In Full...
Let’s take a short break from AI and hit a topic I have purposely avoided until now: Crypto.
The Wu-Tang Clan
Wu-Tang Clan provided much of the soundtrack to my teenage years; their unique, raw approach to production and writing ability stood out amongst the ocean of gangsta rap that flooded the early 2000s. Still now, if I need to get stuff done, I stick them on. In fact, 36 Chambers is playing as I write this. It would be fair to say that I am a fan.
From TheAlbum.com:
Ten years ago, the visionary Wu-Tang Clan released an album unlike any other in the world. Once Upon a Time in Shaolin was recorded in secret over six years and, as a protest against the devaluation of music in the digital era, only one physical copy of the album was created. Once Upon a Time in Shaolin went on to become the most expensive work of music ever sold — twice.
Basically, the Wu-Tang Clan made an album, pressed only one copy and sold it to one single buyer for a couple of million dollars. The purchase included an agreement that prevented the owner from selling copies of it for 88 years, although they were allowed to release it for free or play it at listening parties. The idea, according the Wu-Tang was:
The music industry is in crisis. The intrinsic value of music has been reduced to zero. Contemporary art is worth millions by virtue of its exclusivity … By adopting a 400 year old Renaissance-style approach to music, offering it as a commissioned commodity and allowing it to take a similar trajectory from creation to exhibition to sale … we hope to inspire and intensify urgent debates about the future of music.
That sounds fair enough; the album as a work of art, intrinsically valuable because of its exclusivity. There was always an element of risk of course; unlike a sculpture or painting, the value isn’t in the original physical manifestation of the object, it’s in the fact that the only way to hear the music is to have the original copy …unless someone were to… make a copy of it.
Pharma Bro
So Wu Tang put One Upon a Time in Shaolin up for auction. Inevitably, a perfectly normal and reasonable art collector ends up as the owner: Martin Shkreli. You are likely somewhat familiar with Martin, the internet villain and “pharma bro” entrepreneur who increased the price of a life-saving drug by an astronomic 4,000%. It cost him a cool $2m in 2015 and for the most part, he kept the music away from prying ears, save for a few minutes shared on live streams and listening parties. When Shkreli was, surprisingly, arrested later in 2015 and subsequently convicted in 2018, the Department of Justice went after his assets and seized the album to pay for his debts.
The DoJ, not known for their great love of rappers (again, my teen years led me to understand that the feeling is mutual), was sadly not willing to “release it for free as part of our cultural patrimony” and sought a buyer, eventually selling it for ~$4m in 2021. That’s a pretty good return for Martin, even if he didn’t get to see the actual cash, and of course, was never able to listen to the album again. The Album, by this point having acquired enough cultural legacy, then of course ended up in the hands of a totally normal, straightforward billionaire and went on to spend the the next 80 years locked in a vault. Right?
DAOs
Obviously not. The eventual owner, after a convoluted process to allow them to purchase it using cryptocurrency, was PleasrDAO. PleasrDAO isn’t a person or company1 but a DAO; according to Investopedia:
A decentralized autonomous organization (DAO) is an emerging form of organizational structure with no central governing body and whose members share a common goal of acting in the best interest of the entity. Popularized by blockchain enthusiasts, DAOs make decisions using a bottom-up management approach.
What this means is that members of the DAO purchase (or otherwise receive) tokens that allow them to vote on decisions made by the organisation. Once the requisite number of votes is received, a smart contract (a small program) then takes the action that the vote is on. It becomes more complicated than that, but that’ll do for the sake of simplicity.
I sort of like the concept of DAOs? The idea of an organisation which has a pot of money provided by its investors or commercial activity which can take actions based on votes? That sounds good! It’s somewhat like a board within any company or similarly structured organisation but with additional anonymity and less regulation.
PleasrDAO describes themselves as a “worldwide crypto collective”. Founded in early 2021, the group initially came together to purchase a piece of digital art by pplpleasr, an artist known for her work as one of the early creators of artwork as a Non-Fungible Token (NFT). Since then, they’ve expanded their mission to acquire culturally significant items, with a focus on tokenizing these assets and “sharing ownership with a broader community”.
NFTs
NFTs, and by that I mean specifically digital artwork that is available as an NFT, have always struck me as an intriguing but ultimately ridiculous part of the early 2020s wave of crypto-mania. JPGs that could be freely downloaded with a right-click, save as, being ascribed often huge values just to be able to say you ‘own’ that piece of art? I’m not a luddite but… no.
The attempts to compare ownership of digital artworks with a physical piece of art never made any sense – if you own a Monet, you own the version of the painting that Monet actually touched and painted. It is a genuine and unique one-off. A digital NFT is, by its very nature, not a one-off, and not even the same file that an artist originally pushed pixels around in. Let alone the fact that anyone can make a precise, exact copy of the piece of art whenever they want.
