Non-fungible tokens or NFTs have catapulted their way into the media headlines this year, with high profile celebrities such as Paris Hilton, William Shatner, and Twitter’s very own Jack Dorsey all becoming involved. One such example is Ja Rule, who is now Head of Artists and Repertoire for NTF company, Flipkick of New York, working with co-Founders Robert Testagrossa and James Kirk Cropcho. The latter is the company’s Chief Technology Officer, and we caught up with him to get a first-hand explanation of what NFTs physically are, how they might be monetised by publishers, and where this intriguing part of the digital media industry could be going next.
The first thing to recognise about Flipkick is that it is no ordinary NFT company. Thusfar, most of the business infrastructure that has grown up around NFTs has involved investment and trading services, such as the aptly titled NFT Investments PLC, which recently listed on the London Aquis Stock Exchange.
Flipkick on the other hand, is more akin to the type of business we might expect to find in the traditional media – rather than financial – sector. The company has devised a process to cryptographically authenticate physical works of art such as sculptures and paintings. They can be resold like any other NFT or redeemed for delivery of the physical work.
The company’s homepage is adorned with works by Flipkick artists that can be bid on, and as the afore-mentioned Ja Rule’s A&R title would imply, there are elements here of the traditional music industry, where emerging artists are given a platform through which they can make physical sales. Indeed, it was (certainly in the case of this writer) the news that Ja and original photographer Trevor DeHaas would be selling the infamous Fyre Festival ‘cheese sandwich’ tweet that first propelled the platform into the mainstream.
But, we get ahead of ourselves! First and foremost the key question that I had to put to Cropcho was: What is an NFT!?
“OK! So… an NFT is a record, on a ledger, which demonstrates that someone owns something,” says James Cropcho, co-Founder and Chief Technology Officer for Flipkick. “And this thing that is owned, is unique, there is only one of them. You might contrast this to say, owning dollars or Bitcoins, or something. These possess the property of fungibility, which means that if I take a dollar – or a pound – out of my wallet and give it you, and you give me a pound, then neither of us would feel better off for that. Whereas perhaps if we each traded a painting, we could each feel as though we benefitted, each feel that we got shafted, or also feel the same. So when people talk about an NFT, they’re talking about a record of ownership of a thing – it could be a logical object, or a physical object as well.”
Most NFTs sit on the Ethereum cryptocurrency blockchain, although other blockchains can and are beginning to implement their own versions of NFTs as well. They allow creators to create wholly unique tokens for assets such as images, songs, anything digital, and as discussed in the case of Flipkick, be linked to physical works of art as well. Creators can then sell these as one-of-a-kind works of art, limited editions, or even as small fractions of a whole work.
In March, Jack Dorsey sold the first ever tweet (“just setting up my twttr”) as an NFT for US$2,915,835.47, which he in-turn donated to GiveDirectly for its Africa Response. If Ja Rule’s involvement in the industry sounded a klaxon to media minds that this trend was now something to be taken seriously, then this demonstration by Dorsey represented the mainstreaming of NFTs for the tech side of the industry.
But despite all of the headlines, there still seems to be a slight lack of understanding as to what an NFT physically – or I should say digitally – looks like. And this is a phenomenon that we have also seen this year in other areas of media tech. In March, FIPP sat down with Max Beverton-Palmer of the Tony Blair Institute to find out what social media regulation could physically look like as it begins to move globally from theoretical consideration to physical implementation. In other words, as my old metaphysics lecturer used to tell us at university, “Detail will get you a long way”.
Cropcho agrees, and says that the headlines created around emerging technologies such as NFTs can often distract from their real possibilities on the ground.
“I appreciate that you want to understand technically! That’s good,” says Cropcho. “Honestly, my experience in the past has been that – I don’t know – even with Bitcoin, people largely don’t really care… they’re just kindof like wow, Bitcoin has a crazy price today!”
“But when people think about a Blockchain, ideally they might think of it being a sort of distributed ledger technology. A ledger, meaning in the simplest sense a set of people or entities and the balance that they might have in an account. In this case, you might say that there is a record of the ownership of a completely unique item in this ledger.”
