Over the past few weeks, Berlin-based creative collective CO:QUO has been hosting a virtual panel series titled Music Futures & Simulacra, exploring the use of “symbols and signs to imagine new futures for the music industry.”
The first panel, focused on the future of NFTs and crypto for music, took place via Zoom and Facebook Live on June 16, featuring perspectives from artists, researchers, developers and curators. With a healthy dose of skepticism and criticism, the discussion dissected not only how artists can leverage NFTs to gain more ownership over their careers, but also the significant cultural, financial and ethical risks associated with this emerging infrastructure that tend to get overlooked in mainstream music-industry conversations.
The full recording of the panel is available on Facebook, but we also wanted to publish a text recap of the key themes and takeaways here on Mirror. This specific platform also gives us a chance to put the panel speakers’ collective enthusiasm for collaborative crypto economics into practice, in even a small way.
This article will be free on Mirror (and the blockchain) forever, but you have the option to support our work and our ideas by tipping us in ETH — and contribute to supporting marginalized voices in crypto in the process.
Using a smart contract known as a Split, your tips will automatically be distributed evenly among the following parties (each person/organization gets 10%):
A. The panel speakers
- Kaitlyn Davies/CO:QUO (moderator/host)
- Chloe Alexandra Thompson
- VÉRITÉ
- Zola Jesus
- Mat Dryhurst
- Michail Stangl
- Cherie Hu
B. The co-writer of this recap, Kat Rodgers
C. Two organizations dedicated to supporting marginalized artists in crypto
This article is also the beginning of a “crypto publishing experiment” for Water & Music, Cherie’s paid newsletter about music and technology, which runs primarily on Patreon and Discord. Over the course of the next few months, we’ll be publishing deep-dive analyses of music/crypto projects and business models on Water & Music’s Mirror page, experimenting with different options for readers to compensate contributors and/or even earn access to our community Discord server using crypto (through crowdfunds, NFT sale, tips and more).
In the meantime, if you enjoy the below recap and/or want to support the people who gave their time and expertise to this panel, any amount in tips would be greatly appreciated. <3
This recap is broken down into five themes that emerged from our panel discussion, each representing a different tension, challenge or opportunity in the current state of music and crypto:
- Crypto idealism vs. music-industry pragmatism
- The myth of NFTs’ speculative value
- Reconciling the tension between the highly individualized, libertarian origins of crypto and more collective practices in music
- Letting artists control not only the flow of money, but also the incentives
- Critique and transparency as tools for change
Crypto idealism vs. music-industry pragmatism
At the beginning of our panel, moderator and CO:QUO co-head Kaitlyn Davies explained the context behind the name of the panel series. The word “simulacra” in particular — which refers to the presence of signs and symbols in place of reality — was popularized first by sociologist Jean Baudrillard in the 1980s, then by the Wachowskis in their renowned film franchise The Matrix.
“Over the last few years, I started to notice signs and symbols replacing all of my realities, which was certainly exacerbated by the ongoing global COVID-19 pandemic,” said Davies. “But rather than stay with the more dystopian approach that the Wachowskis did with The Matrix, I was more interested in a utopian approach — in building and imagining utopias and new futures, specifically for the music industry.”
The rapid rise and fall of music NFT hype is a perfect example of people conflating signs and symbols with reality — not just in the literal sense of viewing a JPEG tied to a digital token as equally “authentic” and “real” as the physical world, but also in the metaphorical sense of perpetuating certain myths about how NFTs work and how the artist-fan relationship should look that don’t always line up with the reality of how artists and the music industry operate.
VÉRITÉ is an independent artist who has been active in crypto in recent months — most recently selling a portion of master recording royalties for her single “by now” to a fan in the form of an NFT. That said, due to current limitations around royalty payments, that revenue split had to be implemented off- rather than on-chain through traditional legal agreements, with the NFT merely acting as an authenticated “purchase receipt” of sorts on top of the song. Other auctions like Jacques Greene’s “Promise” NFT and Lil Dicky’s “Save Dat Money” NFT had a similar limitation — i.e. auctioning royalty shares through NFTs, but actually implementing those share agreements through traditional music-industry processes that pay out royalties more slowly.
