WTF are NFTs?
Murray Thom, Cofounder of NFT start up Glorious and James Blackie, Director of Art, give us the download on everything we need to know about Non Fungible Tokens (NFTs) and their potential for visitor attractions – from art museums to stadiums. Combining their respective careers in music producing and art dealership, along with a who’s who leadership team, Glorious have burst onto the scene to create authentic digital masterpieces. Learn about the potential for brand, engagement, revenue, loyalty, access and more that this latest tech trend represents and what to watch out for in terms of security, equity and environmental impact..
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Angie: Hello and welcome to the Data Diaries, I’m Angie Judge from Dexibit. Today, we’ve got something a bit different, a bit special, a bit… glorious. We’re talking about NFTs or non fungible tokens, a name that sheds no light for those of us that are new to this… but digital assets of sorts, which exists in the digital universe, holding value and investment. They’re simultaneously a form of cryptocurrency and a form of art or collectibles, which is all… clear as mud. If you ask me, they are the latest – dare I say it – ‘hype in the digital world. Here today to give us the download and what it all means for the visitor attraction sector is NFT startup ‘Glorious’. We have the great Murray Thom and James Blackie. Welcome to the show!
Murray: It’s great to be here.
Angie: So let’s get the most important thing out of the way. First, is it cooler to say NFT or ‘nifties’?
Murray: Um, well, no! Nifty, of course, I believe is a trademark for another company. We call ourselves Glorious and we’re in the NFT business. So it’s way cooler for us if we go NFT!
Angie: I will stick to that one then. I’m going to level with you both. When I first heard about in NFTs, I had a bit of an eye roll moment. I’m not sure if I’m supposed to admit this publicly, but unlike Paris Hilton and Tiger Woods and whoever, I just haven’t been able to get into this whole blockchain and crypto thing.
And maybe it’s a bit of cynicism leftover from the GFC or I’m old fashioned, or there was a few sort of early misfires in the art world… I’m thinking, of course of Beeple, the artist that went from what, $100 to $69 million with a collection of digital art that was pretty crass and homophobic and racist. So when I saw the story about Glorious, it really caught my eye because of who was behind it. Not only as your team, as we would say here, world famous in New Zealand, but one of your co founders, rugby star Dan Carter is just plain old world world famous. And the superstar lineup of names you’ve got signed from Neil Finn to Lisa Reihanna, it’s beyond impressive. So what was the trigger for you all to come together in this new
Murray: I think we would all agree a hundred percent. And it was my friend Scott McCleaver, who was just an amazing guy. He’s global lead for digital innovation for PWC. He’s an absolute heavyweight, but to reinforce part of your introduction, he sent me a text and he goes, mate, what do you know about non fungible tokens?
And I’m reading this text, and I’m thinking I have no idea what your predictive [SMS] meant to say, but I’m sure it doesn’t mean to say that. And of course that was only back in February or March, which is probably a lifetime ago in the tech world, but my interest could not have been less. And to again, reinforce what you’re saying. When I looked at the world of NFTs, I think what I saw was that they all had in common was that they were overpriced and uninspiring. They had all that in common and my interest was close to zero in anything to do with it.
The moment of change came for me when I understood… a traditional artist, a painter, , of something that you’d hang on your wall, would take their work to a gallery. And let’s say, sell the work for $50,000 and they would get a portion and the gallery would get a portion. And then let’s say, let’s say that it on sold for a $100k and then it on sold for $200k, the artist only, ever profited from the very first sale.
When I appreciated that digital art, on the blockchain, was a continuing revenue source for the artists for every recurring sale… That moment, Angie, I thought, okay, there’s something really quite a significant going on here. And that was my way into the business. And that remains as it were, you know, really what I’m all about.
I was the person that named the company, ‘Glorious’, because it said everything about who we were, who we were going to partner with and our hopes for the future. And our byline, I’ll just finish with this, is ‘authentic digital masterpieces’. In a world of, or on a platform of hype, if we were world class content, that would always endure and it would always have value.
