Imagine if we could invest in artists and influencers like we invest in companies through the stock market. Soon, fans will have the opportunity to be rewarded for their speculation and support for growing artists.
Imagine if you could invest in a content creator or an artist you really believe in. As they grow their audience and popularity, so does your return on investment.
Today, anyone can invest in growing companies through the stock market. You buy some company stock betting that they will improve their business. And if the company performs as you predicted, you are rewarded when you sell your portion of ownership to another investor for a higher price than you initially paid for it.
The stock market is mutually beneficial for both companies and investors. When a company IPOs, it gets rewarded by raising funds, and often leads to increased publicity and credibility. The investors mutually benefit from the company’s success through periodic dividends payments, and when their owned stock value increases.
An artist is defined as a person who practices any of the various creative arts, such as a sculptor, novelist, poet, or filmmaker. For the sake of this article, we will refer to content creators and influencers as artists as well.
Nowadays, prominent influencers can be a business in and of themself. As Jay-Z said, “I’m not a businessman, I’m a business, man. When someone attains a large, loyal audience, their audience is often very monetizable. And since each artist has their own niche, their target audience has many similarities. This helps in developing a product the majority would certainly enjoy.
Artists can generate revenue by offering products & services that their target audience would value. They can also display ads from other company products based on the demographics of the audience. Artists can get creative with their monetization methods and host events, accept donations, host auctions, develop private/exclusive products, subscriptions, and many more.
Now that we have acknowledged that artists can operate as a business, let’s look at how we can invest in these artists to help them grow, and also profit from their success.
An NFT is a representation of a unique digital asset. It allows for fractional ownership of digital or physical assets and is secured via blockchain technology. We mostly understand NFTs as unique digital art being sold, but NFT technology is more versatile than just that.
NFTs may allow us to invest in artists and influencers the same way we invest in companies in the stock market. Artists operate like a business—they have costs. And producing their content requires time, money, and resources. If they are looking to sustain or expand their business, they may require some support.
We already see fans of smaller audiences donating money on platforms such as Twitch and Patreon to their favorite content creators—often out of altruism. They have an affinity for these artists and appreciate them so deeply that they support them out of benevolence and recognition.
If these same fans had the option to bet on their favorite content creators by purchasing a stake in their future success, a good amount would be interested. Buying stock will be a way for true fans to show their loyalty by helping them grow.
Owning stock in an artist will also bring fans closer to their favorite artist by owning the most notable asset they can have. Artists will also be able to run their brand more like a business. This will result in mergers & acquisitions between artist brands, equity transfers, and more investments into content creation.
On top of that, fans will have the opportunity to be rewarded for their speculation. The average fan will opt to purchase their merch or their products, which offer immediate value, while the super-fans will prefer a more meaningful, distinguishable asset.
For example, I have been a huge fan of rapper Drake’s music for years. If Drake decided to go the independent route when he was first starting as a rapper, (and not sign with a record label) it would require capital and resources which he didn’t have in the beginning. To succeed, he offers 1 million shares of Drake stock at $1/share and raises $1 million through his IPO.
I’m a die-hard fan and buy 10% (100,000 shares) of Drake’s stock in 2008 for $100,000 and the rest of the outstanding shares are bought by others. Drake uses his $1M to buy recording equipment, pay for studio fees, and to pay his producer. As the years go by and Drake becomes more popular, I can brag about my investment and prove to others that I’m a bigger fan. Today, in 2021 Drake is now the artist of the decade and Drake stock is in such high demand by other super-fans that it’s selling for $100/share.
My 10% which I initially paid $100,000 is now worth $10,000,000 and I’m publicly known as the one who truly believed in Drake since the beginning. Others may own all his clothing products, all his albums, some may have a signature, but I own the most exclusive music culture asset of this decade. I am the undisputed biggest Drake fan since day one.
Blockchain and NFT technology will allow this new market to become a reality, and trends are in support of this. Our world is already moving away from centralization and away from large exclusive owners with majority control and is becoming more democratized.
We’re seeing music artists stand up to record labels for a larger cut, and some opting to become independent. DeFi is slowly taking over banking and finance. Streaming platforms like YouTube, Netflix, and Spotify are cutting out cable/radio and allowing for more choice whenever, wherever. Twitter is amplifying smaller voices over mainstream traditional media. Power and influence in leagues such as the NFL and NBA are spreading from large owners to the players.
Hardware and media platforms are tightening privacy to give more power and choice to its users. Healthcare, one of the oldest industries in the world, is only now shifting focus towards a patient-centered decentralized healthcare model with new technologies such as telemedicine. Increase in renewable energy is decentralizing energy output away from the traditional grid.
Nearly every industry is changing in some way to decentralize and democratize. Providing artists with capital fits into this retail investment empowerment trend. It allows for a level playing field and gives more power to us, the audience, to choose who we would like to see more of.
This technology may resulting in better creators since it allows the fans (who consume the content) to decide whether or not to invest. It will result in the low demand artists to naturally fade and the brands with high demand to grow—sort of like natural selection.
Similar to a public company, an artist who offers stock publicly will be affected more by acute volatility and every small mistake due to the nature of the 24/7 buy/sell market. The short-term value of a private company isn’t affected by wrongdoing or controversy as does a public company.
When a public company makes a mistake, usually the stock price immediately reacts and can destroy the value and stock performance short-term. Meanwhile, if a private company makes the exact same mistake, its value is more stable and isn’t as affected in the short term.
The difficulty for implementing this technology will be setting the criteria for what standing an artist will need to reach before being allowed to offer stock in their brand. These regulations will be vital to preventing scam IPOs and fraudulent investments.
Artists will probably go public by working with a large investment bank to underwrite their offering (similar to a traditional company IPO). The investment bank basically purchases the artists’ private shares today with plans to sell them at a profit to the public. Another method option would be going public through the method of an initial coin offering (ICO).
Something to note about this market is that investing in artists will not pay periodic dividends on their profit/earnings as traditional company investing does. Investing in artists will be more for speculation and for the enjoyment of supporting them and owning a part of their growth rather than solely on the goal of making a return. It probably should not be used for ‘investing’ but for speculation and enjoyment—no different from gambling.
Here are some early existing technologies for investing in artists exists!
- BitClout (BitClout Is The New Cryptocurrency Monetizing Celebrities)
- Rally “Creator Coin”
Also, here’s interesting thread I found on reddit expanding on the topic: “Can I invest in a YouTube Channel?”
What do you think about this technology? Would you like to see it grow? Comment below.