Plugged In: What TikTok’s NFT Failure Says About Big Brands Getting In Early
The Grammys, the NFL and Live Nation have also tried to get into the game with varying results. Are mainstream NFTs ready for prime time?
Welcome to Plugged In, a newsletter that features the unfiltered thoughts of the CEOs, decision makers and power players at the intersection of technology and music. I’m Micah Singleton, Billboard’s director of technology coverage. I lead Billboard’s reporting on the streaming music ecosystem and the startups that bridge the gap between two of America’s most important exports.
TikTok’s NFT Fiasco
Last September, TikTok sent out a press release about its first NFT drop called “TikTok Top Moments” featuring releases from Lil Nas X, Grimes, and others. There was even an in-person element, with an exhibit at the Museum of the Moving Image in Queens, N.Y. scheduled to run through last October. But that exhibit never took place, and while a few TikTok NFTs did go out, the biggest artists pulled out of the release. A week after the initial NFT release was scheduled, Rolling Stone’s Elias Leight reported that the Lil Nas X NFT wasn’t coming out at all and followed up with a December story detailing how TikTok couldn’t get the publishing rights for Lil Nas X’s hit song “Montero (Call Me By Your Name)” for the NFT, torpedoing the release.
A few months later, the pace of big brands lining up NFT releases has continued. Live Nation launched NFTs for ticket stubs, the NFL partnered with Ticketmaster for its own slate of NFTs and the Recording Academy struck a three-year deal with OneOf to create NFTs around The Grammys as NFT sales continue to grow. But are consumers, and more importantly the corporations setting up these releases ready to handle emerging technology on this scale, or will we see more repeats of TikTok’s NFT fiasco?
“The best digital products are ones that are so simple that older people can understand how to use it easily, and NFTs aren’t there yet.” one senior executive says. “The Lil Nas X situation highlights the fact that rights owners still haven’t wrapped their head around how this will benefit them.”
“Big brands are going after this because they don’t want to be the last ones at the party,” one founder and CEO says of the NFT market, while giving TikTok credit for the attempt, despite the failure. “TikTok is the most organic brand to dive into it; NFTs are extremely community-driven and so is TikTok.”
“I see a lot of people trying to create novelties where they don’t exist,” one CEO says of TikTok’s NFT strategy. “People are making it much more complicated than it is. It’s not novel that you would have something with intrinsic value based on what someone else will pay for it. How is that any different than trading cards? It comes down to a negotiation over value, and if they don’t agree you can’t use someone’s property, it’s no different than anything else.”
“They move very fast, and they do get out ahead of their skis pretty often,” another CEO says of TikTok, while noting that TikTok’s NFT strategy did raise important questions around scarcity. “How do you control the accessibility of it to make things scarce? It’s a much-needed component as we live in a digital world to control the scarcity,” the CEO says.
“We don’t yet understand the ramifications of the NFT market,” a chairperson says. “NFTs are so different and unique and they’re not ‘music,’ they are a music-driven collectible and entertainment product.”
“They have a lot of room in their ecosystem to throw spaghetti at the wall to see what sticks,” a CEO says of TikTok. “Right now, NFTs are kind of in that scammy world. People are buying them with the purpose of driving up the value to flip them.”
“The price people are willing to pay for NFTs may have no relation to their value,” another CEO says. “We’re waiting to see what value collectors put on these things. There’s educational work to go on. There will also be legal disputes. The music industry has gone from being behind the curve to leading the way.”