48: Why should authors care about NFTs?

This week authors J. Thorn and Crys Cain talk all about NFTs and the possibilities they are bringing to the publishing world. 

Transcript

Crys: Welcome to the TASM podcast. I’m Crys Cain with my cohost J Thorn. How’s it going?

J: It’s going great. How are you?

Crys: I am about to enter into a week of full kid time, something I have not had in a while. Priscilla, my friend, roommate, nanny, person, is starting her new job on Monday and Smalls has this break between summer camp and actual school. And so I am preparing my brain to be unproductive in the coming week. And my brain is not excited about this, but I’m preparing it.

J: It’s just a one-week gap that you have to fill.

Crys: This one-week gap where I’m just going to be like going up the walls because I probably will not get much done.

J: Yeah, let’s just say you won’t get anything done.

Crys: My brain is struggling with this. Trying to prepare it. How about you?

J: Oh, I sent a manuscript off to the editor. It’s the next Three-Story Method book. Pretty exciting. It’s been almost two years since we published the original. This one’s going to be on writing scenes and it’s going to tie into a web 3.0 project that’s coming down the line. So I was really happy to finally ship something because I’ve written hundreds of thousands of words over the past couple of years and published very few. And this is definitely a step in the right direction.

Crys: It has been an interesting couple of years for you, and it does not feel like it should be that long since Three-Story came out.

J: I know, can you believe it was late February, early March of 2020?

Crys: Yeah, it’s wild. That’s exciting. Do you have a release date on that then?

J: No. There are a number of things in play, especially around the possible NFT project. And there’s not a release date, but I’m hearkening back to our conversation about pre-orders. I don’t have a release date, but everything will be done and scheduled. So like when I decide, it will be all teed up and ready to go.

Crys: Well, that is a wonderful lead in for our topic this week with a possible NFT tie in there. You especially, have been doing a really deep dive on blockchain technology, NFTs. Crypto is part of that but not really the main focus, and it’s something I’ve also been interested in.

So, I brought to you before this podcast, the idea that once a month we have a discussion on emerging technologies. So right now a lot of our brain space is probably going to be around NFTs and what that might mean for authors, but it really could encompass a lot of things because we’re in a really high period of flux technologically.

J: Yes. Yes. Please don’t bail on the episode. Please, listeners, don’t leave yet. If you’ve heard all those terms, don’t freak out.

Crys: They’re going to be things that we think are going to be really important to authors moving forward. Are we going to sometimes go on like the wild and crazy and be like, oh, it’d be really cool if this is going to happen or this might happen. But we also want to keep it really real about what you might need to know in the near future.

J: Yes. And depending on the timing of release, I recorded over an hour conversation with Joanna Penn for The Creative Penn podcast about NFTs specifically and how they relate to authors. So I don’t know if that’s going to come out before or after this, but that’s a deeper dive.

And I know from talking to Joanna that it’s a polarizing topic with her audience. It’s not something everyone is comfortable listening to or talking about. And so I think it’s a bit of a risk to discuss it. But at the same time, I feel like it is probably the single most important component of what’s coming down the line for authors in the next three decades.

This is just not something you can ignore unless you’re a hobbyist and you are just going to write and then put a book in your drawer or give it to your family. That’s totally cool. But if you have any aspirations or you’re already publishing and marketing and selling your books, like you’re going to have to pay attention to this stuff.

Crys: And even for hobbyists, I think it’s going to be important because I don’t think I’m stretching when I say that this realm is going to be the most industry change or industry breaker, like it’s going to be the biggest change since the Kindle came out.

J: Yeah. Without a doubt. It will be bigger than the self-publishing revolution, eventually. But it is of that magnitude. It really is going to be a complete paradigm shift.

Crys: To keep things easy and simple, I want to start with our question for this week which is: why should authors care about NFTs? Regardless of everything we just said about the importance, why should authors care about NFTs? What are the possibilities of what they’re going to do for us, sooner rather than later?

J: Secondhand sales. If you don’t care about anything else about Web3 technology, secondhand sales.

Crys: Okay. So let’s go into this in a little detail. So right now, what is the deal with secondhand sales and authors?

J: Yes. All right. So right now, if you buy an eBook from Amazon, you technically don’t own the eBook. According to their terms of service, you’re being leased the eBook which means a reader can’t resell your eBook. Okay. Fine. That makes sense.

Right now, if you publish a paperback and regardless of where or how you publish it, if a reader purchases your paperback and then they’re done reading it, they can then go to a used bookstore and they can sell it to a used bookstore. They can sell it online. And when they sell it, you get 0% of the resale.

So with the new technology, without getting into the weeds on the technology, the technology will exist to automatically allow the original creator of the IP to earn a percentage of the profit on every resale forever.

Crys: And that’s specifically on the eBooks, yes?

J: Yes, it will be seamless on eBooks, but I think this technology will undoubtedly make its way to other formats, whether they’re paper books or something else. The point here is that musicians and artists are already benefiting from this technology. These are historically creatives who have been exploited, for lack of a better term, in that once they create their IP, it’s out of their hands. You might have an artist who sells a painting for a hundred dollars and then two decades later, some collector sells it for 5 million and that artist gets none of that.

And so I think that’s the concept you have to think about. Right now in early 2022, don’t worry about how this is going to happen or do you need to know coding or you’re not computer savvy. Forget all that. Just think about conceptually what it means if you can create art that has an automatic piece of code that will pay you every time that art resells.

