist) Pak maintains a cryptic persona and has declined through a Sotheby’s spokesman to confirm any biographical details, other than to prefer the pronouns “they/them.” It also remains unclear if Pak represents an individual or a group of designers.

Pak’s auction will likely elevate the artist’s profile in traditional art circles. Until now, the artist was best known for The Archillect, a social-media feed Pak designed to be run and curated by an algorithm of artificial intelligence. Even so, Pak is widely known in digital design circles for creating sleek, wryly conceptual artworks that explore ideas about value and ownership, and this latest series, “The Fungible Collection,” explores the NFT world’s market aspects in fresh way

Max Moore, the Sotheby’s specialist overseeing the sale, said, “Some people think there’s a stigma to buying a JPEG, but once you dive into the technology, there is a conceptual sophistication that’s not possible anywhere else in art,” adding, “With Pak, we’re just scratching the surface.”

Mr. Moore said the house broke with auction convention by allowing the artist to sell an open edition—or a conceivably endless supply—of “Cubes,” and nearly 20,000 cubes sold for $500 apiece during a 15-minute time slot on the sale’s first day. That amounted to nearly $10 million on Monday alone. Similar time slots were opened on Tuesday and Wednesday—attracting so much traffic on Tuesday that Nifty Gateway’s site temporarily bogged until the glut of credit-card transactions could get processed. All in, the artist sold 23,598 cubes to 3,080 people for a combined $14 million.

After the cube sale opened, Pak added another twist by saying these NFTs could be “burned," or destroyed and thereby converted from unique art tokens back into the artist’s newly created cryptocurrency dubbed ASH—a crazy-eight value loop that could befuddle traditional collectors but appeal to cryptocurrency veterans accustomed to plying their fortunes into tradable digital coins.

Colin Goltra, a Manila-based executive at a cryptocurrency exchange said he bought cubes and followed the sale, and the artist, closely. He says, “Pak is our Picasso.”

Case Study #5


“What’s an NFT?”

by Nadja Sayej March 17,2021

“Christie’s auction house made headlines last week with a groundbreaking digital art sale—the first purely digital artwork has sold for $69 million. This is the latest craze in the art world, as NFTs, or “non-fungible tokens,” are seeing a gold rush in the art market.

An NFT is a special type of cryptographic token that acts as a digital stamp of authenticity. This digital artwork, called Beeple’s Opus, is created by Beeple (the art moniker of South Carolina artist Mike Winkelmann). It is a collection of 5,000 images, including photographs, illustrations, digital sketches, and abstract 3-D renderings that traces the evolution of the artist over the past 13 and a half years. Noah Davis, a contemporary art specialist at Christie’s New York, calls this artwork as “a kind of Duchampian readymade.”

Now, Beeple is the third-most-valued artist, in terms of auction prices, after David Hockney and Jeff Koons. The artist shared his own disbelief on Twitter. This one NFT sale signals a shift in the art world. “Digital art is a long established medium; however, it wasn’t until the introduction of NFTs and blockchain technology that these artists were able to stake their claim in the art market,” says Davis. “It was a vote of confidence in the artistic community, from both the crypto-art market and the traditional art world.”….

…..One can only buy a NFT, as a “purely digital” artwork, with cryptocurrency. This one is collected through Ether, and its proof of ownership is recorded on the Ethereum blockchain. This completely original digital signature has information recorded and encrypted through its blockchain ledger with numbers and letters and can’t be copied.”

Case Study #6


"The World Knows Her as ‘Disaster Girl.’ She Just Made $500,000 Off the Meme"

By Marie FazioApril 29, 2021

Excerpt: "The name Zoë Roth might not ring any bells. But chances are you’ve seen her photo.

One Saturday morning in 2005, when Ms. Roth was 4 years old, her family went to look at a house on fire in their neighborhood in Mebane, N.C. Firefighters had intentionally set the blaze as a controlled fire, so it was a relaxed affair: Neighbors gathered and firefighters allowed children to take turns holding the hose.

Ms. Roth remembers watching the flames engulf the house when her father, an amateur photographer, asked her to smile. With her hair askew and a knowing look in her eyes, Ms. Roth flashed a devilish smirk as the fire roared behind her. “Disaster Girl” was born.

In the years since Dave Roth, Zoë’s father, entered it in a photo contest in 2007 and won, the image has been edited into various disasters from history, with Ms. Roth grinning impishly as a meteor wipes out the dinosaurs or the Titanic sinks in the distance. Now, after more than a decade of having her image endlessly repurposed as a vital part of meme canon, Ms. Roth has sold the original copy of her meme as a nonfungible token, or NFT, for nearly half a million dollars.

The meme sold for 180 Ether, a form of cryptocurrency, at an auction on April 17 to a user identified as @3FMusic. As with any currency, the value of Ether fluctuates, but as of Thursday, 180 Ether was valued at more than $495,000. The Roths retained the copyright and will receive 10 percent of future sales.

The market for ownership rights to digital art, ephemera and media known as NFTs, is exploding. All NFTs, including the “Disaster Girl” meme Ms. Roth just sold, are stamped with a unique bit of digital code that marks their authenticity, and stored on the blockchain, a distributed ledger system that underlies Bitcoin and other cryptocurrencies.

