The Blockchain, NFTs, Cryptocurrency and Author Opportunities

UPDATE: June 26, 2021

When I wrote this blog back in April I was working on a secret project around this entire NFT option. Specifically, I had been invited to be in the first group of authors to offer a Limited Edition digital NFT Book in a new marketplace that catered to both authors and readers. The first drop of books by fourteen authors happened on June 24th and 25th, 2021. Each author had full control of pricing, what they wanted to offer, how many up to 100, and all copy on the buy page. Most people selected a limited edition of 100. One author selected a limited edition of one. She sold out immediately. I’m still waiting to see what happens over the next ten days on mine. Here are links to all the information about this special project.

• Press Release
• A post on my author blog about why I chose to do this and what I chose to create for my NFT Book
• Link to Marketplace with all 14 NFT Book offerings
• Link to my specific NFT Book

——————————————————————————————– Back to the original post about NFTs and book possibilities

If you read that title and started to shake with anticipation of the future then you definitely want to start learning about these opportunities now. I am an early adopter of technology–always have been–not the bleeding edge but the leading edge. This is particularly true when it comes to my author career.

If you read the blog post title and started to shake with confusion, fear, or immediately said “no way, no how” am I adding more things I don’t understand to my career, take a deep breath. Better yet, take three or four deep breaths. When that first reaction has calmed ask if not knowing something ever protected you. Knowing doesn’t mean participating. Knowing means being aware, making decisions, planning if/when you might participate. Technology will move forward whether you participate in it or not. At least knowing what is here and what is coming provides you with the information you need to decide how much attention to pay today vs next year or in five years. Ignorance is not bliss. An author cannot create a long term career based on ignorance of technology or the marketplace.

Brief History of Digital Reading

New technology and uptake of that technology is moving ever faster. If you are anywhere near my age, you’ve seen it. I remember when there was no Internet. I remember when ebooks didn’t exist. Yet, there are hundreds of millions of people who don’t remember that. In fact, anyone under the age of 30 likely doesn’t remember that time. It’s true that digital reading occurred before Amazon. I can remember in the 1980’s creating a WordPerfect document with instructions for how to use a particular piece of software. It first went to many people in the company to review, and then was sent to customers. It is most likely back then that everyone printed it out and filed it. But they could read it on their computers and not print it. That is e-reading. They were reading a digital copy of what used to be only delivered with paper and stamps.

It was 1995 when Amazon took advantage of the internet to create an online bookstore. They began selling  print books because of the relative low cost per unit. Bezos saw the promise of the internet for marketing and distribution long before publishers, booksellers, and big box stores. Two years later, separate from Amazon, the e-ink corporation was formed with a technology that allowed electronic screens to display print similar to paper where no backlighting was needed. That same year (though not using e-ink technology) the first ebook reader was created–Rocketbook by Eberhard and Tarpening. The first e-reader to take advantage of e-ink technology was Sony in 2004.  In 2007, the Amazon Kindle was introduced and sold out in 5-1/2 hours. By 2010 (only three years after introducing the Kindle) Amazon’s ebook sales outstripped its print book sales. By 2012, the American Booksellers Association admitted that ebook sales outstripped hardback sales for the first time. In 2012 U.S. sales from the ebook market generated over $3 billion in revenue. By 2018 U.S. public libraries reported record-breaking borrowing of OverDrive e-books over the course of the year, with more than 274 million e-books loaned to library patrons, a 22% increase over the 2017 figure.

In less than 20 years from the development of the first e-reader, the market was generating billions of dollars for several companies. Even staid places like libraries are loaning ebooks now, with particularly small libraries being able to have a much larger catalog of books than they could have managed to hold in their building. During the pandemic, thousands of libraries in the U.S. shifted their budget from ordering print books to instead providing access to more ebooks.

Technology moves every quicker and authors need to be aware of it. Just like you don’t have to understand exactly how the internet works to have a website or be on Facebook, you don’t have to understand exactly how blockchain technology works to use it. What you do need to understand is how it can work for you so that you aren’t exploited by a business who promises to do everything for you and takes the majority of your income in the process.

History of the Blockchain Technology

The blockchain was invented in 2008 to serve as the public transaction ledger for the cryptocurrency bitcoin. Bitcoin has been using this blockchain technology now for 13 years. Today there are approximately 30 types of cryptocurrencies traded on the worldwide market. Some of the better known ones outside of Bitcoin are Ethereum, Litecoin, Cardono and Tether.  Because of the need for security whenever one is dealing with monetary transactions, the blockchain was developed specifically to do that but without a single government centralizing the information and offering a currency that could be used worldwide. The blockchain works because it is decentralized, distributed (meaning across many nodes/servers), and uses cryptography to increase security of records from one node to another.

