I've spent the last 15 years building an author business on Web 2 — digital publishing, blogging and podcasting, social media, and more. But as Web 3 begins to emerge through blockchain, NFTs, AI, and the metaverse, I want to make sure I still have a thriving business over the next 15 years.
NFTs are an important part of the future business model in the Creator Economy and in this presentation, I explain why they're important and how authors can consider using them.
You can watch the video below, or here on YouTube, and there is a transcript with links and notes below.
In this video presentation, I go through:
- Who am I, and why am I talking about NFTs? My technical background and how I've embraced technology early in my author career so far
- What is an NFT?
- Different blockchains — and energy requirements
- Why do we need NFTs? Ownership and resale; flexing in the metaverse, and erosion of royalties + paid ads + inflation = we need more income streams from our IP
- Six different types of NFTs that authors can consider, and how they are being used in other industries
- Why digital scarcity enables more creativity and collaboration
- How smart contracts enable easier collaboration and a simplified payment system
- How blockchain and smart contracts (and DAOs) could change royalty payments, estate management, and more
- What we need in an NFT solution for publishing
- How do NFTs fit into the current business model? What is a potential future state once the technology goes mainstream?
- What action should you take right now?
You can find more resources at thecreativepenn.com/future
For a broader look at web 3 and emerging technologies, check out my book, Artificial Intelligence, Blockchain, and Virtual Worlds: The Impact of Converging Technologies on Authors and the Publishing Industry.
If you have any comments, tweet me @thecreativepenn or leave a comment under the video or on the post.
Transcript of interview
Hello, Creatives. I'm Joanna Penn, and this is a presentation on NFTs for Authors: Creativity, Collaboration, Community, and Cash.'
So, first of all, who am I and why am I talking about NFTs?
I spent 13 years as a business consultant, implementing financial systems for consultancies like Accenture, Capgemini, and other firms in Europe and Asia-Pacific. And so, I have a background in technology, although I was never a programmer.
I started writing for publication in 2006 and started self-publishing in 2008 (see my timeline here). As a businesswoman, I embraced digital publishing, ebooks, and all of that, before it really became mainstream.
I was able to leave my consulting job in 2011. So, I've been a full-time creative entrepreneur running my own business for over a decade.
In terms of other technology, in 2009, I started The Creative Penn Podcast, well before podcasting went mainstream. It's now had over 6.5 million downloads in over 200 countries. And it is one of the longest-running podcasts for writers and creatives with over 600 episodes. I tend to embrace technology reasonably early, certainly not the earliest to adopt but, you know, reasonably early.
So, over the last decade, I've built a multi-six-figure business basically as an individual author. I work with freelancers but I'm, you know, what one could call, ‘a solopreneur.'
I've built this business on what is known as Web 2.0 — the internet as we know it right now. What I can see ahead are changes to my business model. So, this is an entirely selfish endeavor to try and protect my business as we move into Web 3.0!
And as I learn things, I like to share them with my community. So, really I'm looking at NFTs and blockchain as the architecture of what may become my business model in the next decade. And certainly, I'm in my late 40s and I really want to be doing this business for the rest of my life. And, inevitably, businesses change.
In terms of my writing, I'm an award-nominated New York Times and USA Today best-selling thriller author, as J.F. Penn, and I write non-fiction for authors under Joanna Penn.
I've got around 35 books and I've sold nearly a million books across 162 countries and 5 languages. I'm also an award-winning podcaster and creative entrepreneur and I'm an international professional speaker. I'm a futurist and I'm very interested in how these technologies will change things in the next decade.
What is an NFT?
Well, just in terms of a definition, NFT stands for non-fungible token, which, let's face it, is a terrible acronym!
It's defined in this book, The NFT Handbook by Matt Fortnow and QuHarrison Terry, which is a really good introduction, as “unique digital collectibles secured by the blockchain.” And also an NFT provides “authenticity of origin, ownership uniqueness, scarcity, and permanence for any particular item.” There are a lot of interesting things within this, and we'll explore various parts of these terms as we go through.
But just for now, think about it as a collectible. And since we're authors and rights holders, it's really thinking about, well, the equivalent of a physical collectible, so, a special limited edition hardback with a lovely leather cover with gold embossing hand created by the author, that would be a physical collectible. And we're talking here about digital collectibles, and we'll go into more detail.
But what is dramatically different from a physical, collectible book is that NFTs can be programmed with a smart contract.
So, this is where things become very interesting, because smart contracts allow for automated transactions without manual processing.
When I mint a NFT, and ‘mint' on the blockchain is, essentially, publishing it, publishing this edition on a blockchain, I can put a smart contract with it which says things like terms of the license, the use of that intellectual property, the resale percentage, the ownership, and much more. And I'll come back to all of these things, but that's what is truly different. It is, essentially, a digital product but it can be programmed.
