NFTs NFTs NFTs
2021-03-12 1:11 by Thomas– 6m read
Originally posted on Substack. Posting it here to as to move all my web3 writing to my own platform (powered by LT Fan Platform, the web3 CMS my startup Liquiditeam is building).
Non-fungible tokens are the hot topic du jour. From arts to music to sports, no day goes by without some hot NFT story.
Here’s a story about how Bleacher Report developed an NFT concept, brought it to market within 10 days and made almost a million in revenues. Here’s the pipe-smoking alien CryptoPunk NFT selling for $7.5 million. And even I cannot not talk about the subject, as yesterday’s SportsTech Allstars podcast episode, on which I was invited to speak about tokenization in sports and our work at Liquiditeam, proves.
But not all is rosy in hyped-up NFT land. Neitherconfirm, an NFT artist, just changed all the jpgs of his sold works on OpenSea. In his corresponding Twitter thread, he highlights the problematic disconnect between the token and the media asset it points to. And here’s Decrypt with a good piece that depicts some of the flaws with one of the space's darlings, NBA Top Shot. The subtitle says it all:
"People are paying thousands of dollars to "own" NBA highlight NFTs. But ownership in this case might mean a lot less than you think."
The criticism in the article - which essentially centers around the fact that the NBA, as one would expect, keeps all the copyrights and NFT buyers don’t actually “own” the highlight they purchase on Top Shot - is certainly valid. But it points in a direction that is highly interesting. Because to me, Top Shot is merely a first step in the direction of what I called micro-licensing in the Tokenization Playbook for the Sports Industry. I wrote:
In the face of our changing media and content landscape, it is not surprising that blockchain technology and tokenization are met with interest by the copyright and IP community. Tokenizing content licenses is a potential answer that could enable a diversified rights & licensing landscape that is well-adapted to the digital & social media age. Using tokenization could, for instance, enable licensing of even small content nuggets — think a highlight dunk or the clips of individual plays that analytics services like Cleaning the Glass are using — in ways that benefit both the rights holder and the user.
Tokenized licensing schemes could, for example, automatically account for the environment in which content is used (e.g. for-profit or not-for-profit), actual viewership numbers, or even the age of the content. This way, a highlight clip from the same night, used by a professional site and creating lots of views for it, could be monetized adequately while the blogger or fan on social media could still use it free of charge. Over time, the price could decrease as the clip ages and loses its relevance — unless, of course, when it turns out to be a highlight for the ages.
Of course, such micro rights and licenses could even be made tradeable, thereby creating an exciting new market. Imagine you could acquire the rights to all Lionel Messi goals, Tom Brady completions, or Steph Curry 3-pointers and earn money when they are shown (dollars when on TV, cents for 100,000 views on social media). While not going to materialize soon, it’s clearly a fascinating outlook.
To me, that’s where it gets interesting.
Personally, though, my main concern with many of the non-arts NFT cases that we are seeing is a different one: people create NFTs to create NFTs. But they should be asking themselves "what's an awesome digital thing people would want"? Only when doing this, you'll create something worthwhile. And as the market's response suggests, Top Shot is doing quite well in this category - at least for now.
Btw I touched upon this subject before in Lamborghini Blockchain Stamps and Trajectories of Innovation:
When a new, paradigm-changing technology emerges, many of the early projects and companies that utilize this technology merely try to replicate what worked in the old paradigm, only with the new tools. Think of Yahoo creating the digital equivalent of the yellow pages, of early newspaper websites looking just like print newspapers, or early mobile apps trying to sell software instead of selling access to software.
Of course, usually these replicas of old models don't fully leverage the capabilities of the new technology. It takes a few iterations of a concept, e.g. web search, to get it right from a product perspective. Only once Google created its PageRank algorithm did a search tool fully utilize the internet's property of being a network. Instead of cataloging information by hand, Google used the network itself to collect, categorize and rank websites.
With this in place, we had an objectively better (and I'd say by an order of magnitude better) information discovery tool than ever before.
Let's bring this back to crypto collectibles.
When it comes to the category/general concept, I'm bullish. Virtual items are already highly popular and truly ownable digital collectibles make a lot of sense for users. But many of today's forays into the field strike me as misguided replicas of old models. Too often I find that an engaging use case is utterly lacking.
So, let’s watch out for the cool experiences.
I'll leave the closing words to Matt Levine who wrote this about NFTs a few days ago:
Of course this is stupid but it’s not so much stupider than anything else.
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