After finishing the manuscript for the tech thriller Catch-42: A novel about our future, Felix Holzapfel was approached by a Canadian gaming expert who’d read an advance copy and harbored a wild idea: What if he were to tokenize the cover as an NFT (non-fungible token) — an encrypted record verifying the authenticity of a digital object?
Holzapfel, the founder of digital marketing company Cognizant and author of several nonfiction books on guerilla marketing and digital media, thought it was a fabulous idea. He reached out to Australian digital and crypto artist Nate Hill about the possibility of using Hill’s tunneling, black-and-white “Back to our World” piece as the cover of an exclusive, limited-edition NFT package containing the cover artwork, a paperback and an e-book with a personalized dedication. The two struck a deal, the details of which they asked not to share.
“It’s proof that this item only exists once. If you take Andy Warhol or more modern artists, it’s easy to replicate their art. And the more popular the art gets, the more valuable the original artwork gets.”
Last month, they held a reverse auction for the book and art bundle on SuperRare, one of the leading marketplaces for crypto art. The NFT package sold for 3 Ether — equal to $7,421.76 on the day of the sale. It wasn’t a fortune, but it was a pretty good take for a single work of fiction.
“I thought it would be beneficial for the artist and for me, as well,” Holzapfel said. “We could create a win-win situation. We create a special story for his artwork, because it’s not just an artwork, but it’s a special artwork, which at the same time is a book cover. And the book cover is a special book cover because it’s not just a book cover, but a piece of art at the same time.”
Welcome to the topsy-turvy world of NFT media promotion.
Okay, What Are NFTs?
In case you’ve been holed up in a bunker — or just spending your time somewhere besides Twitter — NFTs are the latest tech gold rush. Synth-pop artist Grimes has sold millions of dollars of digital art as NFTs and Twitter founder Jack Dorsey has fetched bids north of two million dollars for a signed copy of his first tweet: “just setting up my twttr.”
NFTs live on a blockchain and can be attached to anything — images, videos, tweets. A unique string of encrypted code signifies an NFT as authentic with a secure record of ownership. Once “minted,” the digital object — often a 3D image or animation — can be stored in an owner’s digital wallet and sold at auctions for cryptocurrencies like bitcoin and Ether.
Much like traditional works of art, the value of NFTs is derived not only from their artistic merits, but their verifiable proof of origin, Holzapfel told me. There are countless posters and digital photographs of “The Mona Lisa,” but most are worth next to nothing. Leonardo Da Vinci’s old master on permanent display in the Louvre, however, is believed to be worth $850 million. That’s because it’s not a simulacrum; it’s the bona fide original.
The same idea of scarcity-based value holds true in theory and, at least right now, in practice for NFTs. One of the bullish ideas collectors attach to the exclusive digital objects— which, in file form, can be little more than a JPG or GIF validated with a string of text in a hash or link — is that verifying the provenance of digital artwork using blockchain increases its market value and reduces piracy threats.
NFTs signify ownership, but copyright remains with the creators. So while you can reproduce the works endlessly, the owner of the NFT has something that is, at least notionally, unique.
“It’s proof that this item only exists once,” Holzapfel said. “If you take Andy Warhol or more modern artists, it’s easy to replicate their art. And the more popular the art gets, the more valuable the original artwork gets.”
Cryptocurrency Investors Become Crypto Art Collectors
For Hill, a photographer and graphic designer who formerly made a living from family portraits, wedding photography and album cover design, sales of NFTs on platforms like SuperRare, Nifty Gateway, Foundation, Rarible, OpenSea and Zora have become a full-time job that “set me and my family up very well,” he said.
How well? In the past six months, he has sold 838 pieces, with his top seller fetching $15,000. DJ and producer 3LAU (Justin Blau) introduced him to the space after the two met on Instagram, where Hill cultivated a large following for his work and beta-tested several of the platform’s popular photo-editing apps.
“[Blau] introducing me — and he bought my first-ever NFT — really gave me a huge boost to start off my journey in the whole realm. And then my name started getting out there a little bit as an artist because I had the backing of someone like him. So that was pretty huge,” Hill said.
Though drawing on the playful pastiches of English artist Stanley Dunwood, who created the artwork for Radiohead and singer Thom Yorke, and Storm Thorgeson, the graphic designer behind Pink Floyd’s surrealistic album covers, Hill’s style is his own. Using an iPad Pro and widely available tools like Adobe Photoshop, Illustrator and After Effects, he creates twisting, otherworldly landscapes, psychedelic cloud forms and curving line studies. His piece for Catch-42, characteristic of his head-swimming designs, evokes an eerie, untethered mood similar to the opening credits to Mad Men.
