Home Knowledge NFT makers are trying to build the next Disney

NFT makers are trying to build the next Disney

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There’s a long way to go

In the online auction market OpenSea, you can pay around $600 to buy a portrait of a robot in streetwear — and, if you’re lucky, a stake in a new media empire.

The robot is called a TARS, and it’s part of the Voguverse, an elaborate 37th-century mythos involving space arcologies, a nuclear war, and interstellar travel. The portrait is one of countless digital assets being sold as non-fungible tokens, or NFTs. But by pairing its fictional universe with a blockchain-based ledger, the creators think they can tap into a new way to tell stories.

As NFTs explode in popularity, entrepreneurs are imagining an entire media industry that’s built around them. At its most ambitious, the vision is sometimes dubbed a “decentralized Disney”: a world of fictional crossovers like the Marvel Cinematic Universe and its many spinoffs but where different characters and creative properties are owned by a panoply of fans, not a single company. Talent agencies, comics authors, and countless NFT enthusiasts are buying in.

Over the past couple of years, NFTs — essentially certificates of ownership inscribed on a cryptocurrency blockchain — have exploded into a lucrative and growing market. Some of the most sought-after NFTs are collectibles: typically limited edition runs of unique, automatically generated avatars or other items. The most popular tokens can sell for millions of dollars in sales that are more like an art auction than a bitcoin trade.

NFTs have made the biggest waves in the fine art world, and some NFT collectibles series are united by an aesthetic rather than a concrete narrative. CryptoPunks, the best-known example, are a set of 10,000 mostly human pixelated portraits. But many are based in some kind of fictional setting. At its simplest, this might look like the city of “Arctopolis,” where Chill City NFT penguins live and work. At its most complex, it might involve something like the Voguverse.

The Voguverse lore is laid out on a web page explaining the backstory of the TARS, a name that stands for “Tether Assisted Robotic Skeleton.” In the far future, Earth is uninhabitable, and humans live in space-bound “hives” ruled by a galactic government and mega-corporations that deal in cryptocurrency. (A lot of NFT lore involves crypto fans getting rich.) People use TARS telepresence bots to revisit their home planet, buying models that reflect their personalities and jobs.

Vogu founder Andrew Trackzy sees TARS as a potential building block for the next big media intellectual property, or IP. “Our goals for Vogu and this IP is to grow it to a large-scale worldwide IP, just like Star Wars, just like Pokémon,” he tells The Verge. Even if Vogu doesn’t hit this bar, he thinks some other project will. “I do believe that — whether it’s us or another project that comes before or after us — that someone in the NFT space will create the next big worldwide IP.”

He’s not alone. Some NFT series involve formal media tie-ins, like Stoner Cats, a collectible that’s funding an animated series featuring Mila Kunis and Seth MacFarlane. Other creators have struck open-ended deals to leverage their fame: CryptoPunks creator Larva Labs signed to Hollywood talent agency UTA in August, and the Bored Ape Yacht Club is represented by U2 and Madonna manager Guy Oseary. Trackzy says Vogu is currently talking with several potential media partners and working on a webtoon set in the Voguverse.

Trackzy’s plan mimics the strategy of building powerhouse media franchises from toy lines like GI Joe and Transformers. NFTs have some crucial differences from action figures, however, beyond being harder for kids to play with. For one thing, many buyers are seeking a fast-growing investment rather than an art piece or a toy.“Most people probably aren’t calling up Thundercats and being like, dude, Lion-O did not have the screen time in the last episode that I needed”

“With an action figure, most people probably aren’t calling up Thundercats and being like, dude, Lion-O did not have the screen time in the last episode that I needed,” says Trackzy, referencing the 1980s TV series. “As a project, you’re constantly under pressure from your community to increase the value of that collectible.”

Because each NFT avatar is unique, buyers can also forge a connection with a genuinely (if only slightly) one-of-a-kind character. Some NFT buyers make fan art of their purchases, while others spin entire independent stories around them like Jenkins the Valet, a character built around a Bored Ape Yacht Club NFT. If one of these stories blows up, it can raise the profile of the entire lineup. The buyers can sell their NFT if they want to move on to another project, and unlike an action figure, the person who minted the NFT can collect a royalty every time a collectible changes hands.

To NFT proponents like investor Drew Austin — who’s working on his own community NFT narrative project — that mix marks the birth of a new media model. “We are putting the foundation in place so that people can use their imagination and create stories and content and experiences with their own characters that they own through this because it’s an NFT,” says Austin. “The ability to be able to leverage the community, to be able to expand on IP and to create a universe, I think, is a really exciting concept.”

