The spring of creative media is here? Interpretation of the value of NFT+DAO to IP integration
Original Author | Cuy Sheffield, Head of Visa Encryption Business
The following is the full text compilation:
We consume popular, character-centric entertainment every day. A successful collection of characters can form the basis of a franchise -- eg Odaily Wars, Marvel, Harry Potter -- that can span decades and be incorporated into successful offerings across platforms and media types middle.
But today, most successful characters exist as intellectual property owned by a single company. That said, fans don't have any management rights over these characters, let alone direct ownership. They can only become passive consumers of the products and narratives that companies decide to create.
Even when fans buy public stakes in companies to show support or ally themselves, it can be difficult to make targeted bets on the success of individual characters or franchises because many companies are large, diverse, vertically integrated businesses, Owns and operates many product lines. Shareholder votes are not and cannot be for fans and investors to choose which actor plays their favorite character in the next installment in the franchise, or to help make other such influential decisions.
Some might say that such a request sounds crazy, but the most ardent fans have already started forming online communities, events, and even posting their own fan fiction online. Rather than negating these communities, character IP holders can bring them into the creative process, and they can provide an outlet to test and scale ideas that would otherwise be difficult to manage at scale with traditional tools and techniques.
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1 open"role governance"closed loop
There is already a broader cultural shift happening inside and outside of business – just look at the rise of environmental, social and governance (ESG) investing, or activist investing, or fan communities for creators of all kinds. What these different engagement styles have in common is that stakeholders or communities seek new ways to organize and invest time and money in support of the people and causes that appeal to them.
We are facing intellectual property issues related to cultural roles.
Early in my career, while working at TrialPay, an e-commerce payments and advertising platform (acquired by Visa), I worked with some of the most successful free-to-play game developers, helping them grow and monetize their virtual economies. One game in particular provided an early case study that gave fans a sense of how"individual"Control the power of a popular character. That's Kim Kardashian: Hollywood (2014 by Glu Mobile), a simple pick-and-choose game. Players can pretend to be a Kardashian and make decisions about the avatar's outfits, fictional film shoots and appearances.
While the game became a smash hit, the game's currency -- and all the output from the myriad choices and decisions fans make -- is confined to a closed-loop world. These early game experiences demonstrate the"Role"The promise of mock governance that everyone can enjoy individually has never provided the opportunity to work with the community in more meaningful and creative ways.
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2 Economic Incentives of DAO and Tokens
Enter DAOs. These decentralized autonomous organizations bring a new mechanism for creative people around the world to form communities and new characters with real money — just as fantasy sports attract sports fans to team ownership (and potentially economic income) is the same as the underlying desire.
decentralized version of"fantasy hollywood"There is also a market -- it just hasn't been met yet.
How will the DAO achieve this goal? Simply put, a DAO is a network run by smart contracts or self-executing code on a blockchain, and if you are a member of the decentralized organization, you can make commitments to certain rights and responsibilities -- while the central figure Little or no active supervision. Anyone in the world with a mobile phone and an Internet connection can become a participant in such a network, and the network can also issue tokens to participants based on their contribution (or based on any other factor determined by the creator of the protocol).
These tokens can confer certain voting rights or governance rights, and if more and more people want to participate in the network, the value of the token may rise (not just monetary value). Due to the economic incentives of the token itself, it is in the interest of the participants that the utility of the network can be maximized, including using their"Equity"Make good collective decisions about ongoing operations.
The first iterations of successful DAOs were largely formed around financial protocols, such as having a community of token holders manage decentralized lending by suggesting and voting on specific changes to the protocol. While this structure enables new protocols in the decentralized finance or DeFi ecosystem to grow and function, most mainstream consumers do not have the financial literacy or interest necessary to weigh specific governance decisions such as collateralization rates.
However, the usefulness of the DAO concept can be broader and it can be applied to other use cases of networks of people with shared incentives and shared interests. Therefore, the next iteration of the DAO will emerge around creative communities to crowdsource ideas and coordination (aka"Creator DAO"or other similar).
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3 Build a community around the character
Today, there are at least two avenues for forming communities around characters: innovating their IP; building their digital identities, and financially benefiting from the characters' market success.
More approaches are sure to emerge over the next few years, but I'll use current examples to illustrate each model.
CryptoPunks
CryptoPunks demonstrates one approach, with developer Larva Labs bringing the artistry to 10,000 characters, each of which exists as an NFT with unique attributes. A decentralized community of collectors has formed around CryptoPunks NFTs with their own cultural behaviors and norms, such as using Punks for personal photos on social media platforms. Although CryptoPunks was originally released for free in 2017, through community guidance, the project has sold more than $680 million to date (the rarest single punk sold for more than $7 million).
