The Cryptoptimists

NFTs, a market crash, and the journalism business


In May, Daisy Alioto and Kyle Chayka announced that Dirt, their NFT-funded Substack, had raised $1.2 million to expand into a “web3 media ecosystem.” Started almost two years ago as a daily newsletter about digital pop culture, Dirt had gotten into selling NFTs, in the form of a cartoon pile of dirt called “Dirty.” Ninety thousand dollars in NFT sales later, Dirt’s leap—“web3” is a catchall term for any blockchain-based website or application—took a firm landing in crypto. “We’re planning on releasing capsule collections of NFTs and digital products; it could be a wearable, an NFT that represents a ticket to a virtual festival, or a thematic capsule collection of artwork,” Alioto told me at the time. Weeks later, the crypto market tanked.

In June, the total value of cryptocurrencies—which in November 2021 had peaked at nearly three trillion dollars—fell to one trillion. “Investors ditched riskier assets in the face of high inflation and fears that interest rate raises by central banks will hamper growth,” Reuters reported. By July, the value of Ether—the cryptocurrency most commonly used for NFTs—dropped from a high of $4,800 to less than a quarter of that. Startups collapsed; Celsius, a crypto bank, put a stop to withdrawals; the New York Times declared: “Stock prices of crypto companies have cratered, retail traders are fleeing and industry executives are predicting a prolonged slump that could put more companies in jeopardy.” It didn’t help matters that crypto is largely unregulated.

That seemed to leave crypto-based media in a predicament. In addition to Dirt, there are enterprises like Mirror, a publishing platform that pegs the value of a writer’s work to the sale price of an NFT, and on a smaller scale, Popula, part of a cooperative called Brick House, led by Maria Bustillos. Volatility in crypto is impossible to avoid, she said: “You still have to conduct your business in the existing global economy, so if people invest in something and then prices are skyrocketing and collapsing in the crypto world, it’s really disruptive.”

Yet the crypto crowd is not easily deterred. Josh Katz—whose company, Yellowheart, facilitates the sale of NFTs that provide music and sports fans access to front-row seats and concierge stadium services—had a positive spin on the crash. “It’s like the tide washing away all the trash,” he said. The trash being a trend: the JPEG NFTs that have incited frenzy among crypto users, including those who spend thousands of dollars on images for their Twitter profiles. “There’s situations that have cast a bad light on the overall sector and put negativity into people’s thoughts,” Katz told me. In other words, he argued, the market collapse could help companies like his get taken more seriously than “the guy who put out seven thousand pictures of ducks.”

For a couple of years now, the journalism business has abounded in crypto-optimism, or at least crypto fomo. Old-school publications have dabbled, mostly by turning photographs and covers into NFTs. Time has reportedly made $10 million from its NFTs, in part through the TIMEPieces project, which began with NFT-art commissions and has since grown to include magazine issues. As an experiment, Kevin Roose, a New York Times tech reporter, minted an article he wrote on NFTs as an NFT; it sold for $560,000. Fortune created a cover with an NFT graphic artist known as pplpleasr; 256 editions of the cover art were sold for one Ether apiece, which at the time was equivalent to about $2,800. “Vault,” by CNN, turns video clips into NFTs, including segments on the 1987 March for Lesbian and Gay Rights and the 1991 bombing of Baghdad (prices vary, from $10 to $250); in March, the company announced that Vault would sell the first few minutes of the CNN+ stream in NFT form—a rare buy, considering CNN+ shut down within a month. The AP offers NFTs of photos at prices ranging from a few hundred to hundreds of thousands of dollars. (At times, selling photojournalism at auction has raised ethical concerns, as well as questions of taste: in February, when the AP offered an image of refugees on an overcrowded raft as an NFT, people complained; the AP removed it from the marketplace, but continued with the rest of its NFT rollout.)

Many of these news organizations have said that NFT sales support their journalism—crypto is bonus cash. A hit to the market, for them, is just another item on a long list of news media’s economic troubles. But for the outlets making major forays into crypto, the blockchain is the basis of their business model. At Dirt, for instance, when an NFT is purchased, the buyer receives Dirt tokens—the newsletter’s proprietary currency—and membership to Dirt’s DAO—a decentralized autonomous organization, typically a group of web3 users or cryptocurrency holders who put money toward something. Dirt’s DAO allows members to vote on stories they’d like to see published, by allocating tokens to their favorites. The benefit of being a part of the community is not only being influenced by what’s in the newsletter, but being able to influence the newsletter back—and see your taste reflected in it,” Alioto told me.

Sign up for CJR's daily email

Bustillos is skeptical of DAOs. “We talk about participatory government as if it were a thing that could just magically happen—it isn’t,” she said. “People don’t want to participate in government. They’ve got to make dinner.” She’s focused instead on the potential of the blockchain to help independent publications expand patronage possibilities and securely archive their work. (A feature of the blockchain is a permanent public record.) For Bustillos, who has been a crypto pioneer through a few journalism ventures, Civil, a blockchain-backed platform (2017–20), was a lesson learned: during a crash in 2018, the value of Ether dropped by more than 70 percent, and the company backing Civil lost significant paper wealth. “The plug was pulled on dozens of projects,” she said. 

Members of the crypto-journalism world are hoping for another bounce back. Bustillos is experimenting with “microtipping,” through which readers can send Ether to the author of an article—and to commenters. (Kyle Pope, the editor and publisher of CJR, is on the advisory council of Brick House.) “I used the last of our Civil money to develop a primitive microtipping system,” Bustillos said. “I call it the moment of passion, where you get to the end of the piece and it has altered your reality.” 

At Dirt, money from investors is going toward hires in marketing, operational, and editorial roles; last week, Terry Nguyen, formerly a reporter covering the internet at Vox, was announced as Dirt’s first staff writer. There’s lots more in the works. “There could be a downside for a project that leads with financial speculation and attracts people that are only interested in the future value of that NFT from a financial perspective,” Alioto told me. “There has to be some greater purpose to sustain a community long term.”

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

Feven Merid is CJR’s staff writer and Senior Delacorte Fellow.

TOP IMAGE: Art by Aaron Fernandez