Netflix May Find No Business Like Show Business | Sidnaz Blog


Anya Taylor-Joy and Thomas Brodie-Sangster in a scene from ’The Queen’s Gambit.’


/Associated Press

It is as good a time as any for


to test a new story line. Even a lucky turn in videogames won’t free the streaming giant from the need to keep playing Hollywood’s game, though.

Netflix used its second-quarter report Tuesday afternoon to confirm previously reported plans to enter the videogame business. No timing was given, though the company said the offerings would be included in its current subscription plans at no additional cost. The company isn’t backing away from its work on movies and TV shows, but said in its letter to shareholders “since we are nearly a decade into our push into original programming, we think the time is right to learn more about how our members value games.”

That news comes as Netflix remains mired in somewhat of a post-pandemic slump. It added 1.5 million net new paying subscribers in the second quarter, which was a bit better than it had forecast but still its lowest level of growth in nearly a decade. It also projected 3.5 million net adds for the third quarter—about 29% less than what Wall Street was hoping for. That would bring the total number of new subscribers to about nine million for the first nine months of 2021. Netflix added more than 28 million paying subscribers in the same period last year.

A foray into games might make sense for a company with an intimate knowledge of the viewing habits of a user base that now numbers over 209 million. It is also a tough business to crack—even the mobile gaming market that Netflix says it expects to target initially. There are many participants, but most of the money is still made by long-established properties. Games like “Candy Crush” and “Clash of Clans” remain in the top-five grossing charts even after nearly a decade on the market.

Netflix will need to keep battling it out for video streaming eyeballs. The company expects its pace of new releases to pick up in the second half of this year; analysts from Wedbush count 42 original shows and movies expected for the third quarter alone. But the company still has its own track record to compete with: Last fall included popular shows such as “The Queen’s Gambit,” “The Crown” and “Bridgerton.” Netflix shares are down nearly 2% this year, lagging behind many internet and entertainment peers. Streaming investors hyper-focused on subscriber growth aren’t playing games.

Write to Dan Gallagher at [email protected]

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Appeared in the July 21, 2021, print edition.


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Ackman SPAC Decides Against Buying 10% Stake in Universal Music | Sidnaz Blog


Universal Music’s headquarters in Santa Monica, Calif., earlier this year.


Bing Guan/Bloomberg News

Pershing Square Tontine Holdings Ltd.

PSTH -1.81%

, a blank-check company led by hedge-fund manager

William Ackman,

said it won’t proceed with its proposed acquisition of a 10% stake in Universal Music Group and will assign its share-purchase deal to

Pershing Square Holdings Ltd.


SE—Universal’s majority owner—said it approved Pershing Square Tontine’s request to assign its rights and obligations under a June 20 agreement to investment funds with significant economic interests or management positions held by Mr. Ackman.

The French media company said the equity interest eventually acquired in Universal Music will now be between 5% and 10%. If it falls below 10%, Vivendi said it would still sell the additional interest to other investors before the planned spinoff of Universal Music into an Amsterdam-listed company in September.

On June 20, Pershing Square Tontine agreed to buy 10% of the ordinary shares of Universal Music in a deal valuing the world’s largest music company—home to stars including Taylor Swift, Billie Eilish, Queen and the Beatles—at about $40 billion.

Pershing Square Tontine said its decision to withdraw from the deal was prompted by issues raised by the U.S. Securities and Exchange Commission. The company said its board didn’t believe the deal could have been completed given the SEC’s position.

The blank-check company said its board concluded that assigning its Universal Music stock-purchase deal to Pershing Square was in the best interest of shareholders. Pershing Square Tontine said Pershing Square intends to be a long-term Universal Music shareholder.

Pershing Square Tontine said it would seek a new transaction, which will be structured as a conventional special purpose acquisition company merger. The company said it has 18 months remaining to close a deal.

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Burberry’s CEO Exit Points to Talent War, Not Takeovers | Sidnaz Blog


Monday brought disappointment for designer label


BURBY -8.29%

and for deal makers in the world of European luxury goods. A top-level poaching incident may strike two of the most commonly cited listed takeover targets off the industry shopping list for a while.

Burberry said Chief Executive

Marco Gobbetti

will leave in December to join Italian shoemaker

Salvatore Ferragamo.

SFER -1.61%

He has been in the job less than five years and is stepping down while the British brand’s turnaround is still only half complete. During Mr. Gobbetti’s tenure, Burberry’s shares have returned 9% annually, lagging bigger brands such as Hermès and Prada.