On this note, during our panel, VÉRITÉ pointed to how two simultaneous conversations were emerging within the music NFT community: “The idealism of what NFTs can be, and the pragmatic and practical reality that we still have to be in relationship with more antiquated systems, especially within the music industry to make that work.” The way in which royalties are collected in particular is a “50-year-old clunky system with a black box that definitely benefits the holders of that black box,” she said.
A sense of pragmatism needs to be considered not only for issues like fractionalized royalty payments, but also for the realities of fan behavior and how everyday people do (or don’t) value culture.
First things first: “The masses do not value digital assets,” said VÉRITÉ. “They do not value the MP3. The idea that we’re going to raise the price of a stream beyond 0.004 cents — I don’t believe that is going to happen.” Crypto is also still inaccessible enough such that the vast majority of VÉRITÉ’s fans are not active in that community: “I have probably five fans participating in these things. Until I’m able to issue NFTs with a fiat option and a credit card onboarding ramp, so I can give my fans the experience of owning a digital asset and having them internalize that [experience], they’re not coming over.”
A related misconception in the crypto world is that there is a critical mass of fans who want to act as financial investors in their favorite artists. Michail Stangl — who works at Zora (the protocol that powers Mirror), curates the CTM festival and formerly served as host and lead programmer for Boiler Room — pushed back on this idea that the artist-fan relationship should be financialized in this way by default.
“A future in which every interaction between audiences and musicians is a financial transaction is dystopian to me,” said Stangl. “A lot of spaces that are designing [crypto] technology assume a certain relationship between fans and artists … if your reality is staring at crypto charts all day, you might think my relationship to my favorite artist is one of an investor. But 99% of fans don’t want to handle cultural investment portfolios, tracking which ‘blockchain track’ is the hottest that might create revenue for them if they sell their fractional share. That is not the way we engage with culture.”
It will take several years to reverse the widespread devaluation of music consumption, which VÉRITÉ suggested is a necessary side effect of overall “market saturation” in music and the fact that “the creation and distribution of music is now fully democratized.” That said, it’s still common knowledge that fans value music in at least some way, even if it’s not reflected in streaming economics.
“They are lovers and consumers of art, and they do want to support the artist — we just need new ways to enable them to give that support,” said VÉRITÉ. “We can add these additional value layers, whether that’s membership to a community, or providing people with an experience that’s bigger than just clicking on something and listening to it.” In this process of devising new means of artist-fan support, this is where it’s important to “center voices who have a pure idealism about what we can build.”
The myth of NFTs’ speculative value
Independent artist Zola Jesus was one of the more critical voices in our discussion when it came to the current state of crypto in music. In a previous interview with Pitchfork, she had expressed her frustration with the financialization of music NFTs, arguing that the market would only become fair for artists once “the art is being purchased for the merit of what it expresses, rather than what profit it could yield in the future. I don’t want people to bet on me like a racehorse.”
During our panel, Zola Jesus expressed similar sentiments. Initially, she said, her impression of NFTs was positive; she had viewed the technology as an antidote for the corporatization of the music industry — particularly for the “disillusionment” she’d experienced while having to navigate “endless corporate structures,” forcing her to “play a game outside of music itself … [Crypto] was a whole new way to create art, and to be able to find homes and support for that art.”
However, she quickly became suspicious of the intentions of the buyers of her art, and concerned that her art was just becoming “a means of profiting off speculation.” Rather than representing any real challenge or alternative to mainstream culture, she felt that NFTs in their most hyped-up, auctioned form were simply “further enmeshing us in financial contracts and capitalist frameworks,” with artists being “traded like stocks.”
Chloe Alexandra Thompson, who is First Nations (Cree), drew a deeper historical connection between the “cash-grab, transactional rhetoric” around NFTs and “movements around resource extraction and the emergence of new physical colonies on Indigenous land, like mineral mining” (an analogy that is especially relevant given the environmental concerns around proof-of-work blockchains). The end result is an environment where art is merely being “objectified,” rather than “supported and engaged with in a caring way.”
Fortunately, the speculative value of NFTs is largely a myth, anyway. For one, the five- to seven-figure auction model has largely fallen out of fashion for music NFTs. According to research spearheaded by Water & Music, monthly music NFT sales plummeted by 80% from April to May, and is projected to plummet by another 60% to 70% month-over-month in June. Moreover, according to an economics paper published by researchers across the U.S. and Europe, under 10% of NFTs that generated a primary sale since 2017 ended up generating a secondary sale within a week, and only 22% generated a secondary sale within a year.