“It’s a lot like social media, to be honest. It seems to be where all the tech people and crypto people are.”
In a burgeoning digital art market that has seen NFTs sell for jaw-dropping sums of money, Hill is hardly alone in his success. After two weeks of bidding at the auction house Christie’s, the 39-year-old graphic designer Beeple (birth name: Mike Winkelmann) sold his digital collage “Everydays: The First 5000 Days” to Metakovan, the Singapore-based founder of the cryptofund Metapurse, for $69.3 million, more than any painting by Titian or Raphael, according to a recent Washington Post editorial. In fact, Forbes reported that NFT market capitalization grew by 1,785 percent in the first three months of 2021 alone, leading to increasingly stiff competition for rare NFTs.
“There are a lot of collectors that I think have probably gotten rich off cryptocurrency and are enjoying this technology and the art coming into the space,” Hill said. “It’s a lot like social media, to be honest. It seems to be where all the tech people and crypto people are.”
Social reciprocity and active involvement in the NFT community — which, in many ways, is its own self-fulfilling hype beast — appears to be a winning strategy.
“Community is a huge part of it,” Hill said. “The major collectors want to see that you’re not just coming in to drop a piece of paper, a couple pieces of art, and out for a quick cash grab. They want to see that you’re investing in the space and sharing about it with other artists, that you believe in this as a medium and as a way to create, and earn a living off, your art.”
Murky Ownership Rights Have Some Designers Fuming
Of course, the community has its share of outspoken critics. A group of digital artists protested when indie developer Jason Rohrer created an NFT auction called “The Crypto Doctrine” using paintings he commissioned from them in 2012 — well before NFTs were created — to use in a burglary game called “The Castle Doctrine.” Though there were no written contracts issued when the paintings were obtained for the game, several of the artists complained that their works were appropriated under false pretenses.
“I am not a fan, to put it mildly, but am deeply opposed to the current trend towards artificial scarcity of digital objects, for numerous reasons,” game creator and scholar Andy Nealen was quoted as saying in a recent interview with Kotaku, citing what he called the “unprecedented environmental damage” caused by the massive electric power required to run blockchain transactions.
“They want to see that you’re investing in the space and sharing about it with other artists, that you believe in this as a medium and as a way to create, and earn a living off, your art.”
Another gripe is that NFT art is not real art, but a chintzy derivative, “one more riotous example of high-roller groupthink, market manipulation and the seemingly unstoppable human urge to commodify everything,” as critic Sebastian Smee not-so-mildly put it in the Washington Post.
Then there’s the issue of the ephemeral quality of NFTs. Where does their value lie?
“I am offering handmade NFTs,” quipped Whet Moser, a Chicago-based freelance writer and editor, in an April 29 tweet. “For $50 I will write a long password on a Post-it and put it in my file cabinet. That entitles you to ownership but not use of one thing in my house. We are starting with a CD of KD Lang’s ‘Angle With a Lariat’ that I bought at a thrift store.”
Yes, a Mash-Up Is Art, Too
Yet Holzapfel believes criticism of the art itself reeks of the same sort of gatekeeper snobbishness that snubs its nose at, say, electronic music or vernacular architecture.
“It’s a different type of creativity that these artists use,” he said. “They hack tools to import filters and combine files. It’s not so different from taking an oil painting and putting chalk into it to change the structure. It’s just a different type of creativity that we need to get used to, to value it in the same way we used to value traditional arts.”
Criticisms of the value of NFTs, like Moser’s, are equally misplaced, he argues. Their trade is not so different from traditional art sales: NFTs are sold directly from platforms that operate like storefronts, through open-bid auctions or in “reverse” auctions that typically provide a 24-hour window to up a starting minimum bid. While scarcity is artificially engineered, collectors buy crypto art for the same reasons they buy other art: because they admire it or expect its value to appreciate over time — or probably a little of both.
“Everybody asks the same questions: ‘Okay, give me a break. So you sell the JPG, which is basically the artwork, for $7,500. Couldn’t everybody just download the high-resolution artwork and print it?’” Holzapfel said.
And isn’t it the same JPG?
Excluding the password and ownership record, yes.
And can’t it be easily reproduced on Twitter, TikTok, Instagram, et cetera?
But none of this really matters — in fact, social media may be dry tinder for NFTs. Their currency on platforms like Twitter, where Hill promotes his work, may explain why brands like Reebok, Pringles, Nike and Taco Bell are selling them to customers, musicians like Kings of Leon are releasing NFT albums, and the collectable game NBA Top Shot, which lets people purchase videos of sports stars in the same way one might buy a rare baseball card, has hosted user sales totaling $308 million.