Burberry’s board, which only heard about Mr. Gobbetti’s plans over the weekend, must now hunt for a new boss as well as reassure investors that lead designer

Riccardo Tisci

won’t follow him out the door. The company’s shares fell 8% in morning trading in London.

Burberry Chief Executive Marco Gobbetti will leave in December to join Italian shoemaker Salvatore Ferragamo.


Dave Benett/Getty Images for Burberry

Both Salvatore Ferragamo and Burberry have long been considered takeover targets, although the former is family-controlled. Some shareholders are betting that the pandemic will compel weaker brands to sell up to one of the large, cash-rich European luxury houses, such as Gucci-owner Kering. The hiring of one of the top CEOs in the business suggests that the Ferragamo family is serious about turning the brand around by themselves. The company’s shares fell 2% despite the positive hire.

The timing is bad for Burberry, which is most famous for its checked trench coats. Several years into a makeover, the brand was beginning to show signs of improvement. Sales fell 10% over the pandemic-struck 12 months through March, but the label has been selling more items at full price—a sign that its image is improving among shoppers. Now, investors must wait for a new boss to be found and see whether he or she changes direction.

The uncertainty will likely weigh on Burberry’s share price, in theory making it a more appealing takeover target. But the stock still trades at 24 times projected earnings and would be a mouthful. Add a 30% takeover premium to the value of its equity and Burberry comes with an £11 billion price tag, or $15.3 billion at current exchange rates—a risky bet considering its still-unsettled outlook. An opportunistic buyer could have picked it up for a lot less last year.

Meanwhile, Salvatore Ferragamo’s move to hire Mr. Gobbetti suggests that the pandemic has caused a rethink among some independent luxury brands. To attract a boss of Mr. Gobbetti’s caliber, the controlling family would have had to give him assurances that they wouldn’t meddle with his strategy. Underperforming names now recognize that they need to change to compete against giants such as

LVMH Moët Hennessy Louis Vuitton,

the world’s biggest luxury company, whose hand has been strengthened by the crisis.

Investors may still hope that Salvatore Ferragamo will be polished up and sold in a few years’ time at a higher valuation. For now, though, the tougher outlook for smaller luxury brands points to a fight for the best executives rather than major deals.

Write to Carol Ryan at [email protected]

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Netflix Bets on Even Stranger Things | Sidnaz Blog


A scene from the Netflix show ‘Sexy Beasts.’




NFLX 1.04%

and romance have long been a match made in heaven, but now the streaming giant is taking things to another level.

Perhaps emboldened by the success of recent shows like “The Circle” and “Love Is Blind,” Netflix is now doubling down on dystopian reality dating. According to the trailer, released this week, the new concept will feature “real life singles,” sporting “elaborate makeup and prosthetics” and putting blind date chemistry to the test.

After reporting disappointing subscriber numbers for the first quarter, Netflix needs new alluring content. Analysts expect the streaming giant to add about 15 million subscribers in the second half of the year, nearly three times the number it is forecasting for the first half.

As if dating weren’t already hard enough, contestants on “Sexy Beasts” are expected to find love while looking like a panda or a mouse. The trailer features a suave alien in a bowling alley chatting to his date, an apparent cross between a dolphin and a platypus, stating that “personality, for me, is everything.” Others—especially a beaver who candidly describes his favorite physical feature—are at least honest.

If nothing else, viewers will be in it for catfights.

Write to Laura Forman at [email protected]

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Consolidation May Be Coming to a Screen Near You | Sidnaz Blog


Far from killing the movie-exhibition industry, the pandemic may end up helping the big theater chains get even bigger.

Flush with money from sales of its soaring meme stock,


AMC 2.25%

Entertainment has clearly indicated it is shopping around. When the company landed a deal on June 1 to sell about $231 million worth of shares to Mudrick Capital, Chief Executive

Adam Aron

proclaimed that it is time for the largest theater operator in the U.S. to “go on the offense again.” He noted at the time that the company was in discussions with multiple landlords to take over some theaters formerly operated by ArcLight Cinemas and Pacific Theatres.

The AMC Lincoln Square 13 movie theater in New York.


Jeenah Moon/Bloomberg News

That deal may be near done. The Los Angeles Times reported Tuesday that AMC was nearing a deal for “key” Pacific theaters in the area. Two of the theaters were even listed on AMC’s site and ticketing app for part of the day before being taken down, the paper reported. They are unlikely to be the last, considering AMC’s acquisitive history and now bulging coffers. Chief Financial Officer

Sean Goodman

told a Credit Suisse investment conference this week that the company will end June “in the ballpark” of about $1.8 billion in cash, according to the broker’s report of the conference. AMC had about $308 million on its balance sheet at the end of 2020.