Angie: James, I think I’m going to have to ask maybe if we can back the truck up a bit… WTF is a NFT? Can you explain it to me like you would with your grandma, and tell me about what’s different about Glorious’ offering?
James: Well, to explain it to a more octogenarian audience, is that if an artwork is magnificent enough that the public wants a memory of it, if you go and visit a museum and you see it, and you want to remember it at home, you buy a poster print, right? And you take that home and you might frame it. And that creates for you a visual memory of that original, in your home. And the poster’s role is to up the ‘mana’ [life force] of the original artwork.
Now, as an aside, the sale of those poster prints, they create an income stream for the artist or the institution that licensed it. But the problem with poster prints is the quality is low, right? The, the ink will fade, the paper’s full of acid and they’re valueless. As soon as you’ve taken them out of the shop, they’re pretty much valueless.
So NFT s are an invention that has allowed digital images of masterpieces or an artist’s original work to be properly controlled, editioned, authenticated. And that means the replication can not only become digital and therefore globally accessible, it doesn’t matter where the artist is geographically… they can also make it scarce by limiting the addition of the digital copies. And therefore that can carry value. Right? So if the digital copy has author authenticity and provenance, then it can carry value. With the poster print, and any other digital copy of an artwork like Google images or wherever you find it, it can’t. So it makes the possibilities for NFTs endless for major institutions around the world. A lot of them have been closed because of COVID and if they’re selling NFTs of artworks, they’re creating an income stream. But the potential is huge for educational tools, or for people who can’t travel, or people who want to have the experience of standing in front of an artwork and can’t get it.
Angie: I quite like this comparison to the poster print, because merch is something we can all relate to in the sector. And I’ve always loved the idea that it’s a way of making the experience accessible and allowing visitors to take a bit of the visit home with them. So thinking about this visitor attractions world, the applications, it seems for digital are fairly straightforward for art museums.
I know one of our customers, ICA Miami, just made their first acquisition. The British Museum’s selling a couple of hundred Hokusai works in tandem with an exhibition and complete ironically, with a physical pop-up store. But I take it that there’s more than just art in this industry here. I’m thinking of zoos and the Bored Ape Yacht Club or aquariums and the Pudgy Penguins NFTs and then there’s theme parks and film studios and halls of fame and the sports stadiums. What is the potential here for wider visitor attractions?
James: I think the thing that NFTs really provide for anything – for a zoo, an aquarium, a library, is – it’s about connection. It doesn’t necessarily have to be a Glorious artwork.
But the thing that really differentiates Glorious from a lot of other NFT platforms is that everything that we are going to make will be a Glorious artwork on a screen. It will look stunning. NFT is actually a term that relates to the smart contract behind these entities that allows amazing things to happen. You can authenticate and you can limit the addition, but you can also open connections between your fans… and connectivity is massive. And that’s where I think potentially the majority of the power of NFTs lies. That if you have a zoo or an aquarium or a stadium if you have an NFT of a stadium, you might be able to enable first tickets of any concert that’s going on show there or sporting fixture. If it’s a zoo, you might invite in people who hold your NFT to see an unveiling of a new animal. A lot of people contribute to these local institutions. People donate money to keep their local zoo alive. But if you are creating an NFT, then you have that connection.
You’re still providing the fiscal support. And you know that money has gone straight to them, but they then have a direct conduit of communication back to you to make you feel properly connected to the institution that you’re trying to support. And that’s incredibly powerful.
Murray: And just adding to that, what James is saying, you know, like take a zoo, you know, if I’ve got an NFT for a zoo, James was right, I’m supporting the institution financially. But maybe your NFT holders can get in half an hour earlier or stay half an hour later. In other words, there’s all manner of rights and privileges that can be added or sold with the NFT. Even take a work of art you might buy a digital work about and then find that you can go to a gallery and you’ll have a professor speaking on the subject. I love all the rights that go in and around the NFT, in addition to the actual digital assets.
Angie: I love this connection to membership and loyalty because that’s a real focus for so much of our industry. Right now it’s recurring revenue, it’s support from membership, which has held so many venues through closure when their revenue otherwise disappeared. And so I can understand it from the visitor’s perspective of the member’s perspective.