In the meme hall of fame, “Disaster Girl” ranks alongside “Ermahgerd,” a pigtailed teenage girl posing with “Goosebumps” books; “Bad Luck Brian,” immortalized in a grimacing yearbook photo with braces; and “Success Kid,” a toddler on a beach with a clenched fist and an expression of intense determination.

In an interview, Ms. Roth said selling the meme was a way for her to take control over a situation that she has felt powerless over since she was in elementary school. 

Before making the decision to sell, Ms. Roth consulted “Bad Luck Brian” himself — his real name is Kyle Craven — and Laney Griner, the mother of “Success Kid.”

“It’s the only thing that memes can do to take control,” Ms. Roth recalled Mr. Craven telling her.

“Disaster Girl” memes have spread far and wide. Once, a group from Poland asked permission to use the meme for educational material about a dying Indigenous language. Someone in Portugal sent Ms. Roth pictures of a mural with the meme…..

…..(Now a university senior)…After graduation, Ms. Roth plans to take a gap year before pursuing a graduate degree in international relations. She said she would donate the fortune she has made from her likeness — which is still in cryptocurrency form — to charities and to pay off her student loans, among other things.

When she’s home, she often walks past the lot where it all started and wonders if locals know that it’s a “meme place,” she said.

“People who are in memes didn’t really have a choice in it,” she said. “The internet is big. Whether you’re having a good experience or a bad experience, you kind of just have to make the most of it.”

Ben Lashes, who manages the Roths and stars of other memes including “Nyan Cat,” “Grumpy Cat,” “Keyboard Cat,” “Doge,” “Success Kid,” “David After Dentist” and the “Ridiculously Photogenic Guy,” said his clients had cumulatively made over $2 million in NFT sales."

He said that NFT sales had helped establish memes as a sophisticated art form and “serious pieces of culture.”

Case Study #7


"What do you acquire when you buy an NFT?"

by Margaret Wertheim 5.9.21

Excerpt: "....What is this beautiful, special thing you acquire when you buy an NFT? It is not generally the artwork. Rather, what one is buying is a digital “token” that, strictly speaking, refers to a transaction.

Digging into Foundation’s website, the limitations of NFTs become clear. The site’s “Community Guidelines” state that a collector of an NFT “can’t claim legal ownership, copyrights, trademarks, or other intellectual property rights” to a work. What the buyer acquires is an “NFT that represents the artwork on the blockchain.”

This crypto-jargon is rarely unpacked. In layman’s terms it means that when you purchase an NFT you are literally buying an entry in an online ledger — which is to say data on a “blockchain.” Most often an NFT-affiliated artwork will be a digital file of an image, a video or an animation. The blockchain doesn’t contain this file, or only very rarely. Rather, it contains a link to a database where a copy of the file is stored.

While crypto-art enthusiasts make much of the uniqueness of NFTs, they are unique in the way a bar code is. A bar code is a distinct identifier associated with an object, say a pair of sneakers or a can of sardines. Bar codes enable stores to keep track of inventory; NFTs allow keepers of a blockchain to keep track of transactions about a file.

As to what’s in this file: It may be best thought of as a representation of an artwork. There may well be more than one such representation (just as there are multiple cans of sardines), each with its own blockchain entry and its own NFT. Canadian musician Grimes made several million dollars selling hundreds of NFTs for copies of two short videos with cherub images.

In a sense this is the digital equivalent of a photograph or print that’s part of a numbered edition. One difference with an NFT is that the exact image it links to is probably available online for anyone to enjoy as much as the collector who’s paid thousands of dollars for a token.

Sometimes, NFTs are connected to physical things, as was the case with the disappearing Basquiat. High-end sneakers, expensive streetwear and baseball cards are some of the items now on offer via NFTs, which act here as a kind of ownership certificate. In the spirit of Andy Warhol, I’d like to mint an NFT for a can of Campbell’s soup.

It’s possible the creator of an NFT-affiliated work may also sell its copyright as part of the deal. The Basquiat sellers claimed to be offering “all related IP and copyright in perpetuity.” (IP being “intellectual property.”) Yet this is the exception. Most “minters” of NFTs retain subsidiary rights.

Perhaps the rights NFT collectors most highly value are bragging rights: They can say they “own” a work. Yet their copy has no special qualities aside from its NFT, so under the hood of the hype, the frenzy is about the token, in which there is now a booming secondary market.

It’s hard not to see this as a case of digital tulip fever. Can you imagine paying millions of dollars for a bar code? Then again, perhaps this is the apotheosis of Warhol’s soup can strategies — attributing value to that which seems the most banal.

Art NFTs put me in mind of film auteur Werner Herzog’s distinction between the “truth of accountants” and “ecstatic truth.” NFT mavens wax lyrical about the “authenticity” of these tokens as if they are trading a semi-divine quality, yet the authenticity encoded by an NFT is the same kind encoded by a transaction number on a credit card statement. They are a dressed-up species of bookkeeping. What art needs is less auditing and more ecstasy.

Moreover, there are serious legal issues. Will databases containing NFT-linked files disappear, as Myspace did? Already, defunct links have caused collectors to lose access to files. If an artist or minter forgets the “seed phrase” (a passcode) to their “digital wallet,” they lose access to the proceeds of sales with no recovery path.

