I was recently texting back and forth with a certain startup founder turned angel investor turned crypto enthusiast named Scott Paul. He’s something of a personality in Utah’s crypto scene—not only has he successfully founded and funded four startups (and invested in countless others), but he also owns an eccentric number of wigs and has a tendency to teach crypto classes at BYU dressed like Jesus—this is kind of what he is going for.
Two weeks ago I happened to mention that I’m working on a book proposal—this one the biography of another particularly interesting individual with whom we are both acquainted—Paul replied: “I need to be your second biography, but it’s about me after I go completely into the metaverse…”
Somehow it turned into a fictional biography—or autofiction. And then he was talking about crowdfunding the rest using cryptocurrency. And by then I was more than a little intrigued so I wrote a prologue and put it up on Mirror to see what would happen.
Before the week was up, my first two chapters were funded and purchased as NFTs, I had earned 0.51 ETH (or about $2,000), and I was writing the next installation of a fictional biography of an actual person called The Totally True Story of Scott Paul.
If you’re into weird web novels that take place at the intersection of Mormonism and the metaverse, well this is the book for you. The prologue and first chapter are now published and minted as NFTs, and I will publish the second chapter on Wednesday. If you want me to write the third chapter, you can invest here.
What does it mean to fund a novel using cryptocurrency?
This is all very new to me. I started experimenting with cryptocurrencies about six months ago and so far I have invested in Ethereum and Solana, purchased an NFT, written for a DAO, purchased my own ENS name, wandered around Decentraland looking for a library (which crashed my computer), started a crypto crowdfunding campaign, and minted my own NFT, all in the name of figuring out if writers might be able to earn a living in the age of web3.
FYI: The internet was web2, the blockchain is web3. I don’t know if you know this but people on the internet are extremely horrible at explaining what the blockchain is—probably because it’s like trying to explain what the internet was before any of us had AOL. I quickly realized the only way I was going to figure out the blockchain, was to start using it.
It’s been an expensive hobby, truth be told, albeit an enlightening one. So far I have spent 0.00554783 ETH (about $513) just to purchase my ENS name (which functions like a Venmo username for my crypto wallet, mine is ellegriffin.eth) and pay transaction fees to get my crowdfund up. But then I also earned 0.51 ETH (or $2,000) just for the first two chapters of a book—and from only three backers—which is an actual livable wage for writing a book (not usually a thing).
I published the project on Mirror, which is a platform that allows writers to fund their writing using cryptocurrency and even mint it as NFTs. You can set this up in a variety of ways, but I launched a crowdfund—kind of like a Kickstarter campaign—outlining that I would write a new chapter for every 0.25 ETH raised. Anyone can contribute tiny amounts ultimately contributing to that 0.25 threshold, but there is an additional benefit if someone wants to pay for the whole chapter themselves: For 0.25 ETH they can purchase one of the chapters as an NFT and own 250 $COTT tokens.
Owning an NFT just means you are the verified owner of something. When I was about to publish my first chapter, all I did was click the “mint as NFT” button and enter the wallet address of my backer. It was as easy as sending someone money via Venmo. My first backer was Scott Paul himself and he sent me a screenshot of his crypto wallet with the chapter that he owns sitting in it. So there you have it, one book chapter sitting in an app on a phone. (RIVETING STUFF, am I right?)
As for the tokens, they function kind of like a stock share in that the number you have compared with the total number that exists dictates what percentage of something you own. Right now I have three backers, two with 250 $COTT and one with 5 $COTT. That means two people own 49 percent of the book and one person owns 1 percent. If another person buys an NFT for 0.25 ETH and 250 $COTT, then each person will own a smaller percentage of the book, and those numbers will change. I opted to retain 20% ownership myself, which I believe factors in at the end once we know how many tokens there will be.
But all of this begs the question…
What does it actually mean to own a percentage of a book?
Emily Segal was the first person to fund a novel using crypto and she raised 24 ETH (the equivalent of $96,000 right now) from only 104 backers to write her young adult novel Burn Alpha. Most of her backers own about 1 percent of the book, but one backer contributed 5 ETH (roughly $20,000) and thus owns 14 percent of the novel.
But what does “owning 14 percent of a novel” actually mean? Do they get 14 percent of the royalties once she publishes her novel? No—and that would be a horrible strategy. Books don’t really have a market—only 267 books sold more than 100,000 copies in 2020—so even in her best-case scenario, her investors are unlikely to recoup their investment using that go-to-market strategy (publishing houses rarely do).
And Segal’s investors are not necessarily her readers. Presumably, none of Segal’s 104 backers are into reading “homoerotic teen thrillers” (unless the YA demographic is much more wealthy in crypto than I know). Even if her backers are all queer teens who want to read the book, there are only 104 of them, which is not enough of a market to sell books.
But here’s the kicker: Segal doesn’t actually need a market. Though she does intend to release the novel through Deluge Books, an indie publishing house she owns, it doesn’t matter if she sells a single book at all because her strategy isn’t the traditional “mass-market play” used by publishing houses today. Instead, her strategy is a uniquely web3 one: to mint the book as an NFT when she’s done and sell it at auction.
“The initial manuscript excerpt will exist on Mirror, publicly accessible to all. It will be minted as an NFT utilizing the Zora protocol,” she said in her crowdfund. “Supporters retain a stake in both the manuscript excerpt and full manuscript NFTs. Any time these NFTs are sold, a percentage goes back to the token holders, who can then redeem them for a proportional share of ETH in the shared pool.”
