Who owns what when someone owns an NFT? It’s not always clear.
When Actor Seth Green’s Bored Ape was stolen, for instance, it brought plans for a show with the animated character into question.
There’s the ambiguity of whether the metadata, the code that creates NFT images, is actually stored in a way owners can rely on. And then there is the more general mystery of how someone can “own” digital images or characters that are only a right-click away from duplication.
Now Andreessen Horowitz, the Silicon Valley venture capital firm that closed a $4.5B crypto fund in May, is wading into the NFT ownership morass.
On Aug. 31, a16z, as the firm is known, launched six new NFT licenses under the brand “Can’t Be Evil” that purport to help artists monetize the new technology. The licenses have been released to the public gratis. According to the VC firm, the licenses aim to accomplish three goals:
First, the licenses are meant to help NFT creators protect and distribute their intellectual property. They are also designed to grant NFT holders a set of ironclad rights. And third the instruments are supposed to help creators, holders, and the community at large leverage the licenses to “unleash the creative and economic potential of their projects.”
In a post published on Aug. 31, a16z partners Miles Jennings and Chris Dixon said traditional copyright approaches are too restrictive for creators and cannot keep pace with technological change.
“Now that web3 innovations are testing the limits of traditional legal frameworks, it’s time for a new set of licenses designed specifically for non-fungible tokens, or NFTs,” they wrote.
Not everyone is excited about the licenses. Andrew Hutchinson, head of content at Social Media Today, which provides analysis about the social media industry, didn’t see anything new in the development.
“Web3 bros keep coming up with ‘new’ systems, which essentially replicate existing regulatory frameworks,” he tweeted, “but then pretend like they’ve come up with some revolutionary concept.”
It won’t go unnoticed that a16z’s “Can’t Be Evil” branding echoes the “Don’t Be Evil” admonition Google famously included in its pre-IPO prospectus, a moral posture that invited ridicule from critics who accused the search giant of abusing its market power over the years.
Delving into the arcane world of intellectual property rights and royalties is an unusual foray for a VC firm. And giving something away for free is even rarer. When it comes to NFTs, a16z is nothing if not ambitious. Looking beyond the bear market, Jennings and Dixon are betting non-fungible tokens are a killer app with staying power.
Earlier this week, a16z led a $50M round in Proof Collective, the company behind the NFT collection Moonbirds.
The investment came less than a month after Moonbirds’ adopted a “no rights reserved” CC0 license, which shifted the NFTs into the public domain. No surprise, the move ruffled the feathers of NFT owners who felt the switch pulled the rug out from under them.
And in July, a16z led a $50M round in Gary Vaynerchuck’s collection, VeeFriends. Plus don’t forget the $450M round the firm executed in March in Yuga Labs, home of the Bored Ape Yacht Club, and the firm’s 2021 investment OpenSea, the leading MFT marketplace.
In short, a16z has their hands all over NFTs. It makes sense that the firm would want to clarify the rights the tokens confer to owners and creators if the space is going to push forward.
The licenses are stored in PDF form on Arweave, the blockchain-based data storage platform. Developers can write the licenses directly into the smart contracts for their NFTs. Adding the license at the on-chain level could enable new use cases.
“One can imagine a future where platforms automatically recognize the licensing rights associated with a project,” the a16z partners’ post states. “When creators of a new NFT project incorporate art from existing projects, the sale of the new NFTs could automatically result in royalties paid to both the original creators, and the current NFT holder.”
This layering effect is a key value proposition for NFTs; developers can interact with content at a much more precise level than if it were off-chain.
Each of the six NFT-specific licenses come with their own specifications — four allow commercial use, two allow termination for hate speech, five allow users to sublicense their NFT. This means a holder may transmit those rights to someone else.
This sublicensing concept gets at the layered idea of NFTs. Someone could develop an NFT collection whose holders would have access to a bundle of the commercial rights of many other NFTs. This would allow a user to acquire the IP to many different NFTs with a single token, a potentially valuable proposition to creators.
While critics may downplay the impact of the licensing move, the debate around NFT ownership is accelerating. If a16z is making the right moves with their NFTs and their licenses, a complex world of content connected through smart contracts may emerge. And of course, a16z plans to be right at the heart of the action.
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