Is the Bored Apes Yacht Club coming for CryptoPunks?
On Monday’s seven day table on NonFungible.com, Bored Apes had posted $59.1M in sales versus CryptoPunks $17.5M. Worse, the vaunted floor price — which follows the lowest price of the most common NFTs in a set — for both projects looks as though it might converge, with Apes rising and Punks falling. The Punks floor sat at 68.69 ETH on Monday, down from 90 ETH on Nov. 8.
Meanwhile, Bored Apes’ floor price was 52 ETH, well up from 30.5 ETH on Nov. 6.
What’s behind the change? Prices are always anyone’s guess, but it seems like part of Crypto Twitter believes it’s because the Ape’s creators, Yuga Labs, conferred something on their holders of true and enduring value: the intellectual property (IP) rights to the underlying artwork of the NFT.
He wrote that the IP rights ultimately caused him to turn away. “I love punks, but the copyright issue kind of broke my heart,” he tweeted.
Aaron Lammer, the podcaster turned DeFi specialist at the trading firm Radkl told The Defiant over Twitter DM that this debate fits into an ongoing theme in crypto: “The issue of how to compensate founding teams is always a source of drama, and in the world of NFTs that ends up coming down to rights rather than tokens.”
Others are feeling it as well. “[Yunt Capital] has had a few internal conversations on the topic of punks/CCO with a wide range of internal opinions,” Yunt Capital, an early stage venture fund, told The Defiant via direct message.
The big CC0 projects are CrypToadz, NounsDAO and Vine co-founder Dom Hoffman’s Blitmap. These projects are the most open, with no rights reserved to anyone. Bored Apes offers a more limited set of rights, only to the holder of the Ape, who can profit from the art and make derivatives.
This is weird. If you buy a painting — even a very expensive painting — you have no right to reproduce or otherwise use the image on that painting. You own the object, not its ideas.
This is uncontroversial in the traditional art world. It is extremely controversial in the unique digital assets industry, however, and right now the Bored Ape community and partisans of the CryptoPunks dynasty are throwing down over the fact that one gives its owners the right to make use of the underlying material and one just lets them have something to look at.
Will Peets, chief investment officer of 100 Acre Ventures, a fund focused on the metaverse, remarked on the incongruity between crypto’s take and the traditional one in a text message to The Defiant. But he argued that crypto’s NFT community might be nudging the world where it needs to go.
The push for NFTs to follow the open rights model, Peets said, reflects the fact that crypto is open source and allows for rapid innovation by copying existing ideas and tweaking it to create something new and in some cases that means challenging previous norms.”
Peets also said this isn’t exactly a new controversy in crypto, it’s just become more fierce now that NFTs are worth real money. CryptoKitties, the first mega-buzzy NFT project, has similar terms to CryptoPunks, and there would be flare ups from time to time about holders’ lack of commercial rights. For example, attendees at Consensus 2018 in New York City brought it up with CryptoKitties staff during the Q&A for a panel about NFTs moderated by this reporter.
Like CryptoKitties owner Dapper Labs, the CryptoPunks creators, Larva Labs, retain the rights to reproduce CryptoPunks and profit off their imagery commercially. Larva Labs uses the NFT License for the project. Meanwhile, the company signed this summer with the United Talent Agency to represent it and its Punk IP.
But Yuga Labs has also secured representation for the overall Apes brand, and that doesn’t stop individuals from making use of their IP. The company did not respond to a request for comment from The Defiant.
“I think extension of IP rights, embracing NFT ownership as a membership in a DAO, and expanding how the characters are used represents a really cool design space,” Peets said.
An owner of a Bored Ape can try to create a character around their ape that grabs the public’s attention, as Dan Rollman has done with his Hippie Sushi Chef comic. Or a big company can try to turn a few of them into a music group. Or a basketball player can just put his ape onto his shoes.
All these options are allowable under the Bored Ape terms. Not CryptoPunks. CryptoPunks can only be displayed and sold by owners. Only Larva Labs can make a TV show out of the Punks; Punks holders can’t even do a YouTube short.
Eric Conner, ETH Hub co-founder and investor, tweeted that he thought the company “should turn over the license and IP to the community. Let those who got it here take over.”
But NFT fans are not monolithic on this point. Despite the fact that the comic maker, Rollman, is enjoying his rights to his Ape, he doesn’t think Larva Labs needs to change its deal with Punks holders.
“CryptoPunks will forever be the original project that set the standard for BAYC and others to follow, and that’s all it ever needs to be,” he told The Defiant via email.
Larva Labs did not reply to a request for comment from The Defiant.
There actually is a little discussed middle ground. Dotta of Magic Machine, the company behind the Forgotten Runes Wizards Cult told The Defiant that their project takes a hybrid approach. Wizards owners have the right to make use of their characters, but the creators of the project also have the right to provide a mainline narrative for the whole project.
“You need J.K. Rowling to write Harry Potter before you can get cohesive fanfic,” Dotta said in an email. “Netflix isn’t going to jump into our Discord and negotiate IP rights with every NFT holder.”
Or as Dotta’s collaborator, Elf Trul, put it in another email, “ Magic Machine is the world builder, the Cult members are the character builders.”
The whole community wins, Dotta argued, with the creators putting all their energy into maximizing the project.
Yunt Capital, for its part, comes down in a slightly different middle than Magic Machine. It sees projects like the Apes and the Toadz as an evolution of what the Punks pioneered, but that doesn’t mean their decision to go CC0 should become a prescription for all NFT makers, in the fund’s view. “While we believe the future will be in the metaverse with on-chain identities, individual creators should have the right to determine their level of licensing,” Yunt Capital said.
As in most things in crypto, the bad feelings here are most likely driven by a suspicion that people have missed out on potential gains. Have they, though?
Is it really fair to say that the rise of the Apes can be ascribed to this one legal property? After all, raw IP isn’t worth much to someone who doesn’t have talent, clout or preferably both.
Spottie Wifi, holder of Punk #5528, tweeted, “LARVA LABS COULD PUBLISH A CRYPTOPUNK COPYRIGHT LICENSE ON THEIR SITE TOMORROW AND THE SAD REALITY IS ALMOST NONE OF THE PUNKS WOULD KNOW WHAT TO DO WITH IT.”
The Bored Apes and the Punks are both mostly just images. To win mindshare and therefore value, a person needs to leverage something more. “I think one of the problems with CC0 is that they often don’t have a strong enough voice / brand / creative vision behind them to create breakout characters,” Dotta noted. It would take an exceptionally talented person to fill that gap in for just one character and grab the public’s attention.
Theoretical and Abstract
Meanwhile, the Loot community is galvanized around driving value to the corpus of items, but most of this IP conversation seems to stem from holders hoping that the Cartoon Network will show up at their door with a licensing deal.
This is unlikely. Commenting in a Medium post by crypto researcher, Economist, Vivek Ravishanker, a crypto investor, said: “The value is almost entirely theoretical and abstract, but people talk about it constantly.” Is this difference in rights really so salient that it explains increasing demand for Bored Apes and the softening of the CryptoPunks market?
It would be strange if it were, because so far the big news in IP use of Bored Apes has all been around people that already have big platforms making use of their Ape in a creative way, not average owners without followings making something amazing from their NFTs that everyone wants to see.
When, for example, legendary producer Timbaland turns some of his NFTs into a musical act, are the Apes providing him value or is it the other way around?