In other words, she’s going to mint the whole book as an NFT and sell it to one person (likely via auction) and all of the 104 people who own a percentage of that book will get to keep that percentage of the profits (including the author who retains 30 percent ownership of the book).
If someone buys the book for the equivalent of $100,000, then the person who owns 14 percent in her book will earn the equivalent of $14,000. If someone else buys it after that for an even higher price, they’ll all benefit again, profiting from each sale as it grows in value, much like the dividends we earn from a stock that goes up in value.
To put it simply: In the traditional publishing world, an author has to sell 42,000 copies of their book at $15 apiece to earn $100,000. Using the creator economy, an author has to sell 1,000 subscriptions at $9/month to earn $100,000. In the web3 world, an author only has to sell one NFT to earn $100,000.
And all of this is very fascinating because no one actually has to like, or even read the book for it to be an intensely lucrative endeavor—and maybe that’s a good thing. Because perhaps the problem with publishing has always been that we’re relying on the end-user to pay for it. When maybe art should be free for the end-user and paid for by a benefactor instead.
Just like it was during The Renaissance.
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Why would anyone want to buy a digital book for $100,000?
You might be wondering who exactly these benefactors are. I mean, who in their right mind is going to spend $100,000 or more to own the digital copy of a homoerotic YA novel by Segal? Or in my case, the fictional biography of a man dressed like Jesus floating around the metaverse in a Glenda-like bubble blown by the Mormon angel Moroni?
This is where it gets really interesting—because buying an NFT is not about owning a digital product. Someone doesn’t purchase a Bored Ape NFT because they want to own the picture of an ape on their phone, they purchase it because it could go up in value in one day. In fact, they can ensure that it goes up in value by doing things like creating The Bored Ape Yacht Club, which functions as a networking group that you can only be in if you own one, thus driving the price up of a Bored Ape because now it's an exclusive club people want to get into.
In this way, purchasing an NFT is like low-stakes angel investing. You might not have $1.2 million to pour into a startup you’re interested in getting off the ground, but you might have $200 to invest in a piece of art. And if the art you fund becomes successful, then your stake in it goes up in value and your $200 could turn into $2,000, or even $20,000. Not only that, but it is totally within your power to increase its value.
Take my book for example: I’m only writing chapters as they get funded. Say you purchase one of my chapters because you like it and you want to support my novel. I write that chapter, but no one else buys another chapter so the whole thing dies. You still own that chapter, but now it’s losing value because it’s the chapter of a dead project.
BUT, because you are a part owner in the project, it’s in your best interest for it to be successful. So you might promote my project or design art for it. You might make a comic book version available exclusively for $COTT holders. You might design a quirky video game in which Joseph Smith is chasing Scott Paul across the metaverse, but it’s only playable by people who own $COTT. Because if it becomes desirable to own $COTT tokens and NFTs, then being one of the limited people who own them means the price of your tokens go up—and that benefits both the investor and the artist.
As it turns out, “I could exponentially increase my investment” is a very alluring incentive for someone to invest in art. In fact, it makes it a game. This is why so many very wealthy individuals are hanging out in the web3 space right now looking for projects to invest in. They know they can skyrocket artists into the stratosphere by investing thousands of dollars, in some cases millions of dollars into their art, and they think it’s a fun hobby to find creative ways to add value to these projects and ensure they are successful.
This could change the game in publishing. Because with this kind of financial incentive, people are actually investing in art again—for the first time since the Renaissance. And Renaissancian Florence was so great for the sole reason that the Medicis and the Vatican were pouring money into artists to the point that they were able to spend five years devoted to painting a chapel ceiling.
Think of what would happen to art if we did that again—if we funded artists to the point that it was no longer an obscure hobby they did on the side, but a full-time career supported and incentivized by financial backers. Think of all the masterpieces we’d be able to create! Think of the art, books, plays, music, and experiences that would result!
I think the next Sistine Chapel is coming. The next Mona Lisa is on the way. I think a modern Renaissance is in the works. And I think web3 might be funding it.
Thank you for reading,
P.S. My next post is coming for you January 3rd. It’s the one in which I share my intentions for this newsletter, talk more about the fact that I was accepted into Substack’s HALLOWED FELLOWSHIP PROGRAM (I feel so completely honored), and talk about where we’re going from here.
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Other interesting writing-related crypto projects
The Substack newsletter Not Boring uses Mirror’s auction feature to put individual newsletters up “for sale” as NFTs and then he uses the splits feature to route the money from that sale to the people who own a stake in it (the writer himself owns 69% so he gets most of that money). Here’s an example.
This person crowdfunded a serial, LitRPG, choose-your-own-adventure novel using Mirror.
Kevin Moran is about to release The New Fiction Society which aims to give readers access to various novels depending on which NFTs they own.
Readl is creating an NFT platform for book publishing.
Loving this serial novel
If you haven’t already heard of Kyle Rutkin’s Substack novel Tik Tik Gone—in which a TikTok star goes missing and we attempt to derive clues from her social media account—it is riveting. Start with episode one.
Find your next read
I’m participating in one BookFunnel promotion this month. If you’re looking for something to read and want to support independent authors. Take a peek here: