When it comes to making money with your content online, non-fungible tokens (NFTs for short) seem like the flashiest option. Often paired with mind-boggling price tags, these new status symbols are kicking up a digital storm—it's fair to say that most creatives in the world have at least considered selling their own. But how profitable are NFTs, really? And how do they compare to stock photography; another online money-making venture? It's the NFT vs stock photography showdown, let's dive in.
Photo by Barbora Dostálová
Brief Intro on NFTs
Digital assets with ownership verified by thousands of computers around the world using blockchain technology, NFTs are sold using cryptocurrency. Turning a regular digital asset into an NFT is called "minting" which tokenizes the digital asset on the blockchain.
The asset itself is no different than any non-NFT media, but its verification on the blockchain gives the owners legitimacy. And while some people may buy NFTs because they like the content, many are treating them as speculative assets, purchased with the knowledge that they may increase in value and be sold for profit. With many NFTs being sold as one-offs or in limited editions, this digital scarcity element increases the value of an NFT over time.
Who Owns an NFT?
When sold, NFT transactions are verified on the blockchain, meaning that owners have digital proof of their purchase. That does not mean they own the original asset or the copyright for that asset, but it means that they have access to the NFT version of that thing---verified and unchanged unless it is sold again. The blockchain verifies the transaction, which acts like a digital receipt that validates ownership of the NFT.
Bought and sold, NFT ownership is verified each time on the blockchain. The original creator, however, remains unchanged. The way it usually goes is artists receive payment once when they sell their artwork, but selling an NFT is different. Each time an NFT changes hands, the creator receives a cut of the profit, which is a royalty payment. With the hope that NFTs appreciate value over time, creators potentially make more on royalties than the initial price of the non-fungible token.
Through NFTs, creators, whether they're illustrators, photographers, or videographers, have more control over their work. And right now, NFTs are the hot new thing.
While the bubble can potentially burst and cause NFTs to depreciate in value, savvy creators can get in on the craze and line their crypto wallets. And the interesting thing with NFTs is that they can be anything you want. People have sold tweets, NBA highlights, crypto-cats, music...the list goes on and on. Seems like a pretty sweet deal right? Well, the reality surrounding NFTs comes with quite a few caveats.
Photo by Luke Jones
The Hidden Cost
With all the craze surrounding NFTs, what not many talk about is what it takes to actually buy, sell, and mint NFTs. Depending on the platform you're using, you can be charged a fee for either of those three, which pays for the computing power needed to verify purchases and mind the non-fungible tokens. And those fees can change every given moment, adding a level of volatility to the whole ordeal. Buyers can end up paying more for the gas fees (a nickname for the transaction fees) than the actual NFT!
Sellers pay these fees when minting an NFT. On OpenSea, for instance, sellers can be on the hook for gas fees when the NFT sells. So, it is possible to pay for gas fees twice as a seller, and that's not even taking into account the fees associated with converting cryptocurrencies. Users have to convert cryptocurrencies since not all NFT marketplaces accept the same ones, which often ends up being yet another fee as it requires the blockchain to verify the conversion.
The Get-Rich-Quick Appeal
It's very easy to get caught up in all the frenzy surrounding the top-selling NFT projects; especially when learning of their potential to be empowering to artists. But realistically, most sales (that manage to actually occur) are about $2000 or less.
Out of the thousands of artists on NFT marketplaces, the top 1% account for 48% of the total market share. And if that does not tell you something, it's also noteworthy that Beeple alone commands nearly 17% of the market.
And even if you spend time researching the best NFT pricing strategies, it’s simply going to be too difficult to predict a market this young and uncertain.
The Environmental Toll
We can talk at length about how NFTs affect the environment. But we find it useful to focus on one artist’s story. Upon learning about nonfungible tokens, Austrian architect and artist Chris Precht was initially captivated. These digital collectibles were taking the world by storm, and Precht, being creative that he was, couldn’t help but explore the now-nonfungible options he had to grow as a professional. However, there was another side to Precht, a side that earned him fame in the world of ecological architecture. Learning about the mind-boggling environmental footprint of NFTs was enough for him to swear off the idea, despite the sky-high sums he was witnessing.
By Precht’s own calculations, creating the 300 items of digital art he’d planned to sell (100 each of three art pieces), would have burned through the same amount of electricity an average European would otherwise in two decades. What in the (not-so-green) world?
Photo by Emre Karataş
.JPG to NFT
Although still in its infancy, NFTs may become a legitimate way for artists to sell their work. With the ability to profit from a future sale, NFTs might pay off in the long term. But, as great as they may be for the 1% of the creators, NFTs are far from perfect.
The high cost of the gas fees, the volatility of cryptocurrencies, and the effect NFTs have on the environment are all valid reasons to rethink. It might be best to wait until all the fade dies, then realistically consider your chances.
Stock photography, on the other hand, does not charge exorbitant fees to upload your images or sell licenses of them, and neither of those things harms the environment the way that NFTs do. Steadily selling image licenses may be more of a conservative approach, but it is undoubtedly less of a hassle.
NFTs vs Stock Photography
For artists who want to sell their photos online with Wirestock or another stock content marketplace, dabbling in NFTs can prove an alternate revenue source. On sites like Rarible, Cargo, and OpenSea illustrations and animations seem to be the most popular forms of NFTs. The same cannot be said about photography. Despite a lot of NFT photography guides being out there, the art form is yet to make a significant impact as a viable NFT, though this might change in the future.
Both non-fungible tokens and stock photography pay original creators for their content with each transaction, with a few notable differences. Take Shutterstock, for instance. Photographers receive a commission each time a user purchases a license. However, there's no initial payment when uploading the image. Original creators of NFTs, on the other hand, get paid when selling the digital asset the first time, and they receive a percentage of the profit from each subsequent sale. Either one can potentially be beneficial to a photographer, but there are some things to consider.
With NFTs, you can earn a big payout from the onset. Instead of selling licenses for an image, you are essentially selling access to a blockchain-authenticated digital asset that the owner has a digital proof of. You can sell one NFT of an image or as many as you like. Though, producing too many may dilute the overall price of each NFT.
NFT creators can continue to make money every time it is sold, so long as the royalty is built into the contract. However, the problem is that the owner may not sell for a long time, maybe not ever. And while the initial payment might be a nice chunk of ETH, creators might not see any other money for a while. But, just as with stock content marketplaces, the more images, in this case, non-fungible tokens, the more money.
Although both are ways to make money off photography, selling NFTs may require some technical know-how, an understanding of crypto and blockchain tech, as well as a lack of certainty when it comes to achieving success.