All that may sound like gobbledy-gook but it’s important to computer geeks. For the rest of us, think of the blockchain as a digital ledger (think of an accounting or bookkeeping ledger) that is public. These records, called blocks, are used to record transactions across many computers so that any involved block cannot be altered retroactively, without the alteration of all subsequent blocks. This allows the participants to verify and audit transactions independently and relatively inexpensively. In other words, it is hard to hack and the fact that is public  means that every transaction is traceable. Read  What is Cryptocurrency for Dummies? article for a good description for nontechnical people about what exactly cryptocurrency is and why/how it works, and how the blockchain protects its integrity.

By 2016, several large businesses began looking at how blockchain can increase verifiability and efficiency in operations. Most important, for authors, is that several companies have been looking at how verifying intellectual property (IP) owners, having them store their original and/or special edition items could be a way to more efficiently track IP rights, buys and sells AND RESELLS. Give the right marketplace, it could increase both discoverability and potential income for the authors as well as whoever builds and provides these marketplaces.

NFTs – What Are They? Are They Safe? Why Would I Want to Do It?

NFT means “non-fungible token.” Non-fungible means something that is not the same as anything else. An ebook distributed to all retailers is “fungible.” That means whether I download an ebook from Amazon or Kobo or Apple or Google it will always look the same. Yes, it may display differently depending on my device, but the story and content is exactly the same. Furthermore, because of the public visibility it is easier to pirate (or pretend to pirate). It’s easy to build a program that scans all of Amazon books and the information about them (including the covers) and put it on my own website and then make it available for “free” or some lower price. I may not have the book, but I can convince you I do and get your money or your email address, or something else I want to exploit.

A non-fungible token is a unit of data stored on a digital ledger called a blockchain. As explained above, blockchains do not have a single centralized point where all the data resides. In fact, in complex NFTs that bundle items together, it may be that the EPUB exists in one place, the cover in another, the audio in yet another, and the delivery of a hardback with the package is a link to me personally. All that comes together only when a purchase is made. Because of that secure, interwoven setup, the blockchain can certify that a specific digital asset (like a piece of art or a digital trading card or a digital book) is unique and from the creator. Therefore it is not interchangeable. However, simply being unique does not necessarily make it valuable. That is what the marketplace decides.

That system of each token representing a unique product unlike any other similar product means authors have complete control over the publication process. They also have a full suite of analytics to track each book’s reach and impact. It streamlines attributions and royalty distribution, and enables resale by the buyer where the author can still get a part of that sale. Every NFT also comes with a smart contract.  That is a legal contract that you decide what to include (i.e. all your parameters for selling and reselling your book). This will include the:  price; number of available copies; royalties and any royalty splits (want to share with an illustrator, an editor, a nonprofit?); resale permissions; and specific rights that are sold with the product (e.g., display rights, lending rights, film rights, etc.). Your full copyright (all rights) are not sold unless you specifically agree to that.

Because that contract data is stored and every purchase, trade, sell is monitored and verified, it does offer an opportunity for the author to get paid every time. Most contracts I’ve seen that include resell are in the 10-20% of sales price range. However, you can set it at whatever percentage you want. The hope, of course, is that unique items go up in value. Though you may not be well-known today when someone purchases your NFT, you may be more popular later or something big happens to change your popularity–more fans, perhaps a TV or movie deal, etc. Like every collector a purchaser wants to get in when it’s less expensive (and because they love it already) with the hope they may make money later. For example, I might sell my special edition NFT for $100. A year from now I get a movie offer and the purchaser sells it for $5,000. She makes a good profit, but so do I. At a 10% royalty rate on resale, I get an additional $500 on top of the $100 already paid.

Is this a viable platform that everyone should jump on?

Though there have been some attempts at a NFT marketplace for books, so far most of them haven’t moved forward much or found an audience beyond early adopters of technology. I participated in Steemit back in 2015-2016 with serials. It was way too early to really get traction or to convince mainstream readers to come into that environment and participate. It was more of a social network, and mutual handshaking environment than a technology designed to increase creator viability in the larger marketplace. In 2018, a renewed effort with significantly more funding occurred as the blockchain backbone for tracking more than currency became solidified. Most notably Publica and Bookchain made splashes that year for specific book publishing on the blockchain. They each have different goals in their platforms and, I believe, neither has really made much of a dent in the market nor grown beyond their beta offering of the platform.