Murray, in a world where anyone can download or copy digital assets. What is the point of ownership? Is it just flex?
Murray: I think there’s an element of flex. There’s no two ways about that, but I think that if you take a work about that’s near and dear to you, of course, beauty is in the eye of the beholder, but you know, I’ve already got my eye on two or three editions that Glorious is going to be coming out with. I’ve got physical art all over my walls at home. I haven’t got room for another piece of art. What I love about the digital art is that it’s going to go on a screen.
If you think about our screens all around the world, we’ve got black television screens lying dormant in the corner, right until TV comes on and what digital art does, it now it enables you to put something compelling in some way that you’ve never had it before. And not only can I have a piece of digital art, but then the following day, I can change it to another piece of digital art that I own, as opposed to knocking holes in walls and trying to shift my art. James has probably spent his whole life doing that also. I’ve got something, as James said before, that is actually authenticated by the artist, it’s on the blockchain. Really the blockchain is all about a digital ledger. It’s as simple as that. For my part, I’m very keen to purchase something that is an original, if you will. And own it. We’ve all got different tastes. People might buy this and sell it. I don’t know that I’ve ever sold a piece of art in my entire life. So I’m probably unlikely to sell my digital art, which probably isn’t good for the Glorious business model, but I’m very energized about this.
Angie: And James, can you connect an NFT to a real world object? And what does that mean? If that object is held and the permanent collection of say a museum, and it’s not going anywhere?
James: That is happening all around the world. In the last month – the Uffizi in Florence, the Hermitage in St Petersburg, the British Museum, as you said, all releasing NFTs of their masterpieces and those masterpieces aren’t leaving the walls. And in fact, in some cases like the Hermitage did a DaVinci, Giorgione, Kandinsky, van Gogh. And they released those five NFTs, but they actually released them as an edition of two and the Hermitage retained the second edition.
So they’re keeping the original artwork on the wall and there’s one NFT sold and one edition kept in the museum, but as you said, the Hokusais and the British Museum, they might do an edition of 1,000 or 10,000. So you can absolutely collect an NFT of an original artwork and you’re not buying the artwork and it’s very different.
In the bricks and mortar art world, there’s, there’s the ability to fractionalize paintings. And it means you can buy like, a square millimeter of a Picasso or a Jean Michel Basquiat. You know that you own a square millimeter, but you’re never going to get your hands on the painting because you only own that small amount. That painting is kept on a store in the dark somewhere in New York, in a secure warehouse, and then five years down the track, they sell it and you make your money because the value of artwork’s gone up. Now to me that’s base kind of speculation. That’s not, it’s not particularly attractive. It doesn’t have the beauty and wonder that comes with collecting art. But if you buy an NFT of a masterpiece, you have that NFT and an authenticated copy on your screen at home that you get to enjoy. And you know, that the purchase of that NFT has gone to support the museum that houses the original.
And then as, as Murray was saying before, you can have all these kickbacks from the museum, you might get in an hour earlier and an hour of private time in a major museum like that is priceless to people who want to own an original Rembrandt or a NFT or DaVinci.
Angie: So it’s not just the original that ownership applies to, you can create editions too? What are the ethical or legal aspects to think about around that?
James: I think some of the big ones are things like royalties, whether the royalty still applies, if the artist is still alive or has recently died, then royalties last, depending on your country, around the 50 year mark. For a lot of the artists that we are representing through Glorious that are still practicing artists, they will retain the copyright themselves.
And as Murray said, every time it sells, they’ll get the money back on the secondary market artists, resale royalty type scheme. But when it comes to an institution, then you want to know whether the copy, the NFT that you have of their masterpiece is authenticated properly by the institution that houses that masterpiece.
