As the NFT owner (creator) of the NFT’s original content, I can attach a royalty to it, resulting in a percentage of future sales going to me. I also have the right as the owner to prevent others from infringing on my intellectual property. For example, if someone takes my artwork, mints it as an NFT, and sells it, I have the power to take it off from the market.
The current growth of the NFT market on blockchains has proven to be a pleasant possibility for authors to earn money in a controlled manner by receiving royalties each time an NFT is sold. It’s great potential, but it’s also a new market where selling artists and buying collectors must ensure they understand the market and the rules.
The sale of digital arts, music, and other NFTs began slowly through online auction houses but has exploded in the last year, both on digital marketplaces and through more traditional and established auction houses such as Christie’s.
Collectors are driven to the new NFT market because it is fashionable and more accessible than acquiring actual goods. After all, ownership is securely stored in a blockchain of computers, eliminating the need for secure showrooms or galleries.
Collecting in NFTs is not only less expensive, but it is also much easier, and it appears to fulfill collectors’ need to own.
As far as I know, the highest price paid for NFT art is USD 69 million for an online collage of sketches named “Everyday’s The First 5000 Days” by Mike Winkelmann, which was sold in an auction by Christie’s.
It was never revealed who bought it.
I don’t know if the treasure’s owner has gained all rights to use, show, or otherwise exploit it. I also don’t know how much of the original rights to Beeple’s piece of art he has secured. It’s a new market with a lot of unknown variables.
What exactly are people selling when someone creates and sells NFT?
With new technology comes a lot of uncertainty. So It’s a good idea to start by explaining that an NFT is a mix of two things:
- The non-fungible token, which is the blockchain asset
- The creative content.
When an NFT sells, only the non-fungible token is sold.
The buyer owns the non-fungible token, who can destroy it, resell it, give it away, or do whatever they want with it. The creative content, however, is not owned by the buyer. The purchaser has purchased only a license to use the creative content. The content author owns all rights, titles, and interests in the original content.
The way ownership influences monetization
Is it necessary for an artist or a buyer to understand the specifics of an NFT’s ownership and license rights?
Hell Yeah! You can’t just dive into a swimming pool after watching some how-to swim youtube videos. You have to learn, of course. So onto the topic, The majority of monetization is dictated by ownership.
As the owner (creator) of the NFT’s original content, I can attach a royalty to it, resulting in a percentage of future sales going to me.
I also have the right as the owner to prevent others from infringing on my intellectual property. For example, if someone takes my artwork, mints it as an NFT, and sells it, I have the power to take it off from the market.
I only have a license to the NFT’s creative content; if I am not the NFT owner, I’m restricted in what I can do with the creative content.
So the purchaser can do whatever they like with NFT, right?
You’re right and wrong. Let me explain. When a buyer buys an NFT, there is a significant lack of transparency about what they are getting.
Frequently, the purchaser believes they can do whatever they want with the NFT’s original content, but this is incorrect.
The purchaser’s rights are limited to the terms of the license that comes with the NFT.
It is crucial that the NFT seller fully disclose the terms of the license in writing to provide greater transparency to the NFT customer. The buyer license shows what they may and cannot do with the creative content.
Does that mean it’s only easy for NFT owner/creators? Shouldn’t they be worried about lawsuits and stuff?
Not really. Creators must release any or all liability. There are many uncertainties in the field of blockchain-related technologies. It’s necessary that authors make it clear to buyers that they are not responsible if the NFT technology fails in any manner, including through the use of a Metamask wallet. Creator must include these types of disclaimers in terms of the Service of a website.
Royalties are automatically deposited into your crypto wallet when you own digital assets on the blockchain. However, if you are collecting royalties, you must make this clear in your Terms of Service. Otherwise, you’ll be in legal trouble.
See also: [Don’t] buy land in the Metaverse, without knowing these reasons.
Then, Why should artists be aware of NFTs? Are there any advantages for an average user?
Let’s warp back a little bit.
An NFT identifies the artwork’s original owner.
Without NFTs, locating the copyright owner is always a challenge in the real world.
For example, I locate an awesome digital image that I’d like to use on the cover of my book, but I can’t find the photographer.
So, what happens next? I have two options:
- I use the photograph, and the owner can sue me for using it without permission
- Don’t use the image at all.
Now, if that photograph was an NFT, I can easily track down the owner and request permission. What are the next steps? I can utilize this fantastic photo, and royalties or credit will compensate the creator.
Apart from the rights of NFT makers and buyers, individuals must also respect the intellectual property of others: I’m referring to the instance in which someone who developed a Meta-Birkin that looked like a Hermes Birkin bag and Nike sued someone for selling virtual shoes.
NFT Copyright perspective
So, in Nike’s scenario, someone creates the NFT with a shoe with Nike’s symbol and then sells it without obtaining a license from Nike. That is a straightforward example of infringement.
In the second case, the designer of NFT was supposedly “inspired” by the Birkin bag and borrowed much too much of design without permission.
“How much of the design is too much?” is the question here.
It will be fascinating to see how this plays out.
With NFTs, people will try new things that companies may or may not enjoy. I believe we will see more of these sorts of situations in the future.
It’s thrilling, and I believe we’re living in a great era where new technologies are popping and touching the moon. But it also brings new issues, and it requires unique solutions. Like the news about rape in Meta’s Metaverse, they later introduced Personal Boundaries as the solution and NFT or NFT Copyright Issues.