The dream might sound intuitive in the world of modern media franchises, where giant games and blockbuster movies are shaped by convoluted licensing deals for beloved figures like Spider-Man. Instead of rooting for a giant corporate merger that might let the X-Men hang out with the Avengers, fans could directly collaborate to have their favorite characters share the same fictional world.

For believers, NFTs and entertainment IP rights seem like a perfect match — an emerging market with overwhelming possibilities and hype paired with a billion-dollar industry in dire need of disruption.

But owning a fictional character and owning an NFT mean very different things, and the two forms of ownership don’t neatly overlap. It’s an often overlooked but incredibly important distinction that much of the NFT world is still grappling with.

To explain why, we have to dig into how NFTs and intellectual property work. NFTs are, at an incredibly oversimplified level, entries on a database called a blockchain. These entries represent (or sometimes directly encode) a file or even a physical object, and an entry is linked with a specific cryptocurrency wallet. “Owning” an NFT means having its entry associated with a digital wallet you control.NFTs don’t confer any specific, universal set of legal rights

“Owning” a media property, by contrast, typically means that you hold the copyrights and trademarks associated with it. A copyright — again, at an incredibly simplified level — is an exclusive, automatically granted legal right to sell copies of a creative work or produce other media based on it. A trademark stops other people from selling commercial goods with a name or mark that you’ve registered with an agency like the US Patent and Trademark Office.

NFTs don’t confer a specific set of legal rights. If anything, part of their appeal is supposed to be that you don’t need a government involved in enforcing their ownership. By contrast, copyright and trademark are complex legal frameworks enforced by individual countries and international bodies.

Some NFT collectibles, like a new lineup sold by Disney, basically operate at the level of trading cards and confer no rights to the underlying art. But other NFT sellers do try to outline some kind of intellectual property framework. They draw up terms of service, laying out which legal rights they’re allowing buyers to exercise. Owning the NFT (in the “having a wallet linked to its entry” sense) signals that both parties have agreed to this contract. If one side breaks it, the two parties could go to court, the same way you could sue over any broken contract.

But these contracts vary widely. Holding a Chill City penguin NFT allows you to print non-commercial “one-off units” of T-shirts or other items depicting the penguin. A Bored Ape Yacht Club agreement lets you sell merchandise or derivative works depicting your ape, although you can only use the phrase “Bored Ape” to reference the NFT number. CryptoKitties uses the NFT License, an attempt at a standardized NFT intellectual property framework. Cool Cats offers a single sentence saying users are “free to do anything” with their digital cats.

Even a fairly generous NFT deal isn’t the equivalent of Disney owning the Avengers, as you’ll see if you look at lore-heavy collectibles like Vogu’s TARS. Vogu’s terms of service give TARS owners an exclusive copyright license to an image of a robot with the NFT’s specific combination of features. If Vogu wants to depict that exact robot in its media, the contractual deal it struck with the current owner says it needs to either get their permission or buy it back from them. The company apparently spent $16,000 reacquiring one besuited robot to use it as a fictitious in-universe CEO.

But buying the NFT doesn’t give you any intellectual property rights to the underlying details of the Voguverse, like the backstory of the robots or the term “TARS.” If you wanted to make a cartoon starring your TARS without Vogu’s active approval, you’d have to invent a whole new sci-fi world complete with new names for everything — as Trackzy puts it, Robot Dude In A Kimono is acceptable,but Vogu Kimono Guy is not.“When you look at a CryptoPunk, it sort of served as inspiration to us”

NFT creators can also bypass buyers by designing a non-minted media character in the style of their collectibles. If Vogu had really wanted to avoid paying for a CEO that looked like a specific TARS, it could have made a nearly identical robot but added an extra accessory. For future projects, the Vogu Collective plans to hold virtual casting calls for cameo roles, but its major characters won’t be drawn from the TARS NFT lineup. Other creators take similar tacks: Stoner Cats isn’t selling NFTs of its main characters, for example — it’s offering collectibles recombining their attributes.

“We wanted artists in the space to be able to exercise their creativity and use what they purchase. That’s part of the value of owning these assets,” says Trackzy. “At the end of the day, it’s a business decision that we had to make, to make sure that the community was happy with the rights that we gave them. But we also have to make sure that when I go and sit down with Universal Studios, they’re comfortable that they can make a movie.”

Many NFT sellers still want people to play in their sandboxes. Unlike Disney, a company notorious for ruthless copyright crackdowns, plenty of them welcome fan works, including for-profit add-on NFT series. But that’s not unusual for small creative projects of any stripe, and a lot of collaborations involve handshake approval or one-off licensing deals, not an automatic blockchain contract.