So, it gives it so many more possibilities for functionality but also for payments. And, as authors and rights holders, we are very interested in making more money from our intellectual property!
So, just to come back to the phrase ‘minted on a blockchain.' And, of course, this area is full of different language, but so is every area of publishing, there's always different language, so, try not to get too bogged down in the language, just accept that there's always another language.
So, minting is, essentially, publishing on a blockchain. You don't have to understand blockchain in order to use it. I'm sure you don't understand the https protocol for using the internet. You can send money on PayPal without understanding how that works. And this is the same. You don't need to understand the technology of blockchain to think about using it.
But the point is there are different blockchains and they have different functionality and energy usage.
And, of course, this is one of the issues that people have with NFTs at the moment, as I record this in the late days of February, 2022. And it's very important to time and date stamp this actually because things will change.
But I will direct you to a site called cleannfts.org where they list out what are the different eco-friendly blockchains. So, when people say, ‘Oh, the blockchains will destroy the planet,' there are different uses on different blockchains.
Here's an example from the Flow blockchain, which is fascinating, it says, ‘1 minute in a hot shower is 382,000 Flow NFTs,' so, and, ‘1 mile in a car is a million Flow NFTs.' So, when people say, ‘Oh, you're destroying the planet with creating NFTs,' well, compare that to some of the other things that you probably do every day. Or here, ‘1 Google search equals 12.5 Flow NFTs.' So, have a think about that.
And if you're going to look at doing NFTs yourself, then consider an eco-friendly blockchain. Now, personally, I think that they will all become eco-friendly, it's just a matter of time because this is a problem that people in the NFT and blockchain community absolutely want to solve.
Why do we need NFTs? Don't we have a perfectly good publishing system already?
So, you might be thinking, ‘Well, why do we even need NFTs? We have a perfectly good publishing system already. Why do we need to go into this?' Well, there are a few reasons.
First of all, ownership and resale of digital products.
This is something that many readers don't even understand, but readers do not own digital files in the current ecosystem. If they read on Amazon Kindle, if they read on Apple devices, or they listen on Audible or some of the other platforms, these services, these companies can remove access at any time. And indeed, we've seen this. If a customer has their account removed, the person loses access to all those things.
Essentially, a reader has paid for something they do not own, they have a license to read it but they don't own it, they can't resell it like they could a physical book. And NFTs make it truly possible to own this copy of the book and resell those digital products.
This resale market for NFTs is something I'll come back to because I think it's really amazing. With smart contracts and resale, it means money coming down the pipe for many many years into the future. And let's face it, we all like automated income streams! And this will allow it.
The second thing is flexing your bookshelf in the metaverse.
So, yes, sorry, more jargon, but people increasingly live inside digital realms. And I'm sure you've been aware of the news around metaverse and the different places that people will gather virtually.
I don't believe there will be any single system. There won't be ‘the' metaverse in the same way there won't be ‘the' internet — it is lots of different places. NFTs are being used to flex identity, or show what kind of person you are, in the metaverse.
And this terminology is kind of the reason why I have my books behind me is I'm showing you what type of person I am. And that's the same reason why people put a particular NFT as their avatar on Twitter or they, you know, might carry a particular brand or wear a particular brand. It says something about you as a person in the way you dress, in the things that you carry, in the way you portray yourself. And we know that branding is super important.
Now, art, music, gaming fans are already flexing their NFTs online and in the metaverse. And so, publishing has to catch up because book lovers, bibliophiles, people like us, we love our books.
If I walk into someone's house, the first thing I do is look at their bookshelf, and I'm sure you do too. That's the type of people we are. So, when I think about the future…and again, not right now but in the next couple of years, 5 years, 10 years, if I do this presentation in a metaverse space, then I'll want to do it in a space where I'm surrounded by my books. And that may be using NFTs, which will be, essentially, original digital products that I've bought to display what I think is important in the metaverse.
So, both of those are really from the reader perspective, from the end-user perspective.
In terms of authors and rights holders, digital income and author royalties are being eroded.
Now, in the same way as we've seen in the music industry, what's happened with streaming over the last few years, streaming and subscription models, is that, while the cost of creating the original product is still the same, we then have to, essentially, get lower payments for our books when they're borrowed, when they're checked out.
These are micropayments, payments essentially per stream, per subscription, per page read, per listen, whatever they will end up being. And this isn't going to stop because, from a reader and a listener perspective, from my perspective as a reader and a listener, subscription models are incredibly good value. So, they're not going away. In fact, they'll probably increase.
[More on subscription models for audio in particular in my Advanced Salon discussion with Orna Ross (Feb 2022)]
So, while subscription and streaming have increased the audience for our work, they've also eroded the royalties. And this is why the music industry has jumped headfirst into NFTs because they're a couple of years ahead of us and they've seen the erosion of income through micropayments and, so, they're looking at different ways to make more money from intellectual property.