That, to me, is earth shattering. And it saddens me to think that there are many authors who are not even considering the technology because I think they’re going to be missing out on something massive.

Crys: Now, I want to talk about the waterfall effect of what this could mean for particularly independent publishers, because we work on such a smaller scale than like trad pub, like as far as how much we sell our books, how many books we sell.

So first of all, like that’s super cool, right? We make money from the garage sale of our eBooks. That never has been done before, really. Right?

J: Right. I mean, you think about selling direct. And if you sell your eBooks direct, which is pretty easy to do technically, like that’s not something people are afraid of. Whether you do it or not, it’s quite easy to set up. So now imagine not only are you selling direct, but now your readers can resell your book and you get a piece of that.

Crys: Now, here’s a couple of waterfall effects I see that I’m really excited about. Because readers are going to have the opportunity to resell their books, and also these books are not going to lose anything in value because they’re going to be as pristine as the day they bought them. So they will often probably be selling it fairly close to retail value.

We don’t know how that will all play out, but because they have the opportunity to sell their books, they also have the means to buy more books, if that is something that they decide to do. They buy a new book, they read it, and they love it but they’re not a re-reader, so they sell it so they can buy more books. Which means that there’s going to be more book money circulating for the purchase of new books.

J: Yes. Yes. And this secondhand sale concept isn’t even the most exciting thing. So this is the most accessible thing.

Crys: This is the most accessible. Like this is how we’re getting you to buy into the idea that this is important for you.

J: Right. This is the simple explanation to make you go, oh, okay, I understand that. So don’t mistake the conversation and think, oh, this is the only thing. This is the first thing.

Crys: The second waterfall thing I see from this specific usage is that it disincentivizes subscription programs like Kindle because they’re able to resell and therefore their reading experience is costing them less, or the Kindle Unlimited.

J: Yes. And Web3 is going to be decentralized which is the opposite of where we are now. So right now, things are centralized. Most readers go to Amazon to buy their books. But that is changing. We’ve already seen evidence that’s changing and that is good news, especially for self-published authors and independent publishers.

One of the criticisms I hear is if it’s going to be decentralized then I’m going to be competing with millions of other authors. I’m like, yeah, that’s what you’re doing now. You’re not giving that up, that’s the way things are now. So I don’t even see that as a negative.

I think what that’s going to mean is you’re going to have more niche readers. So for instance, instead of having an Amazon of NFTs, you might have 200 different marketplaces. And you might know that like, oh, thethrillernft.com– I’m totally making that up, I don’t know if it exists– but thrillernft.com is where I go to buy all my thriller NFTs. And I might go to a different website or different marketplace to buy something else.

I think that’s great. Like I’m all for that because now what you’re getting is you’re getting specialization and you’re getting more rabid fans, as opposed to a centralized Amazon that just has everything.

Crys: So beyond the secondhand sales, what’s another thing that you are super excited about?

J: All right. So I’ll go from the most accessible, easiest thing to, right now, what I think is the fullest potential. And I’m saying right now because we don’t even know where this is going. But as of right now, fractionalization is the thing that’s blowing my mind.

Crys: All right. Let’s describe what that is.

J: All right. So fractionalization is when you create a piece of art and you allow fans to own a small percentage of that. It functions very much the way stocks do. So if you understand how the stock market works, imagine you buy fractionalized shares of companies. Like maybe you can’t afford one stock of Apple, so you buy 0.01% of it. And what that means is you own 0.01% of one Apple stock, and you then get the dividends accordingly to that stock.

And this is already happening in the music space. So there are artists, Nas being one of them, who fractionalized a song. And so if you buy in, let’s say it’s $50, you pay $50 for 0.01% of the song, and what he’s doing is he’s giving a percentage of streaming royalties back to the people who own that fractionalized piece of his song. So you’re incentivized all the way around in this.

Nas is incentivized because he can sell fractionalized shares of songs. Spotify is incentivized because they make money on the play. The listener or fan is incentivized because the more Nas makes, the more they make.

Crys: So I wanted to ask a question. Specifically, how was he incentivized? How does he profit out of sharing his work?

J: Because he sold tokens for a song, and they all sold, and I think the total was $170,000. So think of it like a Kickstarter or a crowdfunding campaign. His fans paid him $170,000 for the song, which he now pockets, and he can still sell or stream on Spotify. And he’s giving up a percentage of his Spotify revenue, but he’s going to get that too.

Crys: Love it. So it’s basically his advances paid for by his fans.

J: Yes. And then his fans want him to sell more because the more he sells, the more they make from their percentage of share.

Yeah.

Crys: I love this. I’m really interested to see how this moves into the book space.

J: Yeah. And it’s not identical, but the structure is pretty simple. Like you could substitute a book for a song and an author could do the same thing. You could fractionalize a book and whenever the book sells, whoever owns a piece of that book also gets paid royalties.

Crys: I think we’re going to have so much to talk about over the next few months, and we’ll be doing one of these a month for right now. We’re not going to just go deep into NFT, the blockchain, emerging technology land full force. You don’t have to abandon us.

We’re still going to be talking about mindset and like what we can be doing today to help our writing paths in our business. But this is something that we both really feel passionate about and it would be disingenuous to not share it because we feel like it’s going to be so important and help so many authors.

J: Absolutely. And if you don’t want to hear it, that’s totally fine. You can skip them. It’s fine. But we feel responsibility to let people know what we’re discovering.

Crys: If you would like to join this conversation in real time, we’d love for you to pop over and check out what The Author Success Mastermind is all about.