The optimization of aggregate price is the rationale behind the supply-demand theory. If one reduces the supply, then the individual item price will increase. After a point, the decrease in quantity of items offsets the increase in price and the aggregate declines. This is at odds with the assertion that restricting availability of a few copies of a good reduces the price of the remaining copies of the good. Furthermore, the challenge with digital goods is that the cost to reproduce them is essentially zero.
I agree that the signed book analogy is imperfect, but I suggest the following thought experiment. Assume that there is a signed book that is considered valuable enough to go to auction. Suppose that the auction house removes the signed page from the book and auctions off the book and the signed page separately. Which would command the higher selling price? Would the individual selling prices be any where near comparable?
Neither book nor page would sell as high as they would have together. The book is damaged goods, and no collector will want it—quite possibly nobody will want it, if there are undamaged copies available (seriously, if I come upon a book missing a page while I’m looking at books to sell, I don’t even bother to list it—even if it’s otherwise As New, that missing page downgrades it all the way to Poor condition, and unless you’re selling a lot of used books (enough to make money off of the quantity you’re selling), it’s just not worth selling); the signed page was part of the book, and while still somewhat valuable, its value is diminished—it is only as valuable as any other signature of the author. Most collectors will want a
signed book, not just a signature; it would only be the few really big fans of the author in question that would want the signature alone—and for most authors, there aren’t enough fans of that calibre to justify anything near the price of the signed book. The value has been damaged by the dissociation. The digital work is as valuable when dissociated from the blockchain as it would have been never having been dissociated; the same is not true for a damaged book. At any rate, the signed book metaphor isn’t important; this is:
The profit from an NFT which has been stolen from the original artist is not going to the original artist. They see not a penny of it. People who might have bought a copy of the original from them can be distracted by the NFT and not realise they’re paying for a stolen good; and the person selling the NFT has no reason not to sell as many copies of it as they can—after all, if it stops paying out, they can just steal something else. The original artist loses out, even if in aggregate more money is being made from the work, because they have fewer people buying what they’re actually selling, the lower demand means lower prices, so they get less for what they do sell, and of course they’re not getting anything for what the thief is selling. And because NFTs are unregulated, because there are no consequences for stealing art in this manner, they have proven a very good vehicle for digital art theft—enough that it’s becoming a problem for the actual artists actually making the art.
It also becomes a problem for honest NFTs sold by the real artists, because there is no way to tell the difference between an NFT sold by the original artist, and an NFT sold by an art thief—not without already knowing it’s been stolen from an outside source. An author’s signature can be judged, on its own merits, and determined whether it’s authentic or not. The same cannot be said for a blockchain. The part of the value of the NFT which lies in the certification that it is indeed a unique piece from the original artist is
less, because it does not truly test for whether it is a unique piece from the original artist—all it will tell you is that it was sold on the blockchain. Therein lies the inherent flaw in the system.
In short, the problem is the art theft, not just that the artist isn’t going to make as much selling elsewhere; the problem is that many artists are finding somebody else selling their art, and are understandably and justifiably upset by it; the problem is that the blockchain says nothing about the legitimacy of the seller, only the manner of sale; the problem is that as the theft goes unchecked, honest NFTs become worth less than they otherwise would be; the problem is that NFTs are far too susceptible a vehicle for thieves and con artists out to make a quick buck, so that the NFT market must, inevitably, be destroyed by them.
That is the the problem with NFTs, and I can see no solution that will not destroy every distinction between NFT markets and other online markets for digital art, or conflict too much with the profits of the NFT markets to be attempted before it is too late.
