Intellectual property (IP) rights have become one of the most-discussed topics in the non-fungible token (NFT) space. The ability to commercialize and make money from owning the art associated with your NFT opens a new era in digital ownership and property rights. Of course, the rights you get with a specific NFT depends on the project, and the creators usually are the ones who decide. Still, there are many projects that give at least some sort of commercial rights to holders.
If you are still unsure what IP rights mean and what kind of rights you could get with your NFTs, you can read our detailed article about it HERE. But if you already understand the differences between NFT IP rights and you’re looking for practical applications of NFT IP ownership, you’re in the right place!
Read More: WTF Is... CC0 and NFT IP
Here's how how holders like you can license the right to your NFT artwork and start monetizing it.
Before diving in, you should know that planning anything regarding IP rights should always be overseen by a lawyer with relevant expertise. That helps you avoid legal issues and do things the right way.
You should also check the kind of license that your NFT holds. Not all projects give full IP rights to their holders. According to Galaxy Digital’s extensive report on NFT Licenses, only one NFT collection in the top 25 by market capitalization even attempts to confer intellectual property rights to the purchasers of their NFTs. (This project is World of Women, or WoW, according to the report.) Some NFT projects might retain ownership of the IP but simply rent out the right to use artwork to the NFT holder. While this may seem like a small distinction, it carries significant legal implications as to how freely you can monetize your NFT artwork.
So what's the first step? Ensure you have the right to commercialize your NFTs and in which context. The place to find this information is usually the Terms and Conditions on the project’s official website. Some projects hide the information or make it difficult for you to access it. But others, like Not Your Bro, are intentional about making the parameters clear.
“Education is very important for us, and we have information easily accessible on our website," said Georgia, co-founder of Not Your Bro (NYB). "We’ve also had people reaching out to us for clarification, and we’ve been able to provide that guidance to them.”
NYB gives holders commercial rights to the specific NFT in their possession, allowing individuals to produce commercial products for sale. However, NYB retains the trademark to the brand name and logo. After all, the collection will likely pursue commercial opportunities too, alongside individual holders.
"We've decided to not include the use of our brand name within the commercial rights for our holders," said Natalie, artist and co-founder of Not Your Bro. "We wanted to hold this right to help protect ourselves but also our holders as we move towards new brand partnerships. This helps brands and consumers to decipher between official partnerships and potentially unofficial ones.”
Despite various nuances and boundaries, being a holder of an NFT collection with commercial rights like Not Your Bro still provides a unique and exciting situation, explained Georgia. Holders show a vested interest in the success of the brand and seek opportunities to proliferate the artwork through fun and profitable partnerships.
"Providing our holders with commercial rights is not only going to empower our community with exciting opportunities, but it's also going to increase our brand awareness of the project as a whole," Georgia said.
But while projects like NYB, WoW or Bored Ape Yacht Club (BAYC) give Commercial Rights with very few restrictions, others prefer to keep control. Such is the gray area of Web3, a space with very little precedent — especially when a project wants to move off of blockchain and pursue traditional partnerships.
There are three routes holders can take when thinking about monetizing their NFTs, according to Tory Watters, founder of Snowdrop, a matchmaking service for NFT holders to help them license their artwork for consumer products.
You could build your own brand around a product, especially if you are already a business owner in the CPG category (consumer packaged goods), said Watters. A good example is what the beverage company Perfy did. The owner of this soda brand is a holder of Doodles and released a limited-edition run of customized cans featuring a Doodles profile picture (PFP) and the project's signature pastel packaging to match.
If you’re not a business owner, you can consider putting together a quick white-label product and spin up a new brand around your NFT, said Watters. Some BAYC, WoW and NYB holders have launched products like hot sauces, coffee, tea and more. This is easy for someone that doesn’t have a full-fledged business operation. However, keep in mind you still have to commit to the effort of brand-building — even though the logistics are a bit easier.
If you’re like the vast majority of holders who don’t own their own business and don’t have time to build a brand around a product, you can work with NFT matchmaking services like Snowdrop or gmgn supply co, which is building a portfolio of new consumer brands based on NFTs.
“This is where the future of NFT licensing is going,” said Watters. “The brands already have product distribution in place, and NFT holders can simply license their artwork to the brands, who then handle all the logistics — creating a passive income stream for the holder.”
Another interesting route that some holders are taking is entertainment licensing. From music bands to TV shows, there are many examples in the space. These actions are usually led by holders who are already involved in the entertainment industry in some way. But it is certainly another alternative for NFT holders.
For instance, Seth Green’s “White Horse Tavern," a television show set to star characters from the actor’s NFT collection, is one of the most popular examples. Unfortunately, the project has not been launched without some drama: Green lost his protagonist BAYC through a phishing attack before he was about to release the show, leaving him and the rest of the NFT space in doubt of whether he could go forward with his plans.
The White Horse Tavern mishap shows the importance of working with a specialized attorney before moving forward with any licensing stream, and understanding that we are still in a very early stage of NFT IP licensing possibilities. Like all emerging technologies, there are inevitable risks and obstacles to overcome.
One of the first artists in the space to give full IP rights to their art was Cath Simard, a well-known photographer inside and outside NFTs. She sold one of her most famous images with a public domain license as a statement of gaining back control over use of her images and fair compensation. The outlined conditions granted a "free-to-use" license as of the the date the NFT was sold via auction on the Ethereum blockchain, ensuring the creator would be compensated even as the commercial rights went to the public.
This was a very particular case, as most artists won’t consider giving full IP rights to their holders. But more and more are starting to give some commercial rights.
“To give commercial licensing is great when the community are fans and they want to co-create and want to give voice to the artist," said Maria Rebelo, artist and IP rights specialist. "And if monetization is also available for them, it’s beneficial for both sides.” In some respects, giving commercial license to 1-of-1 NFT art is like a new generation of stock images: fans creating for the artists or the projects.
Despite being deep into a bear market, NFT monetization seems to have a bright future ahead, according to several artists and experts. Big brands keep joining the space and understanding its potential. Similarly, holders keep finding new ways to license their right to their NFT artwork. Watters predicts the licensing industry may change as we move away from centralized franchises, like Disney, Pokemon, and Hello Kitty, towards co-created ones powered by Web3.
But NFT licensing, like every emergent Web3 trend, is certainly not a get-rich-quick scheme. it’s unlikely that a big brand is going to reach out to you tomorrow and pay a big royalty to license your NFT art, Watters said. Nonetheless, she's convinced that if you can build your own reach and influence as an individual, pairing that leverage with licensable NFT assets from increasingly prominent projects is a smart long-term play.
Sabrina Bonini is the Founder of Cripto Es Cultura, a platform that aims to educate and empower Spanish-speaking female artists and creators in the Web3 and NFT space. Connect with her on Twitter @criptoescultura.
This is not financial advice. If you don't want to spend money investing in crypto or Web3 — you don’t have to. The intent of this article is to help others educate themselves and learn.