Now, at the same time, we've had erosion of royalties, we've also had the rise in paid advertising, which eats into profits at the same time and has become basically non-negotiable for authors, publishers, rights holders in order to get our work in front of readers and listeners.
So, while we've got, you know, income coming down and ad costs going up, both of these things are squeezing the income streams. Also, we've got inflation and most of the prices have not risen in line with inflation. So, the money we are getting is worth less over time. And with caps on the price of digital products, we need something new.
So, basically, authors and rights holders need to make more income and readers want to own digital products, resell digital products, and support the creators they love.
What are the different types of NFTs?
Right, let's get into the different types of NFTs for authors. And these are just some that I've come up with based on the other things going on in the blockchain space. But I'm recording this at the end of February, 2022, and it's very likely that other things will emerge over time. But this is a good start.
(A) The NFT ebook or audiobook
Now, this is, essentially, the same product as we already publish on the other stores but the difference is that, by publishing on blockchain as NFTs, these can be bought and owned and resold and the smart contract will distribute money to the authors and rights holders and whoever else you put in the smart contract as part of the ecosystem.
There might be digital extras within these. It might be a limited edition here, for example, one of 5,000 might be the particular run. But the important thing here is the ownership and the resale and the smart contract.
(B) The NFT special edition
I'm calling this my one-of-one. And here's an example, this is my first novel, ‘Stone of Fire,' with an AI-generated piece of art, which I love and actually I'm keeping as my own NFT, but it's really important to think about how we can create things that will surprise and delight readers that they might be really interested in.
So, also, for example, I'm thinking of putting my entire hand-edited draft into an NFT, and that might be interesting to both readers, but also for authors to see behind the scenes on a manuscript. I'd certainly be interested in owning that from Stephen King or someone like that. You can see the value.
I'm also considering doing videos that might go with these but, essentially, they are special editions in the same way that you might do a perfectly hand-tooled print edition. This is a special digital edition. And I like the idea of one-of-one. Some people are doing 1 of 10. And obviously, there'll be different price differentials on that but a true one-of-one, essentially, is an equivalent to the pieces of art that we're seeing in the world.
So, when you consider what you might do for NFTs, it's interesting to start thinking of what you might do for these one-of-one products that will be truly special, that will be interesting to both the readers and the fans and also the whole community that's built up.
(C) NFT community token, also potentially known as membership
This can give access into special channels. So, Discord is being used because it's, essentially, linked to NFT tokens so you can give special access. Maybe it's a readers group, maybe it is a group of genre authors joining together, maybe it's a coaching add-on to your non-fiction book, maybe…well, there's just so many things that you could possibly do with this.
This may, potentially, replace membership websites because tokens are much more easily used as access. So, this will enable authors, publishers, rightsholders, genre communities, author organizations to create spaces where people can buy access but then the buyer can also, potentially, sell their token on. Of course, you don't have to allow resale, that's just one of the possibilities. The idea with a smart contract is that you can put whatever you like in it, which is the power of it.
So the NFT community token is interesting because a lot of people want to pay for access. Again, I mentioned Stephen King, one of my favorite authors, I would definitely be buying a community token for Stephen King to get on video once a month and talk about his writing process.
Now, these are some of the more developed aspects that we're seeing in the music industry.
(D) NFT ticket for a physical event or it can, obviously, be an online event
These are actually limited-time tokens that allow access into that event rather than that sort of membership ongoing thing. The ticketing industry is totally enamored with this because in sports, people resell tickets outside stadiums and the original rights holders, the people who own the rights to that basketball team or whatever, they're not getting any extra money from resale. What NFT tickets allow is a percentage of resale of a ticket to go to the original rights holders.
So, in terms of authors, this could be book launch events. This could be, again, a group of authors getting together and doing an event and selling NFT tickets. And then the NFT can be used to, they call it, ‘airdrop,' which is, essentially, a new piece of content will arrive into the token holder's wallet. And that may be the book for the evening, for example, or that may be a recording of a presentation.
So, the ticket idea, it's unique and it expires. So, it might be able to be resold up to the point of the event and then it might be cut off or, if it's some truly awesome event, it might also have resale value after the fact if it includes all of that extra content. There are so many possibilities with these, and I just want to scratch the surface with this.
(E) NFTs for royalty fractionalization
This is already happening in the music space, royal.io has enabled the rapper Nas to fractionalize the royalties on his streaming. So, they must have worked out a way to publish through a blockchain with a smart contract involved and then you can buy an NFT — well, you can't now because they all sold out — but other artists are starting to do this, you buy an NFT and you get a percentage of those streaming royalties.
So, it's essentially a form of crowdfunding, but also has a form of ownership. So, as a fan, I can own 0.001% or whatever percent of this song or these songs or this album or this book and then I receive money into my wallet as other people stream it.
