Even by crypto standards, the tale of how a one-off album got turned into an NFT owned by a decentralized autonomous organization, or DAO, is a wild one. The story was told in detail by the New York Times recently when it revealed the new owner of Wu-Tang Clan’s notorious one-off album, Once Upon a Time in Shaolin.

The buyer is a group called PleasrDAO, a collective of crypto people who have been buying up non-fungible tokens worth millions since it was formed seven months ago. The DAO secretly bought the album from the U.S. government in July for $4 million and is now working on plans to share it more widely. It’s called PleasrDAO as a tribute to the crypto artist PplPleasr, who was profiled by us in March.

But the implausible story of Once Upon a Time holds the key to understanding why cryptocurrencies are important at all. Just as Wu-Tang tried to create scarcity with their album, so blockchains create digital scarcity with their tokens. As the two phenomena meet, there’s a chance it could transform both the cryptocurrency world, which is desperate to expand its influence over the culture at large, and the music industry whose structural inequities gave rise to Once Upon a Time.

Looks rare

The phrase “looks rare” has passed into widespread crypto jargon use. In a way, that’s what Wu-Tang intended with Once Upon a Time. The album itself is presented in an ornate, jewel encrusted silver box. The idea was to mimic ideas of patronage from the Renaissance: Patrons sponsor artists to create beautiful, one-off, works. 

In many ways, crypto’s core principles date back to a similar era. Questions about the nature of money—and the answers—date back to when Isaac Newton was master of the mint, deliberating on whether to “recoin” the entire silver-based money supply of England. It’s rooted in the idea that money’s value must be derived from a scarce commodity. It’s only valuable if it’s rare. 

Once Upon a Time is hardly the first instance of hip hop culture playing with scarcity. The analyst and publisher of the music and tech newsletter Water & Music, Cherie Hu, points to earlier work by Nipsey Hussle and Mos Def that impose similar supply and access restrictions. “The way Nipsey talked about his pricing strategy at the time for [the album, Crenshaw] is strikingly similar to how many people talk about the source of value for music NFTs today,” Hu tells me, of Nipsey Hussle’s experiment to sell 1,000 mixtapes for $100 each in 2013. 

Nipsey Hussle said at the time, “It’s time we acknowledge what we all know: the music is free. We shouldn’t force people to buy it, what we should do is create different methods to monetize the connection.”

Origins of the drop

It’s not even the first time hip hop’s rare artifacts have been noticed outside the culture. Hu points to the Sotheby’s “Hip Hop” auction last year, which fetched about $2 million in an auction of historic items. It’s a small amount relative to hip hop’s global influence, she points out. It’s another example of trying to put a price tag on items that may be rare and valuable in one cultural context (hip hop), but which may not translate into another (high-end auction houses).

There’s one more interesting parallel between hip hop culture and NFTs. Rare items are usually released to the market via “the drop”. This mechanic was perfected by streetwear merchants, and their origin can be traced to the streets of Harajuku in Tokyo. According to W. David Marx’s 2016 Japanese menswear history, Ametora, the streetwear entrepreneur Nigo and his cohorts started deliberately under-supplying their striped skater shirts, raw denim and other backpacks to trendy Harajuku-ites in the 90s in a bid to boost exclusivity. 

Soon, hordes of fans seeking Nigo’s A Bathing Ape products would swarm retail outlets before new merchandise was due to appear on the shelves. They wanted to get in on the drop. Its effect was to boost the prices of the stuff anyone managed to get from the shop. It wasn’t uncommon to see A Bathing Ape t-shirt resell for five times its sticker price. 

The effect of a skyrocketing price and high-volume secondary market was to turn a commodity into a prized asset. The scarcer it was, the higher the price, and the more desirable it became. The supply mechanics of Japanese streetwear transformed the items into veblen goods, that class of object where higher prices beget higher demand. “The T-shirt—considered little more than underwear three decades before—was now a rare objet d’art,” Marx writes. 

Beating private equity at its own game

So much for hip hop and scarcity. How does the PleasrDAO buy change things in the music business, if it does anything at all? Or is it just a sign of a frothy market, rich crypto folks doing rich crypto things? 