The wisdom of AMC pursuing more acquisitions is debatable. The company entered the pandemic with a ratio of net debt to earnings before interest, taxes, depreciation and amortization of 5.7 times at the end of 2019—twice that of competitor Cinemark, according to data from S&P Global Market Intelligence. Much of that stemmed from three acquisitions totaling about $3.2 billion in 2016 to 2017. AMC as a result was flirting with bankruptcy before the explosion of interest from retail investors ballooned the stock, which is now up more than 2,700% for the year. Eric Handler of MKM says AMC should use the new bounty to pay down its debt load that now totals about $5.5 billion, adding in a June 8 report that the company’s past deals have “produced subpar returns.” Mr. Aron has said AMC intends to use some of its funds to pay down debt.

Still, the opportunities may be tempting for all the major players. The National Association of Theatre Owners, or NATO, estimates about 125 exhibitors have closed permanently due to the pandemic. Emagine Entertainment, a privately held chain of 208 screens based in Michigan, has picked up four sites from competitors out of bankruptcy, according to Chief Executive Anthony LaVerde, also speaking at the Credit Suisse conference. Cinemark has been conservative with M&A historically, but its CEO,

Mark Zoradi,

told the same conference that the company is “really open” to opportunistic deals in the current environment. He added, though, that “we’re not going to overpay for assets.”

Adding screens could theoretically boost the bargaining power of major theater operators with studios, at a time when shrinking release windows and soaring popularity of streaming services has muddled the long-term outlook for the industry. And the relatively strong performance of the few blockbuster-sized releases that have hit theaters so far this year has been an encouraging sign.

But it may take a lot of deals to have an impact. AMC, Cinemark and Cineworld’s Regal chain already control about 48% of U.S. screens combined, according to Wedbush analyst Alicia Reese. And most of the operators who have closed have fewer than 100 screens, according to NATO spokesman Patrick Corcoran. Ms. Reese says operators with between 50 and 250 screens would be most attractive to companies like AMC, Regal and Cinemark. But even adding 250 screens would boost each chain’s domestic market share by just one percentage point. Paying down debt may be safer, but it makes for a less exciting show.

The coronavirus pandemic shuttered every single AMC theater for months. But the pandemic isn’t the only thing pushing the company onto financially shaky ground. Photo Illustration: Jacob Reynolds/WSJ (Video from 11/30/20)

Corrections & Amplifications
The National Association of Theatre Owners was misspelled as National Association of Theater Owners in an earlier version of this article. Also, the last name of the group’s spokesman, Patrick Corcoran, was misspelled as Cochran. (Corrected on June 18)

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AMC Boss Adam Aron Basks in Meme-Stock Spotlight | Sidnaz Blog


Adam Aron,

AMC Entertainment Holdings Inc.’s

AMC -17.92%

chief executive, has decided to run with the meme-stock bulls who helped his company avoid bankruptcy during the pandemic.

More than any CEO swept up in the meme-stock trade, Mr. Aron has come to represent the surrealism and opportunities of modern-day trading. He is a Harvard Business School graduate now known for sharing social-media memes of Reddit in-jokes. He has traded a Chinese real-estate firm, the Dalian Wanda Group, for three million individual investors he calls his community. He has promised the new shareholders dividends and free popcorn.

And it has helped the world’s largest movie-theater chain emerge from its pandemic hole. AMC raised $587 million Thursday through another stock sale effort, its seventh in nine months, adding up to more than $2.2 billion total since it began its stock sale efforts in August. The sale comes on the heels of a recent rally that brought


share price to $72 from $10 in early May.

“Fearless leader, we trust your process!” one Twitter user posted Thursday in a reply to Mr. Aron’s tweet about raising capital. “Guide us to the moon!”

AMC raised $587 million Thursday through another stock sale effort, its seventh in nine months.


Hans Gutknecht/Orange County Register/Zuma Press

It was the latest twist in what has become one of the most unusual relationships on Wall Street. Mr. Aron said in an April interview that he viewed the individual shareholders as “my bosses. They’re who I work for.” Now, Mr. Aron contends with the new challenge of keeping a fragmented investor base happy amid extreme stock volatility and challenges to the movie-theater industry, including getting people back to cinemas post-pandemic and dealing with the growing threat from at-home streaming.