The concept of shared ownership of a physical piece of art using NFTs though? That sounds pretty cool! Sure, it’s long been possible to invest in an art-based fund but not with the ease with which I can just buy an NFT. I can see a use-case here!
The Great Wu-Tang NFT Experiment
So, back to The Album. PleasrDAO buy the album and sit on it for a couple of years whilst they work out a deal with Wu Tang Clan and figure out how to get a return on their investment; they’ve spent $4m on this album, but aren’t allowed to commercially exploit it for another 80 years.
Finally, this year they figure out a deal; they’ll sell “copies” of the album for $1 a piece. Each purchase will come with a 5-minute sampler of the album, and each purchase will accelerate the point at which the whole album can be released by 88 seconds. Presumably, once the release date is reached, the NFT owners will receive a copy of the album, although that isn’t actually explicitly stated.
What the NFT doesn’t give the purchaser, however, is a share of The Album itself – PleasrDAO still owns that outright, so if they decide to sell it tomorrow the NFT owners won’t get anything back.
So are people buying the NFT? Yes! The website shows that some 300,000 copies have been purchased and the release date has been accelerated by just less than a year to 2102.
We can assume that some people are buying the NFTs just to own the NFT (?) but the main drive is to bring the release date forward. For fans like me, the allure of the entire thing is not the intrinsic value of the album, it’s in hearing music that until now I’ve been excluded from hearing. To sate this desire, PleasrDAO have been hosting “listening parties” in Australia, with a special 30-minute mix played on a PlayStation 1.
And herein lies the rub. The intrigue and excitement around the album, and therefore the value, is in the music itself rather than the objet d’art. As soon as the full album is released, the value of the original artefact, the disk and the pretty box, drops to (near) zero.
The Shkreli Factor
Which brings us back to Martin Shkreli. Shkreli poses an almost existential risk to PleasrDAO and their plans. It was inevitable that, given that the Album is a CD containing digital files, Shkreli made a copy.
On June 9th, Shkreli, in an unsurprising display of being himself, hosted a Twitter/X Space and streamed an hour of the album, prompting a lawsuit from PleasrDAO in response. A judge then ordered him to hand over all copies of the album that he had. For now, let’s assume that he did this, and more importantly that he deleted those copies2.
This episode highlights the inherent fragility of digital artworks as assets. While proponents of NFTs for digital artworks argue that “ownership” of the digital asset justifies the price, the reality is that the ease with which they can be copied brings their value down to zero once they are widely available. It is this risk that PleasrDAO are countering – they have a $4m asset that can have its value destroyed immediately as a result of the mercurial temper of a previous owner, despite him not having access to the original item for over 5 years.
The legal implications of Shkreli’s actions are fascinating. While he no longer owns the physical album, he retained a copy of its contents. This raises questions about the nature of ownership in the digital age. Can you truly “own” digital content if you can’t control its distribution? The judge’s order to hand over all copies suggests a legal system grappling with these new realities.
The Saga Continues
There is something relatively neat about this entire thing as an analogy for how I feel about Crypto in general. We have something that does, definitely have some value. It has then likely had its value greatly inflated by attaching it to NFTs and the Blockchain. And then, because of the absurdity of its history, the whole construct becomes insanely fragile – a bubble that can be burst at any moment, bringing the inflated value back down to near zero.
The entire value proposition rests on the assumption that everyone will play nice and follow the rules. In the world of crypto and finance, that’s a bet I wouldn’t take with someone else’s money, let alone $4 million of my own, especially when someone who is definitionally known for “not playing nice” is involved.
It feels inevitable that this all ends with the Album appearing online one Sunday afternoon, with dozens of people like me (but not me, you understand), returning to the simpler way of life of gleefully waiting for a torrent to finish downloading so that we can listen for the first time.
In the end, what have we learned? That rarity can create value, but also that humans have an infinite capacity to create artificial scarcity. That blockchain technology can be used to tokenize anything, even the right to maybe hear an album someday. And that no matter how much you hate on Martin Shkreli, it’s sometimes nice to have a proper villain in a story.
As for Wu-Tang Clan, I can’t help but wonder if this is what they had in mind when they set out to make a statement about the value of music. Did they anticipate that their album would become a case study in crypto economics and digital ownership? Probably not. But then again, Wu-Tang Clan ain’t nothin’ to fuck with, and neither, apparently, is the intersection of music and financial innovation.
In the meantime, I’ll be here, listening to “36 Chambers” on Spotify like a normie, wondering where it all went so beautifully, ridiculously wrong.