Just as video killed the radio star, so did the digital transformation kill (or at least convert) traditional media. While “going digital” became the bane of many traditional media companies that struggled to make the leap to an online world, NFTs may be the digital savior that some of these companies need. Imagine that you are a company with a known brand and sizeable catalog of media with potential historical and cultural significance. Yet, you’ve found it difficult to monetize these assets in a world that abhors paywalls and often takes an overly broad view of what constitutes “fair use.” If only there were a way to highlight the unique significance of these assets and tap into the latent collector in all of us. Anyone who follows us already knows that NFTs can serve this very function.
Indeed, companies with media portfolios are already exploring ways in which NFTs can be utilized to transform these assets and provide new ways in which to generate revenue. For example, Playboy magazine recently partnered with Nifty Gateway—an online NFT marketplace that we’ve discussed previously. Playboy has stated that the focus of its partnership with Nifty Gateway will center on three main areas: artist collaborations with Playboy’s art and photography archive; an effort to incubate and commission new artist NFT works; and the curation and sales of Playboy’s art collection in NFT form. So it appears that Playboy is seeking to use NFTs as a way of monetizing its old portfolio as well as a means for creating new digital-native assets.
As shown by the Playboy example, the move to embrace NFTs doesn’t just increase potential revenue streams, it can also potentially impact market valuation. It has been reported that Playboy’s stock is up 83 percent this month, which has been attributed to a combination of this partnership announcement and Playboy’s focus on modernizing its brand.
With stock movement like that, it would not be surprising if there is an increase in companies that are looking to move quickly and capitalize on the current excitement surrounding NFTs. However, companies considering adapting an existing catalog of media assets into NFTs, must pay attention to the potential intellectual property rights issues that may arise when moving to this form of distribution (as with distribution in connection with any potentially new medium). For example: (1) does the company own sufficient copyrights to distribute the work via an NFT platform; (2) are there any potential trademark or publicity rights that may be impacted by this manner of distribution; (3) are there any issues with how royalties will be accounted for or paid out in connection with the sale of the NFT; and (4) in regards to the purchase and transfer of the NFTs, are money transmitter regulations or securities laws triggered?
It will be interesting to see if other traditional media companies will follow Playboy’s lead and incorporate NFTs as a way of modernizing their catalogs. If so, it will be equally interesting to see how such companies will adapt and leverage NFT technology for their own particular needs.