The latest stock offering sold out within hours of being announced but pushed the price down by 18% Thursday to $51.34. Some individual investors who tout the stock on social media and forums like Reddit’s WallStreetBets hub took to the internet to complain about the company diluting the share count, while others cheered the company and Mr. Aron. 

AMC has embraced the individual investor horde, now the majority of its investor base, to bring its movie theater business from the brink of bankruptcy to a well-capitalized company riding the economic reopening and shopping around for potential acquisitions. “Growth through acquisition is currently a priority,” Mr. Aron told The Wall Street Journal on Thursday.

The CEO, known for raising money and wooing investors, has gotten its theater chain through the pandemic by capitalizing on AMC’s stock price surges to raise cash and nurturing connections with the company’s individual investors. He tweets to them both serious corporate rationales as well as photoshopped memes that rile traders seeking to drive up the stock and make quick profits.

Mr. Aron said he sees the individual investors as his potential customers. “And we are already thinking about ways that we can excite them and lure them back into our theaters again,” he said in the April interview. The company increased its outreach to individual investors on Thursday by opening a web portal to communicate with them and furnishing loyalty perks like free popcorn and exclusive screenings.

Still, AMC acknowledged the volatility of its shares and the unusual nature of being around 80% owned by individual investors. It warned in its filing for Thursday’s offering that investors shouldn’t buy the shares “unless you are prepared to incur the risk of losing all or a substantial portion of your investment.” Mr. Aron and AMC sold the shares after the latest sign that the moviegoing business can make a legitimate comeback. Memorial Day weekend box office sales in North America reached nearly $100 million, a new high since the pandemic.

“Not often do you have a CEO out there representing this particular demographic of people,” said Anton Torres, 33 years old, an AMC shareholder who works as a cable technician in Washington state. “It’s huge,” he said, referring to Mr. Aron’s efforts to reach out to the individual investor community.

Most corporate leaders caught up in meme-stock trading frenzies, such as the chiefs of

GameStop Corp.

GME -8.52%


Hertz Global Holdings Inc.,

HTZGQ -2.51%

have largely avoided the spotlight. Mr. Aron has eagerly exploited his newfound status as a celebrity in online investing forums, embracing a shareholder base increasingly dominated by bullish traders.

He has posted memes on Twitter where his face has been put on “The Godfather” movie poster, renamed “The Apefather,” a reference to the AMC investor group that calls itself AMC “apes.” He also has posted an image of himself where his face was subbed for actor Sigourney Weaver’s on the movie poster for “Gorillas in the Mist.”

Even before Reddit leapt onto his company’s stock, Mr. Aron seemed ready-built for the internet meme world. In an exhibition industry populated by movie-theater industry lifers who tend to keep disputes behind closed doors, he got into public fights with Hollywood studio chiefs and floated ideas like having a phones-allowed texting row in AMC auditoriums. On conference calls with analysts, he quoted Winston Churchill and described disappointing quarters as “no picnic.”

Chinese billionaire Wang Jianlin, head of Dalian Wanda Group, which sold nearly its entire stake in AMC earlier this year.


wang zhao/Agence France-Presse/Getty Images

For those who have worked with Mr. Aron, the outreach employs a skill set of working with investors honed over many years as the CEO of various companies in far-flung sectors. When Mr. Aron got the AMC job in late 2015 after working as CEO of Starwood Hotels & Resorts, he essentially had one shareholder to keep happy:

Wang Jianlin,

the Chinese billionaire and head of Dalian Wanda Group, then the majority shareholder in AMC.

Mr. Wang was known as an idiosyncratic boss, as likely to take meetings with subordinates in the karaoke lounge as in the boardroom. Mr. Aron won him over, colleagues say, and frequently traveled to China for in-person meetings.

Wanda sold nearly its entire stake in AMC earlier this year, replacing Mr. Aron’s small constituency with the three-million-person one he now has.


How do you think the meme stock craze will affect markets long term? Join the conversation below.

On social media, AMC believers can be seen bragging that they saved the company from bankruptcy earlier this year, propelling a capital raise in January after the company warned it could file for chapter 11 if it didn’t receive a sufficient cash infusion.

However, the company’s feedback from its backers hasn’t been all positive. Some users have complained on social media about AMC’s decision to exploit the rally in its stock to raise capital, which pressures the share price.

After announcing a stock deal with hedge fund Mudrick Capital Management LP on Tuesday, some online accounts posted messages that AMC should lay off selling equity and just watch its stock price rise, squeezing out short sellers—or those betting that the company’s stock price will fall—and driving the shares even higher. Those messages continued after Thursday’s equity sale.