And does the minter really own the underlying work, or its rights? Fraud is rife. Scams abound. Misunderstandings, shall we say. The Basquiat sellers seem to have misunderstood basic copyright law.

On April 28, the artist’s estate intervened in the Basquiat offer. “No license or rights were conveyed to the seller,” we learned. The drawing’s owner could not legally reproduce it or reuse it in any way. It all went pfft — there was no legitimate NFT.

So, buyer, beware. The real value in NFTs may well be this: a bonanza for copyright lawyers."

Case Study #8


"The untold story of the NFT boom"

by Clive Thompson 5.12.21

Excerpt: ….It was not quite 4 in the afternoon, and Victor Langlois, an 18-year-old cryptoartist, was at his desktop computer, watching a frenzied bidding war between two art collectors….

…The bidding war began a day earlier, on Feb. 7, on the auction site SuperRare, when an art collector called @thegreatmando1 offered Langlois 15 ETH for his digital painting “The Sailor.” ETH is short for Ether, a cryptocurrency much like Bitcoin. A single unit of Ether can be worth a lot: The day of the auction, 1 ETH was equal to $1,600. That meant @thegreatmando1 had offered $24,000 for Langlois’s artwork. But the sum jumped when another bidder, @yeahyeah, offered 18 ETH, or roughly $33,000. The two bidders pushed the price up and up, until by noon it reached $67,905.92.

Langlois was initially unaware of this remarkable news. He had slept in, after a long evening hunched over his iPad making more art. He only scrambled to check the bidding when a fellow artist pinged him: “Guess who got a $60,000 bid?”

Langlois has an earnest, almost unsettlingly sweet affect; that’s a conscious choice, he told me. (“I decided that because I had this upbringing where people were really mean, I was going to be the nicest person I could be.”) As he watched the bids onscreen, he giggled nervously. “I can’t believe this,” he said. A year ago, he was a broke high school student, living unhappily in his grandparents’ house in Las Vegas, where his grandmother would peek into his bedroom and, he says, dismiss his huge pile of acrylic paintings and colored-marker drawings as “ugly.”

…Langlois isn’t really selling the digital art, though. He’s selling what’s called a nonfungible token, which to its owners represents a unique relationship with the artist and the art. NFTs are digital files created using blockchain computer code, much like the code that makes Bitcoin possible. Langlois’s NFT contains data that points to a copy of “The Sailor” online, as well as data about who currently owns the NFT. It is essentially impossible to duplicate. That means the NFT behaves — in the eyes of a new breed of collector, anyway — somewhat like a physical piece of art. Someone can own it, keep it or resell it to another collector. Langlois’s animation is online for anyone to see, or even duplicate and download. But there’s only one copy of that NFT.

Lately, NFTs have been the subject of countless spit-take headlines, part of a craze that began in December, when the cryptoartist Beeple sold a group of works for more than $3.5 million. By the spring, a dizzying array of digital files — video clips of LeBron James dunking, Jack Dorsey’s first tweet, the “disaster girl” meme — were being minted into NFTs and auctioned off for hundreds, thousands or even millions of dollars. The New York Times itself has participated in the craze: Its technology reporter Kevin Roose created an NFT out of one his columns and auctioned it for a sum worth, on the day of its sale, about $560,000, with the proceeds going to charity.

No one quite agrees on what this gold rush means. If you ask hard-core champions of Bitcoin — the often-libertarian “crypto natives,” as they call themselves — NFTs presage the future of digital property. They’re a glimpse at a coming day when people spend their income on digital items they can trade, resell or hoard as an investment; when government will lose its unique power to mint currency and protect property, because people will instead trust the implacable math of blockchain networks. But there are abundant risks and downsides in this NFT vision, most notably environmental costs. The network Ether runs on requires vast amounts of energy, roughly the same amount per year as Hungary, by one estimate. NFT skeptics also regard the scene as yet more crypto zealotry meant primarily just to keep people talking about cryptocurrencies so that Ether and Bitcoin prices stay high. It looks to them like more empty speculation, the next phase in the decades-long financialization of everything…..

…..For decades, digital artists got little respect. To the tastemakers in the world of fine art, their work seemed more like a commercial craft — could something made with Photoshop, say, really be art? Galleries frequently showed disdain for digital work, as one NFT artist, Android Jones, told me: “It’s just a bunch of gatekeepers.” And why would collectors pay for an image anyone could right-click on and download free?

Then Bitcoin emerged in 2009, proving that with blockchain code you could make digital items that were all but impossible to copy. The first artistic experiments in that vein were made by the New York-based fine artist Kevin McCoy, who became intrigued by Bitcoin and its blockchain soon after its debut. He wondered if it could show the way toward a new revenue stream for creators. McCoy was especially excited by the prospect of decentralization — the blockchain could enable an artist to sell works to fans directly, without the need for an iTunes-like intermediary. In 2014, McCoy, collaborating with the entrepreneur Anil Dash, created an experimental crypto token for a piece of his own digital art. They called it “monetized graphics.” The next year, McCoy opened a small start-up that let artists create and sell tokens of their work. He was met, mostly, with blank stares. “It was a tough grasp for people,” McCoy says

In the spring of 2017, the concept took on new life. Matt Hall and John Watkinson, two programmers in Brooklyn, created a set of collectible characters, little pixelated heads of punk-rock-looking creatures that they called CryptoPunks. (They’re fond of “wacky projects,” Hall told me.) They were unaware of McCoy and Dash’s earlier experiment. But they knew about Ether, then a new cryptocurrency that ran on a platform called Ethereum. That platform had a simple programming language that enabled coders to create new financial products with Ether as their currency. Hall and Watkinson used that language to issue an NFT for each CryptoPunk, figuring that people would be tickled by the idea of possessing little pixelated heads, perhaps trading them like baseball cards.