Collectors aren't just passively holding Punks, though, they've also started collaborating with each other to create stories inspired by CryptoPunk character art, making their Punks"live up". The function of NFT art as digital Lego bricks, or a kind of creative stem cell - either way, provides a basis for fertile imaginations to develop in various directions and ways. For example, a group of collectors created a PUNKS comic featuring 16 Punks, complete with backstories and narrative arcs that would create full character identities for those Punks.
However, such community activity is completely independent of the original developers behind CryptoPunks. The community creates entirely new art, using only the original pPunk as inspiration, and they expand into new forms that are beyond Larva Labs' creative control and oversight. These new Punk-inspired stories could become new NFTs themselves, and community members could monetize and sell them as fan art without the need for a licensing agreement.
When it comes to fanfiction of traditional, corporate-owned characters, fan creativity may increase the value and exposure of those characters, but it doesn't allow said fans to participate in that upside.
However, with the PUNKS comics, fans already have ownership of the core CryptoPunk NFT. As such, the success of their Punk-based characters and stories has driven greater awareness and demand for a potential, original Punk - benefiting the PUNKS comic creators, original developers, and the wider Punk community.
Aku
Another way for a community to own a character is to start with a specific character with a backstory and identity that can inspire the creation of an NFT, and then involve the community of collectors in its development. An example of this is Aku, a young black astronaut character created by former major league baseball player (and self-taught artist) Micah Johnson.
Johnson overheard his nephew asking his mother if astronauts could be black. This inspired him to start painting an astronaut helmet for his nephew. Given the current lack of other such role models and narrative characters to encourage and build confidence that he can achieve this dream, Johnson created a new NFT-based character, a black boy wearing an astronaut helmet.
As I saw Johnson's work, and interacted with the community around me, I was struck by the potential for hundreds of millions of Internet users -- not private institutions -- to determine the value of a work of art, or Easily own tokens that represent it. Additionally, they can use this token to represent their membership in this community, building a digital cultural identity.
That means a lot to an artist like Johnson, and any artist who builds a community or has a following. Black culture and creative expressions across music, literature, and the visual arts have flourished and driven global mainstream culture for generations, but historically, black artists and creators have remained difficult to capture, let alone own Even part of the value they generate through this culture. Seeing a talented black artist sell NFT powers representing an inspiring black character to a predominately black collector base feels like the early stages of a new movement, a black digital renaissance, as I've written before like that.
Just a few months ago, Johnson announced that he would unravel Aku's story all at once by creating a limited-edition NFT of ten short animated video chapters, in the way Aku interacts with different people and places. Not only has the Aku NFT driven more than $2 million in sales through its first two chapters, the NFT also has a passionate community of supporters who want to see Aku succeed as a positive representation of Black children and a symbol of Black economic empowerment. Through ownership of these NFTs, early Aku collectors benefit financially from their success, which in turn can increase the demand and value of Aku digital memorabilia.
The potential for community-owned and operated character IP also has resonance with traditional media.
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4 "character skin": The Business Case for Community-Owned Role IP
In the above two approaches, whether by creating or expanding character stories, NFT is a powerful tool for artists to test the market's early performance needs for their characters. In a sense, this is an audition, or minimum viable product (MVP), preset"role market fit"Their creative vision - where early collectors of NFTs are indicators that the art style, attributes and messaging can attract a wider audience.
However, unlike traditional focus groups (which have no skin in the game), this format provides a stronger signal to artists and other collectors. If there's enough demand for the character -- enough for individuals to be willing to pay a few hundred to a few thousand dollars to collect these NFTs -- then the creator knows there's something"character skin", just like having a skin in the game.
Once NFTs can sustain a passionate community of early collectors who develop affection for the character, the challenge becomes how to grow that community, develop the character, and communicate it to a broad audience through mainstream media platforms.
In fact, I believe this model can also benefit large corporations, because under the current system, it is difficult to coordinate and execute creative collaborations between multiple roles owned by different companies that all see each other as direct competitors.
Even though the fanbases of the two characters owned by two different companies have a lot of overlap, it can be challenging, if not impossible, to organize these collaborations.
Of course, there can be crossover collaborations (as DC and Marvel occasionally do), but it's hard to do both to provide enough benefits for the companies while minimizing potential competitive issues with the products they own. NFTs and DAOs offer a path forward.
But first, what’s different about this new way of working creatively?
In talking to artists like Micah, whose decentralized story mode creates a"choose your own adventure"approach, community members can come up with many different stories or experiences for their characters. But how will this work? The community can distribute governance tokens to holders of character NFTs, which in turn can be used to vote on key creative decisions.
This kind of partnership between creators and the community is already happening and will only improve as participants explore the possibilities, both creative (including governance) and financial.
