About A Nifty Product
Nifty seems to be the popular name for NFTs - something I wrote about just last week.
very attractive or appealing
very pleasant or enjoyable
very interesting or clever
Seems about right.
Photo by Douglas Bagg
Since last week, I have had a few emails asking me to dive deeper into the ‘job future’ I proposed. So - here goes.
A lot of the publicity on NFTs have built on the idea of non-fungible being equivalent to unique. But that is not the only way that an NFT can be used and that is the job opportunity.
Consider Beeple’s own first foray into NFTs when he released 100 identical pieces of art into the system.I am not going to show it here, but if you want to read (and see) more - you can - here, make sure you run the videos. You will certainly have seen the one on the left but the one on the right (the art that would have been visible had Trump won) is not so famous.
You can check out all of Beeple’s NFT art here.
Here’s the thing. Those two pieces of art will have taken a while to make. So why did he sell them at $1 each with an expectant total income of $100? This is where the first piece of maths comes in. The contract in Beeple’s tokens ensures that any sale of any of those tokens downstream will reap him another 10%. On every transaction.
If one of those tokens sells for $30 - the buyer makes $29 (30 - original investment). BUT … $3 is paid to Beeple - so the seller’s NET profit is $26.
If that buyer then sells for $300 - $30 finds its way back to Beeple, but he still nets $300-($30+$30) = $240.
Clearly by limiting supply, he creates demand and an after-sale auction that he continues to benefit from as the sales occur. Producing too many at the beginning takes that advantage out.
To understand the flow of what is going on, this is a great read. It is the story of how those pieces of art were sold over and over again. Interesting is that a central character in the story goes by the handle of Metakovan. You might recognize that name. Thats’ who spent $69 million at Christies on Beeple’s record-breaking auction.
This is where the real maths kicks in.
Let’s get out of art and think about music.
Musicians have been struggling with how to make money from their recorded music for year. It is no secret that these days money is made from ‘touring’ and ‘merch’. There hasn’t been much touring in the past year - and really just how many t-shirts and posters can you buy from one band. Of course, you can put your music on the internet with a service like Spotify and watch the CENTS roll in over the next 10 years.
Alternatively, you might recall a little over 5 years ago Martin Shkreli spent a few million dollars to buy the only copy of Wu Tang Clan’s “Once Upon a Time in Shaolin”. He later sold it at a massive loss (no tears there), but though it wasn’t an NFT, in some ways it represents the other end of the spectrum.
At one end of the spectrum … one single copy. Only one person can own it = VERY LIMITED SUPPLY.
At the other end to produce a second third, 12 millionth version is zero cost = UNLIMITED SUPPLY.
Niftys introduce ‘supply and demand’ as a tool for any creative seeking to earn money from their work. They get to choose the supply - but unlike say a physical book - print 5.000, if we need more, we will print more … A Nifty can require you to decide how many you make at the very beginning OR how long your offer is going to be available before you stop offering them for sale.
Kings of Leon were the first band to use NFTs. They chose the latter approach, essentially as many people who wanted to buy their product in a two week period could buy and then the auction closed.
The Emerging Maths suggests that setting the price for your NFT is dependant on a range of factors including;
what it is
how many there are
selling at what price
for how long
how much anticipated resale do you expect and do you have resale benefit in your Nifty contract
who you are and how famous you are
how famous you might become
the media you are selling
… and that’s just off the top of my head so it is unlikely that understanding how to maximize the value of return for your work placed into an NFT is going to be easy.
You might not have heard of Beeple - I hadn’t until all this went down, but he had millions of followers and his artwork was being bought before NFTs. Still 100 NFTs @ $1 is a big gamble - or a learning exercise as a precursor to something bigger.
Kings of Leon have been around for over 20 years, had great global success I have not only heard of them, but own a few of their CDs (remember them?)
I have no idea which of those two artists are more famous, has a bigger following and buying public
The ability to analyze a creative entity along with their latest NFT and advise how to maximize the revenue based on how many of the piece you released over what time period.
Consider Beeple - was his initial foray of 100 the right number? How much more or less could he have made with say 80? (So limiting supply as well as creating demand) ... $1 to try something out and learn how it works - pretty cool ... but if he had released (say) 10,000 ... I don’t think one of them would be anywhere near 300k yet …
And yes - and AI will eventually going to be able to do that - but not for a while - because that equation is surrounded by marketing programs, demand creation, the state of your email list and an innate understanding of the markets you are operating in. All of this is outside the scope of hard logic and calculation.
To quote a friend … that’s what I think … what do you think?
My thanks and appreciation for your continued support, comments, and attention. Please like the post, share through your social channels and forward the email to colleagues, friends, and family that want to join us on this journey and do comment or email me your thoughts.
The auction was started before the US election and there were two images in the token. Depending on the outcome of that election, the image would lock to one or the other. Biden won, so that is the image we have come to know. There were 100 identical tokens available to buy for a single US dollar. (see more here)
The first $30 being what they first paid, the second $30 being the commission to Beeple.
Great post. And for anyone that needs further explanation, this is one of the best I've seen on NFT. A brilliant SNL sketch: https://youtu.be/mrNOYudaMAc