Like most cryptocurrencies, Ether relies on thousands of “miners” — people running computers all day long, all around the world, to crunch the math for Ether transactions. These miners collectively function as a huge accounting system, in which every accountant keeps the same exact set of books. Each miner records the current location and history of all transactions on the Ethereum network. When you send 1 ETH to my Ethereum wallet, it will quickly be recorded on each of those computers around the world. This makes a transaction in Ether — or one in any similar cryptocurrency — hard if not impossible to fake. If you later try to claim that you didn’t send me that coin, thousands of computers have the records to say, “You’re lying; I own it now.” Blockchain systems like this are decentralized by design; proponents argue that this makes them difficult for any government or corporation to control. It’s also why many of them consume such prodigious amounts of energy, to power thousands of mining computers. Because miners on the Ethereum network earn Ether for running those computers, they have an incentive to keep the entire network up and humming. Cryptocurrency networks like Ethereum are fairly transparent; all those transaction records, from one wallet to another, are publicly visible to anyone. (Visible, but anonymous: Your Ethereum wallet doesn’t have to have your real name on it, which is why criminal enterprises value cryptocurrencies, too.)…

….What sales there were went for small sums. One artist, Coldie, began listing his work in April 2018, and his early sales were for perhaps $100 each. Still, he found the scene gratifying; he had “super-deep philosophical chats” with collectors and other cryptoartists. “I could not have been more happy,” he says. “It was just an artist and a collector having a relationship.” Did he know that his stuff was worth more money? “Hell, yeah — but, like, market value is what you sell to.”

By the middle of 2020, prices were soaring. Another record-setter was Matt Kane, a former painter who had become disillusioned with traditional galleries and spent the late 2000s and early 2010s teaching himself coding and web development. He wrote custom software to help him make intricate digital paintings. In May 2019, he released his first works on SuperRare, a series based on the grief he felt after a friend’s suicide. His early NFT sales were meager; one collector bought an artwork for $85 and sold it the next week for a profit of $59. “He flipped it for 60 bucks!” Kane told me, incredulously.

But by September 2020, he had toiled for months on something even more ambitious, a piece of abstract art whose composition changed based on Bitcoin’s price. One of his first collectors — who called himself Token Angels and came from a family that collected art — had pressed him for the auction date, offering to pay whatever Kane wanted. “I told him that I thought $100,000 made a good story,” Kane says. To his surprise, Token Angels agreed. That price set another record and acted as a sort of psychological release: If people would pay six figures for a digital file, was there any limit?

Ever since Bitcoin’s appearance in 2009, blockchain enthusiasts have claimed that its capabilities would revolutionize industries. Soon, they promised, everything from medical records to stock markets to agricultural inventories would use the blockchain. But little of this happened. Instead, the first popular digital application — outside cryptocurrencies themselves — was for buying and selling trippy, loopy digital images. “It does feel like we’ve discovered some behavior that we didn’t quite know was there before,” Hall says….

….Who exactly is paying such sums for an NFT? Generally, they are young men who have invested in cryptocurrencies for years and seen those holdings reach many millions in value. One of Langlois’s collectors — who bought the $25,000 work — was Eric Young, a full-time crypto investor in his 40s. He started investing in Bitcoin seriously in 2018, he says, and “made good money”; he loved the consistency of Langlois’s aesthetics and the welter of detail he packed into his work. “To have this much talent, this much range, being that he just turned 18” — that was amazing, he says.

For some crypto investors, it’s clear, buying cryptoart gives them something artsy to talk about in a field dominated by otherwise numbingly technical conversations. “There’s only so long you can deal with ex-financiers in crypto and start-up people telling you about blockchain medical records,” as one Manila-based collector, Colin Goltra, put it to me. He loves the long, late-night conversations over text with artists like Pak, famous for having taken a Warholian, concept-art approach to NFTs. (Pak once sold a series of NFTs that were exactly the same image, at prices ranging from $1 to $1 million.) Having access to the artists — who tend to be happy to talk to their wealthy new clients — is a lure….

….For the nerdy crypto crowd, cryptoart’s aesthetics — and its clubby, Twitter-heavy networking — felt like an art scene they could finally “get.” Most collectors I spoke to had never bought any physical art and were slightly intimidated by the prospect of going into a gallery. They often didn’t know much about art history. But the visual palette of much cryptoart spoke to them, because it had been heavily influenced by memes and the trippy, glitchy tropes of the internet or the futuristic style of sci-fi movies and illustration. If cryptoart was in any sense a visual aesthetic movement, that would be the through-line: a generation of creators whose inspiration came not from looking out the window but from looking into Windows — beholding a digital world of software, movies, games….

