The Potential of Blockchain for Artists and Creators: 3 Key Factors in Maximizing Value
By Jonny Zerah, Head of Marketing at Status
One of the hottest topics in the tech industry today is undoubtedly the blockchain and exploring the various ways it can potentially revolutionize certain industries. While its use cases for disrupting the financial sector have garnered much of the mainstream attention, this article explores the ways in which the blockchain can serve as a platform for digital artist to generate revenue by selling their art without centralized intermediaries.
Three factors will be key in generating maximum value for artists and creators on the blockchain:
- Ownership and provenance of digital assets without centralized third parties
- Familiarity and scale
- Permissionless participation in open marketplaces
Ownership Without Intermediaries
One of the key benefits of the blockchain is the provenance properties made possible through smart contracts on a verifiable public ledger. The challenge with digital art as we know it today, is not only creating scarcity, but also proving true ownership of a peice. For example, any digital asset on the internet, can be copied, altered, and replicated millions of times over. There is nothing proving the originality of a digital asset and certainly nothing tying the ownership to a single person or entity.
With the Ethereum public blockchain and the introduction of smart contracts, we can, in fact, prove ownership of digital assets which can be verified by anyone in the world with access to the internet. We no longer need a centralized third party to prove this.
Take SuperRare for example. Using the Ethereum public blockchain and a set of open protocols, artists can upload work onto the platform for free. This generates a unique smart contract associated to the art piece. This contract is then deposited into the creators Ethereum wallet. The token (or smart contract) is then permanently linked to the artwork; making the authenticity and ownership of the work truly verifiable on a public ledger.
This is a great step in proving the viability of the Ethereum public blockchain as a place for digital art creators and collectors alike to engage in a decentralized marketplace. This proves that centralized intermediaries are no longer needed to verify transactions between two totally unknown parties. It democratizes the art world and enables anyone, anywhere to sell and trade their digital work without third parties.
Familiarity and Scale
So now that we have explored the provenance properties of the blockchain and the potential impact that has on digital artists–it is important to consider the relatively small scale and unfamiliarity of decentralized marketplaces today. Blockchain technology is still very new. Understanding smart contracts, ETH addresses, gas prices, and even maintaining a wallet can be confusing to many. Participating in these types of marketplaces requires at least a basic understanding of the underlying tech.
Also, these types of networks rely entirely on the speculative value of a digital asset – similar to a physical painting. Where true value lies, is the scale at which artists can sell their work.
Sure – someone may value a totally unique piece of digital art at hundreds of thousands of dollars – but this is, and will always be, a rare case. Imagine that same artist produces a single piece of art worth $1 and sells it one hundred thousand times. This seems much more likely, especially as blockchain technology becomes more widely used.
What’s needed to achieve this type of scale, is a familiar system that is simple and easy for anyone to partake in. Familiar platforms have a larger probability of success for mass adoption than highly unique ones. Take a Sticker Market for example. Many of the world’s leading messenger applications, including Telegram, Facebook Messenger, KakaoTalk and Line, all have very profitable and successful Sticker Markets.
The sticker and emoji market is actually big business. People know how to purchase them, use them, and they have even become commonplace in modern society. Kim Kardashian has earned millions from allowing a company to use her image to create Emojis. Line the most popular messaging application in Japan, sees staggering numbers around its Sticker Market:
- 610,000 Sticker Creators
- 320,000 Sticker sets and themes created
- 2.4 Billion stickers sent per day on LINE
LINE now derives about a quarter of its yearly revenues from sticker sales, or about $268m USD (Line Corporation IPO Filing).
Now we have discussed the benefits of blockchain technology and the importance of familiarity and scale on value creation. However, it is very important to note that centralized marketplaces not only control and censor the content that is made available, they are able to place hefty “network fees” to generate revenue and profit for themselves. Line for example takes 65% of all community sticker sales.
One of the amazing aspects of distributed technology and open systems is the fact that anyone can get involved. If we take SuperRare as an example, it is clear that anyone can create a digital art piece and partake in an open marketplace. You do not need to be a well known designer, photographer, or fine artists to make your work available for sale. This is not to say your art will sell, but it does create a fair situation in which the value of specific pieces will be defined by the value of the other work in the market.
We can see that distribution of assets is more fluid when in an open market and set at fair market value. Blockchain technology makes it possible for permissionless participation in a network as we can program rules, verification of transactions, and even process for dispute resolution directly into the code in which we use.
Putting it all together
So now let’s consider this – an open and decentralized marketplace programmatically designed for asset provenance, combined with the scalability, usage, and network effect of a platform like LINE. All available to anyone in the world to participate without the approval or guidance of a third party. A truly permissionless platform. Imagine:
- Artist posts a sticker pack for sale
- Artist sets price of sticker pack
- Artist sells sticker packs
- 100% of profits are sent directly into the artists ethereum wallet without any third party
It’s simple – artists and creators are incentivized to use a platform that yields the highest value for them, and combining the three factors outlined above will do just this. While distributed networks and blockchain technology are still very young, the potential of their value to artists and creators around the world is truly massive.
About the author
Jonathan Zerah is the head of marketing at Status.im. Status strives to build private and secure communication tools that uphold human rights. Status, the mobile application, combines a decentralized messenger, crypto wallet, and Web3 browser built with state of the art technology. With the high level goals of preserving culture through privacy, Status is also researching and developing the infrastructure, protocols, and tools to make Web3 a reality.