Publica was formed around providing advances for independent authors (similar to publishers). They did that with an ICO (initial coin offering in cryptocurrency). An ICO is like a bounty program where as people invest in their belief the book will do well it provides proof to the market owner that this book should be produced and sold widely. In my opinion it wasn’t much different fro running a Kickstarter campaign, only more difficult because it was all done in cryptocurrency and therefore had a smaller pool of potential buyers/funders. The first few books, as proof of concept, did well because the founders and those early in the market were “buying/funding” those books. But obviously that stopped as new people joined. You can’t have the same people funding all the books or it breaks the concept of proving book viability.

Bookchain is more accessible to the average author in that anyone can create and load their books. There is no gatekeeper or a means that keeps out people who can’t ever be viable in the commercial marketplace. It many ways it is the same as loading your book to Amazon or Kobo or Apple or anywhere else. The only difference is it uses the blockchain as the backend. The downside of Bookchain, from what I’ve seen, is there is no obvious indication the ebooks available are any different than the ebooks available on Amazon, Kobo, or other markets where they currently exist. In fact, if you look at the pages they are almost identical but without some of the nice information other platforms provide (i.e., look inside features). If there is nothing unique about a book on the blockchain, then what is the incentive for a reader to go there and make a purchase when it is a much more painful process than downloading from an already well known market?

I think that book marketplaces are an emerging platform with so much promise once someone puts it all together. I also think we will likely see several of them between now and the end of 2022 that are smart enough to put it all together. For those who love technology and want to explore some of the limits in terms of book marketing, it is time to learn about it and see if it fits your business plan. If you feel you were late to the audiobook boom, or wished you’d got into social media earlier, this is your chance to prepare for the “next big thing” for authors. Think about what you can offer that will be unique, not available in the usual marketplaces where you distribute. It may be as simple as bundling two books together or as complex as bundling many media options for one book together (ebook, print, audio, and a special video of you talking about the book). Remember these are unique, certified instances of your book.

For those who already have heart palpitations at the thought of loading books to Amazon or Draft2Digital, it is not yet time for you to even expend energy learning much about it–unless you are willing to pay others to do it for you. It takes time to learn the environment , the contracting side, and planning your payment and conversion options. It also takes time to create a product that has a chance to actually make money in that environment. All that learning, planning, re-creating takes away from writing and the already known investment in the current book marketplace. If I had to make a guess, I’d say we are still five years out from Book NFTs being a significant disruptor in the current digital market for books. Probably ten years out from either usurping the current way of distributing digital books or at least making the same or better money for authors.

Here are some ideas of how an average author might consider creating NFTs. I’m sure there are many more I haven’t even considered yet.

• Digital 1st edition released in limited numbers prior to a book being released en masse to retailers
• A collectible version of a backlist book or a recent release that has different art or added art pertaining to the story
• A special edition boxset that is not offered in retail markets and won’t be offered in retail markets
• A bundled special edition that includes ebook, audiobook, and a shipped hardback book as a package
• A 1st edition Live Reading before the book is released widely, whether narrated by the author or a paid narrator
• Additional works of art based on your characters that are sold as separate digital art, playing cards, and/or provides information not in the books but germane to the story
• Tiers of special editions – Platinum tier: Only 25 copies are made of original offering which includes additional art, audiobook, and a special edition hardback delivered signed and numbered. Gold tier: 500 copies of special edition which includes everything but hardback. Silver tier: 1,000 copies of digital special edition which includes additional art.  After this, the book is released as a regular ebook, print, audio all separate without any special edition things to the wider marketplace.
• A digital object that helps your reader solve a puzzle inside the book.
• A digital object that allows your reader to select two or more alternative endings
• A way for the buyer to have a video call with you for a specified period of time or to book you for a limited part of friends (book group, family, etc.)
• You could use one or more of your NFTs as part of a contest or giveaway to create buzz and get people interested in the platform

All of these are additional opportunities for PR, promo, buzz, and have the potential to also influence regular retail sales of your book products. Doing NFTs is one more market for you. I would not leave the usual mass markets just to do NFTs. Instead I would add NFTs as another way to gain income, at least until it proves it is the only way that makes sense for you to market your books.

The downsides of getting involved in this at this early stage

A continuing hurdle for the blockchain platform as a whole is that it is all tracked, billed, and paid in cryptocurrency.  Though you can sell your cryptocurrency and get dollars (or whatever currency you prefer) sent to your bank account, most people are hesitant about cryptocurrency in general. Furthermore, the means to transfer the money is not intuitive or direct from the platform. For example, though you get paid ETH on Ethereum for purchases, there is not a direct way on the Ethereum blockchain to cash out to dollars. You have to use yet another platform that allows you to sell Ethereum (think of it like selling stock) at the market rate and then convert it to dollars and then deposit the dollars in your bank. It’s not ultra difficult, just a pain to set up two platforms and understand all the options and conversions going on. If you’ve ever managed two or more bank accounts and had to move money from one to the other on a regular basis you may not find this that difficult. But there are many readers who do not do that and would find it intimidating, thus lowering the pool of potential buyers for your NFT.

