The first thing to know about purchasing NFTs is that you are purchasing a digital token that contains digital media content rather than the content itself. Therefore, the value of the NFT isn’t going to be consistent with the media content and more to do with the token itself.
When purchasing an NFT, especially if it is an NFT that is the first to contain a work of art authorized by an artist, the copyright to that media content as well as other obligations relating to the asset is provided in a smart contract that is exchanged from the seller to the buyer.
The copyright for the media content in an NFT is more likely than not going to remain with the original artist. This means that the artist will have the right to create more NFTs containing that content which can then be sold and distributed accordingly.
However, the likelihood of it maintaining the same value as the initial NFT is slim as the collectibility and desirability at owning the “original” is what drives the demand in the market.
The more NFTs there are that contain a particular media content, the less valuable it becomes due to the commonness of the content and its accessibility to a wider audience. This means that the rarer the content is, the more scarce it becomes and this drives the demand to a higher value point.
There are instances where the buyer does obtain some rights when it comes to the distribution of the digital content within their NFT.
The main example being the NFTs sold by NBA Top Shot. These NFTs contain video clips of iconic moments in basketball history. The buyers have a limited license in which they can copy and display the contents within the NFT but only for personal or non-commercial use. That means that they are unable to produce it for the masses in order to make a profit or they will be in breach of the contract.
Despite the fact that the media content itself can be copied or displayed online, the token itself is entirely unique and cannot be replicated. This is thanks to the Ethereum blockchain which logs all transactions relating to every NFT meaning that there is no chance of fraud or duplication thus retaining the value of the NFT.
But what are the rules when it comes to the copyright of the NFT? And does the NFT have to contain original content? We’ve gathered everything you need to know in this article to give you a better understanding:
Are NFTs copyrighted?
NFTs offer a unique buying experience as the legal aspects of the purchase are not as straightforward as you may think. When it comes to the larger amounts of money that buyers are willing to spend on certain NFTs, it’s easy to assume that the buyer would then have complete ownership over the copyrighted material of the NFTs’ media content.
When purchasing an NFT, especially an original formatted NFT such as the Everydays artwork for example, the rights actually remain with the creator of the NFT. This means that they can sell more NFTs containing that same media content as well as receive any further royalties if those NFTs are resold in the future.
This will depend on the smart contract that comes with the particular NFT as the particulars regarding any future royalties or copyright will all be laid out specifically. The NFT that is purchased is the token that contains the media content rather than the copyright.
What this means in simpler terms is that the media content of the NFT can be accessed and viewed but the person who owns the copyrights has the right to provide, sell and distribute the media content to the public without seeking further permission.
NFTs can be compared to buying an autographed copy of a book. It has more value since it has been signed by the author but that doesn’t mean you then own the copyrights to that book and can authorize any further details relating to the text.
That still remains with the author. Whereas other people may own a regular copy of the book, you have a more unique version and this makes it more valuable and special.
It is important to always look into who you are purchasing the NFT from. As expected, there are many spammers finding illegal loopholes regarding copyright and selling NFTs containing media content that they are claiming is theirs to sell when they are not the original creators. Not only does this make the media content in the NFT less valuable, but it also means that the person who actually created the content is being paid for their work.
As NFTs become more mainstream and the demand to join in and make investments increases, there are going to be more and more cases involving copyright infringers so always make sure you are purchasing from legitimate sites.
NFTs are at such an early stage of the game that it is impossible to tell whether they will withstand the test of time and maintain or increase in value at all. With cryptocurrencies becoming more and more commonplace, it was only a matter of time before digital goods could become tokenized and sold, especially with the world incorporating technology into daily life more than ever before.
However, whether they are purchased with cryptocurrencies or using credit cards, real money is involved in the process and whether people will be willing to part with their hard earned money in the long term is unknown, especially when the buyer doesn’t actually own the rights to the content.
MetaKovan believes that the Everydays artwork he purchased at auction for $69.3 million will one day be worth $1 billion which is an extremely confident assumption. Not only would this make it the most expensive artwork ever sold in history, but the idea that this artwork is in a purely digital format unlike traditional artworks such as the Mona Lisa shows how integral the digital world has become in the world.
