Today, the transfer of intellectual property is complicated, but NFTs could change that for the better.
I’ve talked about the potential for NFTs to change the media and broadcasting industries for the better, but new use cases are constantly popping up. There is one application for NFTs that has the potential to create positive change for content creators. One of the biggest problems creators encounter today is preventing intellectual property theft—or the ability to seamlessly transfer IP and copyrights in a sale if the creator desires. NFTs are the answer to this, and can allow for the seamless transfer of intellectual property and copyrights.
NFTs are tokens or groups of unique code that live on a blockchain and cannot be duplicated or altered once minted. Cryptocurrency is fungible, meaning multiple versions of a coin could all mean the same thing. Two Bitcoins are indistinguishable from one another, but two NFTs—even from the same collection—will have a different code and can never be duplicated or multiplied.
Artists used to have to worry about people replicating their work, especially in the digital world where people could easily create copies and sell stolen versions of their art, often without consequence.
Non-fungible tokens enable digital ownership unlike ever before.
Organizations can now sell goods online without risking counterfeit products being sold to consumers instead. In art, creatives can post their content without worrying that it will be stolen. Beeple, an early NFT artist who is now a defining artist of the digital age, sold an NFT in early 2021 for 69 million USD.
These digital assets live on the blockchain, giving them a unique code that can be traced from owner to owner, back to the original artist. Counterfeit Beeple NFTs do exist, of course, but the authentic works can be easily traced back to Beeple himself, and are, therefore more valuable. Apply that concept to other businesses, and you could use NFTs to prevent the sale of counterfeit items online across industries.
For streaming companies and entertainment giants, the seamless transfer of ownership could mean that creatives never have to risk losing their portfolios when a network no longer holds their work in its catalog. Imagine you’re a director, and you’ve licensed your entire portfolio to a streaming network like HBO for a number of years. Once the contract is up, your portfolio would automatically transfer back into your possession because those were the conditions set up within the smart contract.
The technology that enables the creation of an NFT is easy to access, and creating one is as easy as uploading a photo to Facebook.
Platforms like OpenSea, one of the largest and most popular NFT platforms on Web3, let users create and mint their own NFTs on the blockchain, controlling things like the price of the NFT, the symbol or photo attached to it, the amount that the NFT can be resold for, or the Intellectual Property contract associated with the sale.
A creator can opt to sell their intellectual property with the NFT, or keep it and sell their work as a collector’s item. Once the NFT is minted on the blockchain, it creates a smart contract—a type of permanent code that cannot be tampered with that spells out the product's limitations. The sale of an NFT is as good as legally binding—possibly better—because it can easily be proven once it’s confirmed on the blockchain network and can never be deleted.
The legal transfer of IP is about to get less complicated.
Today the transfer of IP is complicated. The process often requires lawyers or a clear contract that determines what someone owns or how it can be used. Content creators can set those stipulations in the smart contract when they mint their work as an NFT and quickly sell it to interested parties later. In the future, there could be decentralized networks of IP for sale as NFTs, and all a network or company has to do to acquire it is purchase the NFT. The two parties don’t even have to meet or speak.
The sale of IP is one of the most significant features of NFTs and blockchain technology, but few people realize the technology's potential right now.
An early case study in new approaches to selling and licensing IP: The Bored Ape Yacht Club
The Bored Ape Yacht Club was one of the first viral success stories in the NFT world. The project consists of 10,000 unique NFT collectibles that became one of the most popular projects in the crypto market. What makes Bored Ape unique is that owners of the NFTs own the IP attached to their Ape. Each NFT, represented in a photo of a cartoon ape with some variation in clothing, color, or style, has its IP attached so its owner can use the project’s likeness in their work.
Bored Ape owners have licensed their characters to brands, created their own companies from the likeness of the Bored Ape project, and even sold the characters to entertainment giants to be used in their own television shows. Family Guy creator Seth Green made headlines this year when his Bored Ape was stolen because Green planned to use the character in a television show. Other owners have made merchandise around their Apes. One restaurateur even opened a restaurant themed after his personal collection of Apes to demonstrate the use case for NFTs to the world.