I love this idea because it bakes in marketing. If you are a fan of Nas, or a fan of Stephen King, if you buy a fractionalization of that book, then you are totally incentivized to go and market that song, book, whatever. You're going to encourage your friends to read it and download it and you're going to just have built-in marketing for the people who've, essentially, bought into the future of this product.
So, this is a very interesting model. It is entirely dependent on being able to automate the publication and streaming and royalties, which is what blockchain offers. And I will come back to that for my future state of publishing later.
But I think this model could be fascinating for those authors who have created a fan base and who want to do something very interesting with their book without the overheads of manually distributing tiny, tiny, micropayments to all of those fans.
(6) NFTs for intellectual property rights and co-creation
So, what we're starting to see is NFTs in collections around a digital world. That might be actually built in a metaverse place, but it might also just be for publishing other books or songs or whatever.
So, essentially, you buy an NFT, and then that gives you the IP rights to use the content of that NFT in creating more products. So, we've seen this with some of the famous art NFTs where people have got the rights to turn that into merchandise, so, say, T-shirts with that image on.
Now, in the past, this has not really been possible, you've had to do licensing agreements. But what this NFT enables is, essentially, to set it up in advance. So, you've created a smart contract that, essentially, gives the rights to the rights holder to do certain things. And it's a contract, so, it actually has it all up front.
Now, most NFTs don't include the right to do that. They're just another copy, but this NFT type is, essentially, almost a co-creation. Now, I would equate it to what Kindle Worlds did a few years back, which was an author created a world, fiction world, and then other authors were allowed to write in that world and use characters within that world because the Kindle World's contract allowed them to do that.
And this is how I see the NFTs for IP rights could look like in the future. And there are jobs in the metaverse called ‘lore master,' people who are creating these narratives around digital worlds in gaming etc, and different NFT products so that people can then go and use them to do other things.
[More on this model in The Ownership Economy: Business Models Around NFTs with Jessica Artemisia]
And again, it's a way of expanding your brand, it's a way of creating other products, it's a way of buying in with the community so that we can all profit together. It's a very interesting model.
Creativity, Collaboration, Community, and Cash
So, these are the four areas that I think are interesting, creativity, collaboration, community, and cash. So, first of all, creativity.
Since getting into this NFT space, I've come up with literally hundreds of ideas for NFT s around my IP.
So, I have around 35 books at the moment, fiction and non-fiction, and I have ideas for all of them. This example, ‘A Thousand Fiendish Angels,' which was is based around Dante's Inferno and features a book of human skin (I just can't help myself!) but I've come up with lots of ideas just for this. And this is a trilogy of short stories, essentially a short-story collection, which I can think of absolutely tons of ideas for NFTs. That's just one book.
So, when you get into this, the creativity sparks start going and you start realizing what the possibilities are. So, it's turning our digital intellectual property into so much more.
And of course, it's cheaper to create digital products but that doesn't mean they're worth less.
If we have true digital scarcity, we can create awesome, surprising, delightful, wonderful products that people are interested in.
We can also use video and audio to add to our ebooks and enhance these products and we can do stand-alone NFTs.
So, for example, I do a lot of podcasting and I have a lot of private conversations with creatives that, potentially, we could collaborate in turning those into NFTs. I'm certainly interested in, you know, listening into a conversation by two writers I love and, you know, buying a token for access to that. So, there are lots of ways we can create these one-off products, as well as the products based off our IP.
I also love the potential of commissioning art for different aspects of the books. Or also using AI art generation. There are some really interesting tools for using words to create art now. You can take a passage from a book and generate an original art piece from it, and that can become the token with the text.
There are also lots of ways to collaborate with authors and other creators through NFTs.
And this has been traditionally very difficult. So, this is an example of a book. I co-wrote with my friend J. Thorn, Risen Gods, it's set in New Zealand, it's, again, got a lot of visual stuff we could do with it.
But J. and I, we have a co-writing contract, we published this about 5 years ago, and I published it under my company. And I have to pay J. every month or every quarter. Essentially, I have to go through all the reports, I have to figure out how much I owe him, I have to send the money. It's all manual. And this is what's done across the publishing industry. Obviously, there are a lot of systems, but they're all diverse systems. There's a lot of paperwork and manual work around collaboration.
Now, there are beginning to be things you can do with ebooks. So, Draft2Digital, for example, includes payment splitting. But if you want to do 100 authors in a anthology, for example, it's a lot of work to set that up and then to do all the different products. And you still have to do something manually, you can't necessarily do it all through one system.
So, what blockchain allows and NFTs will allow is you can set up the smart contract to automatically split the payments, the micropayments over time. And also you could include a percentage for an editor, you can include a percentage for a cover designer, there will be freelancers who really want to collaborate with prolific artists, authors. And this will enable much more interesting collaborations between people because it's so easy to do.
Community is incredibly important. It's incredibly important right now, and it always has been.