And so it’s up to you as a collector to go and make sure that if you’re looking at buying a DaVinci NFT to make sure that it’s actually come from a reputable place. If it’s coming from the Uffizi and the contract that you’re buying says Uffizi gallery and you know therefore it’s the right one because everywhere in the art world, there’s the opportunity to fall into the pitfalls of it. And you still have to have your wits about you. But the authentication system of it means they can’t be forged or faked. It’s just making sure you know what you’re buying and you buy from a reputable platform. Part of what Glorious is, is the, is the promise of quality and that, you know, that if you’re buying anything through Glorious through our app or through our platform or by any of our represented artists or content creators, then you’re getting quality and that NFT will retain value. It’s obviously unknown what the valuable will be. And particularly with the examples we’ve seen around the world of crypto punks skyrocketing, that’s an unknown and that’s to be found down the track, but it’s on the head of the buyer to make sure that what you’re buying in and buy from an authentic and valued platform.
Angie: To come back to your point around copyright and your original parallel around merch, it’s not dissimilar to an art museum creating kitchen towels off an art work or the poster to take home. What would selling these rights, give to this owner for something that’s say held by a museum? What are the sorts of ramifications that should be thought through?
James: Well they’re not selling reproduction rights? As an NFT holder, you generally have the right to enjoy, view, display your NFT. And that’s pretty much it. Just like in the bricks and mortar art world, if you replicate something, if you buy a painting, you generally don’t own the copyright, 99% of the time, you don’t buy the copyright with the artwork that you’ve purchased.
So if you replicate it with a digital camera and turn it into a very high risk poster print, and start selling them, then your heads on the block. That’s a breach of copyright and it’s the same with NFTs. You are entitled to view them and enjoy them, but you’re not allowed to replicate them.
And they’re not the easiest things to replicate because those smart contracts are unbeatable when it comes to sell. Like a lot of people have said to me, well, why would I have an NFT? If I could just find a, a high res image of the same painting and just put that on my screen. And that’s fine. And I hope you do, because if I own the NFT and you’ve got a Google image of that on your screen, then you’re elevating the ‘mana’ [power] of the NFT and the original. So you’re helping with the whole fame generation of the originals of the authenticated copies. And at the time that you and I come to sell, if I own the NFT and you have a Google image, then that’s when you find out one is valuable and one is not.
Angie: We’ve touched a little on this already from a loyalty perspective, but what’s the benefits for the visitor attraction? Is it purely revenue or are there other business benefits or even academic benefits? I’m thinking particularly here for our cultural institutions. Should we be thinking about things like brand innovation or collections, accessibility, social media engagement, connecting with non-traditional audiences? What does that big picture look like?
Murray: Actually, everything you just said there, Angie. Whilst it’s got a fantastic, potentially tremendous revenue streams from the NFTs… The engagement with members and fans is extraordinary because you can add as many.
You mentioned Dan Carter back in your intro, Angie, you know, the famous All Black [New Zealand national rugby team]. Some NFT holders might be able to go to a kicking session with them. That in itself is priceless. So there’s all manner of fan engagement that can actually be part of the NFT. Having access to the artists, having the artists maybe be able to communicate with, let’s say, 100 NFT holders or a 1,000 NFT holders, you’re really part of a community. Not a Facebook community, which is endless, or an Instagram community, but a community that the artist is actually engaging with. I think that’s actually phenomenal.
James: And just to add to that, there’s a whole new generation that’s coming through in the way of audiences. Most of my examples are art because I’m an art dealer, but museums are finding that their audience is aging. The average age is going up and NFTs are a way to create a new audience globally that aren’t actually walking through the doors of the institution and standing in front of paintings, but they do want to be involved. And to extrapolate that out, then it might not be that people want to go and visit a zoo. I might want to own a New York Zoo NFT, but I can’t visit the New York Zoo. Not at least because of COVID, but because there’s a fair amount of water between me and there. But I have that connection and I might want to buy an NFT of an animal there. And you’re creating a support network around the world of a youthful audience that’s coming through, that the institution might not be getting physically.
Murray: In addition to that Angie, we’re dealing with… I’ve been in the music industry my entire career and we’re dealing with a lot of artists. And you might buy their NFT, you might have the opportunity to go to a rehearsal. These things are so priceless.