Artist and researcher Mat Dryhurst suggested that mainstream media incentives had a lot to do with NFTs’ rise and subsequent fall. In search of sensationalist news, mainstream media outlets automatically navigated towards the six- to eight-figure sales coming out from only a small handful of platforms and actors in the NFT market, even if those outlets had only a rudimentary understanding of how NFTs actually worked. At one point, even SNL got on board.
“Even in a decentralized ecosystem, you don’t get to decide when people choose to pay attention to things,” he said. “Now, everyone associates ‘web3’ with ridiculous valuations for things that are quite clearly entangled in some dodgy stuff.”
Perhaps the biggest example of this dodginess that seems to have gone over many people’s heads is that the buyer of Beeple’s $69 million NFT on Christie’s — Vignesh Sundaresan, a.k.a. MetaKovan — had a clear conflict of interest. Sundaresan himself is working on his own NFT platform called Metapurse, which offers fractionalized investment opportunities in bundles of NFT artworks. The company makes “B20 tokens” available for fans and investors to purchase and trade themselves to represent a stake in the fund. The kicker: Metapurse gave Beeple 2% of B20’s entire token supply shortly before purchasing the artist’s record-breaking NFT. As Ben Davis wrote for Artnet, “This means that Beeple essentially owns 2 percent of the fund that purchased his work at auction.” Of course, the value of the B20 token then went up 13x in the days following the Christie’s sale.
“Someone will drop like $30 million on an NFT, which of course sounds like an insane amount of money — but then when you follow the price of the token that they own, a billion dollars in value gets added to the company,” said Dryhurst. “That’s a marketing campaign. It’s what marketing is: You invest money in order to get returns later. Of course, the media loves these kinds of big-ticket narratives, and bought into it — meanwhile, protocols like Zora and many others are quietly building something which is at odds with that mentality and those objectives.”
This media miscommunication probably led a lot of investors to lose their money on NFT sales, creating a general disillusionment in the market that led to a 90% dip in month-over-month sales in May. Once again, though, the media was incentivized to cover the downfall of the hype that they themselves created. “I think there’s been a bit of a sabotage campaign between the highly coordinated actors pushing for a very specific vision of how [NFTs] work, and a media that is very, very thirsty to write about bad news,” said Dryhurst.
Stangl agreed, elaborating that the notion of NFTs as “provenance” or as artificially scarce digital collectibles is “only half the story.” Instead, in Zora’s case, Stangl explained that the protocol is even more about redefining and redistributing value than merely about capturing more of it. “Our goal is build an open-source infrastructure that allows anyone to use NFTs to make two fundamental decisions: A, what has value — it can be monetary or something more abstract, social and participatory — and B, how do you distribute that value?” said Stangl. “That allows you to create a matrix where anything from maximizing your personal wealth and selling your asset at the highest value possible, to new models of collective co-creation and redistribution, are possible.”
This brings us to the next section…
Reconciling the tension between the highly individualized, libertarian origins of crypto and more collective practices in music
One major gap in a lot of music-industry conversations about crypto, Web3 and smart contracts is that these technologies aren’t just about creating new ways to sell more stuff. At scale, they’re about creating entirely new ways of governing and constituting societies. (Light stuff, we know.)
“You’re moving on a constitutional level, where you provide rule sets on how one should constitute oneself, in a social system that is utilizing smart contracts to constitute, govern and process itself,” said Stangl. “The question then is, what do you center in terms of your definition of societies? That is the really exciting thing — ultimately what you are creating are blueprints.”
The crypto platforms that have gotten the most mainstream media coverage to date tend to center a more libertarian view of sovereignty, self-ownership and individual autonomy as opposed to collective action. Cherie mentioned BitClout as one of the most extreme versions of this philosophy in practice, where someone’s individual value is investable, tradable and entirely tethered to their social clout — an extension of the individualism rampant in influencer and “creator” culture.