So isn't this just another version of crowdsourcing - the worst possible way to create quality character IP - and doesn't it dilute the creator's vision? No, because new cryptocurrencies natively emphasize unified network incentives that make all the difference. It actually creates a huge new model field where the creator becomes more of a community leader and becomes a decentralized community of fans.
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5 Rise of the Role DAO
Technology can achieve more here. Under the current technical conditions, the following model can be realized:
A community member drafts a brief for a short film or animated series. Token holders (obtain NFT or homogenization"social token"community members, giving equal governance weight to multiple holders) can vote to approve the brief and assign it an initial budget.
The production company can then respond to this by creating a trailer showing how they will bring the brief to life. The community reviews all submitted trailers and votes with their tokens on which one to fund.
The founding artists act as creative directors, work for token holders, help manage the solicitation process, and then work closely with the winning company to execute the collection.
The funds used by collectors to purchase the initial NFT and continue to invest can be reinvested into the community treasury, which can then be used to crowdfund additional digital content around the NFT character to increase brand awareness and develop the surrounding community.
All of the above may sound far-fetched, but it really isn't, considering artists of all types are already eagerly exploring NFTs and other new ways of engaging with fan communities. The interoperability of cryptocurrencies allows innovations and ideas to build on each other quickly.
What are the benefits of this pattern? Here are a few examples:
Faster creative iterations. By owning the character (but outsourcing the creative execution of the series, movie or video game that features it), the community has the potential to create new global franchises faster than a single company can. one"role-DAO"Multiple shows, movies, video games and merchandise (both physical and digital) can be funded as these are executed by separate teams focused on different markets rather than one content activation project concurrently. Small, modular communities enable more experimentation, and cryptocurrencies unify all incentives.
Streamlined collaboration. As multiple independent, creative DAOs emerge around different roles, there will be overlap in ownership between them. But this is not a bug, but a feature. This overlap creates opportunities for collaboration between roles across DAOs, for example, by creating digital content that incorporates both roles, enabling them to drive dissemination across diverse communities and create shared audiences (and brand ambassadors), without competition concerns.
Unified incentives across DAOs. Community members will be incentivized to support collaborations as customers and promote collaborations as brand ambassadors. Every successful media campaign converts new viewers into community members who also want to get involved and help own and manage the character they just saw in that movie they loved.
Better cultural representation. In addition to creating characters that actively represent unique cultures (such as racial and religious minorities), this mode democratizes the kinds of stories that are told. Parents with similar values can now actually collaborate, pooling creative and financial resources to create their own roles for their children that match their values, rather than trying to find existing roles.
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6 Governance issues
Of course, it’s not all fun and games — DAOs, after all, are not just an abstract cryptocurrency concept, they’re systems about people. While they create new models of human coordination around shared principles or goals, they also pose new challenges for effective governance, day-to-day execution, and scaling.
Some of these challenges include the following questions, which will require a lot of experimentation, but I share some thoughts below.
What types of decisions should a DAO be optimized around? If the community needs to vote on every little detail of a character, the experience becomes less fun, less efficient, and less engaging. However, community members may also feel that they do not have enough control and ownership if the decision to vote is set too high.
Who will manage the day-to-day administrative and community management functions? I think of DAO as a"creative committee"More effectively, vote on key high-level strategic decisions and roles while outsourcing product management and idea development to third parties through RFPs.
How will the DAO maintain quality control around IP? Franchises with major characters have strict rules around what characters can and cannot say to establish consistency, identity, and quality. Communities will need to establish their own guidelines or principles for their roles, which members can use to evaluate new proposals. Ultimately, if the community pursues many different character activations in different media forms at the same time, some of them will be more successful and experience better than others. The key here is that all of this experimentation can happen in a way that cannot be done in-house.
How will DAO convert the income generated by role IP outside the chain into financial income on the chain? Selling NFTs is an easy way to fund an on-chain treasury that can be managed by token holders. But DAOs may require third-party administrators who can provide payment and contract services under the direction of the DAO to connect off-chain (e.g., real-world) and on-chain revenue, spending, and treasury management.
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The costs and barriers to bringing a new character into the world, testing whether it resonates with a specific audience, and building various forms of media and stories around that character are dropping dramatically — and that’s thanks to crypto, as things like NFTs and New tools like DAOs emerge.
Not only will individual artists have tremendous opportunities to build communities around their work, consumers will also be able to move from passive to active participants - telling stories with the artists they support - and previously overlooked stakes are at stake. Participants such as parents, underrepresented creators/consumers, and others can also find new avenues and voices.
Thanks to Chris Lyons and Micah Johnson for the conversation that sparked these ideas. The opinions expressed are my own and do not represent those of the affiliated company (Visa).