“We have helped save AMC,” one Twitter user posted in a reply to Mr. Aron Thursday. “You’re making me and most likely millions of other shareholders disgruntled.”

“Seriously we got the company this far let us have our squeeze,” another said.

Meme Shares and the Markets

Related coverage, selected by the editors

Write to Alexander Gladstone at [email protected] and Erich Schwartzel at [email protected]

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Meet Wall Street’s Crypto Artist | Sidnaz Blog


Sarah Meyohas’s work at the intersection of art, technology and finance earned the contemporary artist fame with financiers and tech geeks. Her latest piece aims squarely at the crypto crowd.

Long before Beeple’s digital collage fetched tens of millions of dollars at auction, Ms. Meyohas was experimenting with using the blockchain technology behind bitcoin to make art. The result looked a lot like the so-called nonfungible tokens that have powered millions in art sales in recent months, along with NBA Top Shot and other digital collectibles. NFTs are similar to bitcoin: Each one is unique, allowing them to act like deeds proving ownership of digital assets.

Ms. Meyohas’s work places her at the vanguard of this art-world revolution. She will be relaunching an early project, Bitchcoin, on the Ethereum network, with a public presale at Phillips auction house on May 25. Her 2015 project sold tokens entitling investors to portions of her photographic prints. The new Bitchcoins will be backed by flower petals from a previous work called “Cloud of Petals.”

“Big artists are like central banks, you control the supply, you have to show it at museums, it has to be appreciated culturally, and you create a market for your work,” said Ms. Meyohas in a recent interview. “The extreme of this is the artist becomes the currency.”

Ms. Meyohas said she doesn’t view buying an NFT as purchasing art in the traditional sense. The transparency of pricing makes her queasy, along with the encouragement of speculation, which happens at hyperspeed compared with the normal art world. Additionally, many of the artists who have been doing well financially tend to release “drops” of hundreds of the same image.

Nonfungible tokens will be backed by flower petals from a Sarah Meyohas work called ‘Cloud of Petals.’


Sarah Meyohas

“It’s freely available information,” she said. “It’s a way to attach your identity and a stronger claim on this art than a like. NFT are social interactions.”

Bitchcoin functioned as a sort of proto-NFT, and the boom in digital tokens has brought a niche of tech-focused artists into the mainstream. Some use blockchain technology to find new buyers, or to authenticate digital works, which are easily replicated. Others use it in their art itself, raising questions about art’s relationship to ideas of value.

That continues a tradition from Marcel Duchamp’s “Monte Carlo Bonds”—sold to raise money to finance a system of winning at roulette—to J.S.G. Boggs, known for trying to spend his hand-drawn bank notes.

Nonfungible tokens, or NFTs, have exploded onto the digital art scene this past year. Proponents say they are a way to make digital assets scarce, and therefore more valuable. WSJ explains how they work, and why skeptics question whether they are built to last. Photo Illustration: Jacob Reynolds/WSJ

“Art is authorized by the artist; paper money is authorized by the bank,” said David Joselit, an art historian and professor at Harvard University. “Currency is a form of representation and has always been very close to the kind of representations of value art implicitly has.”

Ms. Meyohas began exploring those concepts as a student at Yale University’s master of fine arts program, when she learned about bitcoin and decided to use blockchain, which acts as a digital ledger storing information, to explore systems of value.

Bitchcoin was a play on bitcoin and a commentary on the financialization of the art world. They sold for $100, and buyers with 25 coins could trade them for one of her prints, even ones not yet produced. The opening party was held at Trinity Place, a restaurant inside a turn-of-the-century Wall Street bank vault commissioned by Andrew Carnegie.

Share Your Thoughts

Do you think NFTs are here to stay? Why or why not? Join the conversation below.

Her 2016 “Stock Performance” earned Ms. Meyohas attention from Wall Street. In that work, she day-traded from Manhattan’s 303 Gallery, attempting to shift the share prices of various small, thinly traded companies. Then she painted the resulting stock charts. The paintings sold for $10,000, and the residency earned nationwide media coverage, with fans including Bloomberg financial columnist Matt Levine.

Ms. Meyohas revived Bitchcoin to mark her place in the NFT boom. Proponents say NFTs empower artists to sell their own work online, bypassing traditional auction houses. They also solve a key problem in the digital age: how to verify the authenticity of an infinitely replicable artifact that exists as computer code.

Still, some say the biggest beneficiaries are those artists with large followings before the craze took off, such as Beeple. The surge in activity on the Ethereum network has also meant that the cost of creating or trading an NFT on the network has risen recently. The dollar value of ether, the network’s in-house cryptocurrency, surpassed $4,000 for the first time this month, up from under $1,000 apiece at the start of the year. It is currently still over $2,000 after a selloff.

