Time magazine covers
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NFTs, or non-fungible tokens, have become, perhaps, the most controversial piece of the crypto conversation, evoking both passionate criticism and praise as Web3 becomes a bigger part of popular culture.
Able to shut out the noise on both sides of the argument is an unlikely figure: Keith Grossman, president of Time, who has spent the past year building the 99 year-old media brand’s NFT business, TIMEPieces, from the ground up.
NFTs are unique digital assets, like artwork and sports trading cards, that are verified and stored using blockchain technology, but critics see them as overhyped and potentially harmful to the environment given the energy-intensive nature of cryptocurrencies. Many NFTs are built on the network behind ethereum, the second-biggest token.
The rise of the internet meant that anyone could view images, videos and songs online for free. People are buying NFTs out of the belief that they’ll be able to prove ownership of a virtual item thanks to blockchain technology.
“All it is is a token that allows you to verify ownership on the blockchain. Its secondary value is allowing the owner to control their personal information,” Grossman told CNBC in a recent interview.
TIMEPieces token holders can connect their digital wallets to TIME’s website, which gives them unlimited access to TIME content, as well as exclusive invitations to both virtual and in-person events. Some of the more popular tokens within the TIMEPieces collection include photography and other forms of digital art from 89 emerging Web3 artists, including Farokh Sarmad, Joanne Hollings and Julie Pacino, daughter of actor Al Pacino, among others. It’s also attracted many well-known celebrity collectors, from Anthony Hopkins to Eva Longoria and Miguel.
In addition to auctioning off original renderings of their most famous cover stories, TIME adds its iconic red-frame to each NFT created by these emerging artists — a group curated by the media giant’s creative director, D.W. Pine. Grossman describes it as highlighting the “next generation of artists,” as the brand prepares to celebrate a century of publishing the news-related cover art it’s known for today.
Since September, TIME has created, or “dropped” as it’s known in the space, more than 20,000 TIMEPieces NFTs that are owned by roughly 12,000 digital wallets, approximately half of which are connected to Time.com, according to Grossman — that’s translated into $10 million in profit for TIME, as well as $600,000 generated for various charities.
TIME recently partnered with ethereum-based gaming platform The Sandbox to create a virtual space in the metaverse dubbed TIME Square, which will serve as a central location for the brand to host virtual art and commerce events.
With its $1.5 billion market cap, according to CoinGecko, The Sandbox is among the largest metaverse projects, due in large part to its early adoption of blockchain technology. In November, a virtual plot in The Sandbox set the record for the highest-valued digital land sale when metaverse developer Republic Realm paid $4.3 million to purchase a digital parcel from Atari.
Investors have been quick to assert that long-term value in digital assets will come from their utility. It’s a message that’s been difficult for institutional investors to digest as collectible artwork, such as the prominent Bored Ape Yacht Club, which took center stage in the early days of NFTs, and equally-hyped Crypto Punks, recently saw prices fall precipitously.
“As this new technology was getting adapted, one camp emerged around the notion of building a community that had a set of values and principles,” Grossman said. “And another emerged around what I would call ‘greed-based communities.'”
Vitalik Buterin, who co-created ethereum in 2013, recently said in an interview with TIME that he is worried about trends he has observed in the space, telling the publication that “crypto itself has a lot of dystopian potential if implemented wrong.”
“The peril is you have these $3 million monkeys and it becomes a different kind of gambling,” Buterin said.
Speaking at a recent TechCrunch talk, Bill Gates described the crypto and NFT phenomenon as something that’s “100% based on greater fool theory,” referring to the idea that overvalued assets will go up in price when there are enough investors willing to pay more for them. The billionaire Microsoft co-founder joked that “expensive digital images of monkeys” would “improve the world immensely.”
The crypto industry has experienced steep cuts in valuation for currencies and metaverse projects since reaching all-time highs in November 2021, according to CoinGecko. Cryptocurrencies have seen $2 trillion in value erased. It estimates the metaverse sector to currently be worth over $6 billion.
Adding to broader crypto concerns, Celsius, a crypto lending platform that promised high yields to users who deposited their cryptocurrency, recently filed for Chapter 11 bankruptcy protection. Meanwhile, OpenSea — the world’s largest NFT marketplace and home for TIMEPieces token listings — announced on Thursday that it’s cutting its workforce by 20%.
Keith Grossman, Time president
TIMEPieces Artist Jeremy Cowart
“Forget Bored Apes for a second,” Grossman told CNBC. “When you move out of the collectible space and focus on the community [of creators and artists] …the tokens not only allow you to verify ownership, but it allows them to affix a royalty on future sales.”
“What you’re seeing right now, as the markets are sort of unstable and correcting themselves, is that the greed-based communities without liquidity in the system, are not really performing with the expectations of the members in those communities,” Grossman said.
The past decade of technology saw the value created in the world of Web2 accrue to tech giants instead of creators, said Avery Akkineni, president of NFT consulting firm Vayner3. Blockchain allows there to be a more decentralized method of payments, incentives and rewards, which she said, “I think we’ll see play into media.”