“From the perspective of the value of that NFT, as more people print that JPG and put it on their wall or do something with it, the value of the NFT goes up, because it proves that more and more people love that image and that it’s a great image,” Holzapfel said.
“Everybody asks the same questions: ‘Okay, give me a break. So you sell the JPG, which is basically the artwork, for $7,500. Couldn’t everybody just download the high-resolution artwork and print it?’”
Popularity, in other words, confers value. But becoming popular requires more than just talent. Almost all major NFT selling platforms are selective in which artist they work with, Hill said, and some do significantly more trade volume than others.
“I think it’s fair to say the biggest platform in the NFT space, at the moment, is called Nifty Gateway,” Hill said. “I feel extremely fortunate to have gotten on there. It’s a highly curated site, and it’s the one that you’d probably see all the big sums of money coming from.”
The Slow-Build Approach
While some of his graphic-design friends have done quite well selling their work, others have floundered, particularly as the market has grown more saturated, Hill said. His advice to those starting out is to build slowly, releasing small batches of exceptional work with the best chance of drawing eyeballs on social sites or NFT marketplaces.
“Try not to jump in and put lots of artwork up all the time, but start small, and see if you can make a sale,” Hill said. “I’ve seen some artists come in and mint like 15 pieces of art that they’ve made in the past. And none of them sell. Because none of them sell, collectors sort of think, ‘Well, why would I invest in that if no one else is interested?’”
Of course, books operate differently than isolated images and raise a whole new set of questions regarding copyright protection. Holzapfel acknowledged that a lack of clarity surrounding digital rights management (DRM) is one of the teething problems of NFTs, particularly as it pertains to the publishing trade.
“Try not to jump in and put lots of artwork up all the time, but start small, and see if you can make a sale.”
While reading platforms like Kindle and Apple iBooks have DRM controls that prevent unauthorized file sharing, the protection doesn’t exist on most messaging apps. That “probably would hold back larger publishers from using NFT technology,” Holzapfel told me, as they couldn’t control the manuscript’s spread.
But for a copyright holder like a self-published author, unauthorized file sharing might not be such a bad thing. As boutique publishers and authors not represented by large publishing houses look for new ways to promote and sell their work outside traditional channels like Amazon and Barnes & Noble, NFTs could become a viable marketing tool and alternative income stream. Plus, so-called “smart contracts” could give the copyright holders access to a cut of secondary markets — like resold books. Remember how Amazon built its empire?
“There are a lot of big players in the market right now who you need to go through, and there will be no need for that anymore. People can start to deal between themselves,” Holzapfel said.
A New Market for Self-Published Authors and Indie Presses? Maybe.
Some tech companies are rushing in with the stated intention to make those transactions easier. The carbon-neutral NFT provider ViciNFT — founded by literary agent Bill Gladstone, who has represented authors Eckhart Tolle and Deepak Chopra and singer Neil Young — recently designed and issued an NFT for writer Victor Villaseñor’s book Burro Genius, according to briefing from Phoenix Rising PR, who represents the author. The art bundle, featuring a childhood picture of the author and a handwritten quote inspired by Villaseñor’s grandmother, sold for .225 Ether, or roughly $793, on the auction site OpenSea, with twenty-five percent of proceeds donated to environmental charities.
Meanwhile, a second phase of the Catch-42 book launch began April 29 on OpenSea and is still underway. Hozapfel is auctioning 30 NFT containing the novel and a limited-run poster of the book’s cover, and proceeds from the sale are being donated to Paradigm Initiative, an NGO that promotes digital inclusion in Africa.
“It’s not about earning money,” he told me. “It’s more about showcasing what type of things you can do with NFTs: What type of specials you can create, how you can use smart contracts to distribute the profit to different players.”
“The bar to read a book is quite high. So by creating something like an NFT campaign for a book in the stage where the market is right now, I give people another opportunity to talk about my book.”
But that’s only partially true. Holzapfel acknowledged he also wants to make money on the novel, and interest in the artwork and charitable campaign could increase its chances of being read and reviewed by critics.
“The bar to read a book is quite high,” he said. “So by creating something like an NFT campaign for a book in the stage where the market is right now, I give people another opportunity to talk about my book, without the need to read my book.”
Interestingly, the book itself — which, to disclose, I have not read — has little to do with NFTs. An amalgam of the mystical number 42 in Hitchhiker’s Guide to the Galaxy and Joseph Heller’s satirical war novel Catch 22, the title reflects humans’ ability to “think the unthinkable and make the impossible possible,” Holzapfel said.
For those banking on NFTs’ success, hopefully life imitates fiction.