By Amy Shepherd and Thomas Walsh
“Let’s NFT it!” Whenever there’s a shiny new technology, there’s always a crowd wanting in on the action. But while some call them a creative revolution, others swear blind they’re a scam.
Non-Fungible Tokens (NFTs) are incredibly polarising, with strongly-held opinions and few minced words on either side. They’re seemingly everywhere already, but as always, we ask the provocative questions : Are creatives getting more from this technology and is the world becoming a better place as a result? Can NFTs positively drive crowdsourcing towards investment in social issues? Should the impact filmmaking community really lend this digital money-making scheme legitimacy?
NFTs are a kind of mashup between share trading and fine art collecting. But even that doesn’t quite capture it. As one commentator described it; “owning an NFT effectively makes you an investor, a member of a club, a brand shareholder, and a participant in a loyalty program all at once.”
It’s a strange world we’ve arrived at when people will spend millions on a copy of a j-peg that anyone could download for free. But it’s not the art; the layered community experience is what makes NFTs such hot property. Conversely, it’s also only because of collective demand that NFTs get imbued with any initial meaning and value.
Understanding the motivation that drives NFTs is pivotal to cracking why the hype and bubble around them has inflated so rapidly.
NFTs can open unprecedented opportunities for new generations of filmmakers – primarily because using NFTs as a film funding source disrupts the industry’s traditionally closed and restrictive structures: they are audience demand powering pure creative freedom.
Mila Kunis’s StonerCats (image above) is a solid example of this. Fully funded by NFTs after being repeatedly rejected by production studios, Kunis raised $8.3 million for her animated show in just 35 minutes.
This was in one sense a perfect win-win scenario. Offering NFTs incentivised fans to help get ‘their’ show made, which built in turn a committed community of content champions. Token-buyers saw legitimate investment return through significantly increased NFT resale value once the show was seen as a success. And Kunis was gifted an army of financial backers invested in making the show a hit without her having to give up any ownership of the project: a massive win against major studios and streamers today that primarily drive fully-owned ‘originals’ content.
Step back a little from the rose-tinted glass, however, and the picture shifts. For StonerCats, NFT owners are the only ones able to watch the show. Not only does this directly eliminate massive potential audiences, the cost of entry is ludicrously high – even if you could have afforded the eye-watering original $800 NFT price, current token resale sits at around seven times that.
NFT value is created through artificial scarcity. The fewer tokens, the better. But scarcity means that not everyone is able to get in on the action. Isn’t exclusivity the antithesis of an industry that thrives on content virality and democratising access?
StonerCats’s hype was also centred on the NFTs, rather than the ultimate video content they paid for. Who now is even watching the show? With no obligation existing anywhere in the industry to share audience data, we may never find out.
Perhaps StonerCats will in time obtain wider distribution so that NFT-only access will turn out to have been an ‘early-bird’ privilege. But that’s not how it’s pitched, and it sets a rather discouraging precedent for others to follow. Do we want a digital ticketing system – for that is essentially how NFTs are acting in this context – that prima facie cuts certain audiences out of access to unique and innovative film content because they can neither afford nor act fast enough to buy up a short supply of colourful pixelated images?
Looked at sideways, NFT fundraising isn’t really any different to other crowdfunding methods. Doesn’t it just add a digital collectible to the reward package, hoping that audiences will believe that it will be worth a lot more one day? Mounting evidence of financial wrongdoing suggests this is a decidedly different risk.
The unregulated NFT market is plagued by scams (to the tune of around $14 billion in 2021). It is a minefield of pump-and-dumps, plagiarism, phishing, fake influencers, wash trading, and more. And that’s not counting the risk to artists, who are experiencing theft at an alarming rate; an age-old problem accelerated and exacerbated by new technology.
For buyers, A-list celebrity involvement provides some surety, but fans investing in NFTs to support up-and-coming artists who are still trying to build a following have no real way to be sure that the seller won’t take their money and run, leaving them holding a line of code that will never be worth anything. Even centralised NFT markets like OpenSea admit their protection systems have limits – and anyway, wasn’t further decentralisation the ultimate goal of crypto and NFTs?
The high prevalence of fraud aside, it also can’t be ignored that since their inception crypto-technologies have faced accusations of an incredibly high carbon footprint. Even NFTs powered by renewable energy might be considered an unnecessary drain on the grid when the planet is staring down the barrel of catastrophic climate change if we don’t make drastic changes now.
Socially-conscious creatives have to ask themselves: will the good that might be achieved through NFT financing offset the harm that is caused in the process?
“Let’s not cancel next gen tech based on its first generation of use” might be the response. The crypto-community has been making changes to try to be greener. But this was no panacea for the World Wildlife Fund (WWF), who pulled their conservation-focused NFT project after backlash against their use of the tech. Nor was it a convincing argument for fans of Jacksfilms, a popular YouTuber, who collectively pressured him to take down an NFT auction.
Socially conscious NFT offerings and marketplaces are starting to surface. Philanthropic entrepreneurs are using NFT sale proceeds to conserve the rainforest, build schools and even help the people of Ukraine. Even the UN has gotten in on the action, collaborating with crypto-native community The First Arabs to create and sell NFT clothing avatars for humanitarian efforts.
Join or flee: it’s not an easy decision. Fiscally, business forecasters cannot say with any certainty whether NFTs are here to stay or if the bubble will burst. Ethically, there’s charitable potential but many artists are also locking their social accounts and urging compatriots to steer clear. For us, while we love to support innovation, having grappled with the issues at hand, until the dream scenario emerges we feel that if impact is the goal, perhaps time, money and energy could be better spent elsewhere.