As more people leave the arts, NFTs and web3 may bring new life to arts philanthropy.
I am deeply passionate about promoting human flourishing: people are created with a unique purpose and have so much potential, but so many fundamentally fail to succeed. That wasted potential not only harms the person who failed to live out their calling, but also fails to bless the many people who could have benefited from their gift.
But these are not new ideas – we all grapple with the importance of calling and see people living it out, and (many) others who are not. And perhaps that wasted potential is most evident in the performing arts, where our internal surveys in Living Opera show that over half of performing artists take up a job outside the music sector – often a low-wage job in retail or customer service – to finance their music career. That’s especially damaging, as my research with Jonathan Kuuskoski at the University of Michigan shows, because their hearts are not in these second full-time jobs, and they earn lower wages. Meanwhile, these artists are still burdened with the high college debt that they paid for with their music degree without any practical training.
So, what can we do about it? Three years ago, I got to know two of the world’s leading opera singers, Soula Parassidis and Norman Reinhardt, who have become my best friends. They launched Living Opera in 2019 to provide performing artists with educational content and lessons learned about what it takes to thrive in the business. Nearly two years ago, I joined as a co-founder and led our rebranding as a web3 multimedia startup using blockchain technology to promote and produce transformative experiences through classical music.
On September 30, 2022, we had a soft launch of our first major NFT collection called Magic Mozart, consisting of 1,791 initial pieces each with a portrait of Mozart containing different elements from his final opera, The Magic Flute. It also comes with a personalized musical minuet based on Mozart’s development of the first widespread generative art game. (Our launch date was specific since The Magic Flute premiered on September 30, 1791 in Vienna, Austria!)
The discovery that Mozart was a pioneer of generative art – which we talk about in detail here – served as the inspiration we needed to get involved in web3 without just jumping on the bandwagon when NFTs and generative art were popular. Indeed, the discovery highlights a throughline between one of the oldest art forms (opera) and one of the most recent social and technological fads (generative art).
But the artistic element of the collection is only the front end: we also just launched the Living Arts Foundation – a nonprofit decentralized autonomous organization (DAO) that will function as a decentralized grantmaking platform for helping and empowering artists. The novelty of the DAO is that it allows us to create stronger incentives on both sides of the “market.”
Here’s how it works. Artists – whether already part of the Living Opera community or not – can take our free arts entrepreneurship curricula. If they complete it, they earn a digital credential that lives on the blockchain. That digital credential gives them access to our grantmaking platform that allows artists to post short funding proposals detailing their requested amount, how they plan on using it, and why it is important. Then, the Magic Mozart NFT holders, or the micro-philanthropists, have access to the platform and can view and vote on proposals. Once a threshold is hit on a proposal, the artist is funded through a direct transfer to their digital wallet. Artists then record a video documenting their experience resulting from the funds and share it on social media. A line of communication opens up between the micro-philanthropist who voted for the artist, and the artist, with the ability to keep in touch and share.
This approach strengthens incentives on both sides. Furthermore, the micro-grants community provides an organic and experiential way of imparting arts entrepreneurship know-how, including presenting ideas and building accountability around their execution. And we also are helping onboard artists onto web3. While we’re only at the beginning of this journey, we are excited to have Living Arts Foundation formally filed with provisional nonprofit status and are in the process of selling more of the collection and building the technology stack for the platform.
The DAO offers a wide array of advantages, notably more accountability and transparency compared to the norm in the non-profit space. Somehow, funding for non-profits continues to grow, yet the challenges they are trying to solve only worsen. While there are some great non-profits, many are burdened by fraudulent behavior, waste, and ineffectiveness. We believe that decentralizing grantmaking is a tool within the non-profit realm and we have a community of performing artists to pilot it on – and onboard them onto web3!
We have much more to learn and test in the journey ahead of us, but we believe that the best is yet to come and that classical music plays a role in it. Moreover, we see blockchain technology as a complement to human ingenuity – not a substitute.
Putting NFTs in perspective
We might be tempted to look at NFTs as a speculative boom-and-bust market. Although some collections, such as CryptoPunks and Bored Ape Yacht Club, garnered international attention in 2020 and 2021, these profile picture projects (PFPs) were simply status symbols – not art.
One of the worst parts about this era of trading activity was the fraud and whitewashing of NFTs. For example, a project might launch and plan among a group of friends to buy up the NFTs to give the impression that the collection “sold out,” thereby driving up the perceived value to less savvy or unfamiliar market participants. Perhaps even more deceptive is when a founder would create multiple digital wallets and buy their own collection from a different address to pretend there is interest and sales when the activity was just a show.
But these boom-and-bust dynamics are not unique to NFTs. For example, the run-up of house prices from 2003 to 2006 in the United States, right before the collapse in 2008 to 2009, was another example of what can happen when there is speculative trading on assets. Although the explanations for the financial crisis are still subject to debate, what is clear is that many homeowners who entered the market without a steady income, received a loan based on financial models that simply assumed house prices would continue to appreciate.
My research on foreclosures during the financial crisis finds that these loans were often adjustable-rate mortgages that had two or three years of fixed interest rates, but would experience a discontinuous change (mostly a jump) in their interest rate subsequently.
The price of any asset is a function of its intrinsic value and the expectation of future cash flow. If expectations don’t align with reality, then the “economic laws of gravity” eventually kick in and the asset price will decline. That is also what happened since the boom in the NFT and crypto market since 2021 – the low-quality projects have plummeted and, while the web3 market has taken a hit (much like the market as a whole), high-quality projects have survived.
The importance of the arts and the role of web3
Few readers would disagree with the statement that the arts matter. Clearly we care about how we dress, what furniture looks like in our residence, the rhythm and lyrics of music, and so on.
Simply put, the arts and culture sectors overwhelmingly influence peoples’ outlook – for better or worse. Much of the viral music does not point to what is good, beautiful, and true, but instead to fairly wicked and shameful behavior that some are trying to normalize. But when people listen to it on repeat – and sometimes not of their own choosing (e.g., if it is the default track in a store), they cannot help but get affected by the messaging.
But sadly, rather than rewarding skilled artists, many people have retreated from the arts all together. Yes, some pretty weird operas get cast, but some pretty weird startups launch. Does that mean we retreat from entrepreneurship? Or do we engage and start contributing to the culture we want to see?
The classical music community – and specifically the community we’ve cultivated in Living Opera – is a highly trained community. These are people who speak multiple languages, can read music, have trained their voice, and can perform and act in front of audiences. These are not the random pop artist who goes viral because of a deal with a record label and a lot of auto-tuning that goes on in the background – it’s live music and performance at a high caliber.
So something has to change. Fortunately, web3 provides a catalyst to change the incentives. Now, micro-philanthropists have a more transparent way of contributing, and artists have the tools to build their fan base, rather than rely on institutions that may not have their interests, or those of society, at heart. DAOs – and what we look forward to doing in the Living Arts Foundation – offer new ways to coordinate activity among potentially geographically disparate people connected by a shared objective and community.