Why Intellectual Property Will Dominate NFTs NFTs are an emerging art form. And like the films, plays and other media that preceded them, they'll eventually be subject to the same immutable laws governing longevity, profitability and mass appeal.
By Lion Shirdan Edited by Kara McIntyre
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Conversations surrounding intellectual property, or IP, often center on movie culture. Major production companies like Disney make billions off their ownership of invaluable IP such as Marvel, Star Wars and animated classics that can be extended and expanded ad infinitum to the end of profiting from beloved characters with whom audiences have a preexisting relationship.
Since IP has come to dominate large swaths of the arts and entertainment industries, companies and executives have become increasingly aware that original stories are often harder sells than fictional worlds whose previous iterations have loomed large in the zeitgeist for decades.
Though the rapid ascension of intellectual property may seem like a relatively recent phenomenon, it's actually a very longstanding practice. The ancient Greeks retold their classic tragedies over and over, captivating audiences who were eminently familiar with the narrative arcs of plays like Oedipus Rex, Prometheus Unbound, and Agamemnon. Even in 500 BC, that is, IP held powerful sway over the masses.
So how do NFTs fit into a discussion about intellectual property? Among other things, NFTs are an emerging art form. And like the films, plays and other media that preceded them, they'll eventually be subject to the same immutable laws governing longevity, profitability and mass appeal. Here are some of the chief reasons IP is set to play a seismic role in the NFT landscape.
Related: Everything You Need to Know About NFTs and Cryptocurrency
Recognizable products and characters ensure staying power
On trading platform OpenSea alone, there are over 80 million individual NFTs. Dozens of websites have sprouted up that allow people to mint their own NFTs. And hundreds of companies have launched their own spins on the digital assets. While these are all strong indicators that NFTs have gathered an enormous amount of cultural momentum over the past year, they also bear the potential to flood the market to the point where determining value becomes a dizzying, futile exercise. Like the tulip mania of the 17th century — a turbulent, highly speculative craze to which NFTs are often compared — the frenzy of interest and economic activity is destined to come back to earth. One of the most salient questions hanging over what may very well be a fragile bubble is what NFTs are going to survive after it bursts.
If the NFT market does see a period of consolidation at some point during 2022, there's little doubt which assets are going to survive and retain much of their value. Major, "brand-name" NFT collections like Bored Ape Yacht Club, CryptoPunks, Azuki and World of Women Galaxy have established fanbases and millions of dollars in weekly trading volume. Further, they were introduced into the marketplace with fixed supply sizes, ensuring scarcity and therefore desirability. Like all art, NFTs only possess financial worth insofar as people agree to continue paying for them. The ones with the most recognizable IP have by far the best chance of ensuring digital patrons continue to do exactly that.
Related: What You Can Learn About NFTs From Coca-Cola, Acura and Gucci
Well-known avatars confer social status
There are sundry categories of NFTs, and the most popular at the moment is the avatar. Avatar NFTs are essentially profile pics of animated or pixelated characters — say, an anthropomorphized ape or a cyberpunk with a nose-ring and a cigarette dangling from his mouth. As these avatar NFTs have become increasingly entrenched in niche corners of the internet, they're developing into something that almost all high-end art and coveted goods double as: status symbols.
One example of this incipient trend can be found on Twitter. Some users have taken to displaying an avatar NFT that they own instead of their own head shots on their profile pages. What goes without saying, of course, is that the rarer and more valuable the avatar NFT they're adorning their pages with, the more prestigious and glittering the status it confers (newfangled social media etiquette stipulates that people only display NFTs they bought and own).
People are beginning to utilize their digital assets the way we've long used designer handbags or extravagant sports cars: as personal emblems showcasing wealth, power and success. How does this connect to IP and the larger argument about its inevitable dominion over the NFT space? Simple: Only the most exclusive and instantly recognizable NFT collections are going to carry any of this symbolic weight when employed as personal avatars. As we continue to immerse ourselves more deeply in a Web3 future, where our digital counterparts are leading lives parallel to our physical existences, the possibilities for NFT IP to augment and ornament our internet avatars will only amplify. Call them immaterial possessions.
Related: IP Is For JPEGs, NFTs Are Property
NFT collections may become pillars of new metaverses
Last month, a mysterious trailer debuted for a project by Yuga Labs called "Otherside." Although very little official information has been made available so far, many in the crypto and NFT spaces are strongly speculating that Yuga Labs, the creator of the Bored Ape Yacht Club, is planning to launch its own metaverse. The trailer — which samples The Doors' classic "Break on Through (To the Other Side)" — features a veritable murderers' row of the most coveted NFT IP, including not only BAYC but also CryptoPunks, World of Women, and Cool Cats.
While we may not have a comprehensive grasp of what Otherside is or when it's going to drop, what's clear is that these NFT characters are going to figure largely in a new play-to-earn gaming platform. Whenever it does touch down, Otherside will be arguably the most powerful coalescence of two major Web3 phenomena: the virtual reality platforms known as metaverses and the NFT avatar. It's an exceedingly logical progression, too, one that will only widen the gap between the most popular and valuable NFT collections and the tens of millions of other digital assets floating around on the blockchain.