…The traditional art world is divided about the aesthetics. Last fall, the Vancouver Biennale decided to include NFT art, and the Biennale president, Barrie Mowatt, went to several NFT sites to scout for some works. He eventually found pieces that impressed him, but, he says, “I remember thinking, Boy, there’s a lot of [expletive] art right here.” Noah Davis, a specialist in postwar art at Christie’s who is a more enthusiastic fan, argues that cryptoartists have a playful spirit often missing from fine art. But he understands why old-school art collectors turn up their noses: “Some of it does look like it belongs in a head shop or on a dorm wall or, you know, on a message board,” he says.

Clearly the NFT market is in part being driven by speculation: Many collectors regard cryptoart as a potentially lucrative investment, much like Bitcoin itself. And on some level it also facilitates pure peacocking, conspicuous consumption for a crypto age. Paying outrageous sums for art — bidding against others in financial combat — is an age-old way for rich people to flaunt their wealth, Kal Raustiala, a legal scholar at U.C.L.A., points out. “The status-signaling parts are really huge,” Raustiala says. “There’s a lot of wealth, and people need a place to park it.”

In the old days, people hung their $40 million Picassos on their mansion walls. Because NFTs are just data, though, cryptoart collectors are mostly staring at screens (if they’re even looking at their holdings). Sometimes these are very high-tech screens. Collectors have created virtual-reality galleries so they can strap on their goggles and behold their art on a virtual wall and invite friends to join them for viewing parties. Other collectors eschew this sort of display; they simply pull up their art on their iPhones or computer browsers, the way they use Instagram. Indeed, several people told me that they appreciate digital art for space-saving reasons. Before he discovered cryptoart, Token Angels bought so many actual paintings that his family upbraided him: “Stop buying things, stop buying these pictures, we don’t have any more walls!” Now he has a virtual 3-D gallery at an online site called Cryptovoxels, where he exhibits his cryptoart, including his $100,000 Matt Kane. “I would describe Matt Kane’s art as a pure orgasm for the eyes,” he told me, “because these images are so beautiful, you want to zoom in.”

There’s one aspect to NFT culture that can seem utterly bewildering to outsiders: Someone who buys an artwork NFT owns only the NFT. The NFT typically contains data that corresponds to information about the artwork, including the creator, the title and a link to an online copy of it. But the visible part of the art, the JPEG or animated GIF, the thing you look at? That is just a digital file hosted somewhere online, with the NFT commonly pointing to it. (If that site hosting the art goes down, the NFT no longer even points to anything.) Anyone can go to SuperRare or another NFT art site, right-click to copy the file, and then post it to Instagram or Facebook, say, or make it the background on a phone.

So what, precisely, do the collectors think they’re getting when they buy an NFT? Many say they’re acquiring proof of their ties to the artwork and to the creator. They can assert bragging rights, as it were. As for the pixels themselves — well, no one cares if other people can see them, too. “I can hang a really nice print of the ‘Mona Lisa’ on my wall and that doesn’t mean I have the ‘Mona Lisa,’” Goltra told me. All the collectors I spoke to professed to be happy if the artworks they owned were copied widely around the internet: Millions of people staring at a piece of digital art make it more valuable for the person who owns it….

….There are plenty of drawbacks to the rise of the NFT market, however. The chief one is its energy use: All those Ethereum-mining computers currently use an estimated 42.78 terawatt hours of electricity a year, according to Alex de Vries, an economist who tracks cryptocurrency emissions. Some artists are deeply concerned….

…Other artists are dismayed at how rapidly NFTs have turned into a hit-based, winner-take-all game of speculation. Sparrow Read, a cryptoartist in Britain, did an analysis of NFT sales with a data scientist named Massimo Franceschet, and they found that a tiny minority of artists and collectors held most of the wealth produced by NFT art. Read told me that the system of marketplaces that encourages competition with leader boards and bidding wars doesn’t look like the democratized vision of the early NFT days, when it promised to lift the boats of all digital artists. The collector base is almost entirely male, and the majority of artists are too.

Perhaps those who feel most comfortable with their good fortune are in the middle — the smaller population of artists who aren’t becoming rich but are now making a decent living. One of them is Sarah Zucker. A 35-year-old animation scriptwriter who lives in Hollywood, she is also a longtime photographer who has sold prints on the fine-art market. To pay the bills after finishing grad school, she ran a website-development firm in the early 2010s, but she soon discovered that she had a talent for making viral animated GIFs. Her work often has a distinctive analog quality, because she uses low-fi equipment from the 1980s and ’90s to make it. For one of her signature techniques, Zucker points a camcorder at a TV that it’s connected to, in order to produce infinite-mirrors-like imagery. “I’m a feedback cowboy,” she told me.

As a creator of animated GIFs, Zucker enjoyed great success, eventually posting 1,500 GIFs on Giphy that racked up 6.6 billion views. (“You’re only one billion away from the entire population of the earth,” a friend of hers joked.) Those GIFs didn’t make her any money, but they attracted corporate clients who asked her to create work for their marketing campaigns.