Having a community is a way to reach readers with your work, it's a way to support the artist community, it helps your mental health. I mean there's a lot of things that community is important for.
And community is even more important as we move into Web 3. So, community tokens, as I talked about, will enable access to different levels within an online community. This might replace membership software, this might also help author collectives, genre collectives, but also organizations like ‘The Society of Authors' or ‘The Alliance of Independent Authors' or I'm a member of International Thriller Writers. These types of tokens could actually change the access model and get rid of a lot of the manual work in the back end, which is, ‘Oh, this person hasn't paid their dues,' or, ‘this person has changed their level,' or whatever.
What we can also see, and again, sorry to bring in more language, but the rise of DAOs or ‘decentralized autonomous organizations.' These are very exciting, this is essentially a way to automate a type of company. It's difficult to go into it without too much technical detail but, essentially, it will be a more automated way of running things on a higher level.
[For more check out this Coin Telegraph article on DAOs.]
DAOs will allow authors to have controlling stakes in these types of societies and organizations or it will enable publishing and estate management with much more automation.
In my head, I see that as the future of my own company is that it becomes a decentralized company with everything automated in the back end. I am a one-person company right now, this would help me a lot. But it would also reduce back-end costs for groups of authors, rights holders, publishing companies. And let's face it, everyone wants to reduce their costs.
And then, finally, cash.
We are artists but we also want to earn some money from our work.
And this is the basis of having a business and a thriving publishing community. We do need there to be money involved. Yes, we love this, but we also run businesses.
Now, what true digital scarcity allows, and that's why I like the one-of-one ideas, but there's so many ways to bring in new streams of income with NFTs, I hope you can see that with some of the examples that I've given, but also resale.
Again, in my mind, resale is very, very exciting. So, let's say I do an NFT and I make $500 on the initial sale. Well, then, let's say, something happens. I win a prize or I hit the top of a list and the value of my IP goes up. So, maybe that holder then sells it for…let's say, you sell it for $1,000. And then, out of that $1,000, I might get the 20% or 10%. So, let's say I get another 10%, let's say I get $100 from that.
And then, over the years, as the NFT is resold and resold, I keep getting a percentage stream from that resale automatically.
Now, this has never happened before. There are some attempts to make the resale of second-hand books work this way but, of course, it's not automated, and it's tiny. Whereas this has potential for massive scale at an automated level. So, it truly is very exciting. When I think about resale of digital books and products and audio, I can't get more excited about it because it really is revolutionary.
As an individual one-person business, everything I do is designed to be scalable. I don't want to have to touch things a second time. I want to put things out there and then just have money coming in. And that's what I love about the digital business. But this makes it even better.
So, when you think about resale and digital scarcity, consider what resale might mean to you as a rights holder, as an author, as a publisher.
Smart contracts and automatic payments mean easier reconciliation, immediate and faster payment.
So, instead of waiting months for money, you get it immediately on the transaction.
It means the removal of third-party processing costs. I mean, of course, there will always be some kind of like gas fee, which is the platform fee, and there might also be other companies involved. I don't believe this will be truly decentralized, I see that there will always be companies that we use who will take a percentage. So, it's important to look at those companies and how much the percentage is.
But it means, as we talked about, easier collaboration, which can, potentially, expand the number of products without expanding the back-end pain of figuring out how to pay people for that.
The author is also incentivized to create more for the long term. So, I am always thinking about my long-term business, my long-term sustainable income.
What happened when I had Covid last year, I couldn't work but the money still came in because I've set it all up that way. Now, I like the idea that, as I create more and the value of my intellectual property rises, which, inevitably, it does, generally, unless something really awful happens, but even then we found bad publicity can cause authors work to sell more.
So, what we can think about is how the value of an author's IP will rise over time and how that might affect the value of their NFTs. Some musicians are doing their own creator coins that might be something that big-name authors will be interested in, in the future.
And then, of course, licensing for other rights might also spin off into the value of other NFTs, which, again, brings in more money. So, to me, this is expanding the possible streams of income. And that is very exciting.
What do we want in a NFT solution for publishing?
I've been looking into the various companies and these are, essentially, the things that I want and I think we need in a blockchain solution.
So, first of all, low-fee minting or low-gas-fees minting on an environmentally-friendly blockchain. This is really important.
Readers care about this, authors care about this, everyone cares about this. We don't want to destroy the planet so we need the blockchain that a solution uses to be an environmentally-friendly blockchain or at least a very low-energy blockchain. Plus, this will encourage resale because, obviously, every time you resell, there's another transaction, which costs more energy. So, we definitely do want this environmentally-friendly blockchain idea.
The next thing is ease of use for readers, collectors, fans, and community, as well as creators.
So, I need it to be easy when I mint my own NFTs, but the reader and the collectors need to find it easy too. Now, at the moment, it is difficult for people who are not blockchain/NFT/crypto people to deal with NFTs, and that's because the technological solutions are designed for people who already know what they're doing. And we can't have that for a mainstream solution.
