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Sep 8, 2022

NFT Licensing: What Can I Do With My NFT?

Jack Burt
Jack Burt

Writer

When an artwork or an NFT project is created, the creator starts off with certain rights:

  1. Right to reproduce

  2. Right to create derivatives/adaptations

  3. Right to distribute and publish

  4. Right to perform

  5. Right to display

Now, depending on their goals, the creator can either drop these rights or enforce them (... this becomes their licensing agreement). In practice though, there’s a continuum of approaches to licensing — some creators clutch their rights, some let go of their rights, and some hold onto certain rights while letting go of others.

It’s helpful to imagine these rights or licensing agreements as existing on a spectrum of freedom vs. restriction.

CC0 Range Illustration

CC0

On the left side, you have freedom or CC0 (Creative Commons Zero). In layman's terms, CC0 means the creator is giving you permission to do whatever you want with their project (within reason) – you can make edits to the original art, put in on t-shirts, sell those t-shirts for profit, form a t-shirt cult around their art, register that cult as a religion, and so on and so on.

The pro’s are simple: anyone and everyone can collaborate and help market the original meme. At the same rate, it's a risky approach — because anyone can use the meme however they wish, people can misrepresent the original project in innumerable ways.

Mfers, in specific, is a collection that has benefited greatly from the CC0 model – the community has ran with the original mfer meme, spun countless derivative projects, built virtual worlds, built businesses, and sold merchandise – because Sartoshi (the creator of mfers) granted “mfers can build whatever they can think of with these mfers”

It’s not a rule by any means, but generally, we see the CC0 model being applied to projects with less utility (off the bat). Projects that are centered around an idea rather than a product or an expereince, can use the CC0 framework to assure that their meme is able to spread freely without folks tip-toeing around the legality of its use.

Restrictive Licensing

On the right side of the spectrum you have restrictive licensing — which, basically means people either can’t repurpose your work, or at the least, they have to be careful about how they do so. For example, an NC & ND license restricts people from commercializing (turning into a business) or remixing (throwing into Dall-E and marketing as a derivative) your work.

Generally, projects that have a super precise and narrow vision for what they want to be, or projects that require centralized control to function properly, will benefit from the restrictive licensing model. Restrive licensing doesn’t just ensure that you retain authority over your work, but it gives you cause to intervene should someone cross the line. Of course, the downside is that restrictive licensing disincentivizes small actors from collaborating with a project (because the legal repercussions or the financial barrier to entry is daunting) and thus, they don’t benefit from an army of informal marketers working on their behalf.

Vee Friends, in specific, is a collection that has benefited greatly from the restrictive licensing model – after all, Vee Freinds is targeting an audience that includes children and as such they need to be able to control where and how their brand is appearing (nothing grotesque or inappropriate) – not to mention, Gary Vee has an acute vision for what he wants Vee Freinds to be, and to have people freely making spin-offs or derivatives could distract from the primary project.

The Gray Area

Between CC0 and restrictive licensing, there’s a chasmic gray area filled with collections that neither relinquish nor reserve their full rights.

For instance, think of Bored Apes – buying a Bored Ape gives you certain rights to leverage that Ape, so, if you own Bored Ape #1798, you are free to commercialize that specific Bored Ape (i.e., Jenkins the Valet wrote a novel that's based on and features thousands of Bored Apes) but they don’t give you the right to just slap the BAYC logo onto your own brand.

Similar but different, Doodles and CryptoKitties allow holders to commercialize the NFTs they own; however, they put a cap on the amount of revenue you’re allowed to earn off their IP ($100,000 annually) – after that point, you’d have to approach the project’s team to work out a comprehensive licensing deal.

Moving forward, it will be especially interesting to see whether more collections move deeper into this licensing gray area. Early on, CC0 NFTs were in vogue and seen as respectively fitting to web3’s decentralized ethos — nowadays though, people are nonplussed that Moonbirds switched to CC0 from their previously restrictive licensing.

Perhaps, one could even argue that the licensing gray area is the future of web3 — combining the best of both licensing worlds — it permits some freedom to remix and guerilla market, while also maintaining a degree of restriction and centralized order.


Disclaimer: This is not financial, legal, or tax advice. This article is strictly educational and is not investment advice, legal advice, tax advice, or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not legal, financial, or tax advice. Talk to your lawyer, accountant, or tax professional. Do your own research. See Flip’s Terms of Service for more details.

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