Someone paid $69 million for digital art?! A sound investment or insane? It’s incredible, especially for many who are hearing about this technology for the first time. NFTs and the underlying technology are the cause. The other headlines are a $6 hundred thousand dollar cat gif, a $3 million tweet, or the Beeple artwork “Every day’s: The first 5000 days“, selling for $69.3 million. It’s undeniable that NFTs are selling for outrageous prices.
As a blockchain enthusiast currently kickstarting an NFT creative company, I would say this is an excellent opportunity for creators to gain luxuriant benefits and attain the right relevance they’ve wanted. With no entry barriers, this new development means galleries or authenticators can’t take a cut of the profits. Creators can collect royalties from every continuous sale of their work in the collectors’ online market.
Regarding why NFTs have become a trend, from the perspective of an NFT creator, I would like to share some interpretations from different perspectives.
NFT from an Intellectual Property (IP) perspective
Bored Ape Yacht Club (BAYC) and its parent company Yuga Labs have captured the NFT interest of the general public. On March 12th, when Yuga Labs acquired the Crypto Punks and Meebits NFT series from Larva Labs, I appreciated the pattern of Yuga Labs. In this business, In the acquisition, Larva Labs is more like Pixar: a top-level IP incubation factory; however, as an IP operation platform, Yuga Labs not only has self-developed IPs but also enables acquired IPs.
Comparing a company that sells pictures with the entertainment giant Disney, I think it is no exaggeration to call Yuga Lab the “Disney in the NFT era.”
As an expert with a background in successful IP incubation and operations, I often think about how to get more traffic at a lower cost. The content, channels, and marketing methods are all designed and changed with this core focus.
Throughout the past 100 years, Disney has also encountered many bottlenecks in growth. It has continued introducing new IPs and expanding distribution channels to maintain its leading position, including developing entertainment program production, theme parks, toys, books, games, media networks, and other businesses. Disney acquired Pixar, Marvel, and 21st Century Fox. Disney also developed the Disney+ streaming service during the pandemic and recently announced that it will enter the Metaverse.
Another exciting example is Line Friends. From 2014-2018, I served as the business development director of Line Friends in China; I participated in the entire process of IP incubation from 0 to 1. LINE is a social media application developed by NHN Japan, a Japanese subsidiary of the Korean Internet group NHN. As an emotion package that comes with LINE, the popularity of Brown Bear, Connie Rabbit, and Sally Chicken are complementary to the popularity of this instant messaging software. LINE FRIENDS has also become a standalone brand, operating character IP, and its business includes gaming, theme parks, animation coffee shops, etc. The global revenue in 2018 exceeded hundreds of millions of dollars.
The IP cases range from film and television works and daily necessities to emoticons. We can see that with the change in communication media, shortening the cycle of cultivating IP and the commercialization chain, the communication mode is lighter, and the reach efficiency is a geometric growth. At the same time, the design presentation and style of IP are constantly changing.
The Unlimited Potential of BAYC and Yuga Labs
In August 2021, NBA superstar Stephen Curry purchased a BAYC and replaced it with a Twitter avatar, which was not only the headline news in the Crypto industry but also became the number one trending search on Twitter that day. Since then, many celebrities have purchased the BAYC series and changed their avatars, including Dallas Mavericks owner Mark Cuban, top 100 DJs Steve Aoki, Marshmello, The Chainsmokers, singer Post Malone, Mike Shinoda of Linkin Park, football star Neymar, rap superstar Snoop Dogg, Justin Bieber, socialite Paris Hilton, Eminem, and other superstars.
As of January 2021, Hello Kitty is the second-highest-grossing IP in the world, with $84.5 billion to date (the first is Pokémon, born in 1996, generating $100 billion in revenue). According to recent data from NFTGo.io, the total transaction volume of Bored Ape Yacht Club (BAYC) has exceeded 2 billion US dollars, and the market value has reached 1.5 billion US dollars. And BAYC launched in the market less than two years ago: The total turnover of the Crypto Punk series reached 2.7 billion US dollars. In April 2022, the price of the APE coin reached around 23 US dollars, and the token market value exceeded 10 billion US dollars. And these numbers don’t reflect the actual future commercial IP value.
Yuga Lab pioneered a subversive copyright system for the Web3 era
YugaLabs initially formulated an unequivocal statement, confirming that owners “own the NFT” and “own the underlying work of NFT, the bored ape,” and the owner can utilize the NFT you have for commercial use.
This kind of “decentralized copyright” is an open force that gives NFT holders objective monetization ability. In the copyright system of the Web3 world – the community determines the height of IP, and the community here can be people, enterprises, or a Dao organization.
After Yuga Labs acquired Crypto Punks and Meebits, it plans to grant the commercial rights of all CryptoPunks and Meebits series to their respective owners, so what will be the results of allowing NFT owners to commercialize these high-value IPs? Let me give a few examples:
1. In December 2021, Adidas co-branded Bored Ape Yacht Club to issue Adidas Originals Into The Metaverse NFT, with sales of 5,924 ETH (about $23 million) and a turnover of nearly $100 million so far.
2. Universal Music Group (UMG) purchased Bored Ape Yacht Club number 5537 to form Kingship’s virtual band together with the NFT it bought earlier. The three members of Kingship are from the Bored Ape Yacht Club series, and the other NFT is from Mutant Ape Yacht Club Series.
3. The world’s top electronic music festival, Tomorrowland, announced that on July 24th, the NFT artist Ape Rave Club would premiere on the main stage, becoming the protagonist of the music festival. A digital artist from the BAYC NFT series, Ape Rave Club NFT series, plans to release original crypto-native music through the NFT platform.
Final Thoughts
Now, the world’s entertainment giants, top clothing brands, and big-name stars are entering the arena using their decades of resources to spread BAYC, giving it leading content and matching the best channels from their perspective.
Today, the floor price of BAYC exceeding 80 ETH is unattainable for most people, and BAYC is only 10,000 after all. However, the production and launching of popular NFT series continue, and the resources and ideas of NFT holders also determine the space for the monetization of NFT IP.
The “decentralized copyright” system of web3 has realized the business model of “low-cost, high-traffic” IP monetization through the holder’s channels and resources, which undoubtedly puts forward a new direction for the traditional IP business model.
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