Hu thinks there’s more to it than that. She points to the booming market in catalog rights, which has come to be dominated by bigger and bigger players in finance. Right now, the biggest private equity houses and other specialist vehicles are using their sheer financial muscle to gobble up some of the most valuable musical catalogs on the planet. 

PleasrDAO’s entry to the market indicates a shift in the type of buyer: not number crunching, extractive, P.E. funds but fan-based communities with plenty of financial firepower of their own, thanks to crypto. It’s changing the makeup of who gets to be in the room when these deals are done, Hu says: “Even if it's a small step, I do think the PleasrDAO deal is indicative of a larger, structural trend of enthusiastic communities pursuing ownership of larger IP or entertainment franchises that they're passionate about.” 

Jesse Grushack, whose firm brokered the deal between the U.S. government and PleasrDAO, thinks the deal is demonstrating what’s possible for musicians in a crypto-enabled world. Grushack should know, he co-founded one of the first consumer-facing apps on Ethereum, Ujo Music, which experimented with artist-issued NFTs from musicians like Imogen Heap and Giraffage before people were even calling them NFTs. 

The point, though, isn’t just super expensive drops, Grushack says. It’s a world where artists benefit from the new stuff that others build on top of their music. “Imagine being able to release NFT “stems” and see the 100 works born from a drum sample you created, link back to the original artist. That’s where I believe we see value. Not necessarily in restricting the supply,” he says. 

Cool crypto things

While the potential structural impact of the PleasrDAO deal is years away, the DAO has told the New York Times it’s planning to get the album “open to the whole world.” On the face of it, this is the very thing that Wu-Tang prohibits: The owner is restricted from a commercial release of the album for 88 years; recordings and remixing of the original is prohibited; playing it to a large crowd or streaming it is also a no-no.

So what are some of the possible crypto workarounds they could potentially use for this? Jamis, who is the “chief pleasing officer” at PleasrDAO, didn’t respond to my requests for comment (he did tweet that he’s super jammed up at the moment). 

Grushack offers one thought, although he stressed he has no insight into PleasrDAO’s plans: “If you’re the owner you can play it for yourself in a private setting. Right now there are about 100 owners [Note: PleasrDAO lists 52 members on its website] but what if there were 5,000? They all have the right to listen.”

Jack Spallone, who worked with Grushack on Ujo, offers another angle: Perhaps PleasrDAO could issue non-transferable tokens to members who interact with the album? This would limit the number of people who could potentially listen to the music, staying within the boundaries imposed by Wu-Tang. “It would be incredibly interesting if reputational DIDs (decentralized identifiers) or non-transferable tokens are issued to those that have interacted with the album,” he says. 

Spallone and Grushack’s ideas highlight the thing that crypto could exploit, which is precisely the principle that Wu-Tang set out to enforce: ownership. The boundaries are blurred with a collective like a DAO. If 10,000 or 100,000 people own a thing, what’s ownership really worth?

Meet the new boss

While the music and crypto experts I talked to for this piece believe that the PleasrDAO deal is a seminal moment for both crypto and music, there’s no getting away from the fact that we’re still talking about very wealthy people who have a chance at participating in this market. Rolling Stone reported that Grushack found only 12 people who were willing to pony up the $3 million-$7 million bill for the album when he was seeking buyers.  

Is it really so different for Once Upon a Time to be now owned by a group of crypto rich people instead of one guy who made money from pharmaceuticals, or a private equity fund? Where does this leave the wishes of the artist? Cherie Hu, the Water and Music analyst, says there’s reason to be cautious about how the whole thing eventually works itself out. 

For instance, someone could gain access to PleasrDAO, listen to the music, copy it and create a pirated NFT to profit from it, she points out. Crypto’s unregulated, frontier nature means that it’s difficult to apply existing rights management models to it. 

“The decentralized nature of the landscape is not that friendly for artists who want to maintain tight control over the intellectual property or information,” Hu says. “This could very well come to a head in the future in terms of the contents of Shaolin reaching a wider audience without Wu-Tang clan’s permission—only time will tell.”