Since the start of May cryptocurrency prices including Ethereum’s ETH, home to some of the most popular NFT projects and platforms, have dropped significantly. ETH itself more than halved in value versus most ‘fiat’ (e.g. the US dollar or Euro).

The externalities of NFTs will upend the world of creative expression. They’ll have to be reckoned with even by those not interested in the technology, through a three pronged approach.

It’s about a year now since Bas and I started writing about NFTs and becoming ever more active in Web3. A lot has changed, but I’m still seeing the field of tension I described as a two-pronged fork back in May 2021. On the one hand there’s the notion that we should break from the past and go full crypto. To put everything on-chain and by virtue of decentralizing everything we can build a better and more equitable future. On the other hand, there’s the notion that we should bring our legacy institutions and structures into Web3. To build on what already exists and improve. It’s a classic situation of revolution versus evolution, and it permeates on so many levels:

What if fans could invest in songs and participate in the financial success of the song through a cut in royalties? This is one of the most easy to explain value propositions for NFTs, yet it’s also one of the least important use cases for NFTs.

The largest obstacle to understanding the developments in the web3 space is the belief that it’s there to replace everything we know. Innovation doesn’t work that way. Innovation lives side by side with past innovations. Napster and Torrent technology brought peer-to-peer network technology to the innovations of sound recordings a century earlier. These innovations paved the way for the modern music streaming service and the web3.

If you read a lot about music, especially the music business, it’s difficult to escape the impression that it’s all about value and the creation thereof. Large catalog sales, investments in start-ups, artists fighting to take ownership of the full value of their own master and/or publishing rights, etc. are all run of the mill headlines. There’s two issues at play here:

There’s a reason why innovations get picked up when they do. Part of it is technological maturity, but a much harder to see convergence of trends is often key to things taking off when they do. The past years have seen creators calling for fairer compensation, trying out new business models through ‘the creator economy’, people being overwhelmed by infinite social media feeds & recommendations, and an ever-increasing normalization of digital payments in general, as well as payments for digital services. The latter two being far from widely adopted in most countries even 10 years ago.

A common issue creators excited web3 run into, is that their fanbase might not be familiar yet. There’s a feeling of needing to port folks over, to educate them, to help them get set up… This may not be necessary. There are lessons we can draw from the past.

After the NFT money hype this past spring, we moved into a space that focused more on the utility an NFT can carry. Taking a cue from the world of gaming - with their skins and items - musicians began to experiment with digital collectibles. Not only does this idea of the collectible allow for good story-telling, it’s also a way to bring non-crypto minded fans into a Web3 environment. All of this seems beneficial to both artists, who can create connections with their fans, and Web3 enthusiasts, who see more people creating wallets and generally getting their feet wet in our blockchain ocean.