Sarah Meyohas says she doesn’t view buying a nonfungible token as purchasing art in the traditional sense. The transparency of pricing makes her queasy.


GABBY JONES for The Wall Street Journal

And there are signs that demand has eased. Sales of CryptoPunks—early NFTs of pixelated digital images of humans, aliens and other creatures—peaked in mid-March at about $21 million in one day, according to data-tracking site

Nasir Adaya, a quantitative researcher, has bought over 100 Bitchcoins in the private presale. His collective, a crypto venture studio, is planning to redeem some for artworks and hold some.

“The supply of NFTs is infinite right now,” said Mr. Adaya. “But a project backed by rose petals is unique.”

Bitcoin, Dogecoin, Ethereum: Cryptocurrency Markets

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Time to Stream the Last Blockbuster | Sidnaz Blog


Manager Sandi Harding stands in front of the last Blockbuster in the world in Bend, Ore.


Gillian Flaccus/Associated Press

Please be kind and rewind to a more innocent time when a family movie night involved a drive to your local video store—most likely a


—and lots of walking up and down the aisles to see what was still available. Just don’t get tagged with a late fee.

It was one of those annoying charges, a whopping $40, that

Reed Hastings

has claimed inspired him to start


NFLX 3.40%

in 1997. A few years after founding the company, Mr. Hastings reportedly offered to sell Netflix to Blockbuster, then at its peak with 9,000 U.S. video stores, for $50 million.

Fast forward 21 years and one of the most-watched documentaries last month on Netflix, now valued at $239 billion, was “The Last Blockbuster,” about one lone outpost of the bankrupt chain hanging on for dear life in Bend, Ore. One could view it as the ultimate irony that Netflix is getting even richer at the expense of the company that it helped bankrupt after being rebuffed, but the documentary has given the now-independent store a shot in the arm. The Oregonian reports that business has been booming the past two weeks since the documentary took off on Netflix, with sales of retro Blockbuster merchandise flying off the shelves.

If you’re one of the few people in America without a Netflix account, you can even rent a copy of “The Last Blockbuster” there.

Write to Spencer Jakab at [email protected]

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NFTs: The Method to the Madness of a $69 Million Art Sale | Sidnaz Blog


Financial innovations often feel like insanity at first. Pay bills with a piddly piece of plastic? Get cash from a faceless machine rather than a bank teller? Stop trying to beat the market and just own all the stocks, including the bad ones?

Yet credit cards, ATMs and index funds went on to make the financial world easier, safer and more convenient for millions of people. One of the nuttiest-sounding ideas in years, NFTs, could do the same.

You’ve heard of nonfungible tokens even if you don’t yet know what they are—because the people buying them sound so crazy. In February, an NFT representing the Nyan Cat video meme, which looks like a feline Pop-Tart dragging a rainbow through outer space, sold for more than $500,000. A video NFT of LeBron James dunking a basketball sold for $208,000. On March 11, an NFT attached to a digital collage by the artist known as Beeple sold at Christie’s for $69 million.

Although such prices are baffling—and may, in fact, be crazy—NFTs could solve problems that have dogged the art world and other markets for centuries. Think of a nonfungible token as a unique digital serial number that certifies the authenticity and ownership history of an associated object.

Non-fungible tokens, or NFTs, have exploded onto the digital art scene this past year. Proponents say they are a way to make digital assets scarce, and therefore more valuable. WSJ explains how they work, and why skeptics question whether they’re built to last. Photo Illustration: Jacob Reynolds/WSJ

That information, along with other data, is recorded on a blockchain. This is a ledger, or immutable record, that resides on a decentralized network of computers world-wide. The blockchain technology underpins bitcoin and ethereum, the leading cryptocurrencies. Any of the ledger’s millions of users can instantly verify that the information is accurate and complete.

By connecting the blockchain to art and other creative work, NFTs bring the objectivity of computer code to fields that are notorious for subjectivity. Artists, writers and musicians struggle to find audiences and make a living. Curators, dealers, collectors and art historians bicker nonstop about the quality and valueand the authenticity—of major works.


Are NFT buyers getting carried away? Does the technology have promise? Join the conversation below.

Consider the French artist Jean-Baptiste-Camille Corot, who was jokingly said to have painted 3,000 canvases, 10,000 of which were bought in the U.S. Is a particular Corot genuine or a forgery? Who were its previous owners? Has it ever been exhibited at a museum or previously sold at auction? Was it ever seriously damaged and extensively restored?

