Smart Contracts on “Smart Contracts”

We all know the bittersweet feeling of an artist you discovered outgrowing you and finding success. On one hand, we’re happy for the artist. They’ve reached a level that they dreamed of and may have deserved. We want the best for them. Yet, at the same time they’re no longer yours. They’re lost in the waves of their own success, and access becomes limited. Engagements take them further away. Tickets to see them become more expensive. Any time their name is brought up you find yourself swallowing the pretentious urge to claim that you knew them before they got big.

Now imagine there was a way to not only prove that you were an original fan, but that you were given an opportunity to invest in the artist themselves like a stock in the market.

Would you do it?

What if I told you you could?

The internet, in its omnipotent power, has evolved faster than a Pokemon with a pocket full of rare candy. Smart contracts on the blockchain are one of the many ways future artists may leverage a connection to their fanbase by not only giving them access, but by allowing them ownership in the brand themselves. In order to understand how this is even possible, we need to understand where the internet stands today, and what the hell people are referring to when they talk about “Web 3.0.”

If you’re old enough to remember it, think about the early days of the internet. If you’re too young or can’t remember then the best comparison is the state of the universe after the Big Bang — it was chaos. People were still trying to figure out what the internet was. There was no grand idea for it’s utility. Very few content creators existed. The websites that did would look barbaric by today’s standards, and if you could code HTML then you could convince friends that you were a genius.

The shift into web 2.0 was generated by user creation. The people responded to the internet with their own creativity, and a social fabric was weaved in the forms of sites like Myspace where you could be friends with Tom. Brands who didn’t make the switch to an online platform faced irrelevancy, and the entire history of everything humans have ever learned was transferred into our pockets. Companies who capitalized on the shift became tech giants like Google, Facebook, and Netflix. Information graduated to the most valuable asset on the planet, and it rested in the hands of very few people. Users became the product, and through aggressive marketing — and no small amount of psychological manipulation — companies like Facebook used their platforms to increase their profits regardless of the impact it had on the lives and mental health of its users.

As this was happening YouTube, Instagram, Tik Tok, Twitch and even Spotify invented an entire industry out of thin air. These companies minted an entire generation of young content creators, some of which would go on to generate millions through video creation, music, podcasts, and sponsorships.

Then in the background, at some point in the early 2010’s, Bitcoin was born to the bane of future girlfriends everywhere. In the next decade it would grow to be the most rapidly appreciating asset on the planet. At the heart of blockchain technology is the desire for decentralization and anonymous platforms that take companies, and even countries out of the equation. Web 3.0 refers to the next stage of the internet — one with virtual realities, cryptocurrencies, and a blended approach of how we interact with one another. As the line begins to blur between reality and the meta-verse the amount of intermediaries between content creators and their audience will begin to shrink. What’s interesting will be to see the creative ways in which creatives will utilize the “Smart Contract” in order to produce smart contracts.

Let’s keep it simple. A smart contract is simply an agreement written between a buyer and seller that is written directly into the code. This can be done and sold in the form of a NFT (Non-Fungible Token.) Once the agreement is struck and the NFT minted it cannot be altered or manipulated, and can be considered proof of an agreement. What exactly this agreement can entail is entirely up to the seller. This gives it an enormous amount of wiggle room when it comes to what can be offered.

Now, I get it. The idea of digital ownership can be a difficult mental hurdle to get over. Enter the “copy +paste” jokes and don’t forget to compare it to “Beanie Babies” on your way out. When people hear NFT’s they think either scam or “digital art.” Neither of these is exciting for most people. However, it’s not the actual art that’s valuable, it’s the utility that it’s able to provide.

I’ll give you an example.

One of the coolest things I own is a 1st edition print of Fight Club signed by the author, Chuck Palahniuk. The book is one of the coolest things I own, but maybe three people in my life have ever seen it. With NFT’s you could not only provide a physical copy of the signed book to the customer, but also provide proof to the internet that you have one. Maybe clout doesn’t impress you. That doesn’t matter. The important thing is that it impresses someone else. Even if the only thing to gain was to show it off in the profile of a Twitter account, then that alone would be enough incentive to motivate enough of the consumer market to buy.

For evidence of this we need to look no further than the first NFT’s ever produced: Cryptopunks. Objectively, it’s not the kind of art that you’d see on most people’s walls, but the scarcity combined with the clout that comes from owning one of these future internet relics is what’s making people pay upwards of $10 million dollars to claim ownership of one.

All of this is just scratching the surface of what’s possible with this technology. Artists can set up automated royalty payments so they can make a profit whenever their piece is sold. The platform also provides an avenue for success for digital artists like Beeble to make a name for themselves — like he did when a collage of his work was sold for $69.3M earlier this year. But, again, it’s not just the clout that’s driving the market, it’s the utility aspect of the NFT that is driving the interest of more people into the space.

Back to the Fight Club example. Let’s say that someone offered me $10,000 to buy the book from me. Honestly, I wouldn’t want to sell it, but for that price I’d have to. Now let’s just that instead of just the book, I also purchased an NFT that not only granted me ownership of a specific copy of the novel, but provided me the opportunity to have dinner once a year with the author because that was the stipulation written in the contract. If you offered me the same amount then, I’d give you the finger.

Not actually. But you get the point. Clout is one thing, but it’s cheap. Access is another and it can be as expensive as people are willing to pay. Maybe you’re not into postmodern authors. That’s fine. Snoop Dogg and Tom Brady have already started minting their own NFT’s, and most people seem to like them. What if Taylor Swift, Timothée Chalamet, or even Kanye printed an NFT with the same stipulation? If Swifties are willing to pay $7,000 for concert tickets, how much do you think they’d spend on regular access to their idol?

The NFT is also a way for artists to bet on themselves and encourage others to do it with them, and it could function exactly like the stock of a company. As the content being created starts gaining momentum, so would the value of corresponding projects. Rather than having a majority share, or a seat at the board there is an NFT with that kind of role built into its code. We are already starting to see signs of content creators building this into their marketing strategy.

Entrepreneur Gary Vaynerchuk launched his NFT project VeeFriends on April 28th, 2021. His collection included a ticket to his upcoming networking event built into every NFT, but there were also other bonuses for the more expensive items. Stipulations like scholarships, one on one coaching, courtside tickets to NBA basketball games, shopping sprees, and even annual podcast appearances are just a few examples of what’s offered through the VeeFriends. Author of the “48 Laws of Power”, Robert Greene also has a project in the work focused on the 48 laws that promise exclusive access to the writer through incentives on the blockchain. My prediction is that this is only the beginning of what will eventually become a prerequisite for artists and athletes who wish to capitalize on their body of work without having to deal with the traditional avenues of marketing or publishing.

The saying goes “if you’re not paying for it, you’re the product.” In true free market capitalism fashion, corporations have dominated innovations in technology, leaving the financial incentives in the hands of very few, and with users little to nothing to show for it. In the upcoming years, decentralization will usher in new philosophies in terms of the way that we interact with technology in order to interact with each other. The only limitation is whatever sized box you decide to put your imagination in.