Importantly, though, the whole point of decentralization is not to ask people to conform to a singular view of society. “If you look at societies that center solidarity or neutrality in the way that they constitute themselves … you can now put those principles into a smart contract and make it part of the blueprint,” said Stangl. “It’s not just a box that you tick at checkout, like, ‘here’s your 1 euro of solidarity if you want it.’ It can be part of the deeper technological blueprint, so that anything you do in the system is rooted in solidarity.”
A big source of current music/crypto tensions, then, is what Stangl calls “a cultural clash, where a lot of crypto and blockchain is coming from a particular sociodemographic group with a particular view on how society works” (read: libertarianism). This is arguably in conflict with the more collective ways in which many artist and fan communities organize and interact with each other — a conflict that the artists clearly voiced during our panel.
Zola Jesus was particularly critical of crypto models that seemed to wring creative control and authority away from artists. “That’s something I don’t want to feel like I have to negotiate with my fans … like they have some sort of authority over what music I make or what direction I take as an artist,” she said. “I guess I’m a little more punk in that way, where I don’t want to feel that level of financial tether to a fan base. I don’t want to just become a stock, or feel like I’m getting further embedded into a financial structure that is going to only limit or suppress wherever I want to take my art and my passion. That’s been my biggest concern.” Zola Jesus does have an active Patreon page with around 700 members, but she said that that experience has made her feel more protected from the isolation and the “sea of competition and market performance in the music industry … I feel supported in a way that breeds charity, compassion and breeds community.”
Thompson was similarly interested in an implementation of crypto that better reflected the collaboration and interdependence of creative communities. “What I’m more interested in around 3.0 and decentralization is not so much this replication of, ‘I’m a popular artist or I’m getting discovered in the crypto community, thus I get much money,’” said Thompson. “It’s about how we can collectivize and create independent agencies which allow for group safety and redistribution of resources — thinking about the past record-label model not in the problematic way where artists have been excluded … but how advances were made at varying tiers of people’s careers to help bring them up and support their practice, and how that supports mixing engineers, producers and all these different people who are part of making work.”
VÉRITÉ more openly acknowledged the notion that, yes, her fans are investing multiple kinds of resources into her work and community “all the time — whether it’s listening to my music, coming to my tour, buying my merch,” she said. Hence, crypto at large could be a valuable tool for her to “give fans an incentive to participate and become a meaningful part of the community, and raise the community’s overall value. And then it’s actually really easy to weed out bad actors, because if you’re just buying my NFT as a speculative thing, you’re probably not going to contribute value into the fan community because that takes a lot of heart, time and effort.”
The point, though, is that the value of the community is self-sustaining, and is something that exists beyond just the individual artist — which VÉRITÉ suggested could act as a safeguard from the kind of mercenary profiteering that artists like Zola Jesus understandably have reservations about. “My Discord server exists without me,” said VÉRITÉ. “I’ve built a community of people who like to hang out and can entertain themselves while I go away for a month. That becomes the goal, where the community isn’t fully dependent on me as this pillar and this center, but where you’re building something that has a greater meaning than just yourself.”
Letting artists control not only the flow of money, but also the incentives
Moving a bit beyond just NFTs, much of the panel discussion focused on the value of protocols and DAOs (decentralized autonomous organizations) at large for giving artists the control and ownership they’ve been demanding from centralized platforms for decades.
“Spotify and Instagram were designed with one thing in mind: To profit the bottom lines of the people who designed them,” said Stangl. “All of the functions and business outcomes were in essence predefined, to benefit those who designed the systems.” (Investor Li Jin posted a lengthy Twitter thread this week with the same argument: “Without ownership … Creators, by working, are strengthening platform owners’ domination over their ability to work.”)
Similarly, one of the main reasons big-ticket NFT auctions seem like the “only” outcome of the NFT ecosystem is because a small handful of platforms have largely been responsible for driving the now-mainstream media narratives. “We have to give artists the tools to make those design decisions in an informed way, and then benefit from the outcome of those decisions,” said Stangl. “A lot of these things don’t need mitigation or third parties that inject themselves into a particular revenue stream. They can still participate, of course, and still create a value proposition, but that value cannot be justified just by injecting yourself into the part where money passes from one hand to another.”