The team behind Jenkins the Valet says they’ve been collaborating with BAYC since the beginning of the project. “Our teams are working together to make sure that everyone is protected, and we will continue to exercise due care to make sure that their IP is expressed in a positive way that does not contradict what they are building,” they wrote in an email. (That said, they won’t be using the Bored Ape branding in their work.)“We wanted artists in the space to be able to exercise their creativity and use what they purchase. That’s part of the value of owning these assets”

The Vogu Collective also grants licensing permissions on a case-by-case basis, including to people who don’t own its NFT. One TARS-less fan is currently building a Voguverse-themed tabletop role-playing game based on the freely available Dungeons & Dragons ruleset, thanks to an informal agreement that gives Vogu final approval rights.

Some people are making NFT-based art without this kind of top-down approval, but they’re treading carefully around thorny ownership issues. Punks comic — one of multiple comics and at least one band involving team-ups between different NFT avatars — is based on portraits from the CryptoPunks lineup. While Pixel Vault members own the avatars in question, Pixel Vault founder Sean Gearin says they haven’t been able to contact CryptoPunks creator Larva Labs for approval. Instead, the company enlisted three teams of lawyers to create a “100 percent unique” intellectual property inspired by the collectibles.

Punk #8146 of CryptoPunks, for instance, is a tiny and nameless figure with a barely visible cigarette and a propeller beanie. Punks protagonist Beanie has the same hat and cigarette, but he’s got a backstory as a former busboy who becomes a digital art kingpin, and he’s drawn in a far more detailed comic-book style. “When you look at a CryptoPunk, it sort of served as inspiration to us, but when you look at the comic itself, it bears no resemblance really to the original art of Larva Labs,” says Gearin.

Pixel Vault’s process resembles a fandom strategy called filing off the serial numbers, where authors change names and world details to make original stories out of fanfiction. This also happens in traditional comics: Doom Patrol’s Willoughby Kipling was created as a direct stand-in for Hellblazer’s John Constantine, and Marvel’s Wade Wilson (aka Deadpool) began as a near-clone of DC’s Slade Wilson (aka Deathstroke.)

NFTs play an important social role here. If Pixel Vault didn’t own the individual CryptoPunks it’s drawing inspiration from, Punks would probably draw community censure and pressure from Larva Labs. But the blockchain isn’t replacing long-standing legal maneuvers — or changing the fact that you don’t need a license to get inspired by a work of art.

Punks is only a jumping-off point for Pixel Vault, which is trying its own ambitious approach to NFT storytelling. That’s the Metahero Universe: a nascent franchise built by a core creative team but run partly by fans.

Metahero started with a series of generative NFT avatars representing heroes and villains. Pixel Vault wants it to include a series of comic books and a big-budget massively multiplayer game. To manage this, it’s founded a series of planet-themed decentralized autonomous organizations, or DAOs.

DAOs are essentially groups of token holders who pool their resources and vote on decisions, similar to shareholders at a company. This system offers broad decentralized decision-making rather than ownership of a specific character. It could also add complications to the already difficult process of designing a video game.

Building a Metahero game could be tough under any circumstances. When I spoke to Pixel Vault, the company had a 17-person staff whose background mostly wasn’t in game design. (It’s apparently considering partnering with a larger studio.) With the DAO structure, NFT holders are supposed to pick the game’s genre — like a battle royale title or a more traditional MMO — and then vote on numerous decisions throughout development, to the point of firing an entire creative team. It’s an intriguing experiment, but it also sounds a bit like running a Kickstarter campaign for a piece of video game concept art and promising to let backers run the studio.“I think self-preservation will ultimately rule the day”

If a game is open to non-DAO members, as Gearin says the Metahero MMO will be, the structure also seems to encourage a fandom crypto-aristocracy. Pixel Vault wants to balance the experience so players without an expensive NFT could join and have fun, even if more money offers visual flair or special abilities. But in theory, DAO holders could simply order the developer to let them steamroll every other player in the game.

Gearin thinks DAO members will avoid this because they’re invested in the overall long-term health of the game. “I think self-preservation will ultimately rule the day. So even if initially, they like the idea of ‘We want to be able to pay to win,’ ultimately that’s going to stunt the growth of the game, right?” he says. “The community can ultimately decide what they will, and it will be somewhat unpredictable. But at the end of the day, people typically act in what they believe their own best interest is.”

In case they don’t, Pixel Vault has an escape hatch: it controls 45 percent of the voting power in any decision. The planetary DAOs control another 45 percent, and 10 percent is tied up in a “founders DAO” that’s not associated with Pixel Vault but composed of early adopters who support its vision. “It’s kind of like the little security to help ensure that the best decision gets made if we indeed have the best decision,” Gearin says. But at least, in theory, all the DAOs could unite against their creator — taking the universe in any direction they want.