NFTs in the Bored Ape Yacht Club come at a high price—partly because of the IP opportunity attached to owning one.
A single Bored Ape NFT sells for a couple hundred thousand dollars worth of Ethereum, on average, with the highest sales sitting in the millions. In the last several days alone, the Bored Ape collection has over $2 million in trading volume. With nearly 10,000 NFTs in the collection, each Ape represents its own potential brand—each with its own opportunity to become a globally recognizable symbol thanks to the IP attached to its NFT smart contract.
Yuga Labs, the organization behind Bored Ape, is only responsible for several projects related to the Bored Ape brand. As one of the most successful NFT collections to date, the Bored Ape brand carries a collection of celebrity owners and investors from around the globe. Imagine launching a company and, within a year, having people like Mark Cuban, Seth Green, Steph Curry, and venture capital firms like Andreessen Horowitz not only investing in your brand but promoting it as if it was their own—because it is.
The IP ownership possibilities of NFTs pave the way for the world’s next significant brands to be created and owned by the very people that use them.
Imagine if, by owning shares in a company, you could use the name in your business ventures. There are some risks to this, but these are considerations someone should take in before choosing to sell the IP of their work in the first place. For a trendy brand like Bored Ape, it’s clear that there are no real limitations to what owners can do with its likeness.
Experts think that NFT projects could turn into whole media companies in the future, with each member using their own NFT to make media projects like movies and TV shows, restaurants, clothing brands, and more that are all based on one main idea.
Today the Disney brand is made up of thousands of smaller, yet generally recognizable characters. From Winnie-the-Pooh to Aladdin, each Disney brand is its own franchise within a centralized company. For NFT projects, each character or NFT within a collection could become its own product, all under a decentralized network of owners coming together to contribute to a larger media company run as an NFT project.
Take iHeartMedia’s Prop Culture podcast, for example. The podcast is its own product, hosted by three characters created by an NFT project. The overall NFT project has nothing to do with the podcast, yet its characters run the show. Seth Green, the creator of the popular television show Robot Chicken, planned to turn his Bored Ape NFT into a new television character.
As entertainment content moves online, and entire catalogs of work are stored on streaming networks, IP ownership has a lot more riding on it than ever before.
Where individual creators who sold their work to distribution companies in the past would have to risk having their work fade into obsolescence, creators today have to worry that their work could cease to exist. In the past, you could likely track down a physical copy of an old movie or book, but in today’s digital world, works that are no longer popular could risk being deleted altogether.
HBO Max made headlines earlier this year when it announced that it would cancel several popular shows on its network. The decision sparked outrage and concern among filmmakers and those in the entertainment world, who took to social media to discuss how streaming networks with exclusive content rights put creators at risk if they remove their content from the platform.
If their content were stored as an NFT, all they would have to do is buy it back from the network and sell it somewhere else, along with any distribution rights. The smart contract could even say that if a network is finished distributing the content, it will return to the original creator. How content is distributed, and how IP ownership is handled, is ultimately up to the original creator of an NFT.
Trademarks would still need to be filed with the US Patent and Trademark Office, but there are use cases that could enable NFTs to streamline that process in the future. Copyright law has been seemingly murky in the metaverse thus far, especially around images and logos associated with well-established brands in the real world today that are being turned into NFTs without permission. But when it comes to content that has yet to be produced, NFTs could make IP ownership and copyright transfer more straightforward altogether.
In the patent world, for example, NFTs could enable a streamlined way for patent ownership to be transferred from one entity to another. Imagine selling the patent to a tech product that you developed as an NFT. Instead of countless hours outlining the details of the transaction, you would have to outline your needs in the smart contract when you create the patent, and transfer it to the new owner’s wallet to complete the transaction.
For the broadcasting and entertainment worlds, NFTs present a form of ownership that gives content creators more freedom than ever. Artists and content creators are often at a disadvantage legally. Hiring lawyers or fighting a major corporation for ownership of their work rarely ends up in their favor. NFTs remove that barrier and give creators a chance to have more control over how their content is used.
Would implementing NFTs in place of individual contracts make business more or less complicated for you as a broadcaster? What ways could NFTs be used in broadcasting and media to streamline current legal processes?