One such way to give artists control over their own platforms is through protocols that allow them to code their own economics into their creative works. For instance, Bas Grasmayer wrote last year about how companies like Audius are trying to let artists use smart contracts to set their own per-stream rates for consumption of their music online. Protocols like Zora — and the platforms that run on them, like Mirror and Catalog — give artists the ability to bring in multiple collaborators to share revenue on a given creative work, or even wire funds instantaneously to public goods. During our panel, Cherie mentioned that this could lead to a greater diversity of artists getting rewarded for their work — instead of merely “incentivizing repeat consumption” as the dominant DSPs do, which arguably gives an advantage to pop artists while disadvantaging artists who work in less “bingeable” modes like classical, jazz or experimental music.
Music- and creator-focused DAOs like the Song That Owns Itself (STOI), Seed Club and herstoryDAO are also becoming increasingly popular for aligning incentives among artists, creative collaborators, fans and industry partners, financially or otherwise. On our panel, Zola Jesus questioned whether DAOs are in any way different from a corporation; Dryhurst offered that the main difference was that “you could see the smart contract as the CEO,” and that “there’s nothing inherent in DAO tools that forces you to see them as a financial vehicle.” (That said, Wyoming recently passed legislation that would allow DAOs to register themselves as LLCs.)
Stangl emphasized that the appeal of DAOs for underground music communities might be less about financial gain outright, and more about facilitating and managing already-blurred relationships and responsibilities among members. “In the value creation of underground music cultures, the distinction between who is the consumer, vs. who is the artist or marketing person, is often very blurred,” said Stangl. “When you talk about event promotion, in 99% of the cases, that promoter is not a promoter — they’re someone who’s so engaged with the music community that they put their own money into populating the culture … We negotiate that all the time in terms of what audiences contribute, what festivals contribute, what cultural institutions contribute — it’s not as clear-cut as it is in the mainstream music industry.” DAO infrastructure can allow these grassroots communities to “renegotiate those power relationships” with fans and audiences in a transparent and open way.
Critique and transparency are tools for change
Last but not least, an important theme in our panel discussion was that the critique around music NFTs should not be interpreted as an excuse to shut down the system for good. Rather, voicing concerns at such a formative stage of this technology’s development will allow active stakeholders to shape the role they want it to play within culture and society in the long term. In Thompson’s words: “We’ve seen so much critique of these NFT platforms … and I want to make clear that I think critique is a form of care.”
Davies added that, in an ironic way, the rapid-fire media frenzy around NFTs is also leading to productive conversations more quickly compared to other kinds of technology in recent music history. “It took 10 years for the mainstream to be critical of Spotify, but it took three months for the mainstream to be critical of NFTs,” said Davies. “This criticism is good because it’s getting things more out in the open.”
Dryhurst added that the core reason why so many people have become so critical of music NFTs so quickly is also because of the technology's greatest selling point: Transparency.
“I don’t think crypto alone is creating financialization around culture,” said Dryhurst. “I think crypto is putting that on-chain, and making it all visible, guts and all … And one of the pros and cons of decentralization is that there is no ‘one thing’ in this space. If someone is interested in web3, the good news is that there is no central actor telling you how to interact with it. The bad news is that there’s no central actor to impede somebody else from doing something you don’t like. That’s the kind of bargain you enter into when participating in crypto.”
Many crypto community members and researchers are already wielding this transparency for more productive use, in terms of better understanding the power dynamics and economics around NFTs, social tokens, DAOs and other applications of the technology. It’s only because of this transparency, for instance, that we’ve been able to pin down that monthly music NFT sales are down by 80%; that figure is practically impossible to pin down in any other sector of the music business, due to data silos across multiple centralized platforms and companies. Others have also published helpful graphics visualizing token distribution for various blockchains, exposing the blockchains that contradict themselves by having mostly centralized ownership (i.e. majority-owned only by the founders and/or investors).
"Ultimately, we might be able to develop some fluency as to how culture is currently working and is currently traded, and how most people see culture as a vehicle for social capital or even capital-C Capital,” said Dryhurst. “And then from there: What are the protocols that we as an individual, community, label, magazine — what do we want to put in place now? That, to me, is a net positive.” ✯
ICYMI: If you enjoyed the above recap and want to support its contributors, you can send tips in ETH that will be evenly distributed among CO:QUO, all the panel speakers, the co-authors of this article and two organizations dedicated to helping marginalized artists navigate the crypto world, namely The Mint Fund and herstoryDAO.