Non-fungible tokens (NFTs) are the hottest new topic in the digital arts community and among blockchain enthusiasts. This technology allows digital content to be sold while maintaining control over intellectual property rights. Why is there so much interest? One reason is the millions of dollars earned by a few artists who’ve jumped at this opportunity.
Last February, the famous Nyan Cat meme, autographed by its creator, was sold for nearly US$600,000. In the weeks that followed, many other artists took advantage of the trend, including the musical group Kings of Leon and the digital artist known as Beeple, who sold a 10-second video for US$6.6 million.
What’s an NFT?
A non-fungible token is a digital authenticity certificate connected to a digital document. Once it enters the blockchain, the NFT can be traded among buyers while remaining traceable and ensuring that a royalty is paid to the document’s creator. In the case of digital content, the creator would be the copyright owner.
Digital content could include books, digital visual art, musical scores, plays, songs or films.
Are NFTs a financial opportunity for artists?
If you’re thinking you could make thousands of dollars simply by creating JPEG files of your latest artwork, you may be in for a disappointment. Although some artists have made a fortune, it was mainly because of speculation related to cryptocurrencies on those blockchains as well as the sudden, frenzied interest in NFTs.
Nevertheless, this new technology has some interesting potential for various categories of artists. Because they’re traceable, NFTs might help ensure better copyright compliance and more royalty payments. Content that can be easily shared digitally, such as music, films and images, could be better protected and generate more royalties for copyright owners. In the case of digital visual artists, NFTs could even be the way to a meet one of the community’s long-time demands.
Resale rights and NFTs
For years, visual artists have been asking for the Copyright Act to be updated to include resale rights. Even the House of Commons Standing Committee on Canadian Heritage recommended the inclusion of that right.
That type of authors’ right, which doesn’t currently exist in the Copyright Act, would provide artists with a share of the royalties when their content is resold, especially at auction.
NFTs and other blockchain-based technologies could make it easier to apply resale rights. By linking an NFT to their content, artists would know who had purchased their work and when. They could program and automate the process of collecting a royalty percentage on those sales.
Since they can’t rely on an effective Copyright Act to protect their authors’ rights, digital artists could at least have the option of applying a resale right. But it doesn’t have a big impact since it’s limited to a sub-market.
Moral rights risk
Although this new technology offers the possibility of tracking specific content and maintaining a direct link with artists, NFTs and blockchain are imperfect tools for protecting the right of attribution, which is one of the most significant moral rights for creators.
Blockchain is designed to be decentralized and free from third-party control. There’s no single authority to confirm the identity of the people using blockchains. As a result, someone could easily take ownership of a digital document by attaching an NFT to it under their name.
In March, the Global Art Museum group made NFTs of digitized masterpieces belonging to various museums without their permission. Global Art Museum said it had no malicious intent in launching this project but many observers considered it a way to illegally appropriate the content.
Are NFTs and blockchain here to stay for artists?
These new technologies are full of promise. Those of us interested in intellectual property are closely monitoring developments and we’re even playing an active role in preparing the future. This will be a field to watch in the coming years.