It needs to be easy. So, it must be as easy as, at the moment, using something like Amazon to get an ebook or Audible to get an audiobook or PayPal to pay. And so, we're definitely looking for these easier-to-use solutions, which, at the moment, I haven't seen emerge.
We also need the ability to change the terms of the smart contract.
So, some solutions will have a standard contract but, as an author and rights holder, and I'm sure most of the publishing companies want to be able to, basically, configure each NFT. So, when I put out a one-of-one NFT, I want to be able to say how long it lasts, what the resale percentage is, if I have other collaborators, and what percentage goes to different people. And, if I want to send the money to different wallets, that might be that I want to send 5% to a charity, for example. It needs to be configurable per NFT mint, essentially.
And then also adhering to financial regulations and providing tax documentation.
So, this is something that is still up in the air as I record this, again, late February, 2022. The jurisdictional laws and changes around blockchain and NFTs are difficult because, of course, blockchain is a truly international technology. It's even difficult to tell where the buyer is from or where the NFT minter is from.
So, these things will have to wash out over time but some of the questions I have right now, for example, are, when I sell an ebook NFT, there's digital sales tax and companies like Amazon and Apple and Kobo, they manage that for me. So, I just get the royalty. But if I sell on a blockchain platform, is an NFT, digital ebook NFT, does that attract sales tax? If it does, who handles that?
Then things like collectibles. In different jurisdictions, collectibles attract a different tax rate to just a normal product. Or a use of IP, for example, those might be considered assets. And again, assets are potentially taxed in a different way. So, there are a lot of questions that have not been answered yet.
I should be totally clear right now I have not minted an NFT, I have not bought an NFT for a book (as of 28 Feb 2022.) I've bought NFTs for domain names, for my future Web 3 metaverse presence, but I have not bought an art NFT or a music NFT or book NFT because I see these problems are still here. But I wanted to do this presentation because I feel we're almost there, we're almost there. And again, I have to be sure that these things are handled on a platform.
So, these are some of the companies that currently offer NFT solutions, specifically for books and publishing.
Creatokia (from Bookwire)
They will inevitably change over time, and they all address different angles. I absolutely suggest you go and check some of these companies out, see what they're doing. And there are lots and there's more emerging all the time.
But when assessing the companies, think about how it might apply to your work, look at the percentages involved in terms of the various fees, look at the blockchains they use.
There are lots of things to assess. But these are, essentially, smaller companies doing things in the NFT for publishing space.
But you might think, ‘Oh, well, you know, this doesn't really matter,' but NFTs are already happening in the mainstream media. You will have seen the hype around art, NFTs, the Beeple $69 million-dollar sale.
People ask ‘why does a picture of an ape sell for millions?', but essentially, this is becoming a much bigger deal.
It's not about the jpeg, it's about all the functionality within the NFT.
But here are just a few bigger companies getting into NFTs. The Financial Times,' talks about Facebook…sorry, Meta, getting into NFTs. YouTube is looking at them.
Shopify, which, of course, is full of independent creators, is talking about that. What I like about the Shopify idea is that Shopify helps creators sell physical products. So, if I want to sell my handbound limited edition books, I can do that through Shopify. I can also then, potentially, sell my digital scarce products through Shopify. So, I'm keeping my eye on Shopify for sure.
Rakuten, as I record this, Rakuten, which owns Kobo, the ebook and audio bookstore, Rakuten launches NFTs in Japan. So, that's really interesting. Could that mean Kobo could more easily do NFTs?
Ebay, which, of course, is a second-hand marketplace for physical goods, now does second-hand digital products with NFTs. And then big brands like the British Museum, Disney, these are all doing NFTs. So, it's not like this is fringe anymore, it's moving into the mainstream. Of course, it's still early days but it's not really really early days.
So, then, of course, people will ask, ‘What about Amazon?' Well, if you go on AWS, Amazon Web Services, you can see they already have a blockchain solution, the Amazon-managed blockchain. And interestingly, 25% of all Ethereum, and Ethereum is a particular blockchain, 25% run on AWS.
So, even in a so-called ‘decentralized world' we still have the big incumbents who are going to run the technology side, the back-end systems. So, essentially, if Amazon wanted to do NFTs, then they could because they have that back-end potential. So, never say never. Like the Ebay marketplace.
If you can buy second-hand print books on Amazon, why won't you be able to buy NFTs in the future? Of course, it involves a massive architecture change but companies do that.
How do NFTs fit into the current publishing business model?
So, this is how I see the current state of the publishing business model and how NFTs might fit into that.
So, we create the book, the manuscript, and we turn it into the existing things that we already do using the existing ecosystem, so, print books, ebooks, audio books, and other forms of licensing. That is the existing model.