“For enterprises, there’s never been a better time to launch a product that’s free, or very low cost, that allows your community to participate without a very high barrier to entry price point,” Akkineni said in a May interview from Gary Vaynerchuk’s VeeCon in Minneapolis.
Since September 2021, Time has created more than 20,000 TIMEPieces NFTs, generating a $10 million profit and $600,000 for charities.
Mathew Sweezey, director of market strategy at Salesforce — Salesforce co-founder and co-CEO Marc Benioff owns Time — said in a blog post that 2022 would be the year “pioneering brands will search for utility via NFTs,” and he referred to Time’s project as a “great example.”
Many analysts say TIME’s move into the metaverse heralds good opportunities ahead. “The more mainstream brands we can get transitioning into Web3, the quicker we can reach mass adoption,” Kieran Warwick, co-founder of metaverse game Illuvium, told The Defiant. “Partnering with The Sandbox is massive news for anyone in the space.”
“Media companies, for years, have looked at consumers and said ‘you’re a renter on my platform and I’ll give you access to portraying your identity on Facebook or Twitter or Instagram or the like, and in return, I’m going to extract your data,'” Grossman said. “What an NFT actually does behind the scenes is it allows consumers to own an asset, so you move from being an online renter to an online owner … and not actually say who they are from a personally identifiable aspect.”
It’s not just Time within the legacy media industry. The Associated Press and the New York Times have also launched their own NFT collections in the past year. But Grossman’s strategy is underpinned by the thesis that online identity is just as important as physical identity.
“In September 2020, I started getting really fascinated with the crypto space from a personal perspective, because I kept hearing everyone say there’s going to be no inflation, and yet, everyone was just pumping money into the system to try and stave off Covid,” Grossman said. “That equation didn’t make sense to me.”
Covid played a big role in the NFT boom. Last year, the total value of NFT transactions reached $17.6 billion, according to a study from NonFungible and BNP Paribas-affiliated research firm L’Atelier, up from $250 million the previous year and fueled by a boom in many asset markets during the pandemic as stay-at-home restrictions resulted in people spending a lot more of their time on the internet and building more cash savings.
In February 2021, a crypto art rendition of the Nyan Cat meme from 2011 sold for about $590,000 in an online auction. Grossman said it caught the attention of Benioff, who appointed Grossman as the publication’s first president since acquiring it from Meredith Corp. for $190 million in 2018.
“And that’s when everything clicked,” Grossman said, adding that, for Time, it was a natural extension of the brand’s red-frame cover stories. “I said that within 30 days, we would start accepting cryptocurrency for digital payments. Today we accept 33 cryptocurrencies for digital subscriptions. … And then I said within six months, we will figure out how to use a token and a blockchain to change the relationship of a consumer with our brand,” Grossman added. “To be honest, I had no clue how we were going to do that. I just knew it was possible.”
The demographics of Time platforms are varied. According to Grossman, the average reader of TIME magazine is a 50-year-old male; the reader of Time.com is a 40-year-old female; 62% of the engagers on TIME’s social feeds are under the age of 35, and one-third outside the U.S.
In the case of NFTs, “it’s small; it’s like a psychographic of people who weren’t thinking about Time before, but all of a sudden like the brand,” Grossman said.
The average price point for a digital subscription to Time.com is about $24, but the average TIMEPieces NFT is about $1,000.
“At the end of the day, we’re able to have just as strong a relationship with the consumer, if not stronger, through community building, than when we sell a $24 subscription,” he said. “Outside of the [Time] name and outside of a tiny logo in the corner, the hero is always the creator. They have a huge following and are uplifted by their community … TIMEPieces comes in and says ‘we want you to be a part of this,’ we’re validating the creator and their community … with the heft of our nearly 100 years of legacy and trust.”
While prominent investors continue to be believers in the long-term potential of digital assets, there are plenty of skeptics.
“I think there’s a lot of hesitancy in terms of not understanding why this wave of digital asset ownership matters,” Akkineni said. “It’s incredible how many [CEOs] are actually taking the time to spend learning, both from a business building perspective and a community building perspective, as well as a consumer engagement perspective.”
The surge in NFTs is still fairly new, but massive amounts of money have already exchanged hands among collectors. Since 2017, for example, NFT collectibles have generated over $6.2 billion in sales while digital art has generated over $1.9 billion, according to NonFungible, which tracks historical sales data of NFTs.
Ultimately, moving the technology beyond the NFT is the goal, according to Grossman, who is most bullish on the underlying concept.
“It wasn’t until Steve Jobs held up the iPod and said we’d have ‘1,000 songs in our pocket,’ that people stopped thinking about the technology and started thinking about what the experience is,” Grossman said. “In my opinion, for mass adoption, the technology has to become invisible. In this early stage [of NFTs], the technology is leading the conversation and the word NFT should disappear from the lexicon. It should literally go into the background and all the token should be doing is providing the online verification behind the experience.”
“For that to happen, you need a lot of friction to come out of the system,” he added.
Correction: The total value of NFT transactions reached $17.6 billion in 2021, according to a study from NonFungible and BNP Paribas-affiliated research firm L’Atelier. An earlier version of this article misstated that figure.