Until now, buyers often had to take the answers to such questions on faith. An NFT, however, can integrate reams of information about an artwork into an authoritative, permanent digital record.

Today, for the most part, NFTs are linked to digital assets like electronic images or audio and video files. People are already experimenting with tying physical objects to blockchain records of ownership, which would make NFTs feasible for material assets—although some technical challenges remain to be solved.

A detail from a collage by digital artist Beeple. An NFT attached to the collage sold at Christie’s for $69 million this month.


christie’s images ltd. 2021/beep/Reuters

With NFTs, all the relevant knowledge about a work of art “can be permanently systematized, automated and accessible by anybody,” says Noah Davis, the specialist in postwar and contemporary art at Christie’s in New York who arranged the $69 million sale of Beeple’s work.

Some people in the art world see the explosion in NFTs as “absolutely absurd and appalling,” he says. “But I studied the theater of the absurd in college, and I don’t think it’s ridiculous at all. I think it’s inevitable.”

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NFTs also are giving creative people an ownership stake they’ve never had before. Consider Josie Bellini, an artist based in Chicago who majored in finance in college and worked briefly at an investment-advisory firm. Since late 2018, she has sold about 300 of her paintings this way.

One of her NFTs, a dazzling digital work titled “Yours Truly #0,” is on sale by its current owner, an account called BitBuzz, for 250 ether. That’s a cryptocurrency, worth a total of about $450,000. Ms. Bellini, who sold the NFT for 50 ether in February 2020, will receive a 5% royalty if it sells—now and anytime again in the future.

Typically, when an NFT is traded on the blockchain, that network won’t allow a sale and purchase to be completed without forwarding the predetermined royalty to the wallet, or account, of the artist who created it.

“It’s so amazing that even if it gets traded 10 or 20 times or more, I’ll still be getting my fee for it,” Ms. Bellini says. “That’s totally not how the art world has worked until now.”

Earlier this month, Mario Gabriele, an investment analyst and newsletter writer, prepared to turn his research report on cryptocurrency trading platform Coinbase Global Inc. into an NFT. “Tokenizing” the report, illustrated by digital artist Jack Butcher (who earned half the initial proceeds), quickly raised nearly $36,000 in ether.

For that, the 119 backers each got tokens they may be able to exchange for ether, now that Mr. Gabriele has opened an auction for access to the NFT of his research. If buyers of the report pay more than Mr. Gabriele’s supporters already put in, then the original backers will share in those proceeds—and in future sales as well. Mr. Gabriele’s goal, he says, is to put investment research “within the reach of those who don’t have a multimillion corporate research budget to deploy.”

Because NFTs are so new, using them isn’t cheap.

On OpenSea, an online marketplace, the typical NFT changes hands for the equivalent of $100 to $1,000, says Devin Finzer, the firm’s co-founder and chief executive. But transaction costs on the cryptocurrency to fund those purchases run roughly $40 to $60. So small buyers incur giant expenses. (OpenSea also charges a 2.5% fee of its own.)

“That’s why the high-value things make a lot of sense for buyers who can afford them,” says Mr. Finzer.

Are buyers getting carried away?

“I’m sure that some of this is a bubble,” says Ms. Bellini, the Chicago-based artist. “Sometimes [buyers] just hear it’s cool and good and they don’t even know what an NFT is, but they want to buy anyway, and I think some of those people are going to get hurt.”

NFTs bring objectivity to the objects being sold, but they can’t bring it to the buyers of the objects, because those are human beings. In the long run, I think NFTs will make markets better. But nothing will remove bettors from markets.

Write to Jason Zweig at [email protected]

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Want to Buy an NFT? Here’s What to Know | Sidnaz Blog


NFTs are digital assets that use the technology behind cryptocurrencies to create unique tokens, each with its own identification that isn’t replicable. These tokens serve as a digital deed for original editions of online art, music, and memes.

NFTs—short for nonfungible tokens—are acquired by bidding online, then paying in U.S. dollars or cryptocurrency. These tokens have taken off in popularity in recent weeks following the sale of digital art for millions, and celebrities and business leaders jumping in.

The major risk of buying any cryptocurrency, including NFTs, is that value is largely based on speculation. Buyers are hoping their NFTs will be the future of collecting without guarantee.

If you’re thinking about purchasing an NFT, here are a few key things to know.

What is an NFT?

An NFT can be music, art, trading cards and even tweets.