All I see is the NFTs add to the existing business model. So, I will continue to do all the existing things with my existing books.
It's not like I'm going to stop doing all those other things. What I'm considering is adding these special editions on top. So, that might include a special limited edition print run (print scarcity), I might do a Kickstarter for one-of-my books, and that is an established model for doing special print runs.
But then I might also do special-edition ebooks and special-edition audiobooks with NFTs for digital scarcity. And when I email my readers with my special print stuff or a new book, I'll also link to my NFTs.
Now, I will, obviously, need to educate my readers and there's a lot of education needed in this space, but it's almost like it was when we started doing ebooks.
Remember, over a decade ago, I'll take my mum as an example.
When ebooks first came out, my mum was like, ‘I would never read an ebook. Why would I do that? That just seems crazy.' And then about, I don't know, 5-6 years ago, she got a Kindle and never looked back, basically. Or my dad, who said he would only ever read the paper in a physical edition who has, essentially, now moved to his iPad.
We say we won't do things or we won't accept these things and then we do. But I see this as the model for the next few years, which is we'll carry on doing exactly the same thing with all the other products, and then we'll add on these limited editions.
This is where I see the future, the eventual promise of blockchain.
And again, it's an architecture shift, and we've seen architecture shifts, over the last couple of decades, within publishing. Architecture changes bring in new opportunities.
This is what I would love to see, and I mean I can't promise when this will happen but we will have some kind of identity blockchain.
And again, people talk about blockchain being decentralized but we will have companies, DAOs, whatever, who will run certain aspects or certain blockchains that are designed for certain things. People have to do the work to build these architectures, these companies.
So, first of all, I think we need an identity blockchain of some kind where authors and rights holders verify their digital identity.
Now, many people think that the importance of blockchain is being anonymous but it's not the whole picture. That might be what some people would like, and there are reasons why that's important, but for the purpose of publishing, what we want is the digital identity of the rights holder to be verifiable and their wallet to be verifiable for that particular situation.
Now, that doesn't mean that your whole online self needs to be included in this blockchain, this is specifically about intellectual property.
Then we have some kind of IP registration blockchain, and this is where we register our intellectual property.
So, the point being that I can upload my book before I send it anywhere. And this may help prevent piracy and all of this stuff because, hopefully, with the IP registration, we will have a registration number on a blockchain which then does truly represent the first publication of that book and that will help protect the future of that IP.
And then that can be changed by the verified rights holder and will, potentially, have a heads of agreement contract which will redirect payments based on what happens when an author dies, when an estate changes hands, when, you know, a company moves from one to the other. That kind of IP registration central rights is really interesting.
For example, right now I'm trying to find someone who can help with this book, Anno Domini by Barnaby Williams. Now, the author is dead but the author's name is a pseudonym, the publishers have basically said they don't know where the estate is anymore. The book is not on Kindle, and I am interested in getting the rights to this book. I love this book, it's fantastic, I would like to publish this in digital.
But for the life of me can't get hold of the right people to sort that out. And if there was some kind of IP registration blockchain, then I'd be able to figure that out.
Then, of course, what we would like next is publication. It could be exactly the same sites, something like Amazon, Apple, etc., but they will check the IP against this other blockchain. And this will prevent plagiarism, piracy, fraud, and all these other things that plague authors, rights holders, publishers. And we would all like that.
Quite often I'll get an email from Amazon saying, ‘Can you verify your copyright ownership of this book because it's been found elsewhere on the internet?' And I'm like, ‘Well, yes, here you go. Here's my proof.'
But what I would like to see is publication through some kind of integrated system that allows the smart contract to be applied to all of the different publishing formats we do, as well as NFTs, because this will truly allow the automation of payments through smart contracts down the line to all the different people.
So, it won't just be that we can do collaboration for digital products, we can also do them for physical, we can do them for events. We can do all these kinds of things and it will all become automated and amazing!
Of course, I don't know how long that might take, if it ever happens. And what we'll probably see, again, is a bit of a hybrid in the way that we do right now in that some of my publications are automated, some of them are manual, some of them have a difficult process, others are super super easy. So, that's how it's going to go.
We're not going to move from, ‘This day it looks like this, and this day it all changes,' it will be a slow change in the same way that the last decade has been a slow change to a lot of digital.
So, it is early days, but I wanted to put this presentation out because there's a lot of confusion in the community. People are trying to learn things and trying to watch what's happening in the music industry, in the art industry, and thinking about how it can apply to books and publishing so I wanted to get my ideas and thoughts out there.
What action should you take right now on NFTs and blockchain?
The most important thing is that you don't have to do anything right now, but you do need learn and watch with an open mind.
So, I've had a lot of comments from people, when I've been talking about this, they're like, ‘We don't need that. That's terrible,' you know, ‘why would I go anywhere near that?'
