Although the term “NFT” has dominated the news cycle for a couple months now, for many of us up until this point the idea has served as little more than a source of anecdotes involving large amounts of money collected from something we once considered trivial (did you see the “Disaster Girl” meme NFT sold for $500,000?) In a way, it’s easy to see why these stories keep making the news: it’s certainly hard not to click on an article stating Grimes made $5.8 million dollars in less than 20 minutes on her digital artwork, or that Jack Dorsey sold his first tweet ever for $2.9 million. The explosive growth of these sales has been called “the latest blockchain craze” or “the NFT gold rush,” but while it is fun to laugh or even tsk our tongues at the novelty of a meme selling for half a million dollars, others are recognizing the potential NFTs have to revolutionize industries.
One such person is Gurps Rai, founder and chief executive officer of droppTV. Billed as the world’s first shoppable streaming platform, droppTV uses proprietary artificial intelligence, machine learning, and computer vision algorithms to recognize products in video content and tag them in real-time, building at the intersection of entertainment and retail. Today’s consumers are increasingly looking to buy with purpose, seeking an emotional connection with their purchases more than ever before that can only be achieved through authenticity and relatability on the part of the brand. The accessibility of the internet has created a savviness in the consumer that means they are quickly able to identify – and distrust – when they are being “sold to,” and Rai recognized that even a pop-up ad or a new window that opens to purchase a product is disruptive to the experiential nature of shopping within a video.
The idea of being able to purchase while simultaneously being entertained – also known as “shopatainment” – is a powerful one, and Rai’s hope has been to see droppTV’s technology used to transform industries. Making the first phase of the company’s consumer rollout music videos, Rai has sought to innovate within the music industry by allowing artists and creators a new way to tell stories through their content as well as connect with their fans. Although the technology that is available today has made it possible to create professional-quality videos without a gigantic budget, many up-and-coming artists overpay directors for videos of mediocre quality while also failing to adequately monetize the content they create. However, the problems within the music industry extend well beyond the monetization of music videos, and Gurps Rai has recognized the parallels between droppTV’s innovative technology and that of NFTs.
NFTs in a nutshell
Before we go any further, it would be best to provide as brief of an explanation as possible of the nature of NFTs. NFT stands for non-fungible token, with “non-fungible” meaning that it is unique and unable to be interchangeable with anything else. NFTs can technically be anything digital, but much of the current excitement is about using the technology to sell digital art from photographs to drawings to music as we’ll discuss in more detail.
Blockchain technology is what has allowed cryptocurrencies such as Ethereum, bitcoin or dogecoin to evolve, and in the simplest of terms can be described as a process for storing data in a transparent and unalterable way. Similar to how watermarks and special paper prevent people from simply printing money, blockchain technology is what allows cryptocurrencies to exist independent of traditional banking networks. Most NFTs are part of the Ethereum blockchain, which supports NFTs by storing extra information that makes them work differently from an Ethereum coin, but other blockchains can and have begun to implement their own versions of NFTs.
While technically every NFT has a unique token on the blockchain, it is possible to issue multiple copies that are still all classed as authentic and unique, similar to a limited edition print or a trading card in which only a certain amount was made.
NFTs and the music industry
The ability to create identical and yet unique NFTs opens the door to changing the way the music industry currently operates. Just as Rai’s droppTV platform puts the power back into the hands of the artists to monetize their creations, NFTs have the ability to revolutionize the way we access music. Rather than be dependent on large record labels and streaming services to earn revenue, musicians can choose when and how to release their content and let the markets establish their value. Additionally, blockchain’s ability to track an NFT through every sale after its creation means that even as items such as merch or concert tickets are sold and re-sold, the artist can continue to receive monetary compensation for them. Think about how a band tee’s value can increase over time as it becomes older and more rare – with NFTs, rather than it being a one-time, direct-to-consumer payment it results in multiple payouts that can result in a more expansive, long-term career for the musician.
The experiential element
NFTs provide fans with the ability to invest in artists directly, but unlike droppTV they lack the experiential element that can draw in a crowd by creating excitement and hype. According to Rai, this is one of a number of roadblocks that can prevent NFTs from reaching their potential within the music industry. The current user experience is more traditionally e-commerce, very transactional in nature and resembling a bidding marketplace such as eBay. As “shopatainment” proves to be an increasingly viable way for retailers to revitalize their business, there is no reason for such an exciting new technology to be using antiquated e-commerce methods. As Rai puts it, the NFT market is in its “Wild West” phase which means that while it is dealing with problems such as copyright issues, fees, energy use and intellectual property infringement, it is also ripe with opportunity for those who see it. While experiential shopping can be an effective strategy for any retail business, working it into the music and entertainment industry has the potential to be one of the most seamless transitions. As stated earlier, Ethereum is currently where most NFT tokens are minted, but on the ERC20 chain the gas prices of minting a token can be taxing. Within the business model of the current NFT marketplaces sellers must be accepted to be able to sell in the marketplace. Additionally, the marketplace transactional fees can fluctuate and are currently quite high with the marketplace taking 15% in addition to other fees.
Bringing together the best of both worlds, Rai is leveraging the energy-efficient cryptocurrency Hedera to verify and tokenize one-off iconic pieces in music videos on the droppTV platform. Through this new innovation, creators will have the unique ability to tokenize music video sets and sell digital and real life pieces. Imagine owning the actual chair Beyonce sat on in her music video or those actual sneakers DJ Khaled is wearing in his music video. droppTV’s interactive video technology will allow viewers to purchase one-off outfits directly from a music video with a single tap, while Hedera’s Hashgraph technology will be used to track and trace the provenance of the collectables and mint the NFTs. This way, the purchasers know the items they have purchased are authentic, and that everybody involved in the creation of the product is properly compensated for it, for old music videos as well as new.
By using Hedera, droppTV has created the world’s first experiential marketplace of verified collectibles. Although market capitalization of NFTs has grown by over 125% in this year alone, it is in no way close to a mature industry yet. As Rai put it, artists are selling music on droppTV already and they make way more money than any other streaming platform can offer them. Adding this NFT layer to that just means there is a solid and robust structure for artists to cut out the middleman and go direct to their fans. NFTs have created the ability for the music industry to evolve way past its current structure, and has massive utility in creating the fair creator economy that artists deserve.