While Metahero is an organized attempt to create a decentralized media franchise, some NFT creators are taking the opposite tack: starting with a tantalizingly skeletal collectible, then encouraging NFT owners to build a fan-made world around it.

The best example of this is Loot, created by Vine co-founder Dom Hofmann. Loot bags are procedurally generated lists with a Dungeons & Dragons-like fantasy flavor: Loot Bag #980’s contents include “Crown” and “Demon Husk;” #2073 includes “Shoes,” “Necklace,” and “‘Rune Root’ Quarterstaff of Giants.”

Since launching in August, the text-based Loot bags have inspired a dedicated fandom. Buyers made art depicting their bag’s contents and formed guilds with people who own the same item, while other creators designed independent NFTs that pair with the bags. If you own a Loot Bag, you can do things like generate a custom Loot Character, a pixelated avatar wearing or holding items from the bag. The Loot Character is then minted as an NFT that’s permanently linked with the bag.“As soon as you make it formal, it starts to feel much more like you’re engaging with a corporation”

A Loot Character team member who goes by Moniker says the group talks regularly with the core Loot team. But the whole enterprise is deliberately informal. There’s no hard answer to who holds the rights to Loot Characters’ art or even the name of the project since it’s derivative of the original Loot NFT lineup. “It’s sort of a bit of a handshake at this point,” Moniker says. “As soon as you make it formal, it starts to feel much more like you’re engaging with a corporation than you are a bunch of folks that are just really excited about a project.”

Some other projects have followed Loot’s formula, like Adventure Cards, which generates the names of cards for a nonexistent Magic: The Gathering-style game. Adventure Cards has inspired its own community-built augmentations, including a simple but playable digital game. “I want people to feel like they can own the cards and be inspired by the cards, as long as everyone is explicit about what their contribution is,” says Adventure Cards creator Paul McKellar, previously a member of Square’s founding team. “I’d like to do whatever, honestly, lets people do as much as possible.”

But NFT creators’ commitment to openness generally hasn’t extended to a formal system for sharing ownership of the world, at least not yet. “I think that it’s really yet to be determined what the best ways of leading the communities are,” McKellar says. One possibility is a DAO composed of people who have contributed to the Adventure Cards universe. If a company wanted to adapt the series for film or TV, they’d work with the DAO to sign a deal, and DAO members could split the profits.“It’s really yet to be determined what the best ways of leading the communities are”

That’s a starkly different model from some older web art. The SCP Foundation, for instance, is a wiki composed of thousands of fictitious paranormal incident reports written by a plethora of authors. The entries are licensed under Creative Commons, an alternative copyright model that lets anybody remix or build on a work. The Creative Commons system requires that all the original stories and any adaptations must be distributed freely, and the wiki itself warns creators that they won’t be getting rich. That guaranteed legal safety, however, has turned SCP into a far bigger decentralized media universe than any NFT project. On top of its reports’ collaborative interlocking narrative, it serves as the source material for spinoff novels, video games, and short films.

To some fandom veterans, NFT projects’ murky ownership questions mean collaborative blockchain storytelling doesn’t look like a revolutionary new medium, just the latest attempt to monetize fan labor. In late October, six young adult fiction authors spurred a community backlash with a project called Realms of Ruin: a fantasy world where the authors would compose origin stories and fans would write tie-ins that they could mint as NFTs. It wasn’t clear who would control the copyright to these tie-in stories, and potential participants worried they were giving up legal ownership in exchange for blockchain tokens. The creators, apparently surprised by the negative response, shut down the project within hours.

It’sIt’s not clear that NFTs make it easier to craft new art from old art, nor that they would help settle common copyright conflicts. Countless copyright cases revolve around fair use, a situation where proving ownership is beside the point. Other cases, like Disney’s long feud with Marvel comics veterans, hinge on the precise terms of a contract. A blockchain could help prevent works from being “orphaned,” or dropped into a limbo where the rightsholder can’t be found, except that cryptocurrency owners lose or forget keys all the time and many transactions are anonymous.

Meanwhile, trying to use NFTs as a proxy for copyright raises its own concerns. If you do something like buy a superhero avatar, write a comic book about the hero, and sell the underlying avatar, there’s no clear norm about whether the new buyer should expect the rights to your comic. If Netflix wants to make a TV series about that comic, it’s even less clear how many people it would need to sign a deal with.

And ultimately, while NFT owners might love their digital characters, companies still own the names and stories that give them meaning. “Are these individually owned NFTs going to hit Main Street? If you can’t use the Bored Ape Yacht Club name — you’re just a cool picture of a monkey. If you can’t use the Vogu name — you are just a cool picture of a robot,” says Trackzy. “We still have a long way, I think, for that.”



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