But I was thinking about my old Nokia phone, back in like 2006, I had one of those Nokia phones. All it could do was text and phone, it was a proper phone.
When the iPhone launched in 2007, I said, ‘Why would I need one of those?
Why would I need a smartphone that connected to the internet or played music?' you know, ‘why would I need all of that?'
And now, of course, my phone is right here by my side and is pretty much always within reach of my hand. I can run my business from my phone. And I did not expect, back in 2006 when I started writing, when I had my Nokia, I did not expect that 15 years later, I would be an author with books all over the world and a multi-6-figure business, as a one-person, solopreneur.
That was not what I expected. But I have had an open mind along the way. I didn't expect my podcast to be where it is now when I started it in 2009. Technology is a lot to do with jumping on board, taking advantage of things as they emerge.
Blockchain is just emerging. But where might it be in the next decade?
Where might it be in the next 15 years? If I think about where I'm going to be in the mid-2030s —I'll be in my 50s — And I still want to be making money, that's for sure. I still want to be writing, I still want to have a thriving business.
And so, I'm learning and watching what's happening with an open mind so I can take advantage of these things.
So, that's my question for you, what technology have you underestimated in the past? What have you later realized that you might have been wrong about?
As an author and a rights holder, please don't sign a contract that has a clause that has something like “all formats existing now and to be invented for the term of copyright,” because, essentially, that will include NFTs.
And what is interesting is, even if you don't want to take advantage of blockchain and NFTs right now, you certainly want to be able to have that option in the future.
I also think the definition of digital rights is going to become a problem. Some of you might have signed digital rights, some of you might have signed ebook rights or audio-book rights which, again, might stop you doing an NFT limited edition.
I think there's a lot of work to be done around contracts, around, you know, terms in contracts and rights and all of this, but, if you want to make sure you can do this in the future, just be very careful what you sign.
Now, I'm very happy to sign a lot of rights agreements, and I do a lot of foreign-language subsidiary rights, etc., but that clause stops you taking advantage of things and the publisher may never actually do NFTs with your work.
So, just be a little careful of what you sign. And if you're watching this and you are an agent or a publisher, then be very clear in your contracts, what the author is signing. And, you know, the language around special editions I think is interesting, but I foresee there will be a few discussions on this in the future.
And then, of course, experiment and try new things. So, if you own your rights, like I do, then why not consider doing an NFT edition?
Early adopters do have some advantages, as I know from getting involved in the Kindle early and also with podcasting early, that there are good reasons to get involved early. Now, they're also downsides. For example, I have made some mistakes by jumping on too early onto platforms, signing contracts that I later regretted. So, I am, as I said, watching this space.
As of 28 Feb 2022 when I record this, I'm ready to mint, I know what my first NFTs are going to be, I just haven't settled on the platform yet because of all the things I've talked about.
So if you control and own your intellectual property rights, this might be something you want to do but the question is,
What do you want to create and where do you want to create it? And, of course, you need an audience who might be interested in buying your NFTs.
But as the classic quote from Wayne Gretzky goes, ‘Skate to where the puck is going to be.' So, again, if you're thinking right now, ‘This is not important,' doesn't matter, you can just wait.
But if we see where the direction of travel is going in terms of Web 3, metaverse, blockchain architecture, I want to be ready for when we get there. And I don't know whether that will be a year, 5 years, 10 years, but keeping an open mind and watching the space I think is important.
So, I hope you found this useful. You can find more resources at thecreativepenn.com/future
If you have any comments, tweet me @thecreativepenn or leave a comment under the video or on the post.
I have a book that goes into a lot of this future stuff: Artificial Intelligence, Blockchain, and Virtual Worlds: The Impact of Converging Technologies on Authors and the Publishing Industry, where I consider the coming technologies and how our business might change over the next decade.
Thank you for listening, and I wish you all the best for your NFTs.
Ingrid Hardy says
Thanks for this! I’m trying to get my head around NFTs and frankly, I still don’t get it, so I’m encouraged when you say “let’s just keep watching what happens”. Will definitely do that. I think it could be something that might apply to my own work, so I’ll keep my eyes and mind open… 🙂
Joanna Penn says
I know it takes some time for the penny drop, but when it does, I think you’ll have lots of ideas!
nicki rising says
really interesting intro about NFTs, really appreciate it! Complicated it seems at this point but I managed to get my head around crypto and blockchain (to some extent) so where there is a will there is way :). I have been dreaming of my memoir with videos and music (I am a songwriter musician and poet as well and keep seeing my poems with videos) hence this has really captured my attention. Will be interesting to see if consultants or agents of some sort pop up to help navigate the process. I’d be interested in taking a workshop about it, if you are offering it or know someone please let me know. I reposted it to a writers group on fb. fyi.
Joanna Penn says
Thanks, Nicki. I guess I am trying to offer education in the way I have always done, in that I share my journey through my podcast, and eventually my books!