All that said, I do think NFTs will start growing as a means to create and sell special editions, offer limited print runs, or kickstart further book sales by using original works of a book to prove worthiness prior to making the book available to the “normal” retail markets. For collectors or rabid fans of an author, they may make the effort to participate in order to get the book well before the general public.

At the moment, for the average author (people like me), the expectation is not to make a thousand dollars on a single sale but to perhaps make fifty dollars or a hundred dollars on a single NFT that will add up if I run 500 special edition books. Certainly, the more popular you are to start the more likely your NFT will garner good sales and you can command a higher price.

It is also possible you won’t make a cent or will end up in the negative considering your investment of time, learning, and perhaps even some ads to get the word out. It may be that after all that you will not find any fans who are willing to make that leap from buying their book on their favorite retailer to purchasing on this blockchain environment.

I’m betting on the viability of NFTs in the future

My bet is this is a future that can be wonderful for authors, but you have to be willing to stick with it. It’s not likely a get rich quick scheme. I think it is inevitable that people who grew up with technology and live in a digital world will value this new environment. I wouldn’t be surprised if major retail entities like Amazon and Rakuten moved to using the blockchain as their backend. It would solve some of the problems around piracy and proof of identity, as well as create a repeat market for resells that doesn’t exist in their digital space now.  I would bet these major companies are already looking at it, creating user interfaces to make it more viable to the general public, and just not talking about it yet.

I see the entire resell factor as very enticing to digital millenials and anyone who has hundreds or even thousands of ebooks just sitting on their e-reader that will likely never be touched again.  I have over 600 fiction books on my e-reader right now; and 570+ are books I will never read again. If I could resell them for just $1 each, it would be a nice chunk of money (even 50 cents would still be a good chunk). I’d have money to buy even more books. If a large bookseller was part of that chain, they could choose to embed those resells in their Terms of Service using automated Smart Contracts. The question is if that TOS would say they have the right to do it without paying authors or that they will return a percentage to authors. Wouldn’t that be an interesting world?

What are you going to do? Are you going to learn this technology and make it work for you? Or are you going to wait for the big players to use the technology and dictate their terms to you? I like control over my career which is why I’m an early adopter–or at least an early try-it-out person. It gives me more power in the negotiation with any bigger players if I understand exactly what they are offering and if it’s worth giving up something to be in their big pool vs my small pond.

Updates and Other Resources

After writing this blog, I had several requests for using parts of it in other blogs as other people built on the concept and wrote their own blogs. In addition while researching blockchain technology I did read a lot of articles and listened to a few podcasts. Below I will list these other sites that I find particularly useful and may help you to learn the logistics for doing this yourself. I will list them here as I become aware of them and find them useful for my readers.

How to Create NFTs by CoinDesk. This article provides an overview of the steps in creating and loading an NFT yourself. It focuses on artwork and uses OpenSea screenshots as the example, though the process is similar no matter what marketplace you might choose to use. It is not in-depth, so there are a lot of nuances around doing this well. For example, not included is any specific information about how or why you might want to add additional metadata for book products.

A Non-Fungible Future? by Rowena Cherry. She gives a great overview of the topic from several different sources and perspectives. What I really like about this posting is she includes the legal perspective from a couple of IP attorneys. The attorneys focus particularly on the relationship between the intellectual property rights and the digital items, so that buyers understand exactly what they are purchasing (e.g., not the rights to make additional copies and share it around the web). This is also a good reminder for authors to understand, when they create those smart contracts, which rights they are including with the purchase of the NFT.

Blockchain for Publishing by Joanna Penn. Joanna has been talking about Blockchain technology on her podcast, off and on for at least three years that I’ve noticed. In fact, it was her talking about it in 2018 that got me paying more attention after I’d given up on the technology back in 2016. In this podcast (also video if you prefer that) Joanna interviews Simon-Pierre Marion, the CEO of Scenarex, a Canadian technology company that opened Bookchain  for authors to access in 2020. I briefly mentioned it above in my article. It is a publishing marketplace built on Ethereum’s blockchain. They talk about copyright protection, smart contracts, digital scarcity, and NFTs for authors and how all of that is handled at Bookchain specifically.