You know, I’ve been to many rehearsals over my career. All of them are fascinating. That’s never been able to happen before. That was always… if you’re going to go to rehearsal, it was free. You might have, back in the eighties, won a radio promo or something like that. But this is now part of the many benefits that you’ll get as being an NFT holder for that particular artist.
Angie: And I like, to that point, that you were making. In the age where we can’t travel so readily, of connecting audiences that are outside local demographics. So say I’m a visitor attraction and I’ve decided to go ahead and do this. What would I need to think about and do in order to pull off an NFT offering? And what kind of money are we talking about?
Murray: Glorious Digital, which is the company that we represent, we’re saying you won’t need any money. We’ll take care of that for you. We are an end to end NFT organization. From playing in the creative, we will help your people actually plan their creative for starters. So people don’t feel that they have to come up with that. We’ve got a whole team of really clever people that would be happy to take the brief and then engage with the customer to come up with something completely compelling so that it’s not a cost thing. But then it’s a matter of what benefits would you like to add to this. Take the example of the zoo, maybe I could take my kids to actually get into the enclosure and feed some animals, all that sort of thing. So to answer your question specifically, anybody that’s got a public property, Glorious Digital can help them come up with their NFT offering..
Angie: And what’s the sort of income potential that we’re talking about?
Murray: That is completely impossible to answer. You mentioned Beeple in your introduction was $69 million, but you might find that, that somebody wants to do in an NFT and they want to charge $5 for it. And they want to sell 20,000 or 100,000. There’s all these levels with NFTs. In other words, you might take the old gold, silver and platinum. Your platinum NFT might be 100, the gold NFT, that might be 1,000, but the silver, there might be 10,000. Each one will have different benefits to go with them. So that’s actually monetizing. It is actually quite exciting when you look at that.
Angie: I was really curious when I was thinking back to when VR/AR came along in the market, there were a few cases of private companies, profiteering or operating in an unendorsed way from cultural institutions. They were selling third party tours, on a museum without actually the museum’s permission or, or engagement in that. I can think of one in particular, in Boston. Is there a risk that somebody might try create something on top of a museum’s collection and then start trading without the institution’s permission?
Murray: Yeah. I think piracy is always going to be with us in any industry, but as James said before, it all comes back to provenance, that’s the advantage that the blockchain and the smart contract has. You can track it, exactly who has given permission for this work. Blockchain gives far more security from a policy point of view than we’ve ever seen through any other platform.
James: That’s absolutely right. There have been instances where a famous public figure has walked past somebody with a high spec digital camera in a crowd and they’ve taken a photo and then they’ve looked to create an NFT saying that it’s an NFT of that character. And it is because that person was out in public, the photograph was taken, all of that’s perfectly legal. And they’ve said that it is an NFT of that personality, but it’s not endorsed by that.
So you still need to go in and check out when you’re buying, where you’re buying it from and who’s selling it. And all of those things are made crystal clear – the blockchain is pretty much unforgeable. And that’s why $2.38 trillion now trades on the blockchain because it’s a very difficult authentication device.
Murray: And also the thing is with Glorious, we know what business we’re in. It’s very clear to us, authentic digital masterpieces. We are going to create quality content with quality partners. So the place that we sit in this new environment is a very safe place for us. We’re going to be continuing to deal with the world’s very best content
Angie: It’s one of those things, isn’t it? Where you’ve sort of got to be and to have your authentic assets represented. Otherwise the world gets away on us all.
Murray: But, Angie, what an incredible opportunity this is for opening up a revenue for opening up assets, which haven’t been seen widely. It’s actually mind blowing the opportunities that are coming out of this. It’s just incredibly exciting.
Angie: James, maybe this is a question for you. Does digital art really exist forever? I’ve got CDs that I can’t play in my house. Maybe even a mixed tape too, if I’m being honest and there’s some file formats from even a few years back that I can’t open up on my computer.