Although he paid a staggering amount for the NFT, MetaKovan doesn’t own the rights to Everydays. The copyright for the artwork remains with its creator Beeple meaning that he can sell and distribute more NFTs containing the Everydays collective or sell the 5,000 individual artworks that make up the collective individually without seeking any permission.
This is because MetaKovan’s NFT contains the original artwork and is more like an exclusive, signed copy and will always be the first to be sold.
However, any subsequent sales of Everydays NFTs are not going to be sold for the same amount as it did at auction because it isn’t the “original” or first copy of the original which is what makes MetaKovan’s NFT so special.
Although NFTs have been on the market since 2017, it is only within the last few months that we have seen some NFTs sell for extremely high prices which have made headlines around the world and made the financial world take notice.
With cryptocurrencies such as Bitcoin and Ether seeing a huge boom in share value which is expected to increase even further, governments are beginning to develop new legislation relating to the selling and purchasing of NFTs to prevent any infringement of copyright by scammers.
Auction sites have begun to create DMCA processes which help to remove any unauthorized NFTs which will hopefully discourage people from tokenizing media content they don’t own. On the other hand, some sites are only allowing the sale of verified NFTs meaning that they are fully guaranteed to be sold by the original creator so you can purchase without any worry.
Due to the nature of NFTs being online only, this means that you’re wanting to ensure that what you are investing in is the real deal. If you’re investing in an NFT that has been sold by someone who didn’t create the content then this is going to deem the NFT valueless and you’ll probably be making a huge loss if you resell, if you can find a platform that will allow you to sell it at all.
Do NFTs have to be the original?
Because NFTs don’t relate to the media content itself but the unique token that comes with the media content, this means that the media content can be sold through other tokens. If you purchase the original NFT containing what the artist deems to be the first to contain a specific media content then this is going to hold a lot more value than any subsequent NFTs that contain the same media.
Using the Everydays artwork as an example, MetaKovan’s NFT is going to hold a lot more value than any other NFTs that contain Everydays because his token is the first of its kind and is the one that has been verified by its creator Beeple as such. It’s the equivalent of getting the first copy of a first edition book that has been autographed and numbered by the author.
This is going to have a lot more value than owning a first edition of a book that hasn’t been autographed and numbered therefore meaning it holds a uniqueness and collectibility that contributes to its scarcity and desirability on the market.
Due to the Ethereum blockchain that supports NFTs, any transaction and all information relating to the NFT will be logged on the record so its authenticity and value can be verified easily. If you do end up purchasing an NFT that contains the same media content as an NFT that has previously sold for a high price, do not expect it to hold the same value as it isn’t the original.
Where can I buy NFTs?
There are a wide variety of sites that specialize in the buying and selling of NFTs such as OpenSea which provide secure and authenticated NFTs at a variety of price points. If there is a particular type of NFT you are looking for such as digital sports trading cards or digital fine art then there are specialist websites that display the best on the market.
Make sure that you do your thorough research to make sure that you are purchasing from a legitimate content creator and not a scammer who has illegally taken the media content and tokenized it for a profit. This will prevent any bad investments that are going to make you a loss and ensure that you will be able to resell it in the future should you wish.
Websites like OpenSea are fantastic because of the wide range of NFTs they have that are varied across over 200 categories. You’ll be able to gage the scarcity and rarity of the NFT from the amount that have been sold and are being sold containing the same digital content.
Thanks to the Ethereum blockchain, you’ll also have access to the NFTs’ transaction history as well as all other relevant information that can help you to make a decision that is fully informed.
Conclusion
Non-Fungible Tokens are usually purchased due to the digital content that they contain, however, the true value is the tokenization and the content is just a part of that.
This means that although the digital content can be replicated or sold in large quantities, every NFT is unique and therefore cannot be duplicated. The more scarce the digital content within the NFT, the more desirable that token becomes and this is what drives the market into making these high valued purchases in the hopes that that scarcity will drive collectors and investors to make the purchase or bid on this at auction.
