Art-Tech & NFT
MUNG loves the arts & entertainment industries and knows the importance of the arts in our society.
Throughout history, art has helped redefine human lives and challenge technology to enhance inspiration for art. Today, art is incorporated in technology all around us. Social Media platforms contain many pictures.
Over the years, street arts like those from Binski and movies have challenged technology to improve entertainment through development of animation and CGI. Over time, moviemakers have challenged the tech to give their audience a better artistic product for them to enjoy. Movies like Avatar and Toy Story have left viewers wanting more, and the art-tech cycle continues. MUNG recognizes that not only does the technology IP need to be protected, but also the art IP.
This is why MUNG is devoted to:
Protecting Art that Challenges Tech and Tech that Inspires the Arts.
Whether you are a painter, musician, or graphic designer, MUNG has the skills you need to protect your art intellectual property. MUNG can help guide you through your copyright, trademark, patent, or business matters and will work with each client to create a tailored and affordable package.
As we progress into a new digital era, the beat of the drum of the cryptocurrency and broader digital asset industry continues and, with it, has come the rise in popularity non-fungible tokens (NFTs). In the month leading up to the writing of this article, a total of more than $208 million1 of NFT-based artwork was sold (in primary and secondary sales), as compared to the $250 million of total NFT volume traded in all of 2020. In addition, creators are utilizing NFTs to generate novel methods of monetizing digital creative works and other experiences, as the music band, the Kings of Leon, accomplished when it released its new album as a limited edition NFT, with six NFTs providing lifetime tickets to front row seats for the band’s shows.
Further, we are witnessing creators experience a new era of incredible sales figures, like the artist known as Beeple, who sold an NFT representing a collage for $69 million. Prior to this NFT sale, Beeple had sold his art for as little at $100. This article explores some of the legal issues behind NFTs and their underlying technology.
The utility of NFTs for digital creative works is premised on blockchains. Blockchains are permanent, unchangeable digital ledgers that are used to record transactions in "blocks” of computer code that are time stamped and linked together, demonstrating the provenance of a digital asset. Blockchains also function as decentralized networks that transparently reveal the history of transactions for digital assets, making it impossible for recorded digital assets to be pirated, modified, or deleted. Assets that are digitally transferrable between two parties in the blockchain ecosystem are commonly referred to as "tokens,” and tokens can be assigned specific uses and properties. Bitcoin or other cryptocurrency tokens are identical and are readily exchangeable for equal value (i.e., they are fungible). An NFT, on the other hand, contains a unique identification code and metadata that distinguishes one NFT from any other, and represents items on the blockchain that cannot be replicated. For example, a cryptocurrency like a Bitcoin can be substituted in a transaction with another Bitcoin without a loss of value or change in attributes for the transaction parties, much like one US dollar can be substituted for any US dollar. Because an NFT contains data that distinguishes it from every other NFT, it is non-fungible; rather, it is a one-of-a-kind asset, like a ticket for a specific seat at a concert. Moreover, NFTs are composed of software code in the form of "smart contracts” that can be crafted to provide significant benefits to NFT creators. Smart contracts are open-sourced blockchain protocols that directly control the transfer of digital currencies or assets between parties under certain terms and conditions. To illustrate, the code could detail limitations on the use of the NFT by a purchaser, provide for automatic royalty payments from resale transactions, and prove ownership. After the code for the smart contract is written, it is then permanently minted into a token on a blockchain, such as Etherium, where it will serve as a non-replicable digital certificate of ownership of a digital creative work. Additionally, this technology lays the foundation for creators to have more control over the value and the conditions of the sale of their digital creative works and create new distribution channels of art, performance access, or other valuable property.
Prior to the recent surge in the use of NFTs, creators faced limitations on the revenue that they could generate from their digital creative works because copies could be easily made an infinite number of times and distributed throughout the internet with no degradation of quality, which has historically made it difficult for creators to monetize their digital creative works. However, NFTs make it possible for creators to generate unique and finite tokenized versions of digital creative works and to commodify such assets, while ensuring that the digital creative work cannot be counterfeited and that the work remains scarce online. For example, NFT creators can set both the sales price and the maximum number of replicas of the digital creative work that can be sold. This allows the NFT creator to perpetuate the scarcity of their asset and artificially increase the NFT’s value in the initial market as well as the resale market, similar to a lithograph that grows in value because of its exclusivity and limited number of prints. Also, NFTs can spare creators from losses related to piracy since NFTs cannot be replicated. Finally, NFTs provide for the improved ease of transferring digital creative assets over traditional sales models since NFTs can be sold on any NFT market or peer to peer, without the need for an intermediary, rather than being restricted to the use of third-party platforms to distribute content.
While the excitement relating to NFTs is growing exponentially and on a global level, the legal treatment of NFTs continues to evolve and is unsettled. MUNG provides legal and corporate advice for compliance, set-ups and evolving issues concerning NFTs and art-tech for our clients.