The lack of transparency has been an unsaid norm in the entertainment industry. All an investor wants, is to know the whereabouts of the projects that they have funded and get an equitable distribution. One of the assurances that Blockchain provides is, fidelity and security of a record of data and generates trust without the need for a trusted third party while helping investors to ascertain what’s going on with money in regards to their investment and its repayment. Block chain technology has indeed revolutionised the world of investing by saving their clients’ money in high-risk ventures. While cryptocurrencies are the modern alternatives of investment, the introduction of Non-Fungible Tokens (hereinafter refereed as NFTs) has changed the ways in which creators and artists fund or sell their projects.
NFTs caught the eyes of the people early in 2012. In February 2021, the digital artist, who goes by the name Beeple became the first to sell a purely digital piece of artwork at auction, fetching more than $69.3 M whereas the founder of Twitter, Jack Dorsey, sold his very first tweet as an NFT fetching $2.9M. Between January 2021 to March 2021, the sales of NFTs rose close to 2000%. Recently, an NFT Community Arabian Camels and Swapp Protocol launched the “Antara Movie NFT,” allowing buyers to hold up to 50 percent intellectual property rights to “Antara,” a $50 million feature film based on the life of Arabian knight, Antarah Ibn Shaddad. Swapp’s NFT platform aims at allowing Arabian Camel to earn passive income on their NFTs. It shall allow the films to be funded, while simultaneously providing a substantial monetary benefit to the investors of the project.
This archetype shift of allowing buyers to hold up to 50 percent intellectual property rights will transfer the control of the industry away from traditional lenders and production studios, and into the hands of individuals or fans but the thing to be focused upon is what will happen if the purchasers breach these terms?
The early movers who are getting a lot of focus are trying to capitalise on the NFT hype, but there exists a requirement of analysing if there’s high value for the stakeholders in the future.
With the agility of decentralised financing, NFT brought forth the creative waves of opportunity in the industry but there are some debatable bones of contention regarding the NFT purchase matching the legal reality as the purchaser gets no proprietary right but only the ownership of the purchased work. The purchaser does not get its original copyright vested with the creator. To illustrate it better we shall take a look at Jack Dorsey’s tweet. Jack Dorsey, CEO of Twitter and Square, sold his first tweet as an NFT on the “Valuables” platform. Even though the buyer spent millions of dollars, he would not be able to use the tweet itself without the permission, as the copyright is still owned by Twitter and Jack Dorsey. An NFT seller can sell both the NFT and the underlying asset together, only if the creator of the original work specifically agrees to transfer those rights to the NFT owner.
With all the opportunities that NFTs dispenses, there are also many inevitable opportunities that could lead to the misuse of a business’s or an owner’s intellectual property rights in any underlying asset. A digital copy of the asset may amount to an unauthorised reproduction leading to an infringement of copyright. Whereas, the act of minting an asset may also allure communication to a new crowd of public which might not be envisaged by the copyright holder. Analysis of copyright ownership gets more vaguely complex if there are multiple copyright owners for a single work. Joint works of authorship may have an ambiguous repercussion. And if the copyright holder is a company, it must ensure that it has documented its ownership of copyrights which it will be turning into an NFT by virtue of employment agreements, independent contractor agreements or assignment agreements.
As a buyer, one must never risk anything that he is not prepared to lose. At this initial stage, NFTs raise regulatory issues due to lack of legal framework to govern them. Sellers and buyers must be aware that NFTs may be subject to compliances and other trade regulations. There is a need for the participants of the NFT market to evaluate whether they are in compliance not only with Indian law, but also the global laws. Whether the NFTs transform the film funding and art distribution industry or prove to be a catastrophe trade is something to watch out for.