“So perhaps a good analogy might be owning a piece of land. No two pieces of land are completely fully equivalent, or if you prefer fungible. So if you imagine going to some local government administration, they may have a ledger of who owns the various pieces of property. And they would also record the transfers of pieces of property from one person or entity to another. So this is just at a high-level sense how these things work.”
In the full interview, I did find myself wandering off at times down the philosophical rabbithole. Because of course, once we start to think in terms of compartmentalising and selling off pieces of the digital landscape in the same way as we currently do the ‘real world’, it does start to shift the dial slightly on what our interpretation of ‘digital’ actually is, from something slightly mysterious, intangible, and out there in the ether… to a world that can be mapped and organised just as easily as the physical realm.
But more importantly than that, where is the money? For me, NFTs represent a great opportunity for traditional media owners to further expand their digital revenue streams. Such companies are after all, be they from the music, broadcast, magazine sector or otherwise, the ultimate producers of unique and quality content.
Vogue covers for example, spring to mind. Could Condé Nast simply produce 50 unique covers featuring 50 unique cover stars, in both digital and print incarnations, and turn them into saleable NFTs? Another recent example that caught the eye from the events sector was implemented by the Charlotte Hornets, who for a recent game made 88 special-edition NFT tickets available at the fan-friendly price of $4.99. For an industry that has longsince been focussed on transitioning physical paper products into tangible digital revenue streams, do NFTs offer an opportunity?
“Yeah, I mean virtually anything can be tokenised… In the case of Vogue let’s say, if you had 50 unique covers, then you could have 50 NFTs. A minor point, which I don’t often mention, but seems as though it would be of interest to you… is that I would differentiate between NFTs and just the broader set of collectable tokens. Let’s say there were 50 Vogue tokens available, but they didn’t have separate covers. Then I would think about these as actually fungible, because one token is equivalent to the other. They would be exactly the same in that case, you might just have a collection of 50, and they would be collectable. This is a pragmatic difference.”
“But in terms of monetisation more broadly, you mentioned ticketing and that is an interesting use-case, because there are so many aftermarket sales of tickets. And the thing that is probably most interesting about these NFTs, is the ability to sell them unconstrained on a secondary market. Or to put it differently, the inability of the issuer to prevent a secondary market, or to destroy the token if the token is under the ownership of someone else.”
“So on the scale of how natural a use-case it is, tickets would be fairly natural for NTFs. The Kings of Leon NFT sale was I think structured smartly, in the sense that the token holder gets a recurring benefit. They get an opportunity with each new tour to have four front row seats and other fringe benefits. This is in perpetuity, or until Kings of Leon is no longer touring, and the token can be sold on the aftermarket. This is a rather clean and effective use-case, because here the fringe benefits and the tickets and such, they really are essentially logical objects. A ticket doesn’t physically exist. You can have a piece of paper of course, but it doesn’t physically exist, in the way that a dollar or a pound don’t physically exist.”
In a wide-ranging interview on the subject of NFTs, Cropcho spoke to us about many areas of the industry, and I would encourage you of course to watch the full 30 minutes. But in terms of summarising the spotlight that the NFT phenomenon currently finds itself under, and where the technology could be going next, the CTO provides an interesting assessment:
“Well, frankly it’s no secret that right now, some of these NFT markets are a bit frothy. There’s definitely a rampant interest right now, which as I said with NFTs having been traded since 2017 was not always the case, it’s a new thing. And the frothiness will subside, as happens in markets. I suspect that these sorts of things would operate in cycles – perhaps it will become frothy and then unfrothy again.”
“But I just couldn’t imagine all of this going way. There really are problems that this technology solves. My favourite example that I like to bring up of what NFTs would just be utterly fantastic for – and is amusing to me because it’s the least sexy thing that anyone can think of – is the management of domain names! I think that NFTs are just absolutely made for that. Domain names being like, oh I don’t know the New York Post, nypost.com, that actual domain. NFTs would just be a fantastic system for managing those, and already are to a limited degree. I believe .eth domains and some others are being managed as NFTs. So that’s a pretty fantastic use case.”