The Kings of Leon released their latest album as an NFT collector’s item earlier this month. The token is the certificate that guarantees that the album is both authentic and original.

Mike Winkelmann, a graphic designer professionally known as Beeple, has taken to the online marketplace Nifty Gateway to sell millions of dollars of his digital art to wealthy collectors. On Thursday, he sold a digital collage at Christie’s for $69.3 million.

The artist and musician Claire Boucher, known as Grimes, has sold $6 million of NFTs, also on Nifty Gateway.

But not all NFTs are collectibles. They can also be items for in-game purchases, event tickets and domain names. For example, some of the Kings of Leon NFTs also serve as future concert tickets.

What do I get when I purchase an NFT?

When buyers purchase an NFT, they own the original rights of their digital asset, whether that is music or images. This is proven in two ways: The buyer gets the sole token bequeathing ownership, and each NFT is uploaded to a digital ledger (like cryptocurrencies) to track when it was created and sold as well as ownership.

Much of the value comes from pride and the ability for people to say they own an original work, said Dan Kelly, the president of “The real key is the ownership itself,” said Mr. Kelly. “It’s the status that comes with owning that thing. It’s totally different owning the original versus the replica.”

One of the main hurdles for people thinking about purchasing NFTs is “for many folks there’s an assumption that having the physical version of a collectible is more valuable somehow than the digital,” said

Andrei Brasoveanu,

a partner at Accel that recently invested in Sorare, an NFT platform for soccer fans. He points out that NFTs are often more secure because of their authentication process. For NFTs on Sorare, this is on the ethereum network. Unlike bitcoin’s blockchain, ethereum is the platform on which many NFTs are created because of its flexibility for developers to store code for blockchain projects.

Nonfungible tokens, or NFTs, have exploded onto the digital art scene this past year. Proponents say they are a way to make digital assets scarce, and therefore more valuable. WSJ explains how they work, and why skeptics question whether they’re built to last. Photo illustration: Jacob Reynolds/WSJ
Do other versions exist? What makes an NFT an original?

Only the buyer of the NFT owns the rights to the original asset, though other copies could still be floating around the internet for free.

Mr. Kelly compares this to owning the original Mona Lisa and the number of reprints that are floating around. Only one person has the original, he said.

Each blockchain-based token is unique. NFTs have metadata that certifies when they were made, who created them and other descriptors. This information is combined with a cryptographic hash function—a technique that turns the data into a unique, 40-digit sequence of letters and numbers—that creates a unique identification. So even if there are thousands of NFTs being sold with digital images that look alike, the underlying information will all be different.

Ownership rights to NFTs are a detail that is still being ironed out in the U.S. Currently, when a person acquires an NFT, the underlying asset is owned, but not the copyright.

If the buyer wanted all rights to a collectible, the copyright holder would need to separately transfer the copyright by contract, said Ali Dhanani, an intellectual-property lawyer at Baker Botts. Otherwise, “the copyright creator could still separately use, display, distribute or create reprints of the work, including generating new NFTs for those reprints,” he said.

NBA’s Top Shot enables sports fans to buy, sell and collect officially licensed video highlights.


Andrew D. Bernstein/NBAE/Getty Images

How much do they cost?

While some have sold for as little as a few dollars, other high-end digital art pieces have sold for millions at auction.

A meme called Nyan Cat, which depicts a cat with the body of a Pop-Tart, was purchased for almost $600,000. The Kings of Leon NFT albums were sold for $50.

NBA’s Top Shot enables sports fans to buy, sell and collect officially licensed video highlights of basketball players. One man spent over $175,000 on digital trading cards; they are now worth $20 million.

Where are legitimate places to buy NFTs?

Online marketplaces exist for buyers to take part in auctions, make purchases and sell NFTs. Some of the most popular include OpenSea, Nifty Gateway, Yellowheart and NBA Top Shot.


What digital collectibles would you consider purchasing? Join the conversation below.

NFTs can be resold on the same online marketplaces.

Mr. Kelly recommends that newcomers stick to purchasing on primary market sites directly from the vendor. It gets trickier to verify authenticity on secondary sites if you are less familiar with the process of buying and selling NFTs.

Are there scams and risks to be aware of?

Even on the most reputable marketplace sites, there are scams. The best way to combat this is to purchase from verified sellers, said Mr. Kelly. He also recommends treating it as someone trading in the stock market would.

“If you’re not experienced, make sure you’re not spending more than you’re willing to lose, and stick to the common type of ‘blue-chip’ items,” he said.

NFTs: Behind the Boom in Digital Collectibles

Write to Amber Burton at [email protected]

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