Zucker became an early adopter of SuperRare — “I’m part of the old guard now” — and profited from the boom of 2020, regularly selling pieces for $2,000 to $4,000. When we met in Los Angeles in February, she told me that she had just done her taxes and found that nearly her entire income now came from cryptoart sales. “It’s not hyperbolic to say that it’s changed my life,” she said. She also got into the Vancouver Biennale.

The velocity with which the money comes in — a recent release brought her $13,117 in a single day — along with the rapid fluctuations in value of Ether “breaks the concept of money,” she said. “Like all these years I think of things I have done, and slaved over, for so much less money than that.” These days she has time to linger over the creation of individual pieces, because she doesn’t need to hustle for commercial work. Plus, she is getting 10 percent in royalties for resales of her work. “This is in perpetuity,” she said. “One day when I am, you know, a wizened elder sage and I establish the Sarah Zucker Foundation or whatever or the scions of my line, they could be holding my Ethereum wallet 100 years from now, still earning royalties. How much would van Gogh’s descendants have earned?”…

…(artist) Langlois, splayed on the ground next to him, recounted the strange experience of opening up a bank account for his business after settling in Seattle. It wasn’t easy to explain to the banker what he did for a living. “He said to me, ‘You’re self-employed?’” Langlois recalled. “And I said, ‘Yeah, I’m an artist!’”

(fellow artist) Parrott chuckled. “First time he heard that in his life.”

“He said, ‘Oh, what kind of art do you do?’ I said, ‘Cryptoart.’ And he said, ‘What?’”

Parrott laughed again. The banker was perplexed by Langlois’s statement of assets; it totaled $300,000, but only half of that was in cash. Where was the rest? In Ethereum, Langlois replied. “What’s Ethereum?” the banker asked.

“The world’s changing,” Parrott said.

They grabbed a spray-can of primer, grabbed the five printed figures and went into Langlois’s garage to start spraying them with a white base coat; the artists would add their own decorations later. When I left at 11 p.m. they were still painting. A month later, the four artists sold their works for just over $3 million….

…(digital artist aka Beeple)Winkelmann is hungry for cryptoart to get more mainstream respect. “I want my mother to feel like she can buy this,” he said. He ordered 600 book-size L.C.D. panels, encased in clear plastic, to be shipped to his buyers; they can plug it in, place it on the shelf and put their digital art on display. Everyday people just want something pretty on their shelves, he said, and aren’t likely to use the VR galleries crypto collectors are fond of. “We’re not in the metaverse yet,” he said. “A lot of these crypto guys want to freaking get in their tub of goo, plug it in: ‘OK, I’m in the goo, and I’m a giant ostrich and whatever. Jack me in, man!’ But it’s 2021, not 2080, so we’re not there yet. So I think we need baby steps.”

In January, Christie’s contacted Winkelmann about doing an even more prominent auction. “To be crass, when you see numbers like that, you start to pay attention,” Noah Davis told me. They decided he would turn nearly his entire run of “Everydays” — 5,000 of them — into a single NFT. Someone would be buying 13 years of his work.

The auction was held on March 11, and while it was going on, Winkelmann joined a live audio conversation about NFT art on the social media platform Clubhouse. At one point, someone gasped when the bidding hit $50 million. Winkelmann left Clubhouse and watched his NFT finally sell for $69 million. “What the [expletive] just happened?” he said.

The story of who bought it, and why, is a sign of just how deeply NFTs are tied up in the financial engineering of cryptocurrencies. It turns out that Beeple had major collectors: Vignesh Sundaresan and Anand Venkateswaran. They are the founders of Metapurse, a fund that collects NFTs. They bought his $69 million NFT, and back during Beeple’s weekend December sale, they had created several pseudonymous accounts that bought 20 of his NFT “Everydays,” worth $2.2 million together. Sundaresan — who goes by the name MetaKovan online — told me that he had been investing in cryptocurrencies for years. He lives in Singapore, which he has chosen as a home in part because he regards it as friendly to cryptocurrencies. “My fear is that governments are going to be like: ‘You, sir, you hate us and you hate our dollars. So why do you want our police to save you now?’” he said….

….But the museums were only the beginning of their plan. The other part was to turn Beeple’s work into a new cryptocurrency, essentially. In January, they took the 20 Beeple “Everydays” NFTs they had bought for $2.2 million and created a new set of NFT tokens, 10 million in total, called B20. Those tokens represent fractional ownership in that Beeple work. They paid 10 percent of the tokens to the designers who built the virtual museums, he said, gave 2 percent to Beeple and kept 50 percent for themselves. Some of the remainder would be put up for sale. “The idea here was to take the art and share the ownership with a lot of people,” Sundaresan said, as our avatars floated up and over the museum.…

…Do the stratospheric prices of NFTs indicate a frothy, high-tech bubble, fated to burst, possibly even by the time you’re reading this? It certainly looks that way, and many collectors themselves agree that it is quite possible. This doesn’t scare them, they say. Bitcoin and Ether have cratered in value several times, but they recovered each time and surged to record heights. Many collectors told me that the NFT market is likely to go through similar shakeouts….