James: This is a really cool one. I think any artwork that’s ever created, it starts deteriorating immediately. There’s all sorts of factors that apply. If it’s a tangible piece of art, you’ve got UV problems or the way moisture might affect it. If you’re hanging on your wall, then you should obviously immediately install a sprinkler system so that it can’t possibly get hurt in a fire, except that the sprinkler will probably ruin it.
So, what does last forever? I think with digital artworks, to compare it to your CDs, the really exciting thing about NFT is as the biggest problem you’re going to have is your TV screen or your device that you’re viewing it on. It’s going to have that sort of inbuilt essence that makes it die. But the NFT won’t. To the extent that you can… we had an example where we were looking at an NFT…. that could be that all our NFTs are looking at being made at 8K. And so it’s all Glorious NFTs so that the quality is staggering. But what if we could only get one made at 2K? You could potentially, although we won’t do it this, but you could release it and then allow an upgrade. And so if you’re NFT pops up in your digital library, you can have an upgrade option. And when it’s really at 4K or 8K, then it could upgrade. So equally, if there was anything that ever went wrong, you can have an update function for the digital entity that makes it about as safe as any artwork’s ever been, because you’re not susceptible to any climactic factors you’re susceptible to. It’s your digital wallet and it’s cloud based, it’s pretty safe.
Angie: Speaking of safety, there has been a few stories and the news of crypto heists lately, is there any security risk within this?
James: These are a digital asset that when you download them, they appear in your wallet essentially. Now those things are, again, they’re as safe as can be imagined by being authenticated on the blockchain. There have certainly been cases of crypto heists and they still haven’t been explained, which is concerning, but it’s still considerably more rare than money being stolen. There’s always going to be some risk to anything that’s ever traded, but NFTs are digital assets that are kept in your wallet. As long as you keep your wallet safe as you would with your cash and your own wallet, don’t let it out of your sight. Don’t let anyone else into it. Then you’re in a pretty safe world.
Angie: What about diversity, equity and inclusion? This has been a huge focus for our sector, particularly in the past few years. What’s your take on this both from a buyer’s and a seller’s perspective, is it going to improve DEI initiatives or do the opposite? What sorts of things should we be careful with around that?
James: I’m really excited about this angle. We’re in New Zealand, New Zealand is in a far-flung corner of the world and we’re a long way from being connected with a lot of what is going on around the world with these voices that you hear through news filters and NFTs are an opportunity for a content to create something that they firmly believe in to put it out to the world.
And there can be followers on the other side of the globe and it allows those voices to be heard instantly, clearly. They can be directly supported by this fan base. And it has a chance for diversity equity and inclusion, to be much more widely considered around the world.
Some of our artists are creating some amazing statements in their artworks. I’m really looking forward to seeing where the audiences are going to pop up, because I’ve always been slightly frustrated being an art dealer in an island nation and watching how the art world operates in Europe, where border borders almost dissolve. Because collectors are quite happy to drive a couple of hours from France to Switzerland to see a new artist’s work, but it’s a bit hard to drive from Australia to New Zealand. And so they help the shrinking of the world to get those messages more clearly delivered directly from the artist and for those audiences to be created.
Angie: The last one for you, what is the stance on the environmental issues of crypto? Is it all fun and games until you check your cabin footprint?
Murray: We’ve all done a bit of a masterclass on this over the last few months. Bitcoin, people talk about that, a Bitcoin is the same as keeping the Switzerland lights on for a weekend, what I’ve learned.
And what is the truth is that there’s two things. One is proof of work and one is proof of stake. So Bitcoin has proof of work, very highly in energy inefficient. We are proof of stake. So the Glorious NFTs are proof of stake. I believe it’s pretty much the same as streaming a song on Spotify. It’s almost like neither here nor there from a power usage point of view.
So, proof of work and proof of stake are the two things that I believe that you really need to know about to have this conversation. And, and we believe that Glorious Digital is very energy efficient.
Angie: Wow. So I think I finally understand this whole space and I’ve got you both to thank for it.
Thank you so much, Murray and James, for today, it has been, in a word, glorious.
Murray: Thanks for having us.
James: Thank you very much.