….On a deeper level, some observers regard the rise of NFTs as a symptom of a long-brewing problem in Western economies — “the financialization of everything,” as Scott Galloway, a marketing professor at New York University, puts it. During all the bubbles of the last few decades, he notes — from the tech-stock boom to the subprime-mortgage boom to the bull market of the last few years — a result has been “trillions of dollars in economic growth over the last 30 years, a great technology age. But we’ve seen wages flat and one in five households with children is food insecure.” Some artists may get rich in the short run, he says, but anything that turns economic activity into sheer speculation tends to boost inequality….

….Galloway also suspects that NFTs could hasten the mass adoption of cryptocurrencies in everyday life, a dream of Bitcoin fans but one that worries Galloway: If national currencies truly atrophy, he fears, the United States, as the holder of the main global currency, stands to lose the most, something that would please rivals like China and Russia as well as money launderers and criminals.

When it comes to the enormous energy demands made by NFTs, there are some possible technological fixes. NFTs can be verified on the Ethereum network using a different mechanism, called “proof of stake,” which uses as little as 0.01 percent of the energy currently used by the Ethereum mining network, according to some estimates….

…The last few times I spoke to Langlois on Zoom, he had become, in the sped-up dog-years of the NFT scene, something of an old-timer himself. He was a bit astonished at how quickly this odd backwater had become the focus of a national conversation; celebrities and major brands were now driving the trend even more than artists. “NFTs are just something that people either make fun of or just talk about very casually — even if they don’t understand what it’s about, they talk about it, right?” he said.

It didn’t bother him. He suspects NFTs are here to stay, for the crazy meme collectibles as much as for the artists. He and Nathaniel Parrott had just flown back from San Francisco, where they visited SFMOMA to gather ideas for his next NFTs. His head was swimming with ideas. “Art is taking off,” he said, “and somehow I’m at the top of the crazy community.”

Case Study #9 -- Hyperallergic Podcast

The World of NTFS, Explained by Digital Artist Addie Wagenknecht.

“While media outlets suggest non-fungible tokens are a panacea for artists, we ask a veteran of the digital realm to offer a more tempered take.”

By Hrag Vartanian 3.2.21

Contemporary artist Addie Wagenknecht is a veteran of the blockchain space — as much of a seasoned pro as one can be in a field that’s only a decade old. She’s been observing the gold rush over NFTs in the last few weeks and agreed to join me on this episode to educate newbies about blockchains, NFTs, and all the issues they bring up. Are NFTs good for artists and the art community? The short answer is maybe.

In addition to being an artist, Wagenknecht is Director of Technical Ecosystems at the Algorand Foundation, and she brings a much-needed pragmatism to the topic, as PR campaigns often make it seem like NFTs are going to change the wor

This is the first in a series of episodes we will publish in the coming weeks on the topic of NFTs. 

Case Study #10


This picture of Emily Ratajkowski is free to look at. But its NFT sold for $140,000


Photo credit: An NFT of “Buying Myself Back: A Model for Redistribution” just sold for $140,000 plus fees. The non-fungible token is linked to a photo of model of Emily Ratajkowski, standing in front of an Instagram post showing a photo of herself shot for Sports Illustrated, that was blown up and mounted on canvas by Richard Prince.(Artist: Emily Ratajkowski; photo credit: Christie’s Images Ltd. 2021)

"The puzzling world of NFTs (nonfungible tokens) just got even more puzzling to those on the outside looking in: A digital-only photograph of supermodel Emily Ratajkowski standing in front of a photograph of herself (with a smaller, different photograph of herself in the corner) just sold at auction at Christie’s for $140,000 ($175,000 after fees).

It’s not that the photo can be seen only by the buyer or even that the buyer can physically mount it in a frame (though one supposes the buyer could project it on a wall or screen and put a frame around the projection); it’s that the equivalent of the certificate verifying the authenticity of the digital file of the main photo is unique. It’s really the certificate that cannot be replaced exactly by a copy. And that is worth $175,000 to someone.

NFTs have recently enjoyed a heyday., which tracks such sales, shows massive spikes through the first quarter of 2021 over the last quarter of 2020, with sales volume reportedly in the range of $2 billion already this year.

By definition, each NFT is unique (nonfungible) and digital only. Each lives on a blockchain, which is like a public spreadsheet that automatically updates whenever an NFT changes hands, supposedly guaranteeing that the digital object’s ownership can’t be faked. That doesn’t mean that each object represented by an NFT is unique, however. The band Kings of Leon recently offered its album “When You See Yourself” in exchange for a $50 NFT; the purchaser received a vinyl copy and a digital download. (Kings of Leon also offered higher-ticketed items such as lifetime front-row seats to their shows as NFTs.)

The gambit has reportedly paid off for the band to the tune of $2 million. In April, the Weeknd reportedly sold an eight-item NFT collection for $2 million in less than 24 hours. Twitter Chief Executive Jack Dorsey somehow sold his first-ever tweet as an NFT purchase for $2.9 million.

That’s nowhere near the ceiling for the items. A collage by a digital artist who goes by the name “Beeple” (born Mike Winkelmann) was auctioned in March by Christie’s for $69 million.

The Ratajkowski NFT and image (called “Buying Myself Back: A Model for Redistribution”) depicts her standing in front of a famous 2014 photograph of herself from Sports Illustrated. The model posted the SI photo on her Instagram account; that post, including some comments on it, was blown up and transferred to canvas by artist Richard Prince as part of his series “New Portraits,” in which he did the same to a number of Instagram posts by a number of people. Ratajkowski, a vocal proponent of models regaining control over their own images, purchased the canvas from Prince for about $81,000. She then had the photo shot of herself in front of the canvas, which is the digital image file linked to the NFT that just sold for $140,000."

If that sounds confusing, there are also the likely multiple layers of copyright infringement to be considered, as the owners and creators of the various images included in “Buying Myself Back: A Model for Redistribution” might reasonably argue degrees of ownership of the main image. Those owners could include Prince, Sports Illustrated and/or its photographer and Ratajkowski (for the main image and for the Instagram profile photo in the upper-left-hand corner and possibly for the Instagram post itself). Prince has been repeatedly sued for profiting off the use of base images he did not own."

Case Study #11


Matt Furie is trying to reclaim his famous cartoon Pepe the Frog — through NFTs

The first authentic Pepe digital art yielded about a million dollars at auction last month. But that's only the beginning. (Photo from the documentary "Feels Good Man")

By Michael Cavna

Excerpt: "Matt Furie is a patient man. After many on the Internet co-opted his most famous cartoon creation more than a decade ago, he was long willing to live and let live. And when his same Pepe the Frog character popped up on the forefront on the crypto-art scene about five years ago, Furie watched from the sidelines and waited.

Now, he’s moving fully into the world of NFTs and their experimental possibilities.

Last month, an image of Pepe — the first authentic crypto-art of Furie’s iconic character — sold at auction for about $1 million. And the artist is planning to unveil a universe of collectible NFT characters — some of them his latest takes on Pepe.

To Furie, the NFT realm is about more than coin. During the era of Donald Trump, extremist social media users adapted Pepe so often that the Anti-Defamation League deemed it a hate symbol. But the exploding world of crypto-art is allowing the cartoonist to reclaim a character who was never meant to stand for much beyond love, peace, hedonism and altered-state chillaxin’.

“The NFT world is new, and there are a lot of optimistic people creating cool things,” Furie says of his interest in exploring non-fungible tokens — unique digital files whose origins and ownership can be verified. “Pepe does not have the baggage here that he does in the 'real world,’ and I like working with utopians and optimistic freethinkers. There are so many possibilities.”

Furie became intrigued when his cousin Frank Musarra, a Brooklyn-based multimedia artist, contacted him in February with an invitation to show his work on Chain/Saw, a new online gallery of crypto-art featuring like-minded creators. Musarra envisioned a “middle ground between crypto-utopian zealotry and grouchy anti-tech naysayers.”

They soon were on a Zoom call with dozens of fellow artists, kicking around ideas about just what the site would look like. Furie embraced the opportunity to show the world he was much more than the Pepe Guy. Yet as the site’s April launch neared, Furie and Musarra, the site’s official founder, knew something was missing. “We both felt pressure to show a Pepe NFT,” says Furie, who’s based in Southern California….

….So why is ownership of a Furie art token called “1pantsdownpee.jpg” worth a million bucks? “It’s my view that this will eventually be one of the most valuable digital originals in the world,” punk4156 told Whitehot Magazine of Contemporary Art last month, noting that given how widely the Pepe image has been copied, the original “should rightfully be our generation’s Mona Lisa.”

This week, Furie is planning to unveil PEGZ — Pog-like digital portraits of his creature characters in 2-D, 3-D and animated form. “Everything else is a bootleg, and I’m very inspired by bootlegs in my life and in my art,” he says — including Grateful Dead mix tapes — “but nothing beats the real thing.”

Furie enters this world fascinated, too, by its sense of community — intrigued by how NFTs can “provide a tangible connection between a digital artwork and a collector who owns it.”

Many people are minting their unique works as NFTs because blockchain technology — as a ledger of transactions across a network of computer systems — can now create a fixed digital record proving who owns each work. So creators are selling electronic tokens of everything from music to social media content — including the viral “Charlie Bit My Finger” video (which fetched $760,999 at auction) and Twitter chief executive Jack Dorsey’s first tweet ($2.9 million).

“This new space is laying the groundwork for the Internet 3.0,” Furie says. “In the future, you’ll be able to trace memes back to their source.”

And as Giorgio Angelini, writer-producer of the documentary “Feels Good Man,” puts it: “Pepe is the ur-meme.”

As chronicled in that film, Pepe has had many online lives: The anthropomorphic frog jumped from the panels of a relatively obscure comic about benign bro-creatures, transmogrified into a meme on the forums of 4chan and was posted on social media by such pop singers as Katy Perry and Nicki Minaj. But Pepe’s image was also swiped by the alt-right and white supremacist groups and plunged into the political mainstream during the 2016 presidential election cycle, with Donald Trump Jr. sharing an image of Pepe among GOP figures, in a spoof movie poster titled “The Deplorables.” In 2018, Furie sued Infowars host and conspiracy theorist Alex Jones over unauthorized use of Pepe; the case was settled the next year."

More on Matt Furie's odyssey here:

UPDATE 11.24.21

Steven Colbert explains AFT vs NFT

New Yorker cartoon by Farley Katz


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