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The Alpha:
- Truth Labs, the company behind popular NFT collections Goblintown, The Illuminati, and more, has announced the closure of two NFT licensing deals with holders from The 187 collection, according to information shared exclusively with nft now.
- The holders, King Kong and Ding Ding, are the first two Truth Labs community members to be a part of such collaborative IP licensing deals, which the company announced it was beginning to build out in August 2022. King King will earn a portion of royalty revenue from Goblintown sales, while Ding Ding will receive part of the revenue from the sale of physical goods based on their NFT characters’ IP.
- The collaborative NFT licenses will give token holders exclusive, separately negotiated rights that aim to bypass the downfalls of a CC0 license, which is sometimes viewed as diluting the value of owning an NFT in the first place.
Dive deeper
The question of how to reward NFT community members and whether or not to give them control over their NFT’s IP are long-standing conundrums that every Web3 project faces — and there are plenty of different approaches to the issue.
After gatekeeping the IP of the NFTs under its banner for months, Proof Collective suddenly switched its Moonbirds collection to a CC0 license last August, causing a ruckus amongst holders, some of whom felt the decision was a kind of centralized bait-and-switch as it happened long after people had originally bought the NFTs. Yuga Labs likewise gave CryptoPunks holders free rein to utilize their NFT’s IP as they saw fit in the same month.
CC0 licenses are essentially means of making an IP public domain, meaning anyone can use the IP for any purpose, even commercial ones. While granting holders use of this kind of license frees holders in important ways, it also allows anyone in the world to utilize that same IP, which some Web3 commentators say defeats the purpose of owning a unique piece of digital art, to begin with.
“Yuga [Labs] licenses are really just like a CC0 license, but don’t have a ‘can’t be evil’ part built into them,” Truth Labs Co-Founder Alexander Taub said while speaking to nft now about the importance of handling IP rights properly. “If Yuga gets acquired by Mark Zuckerberg and he wants to change the licensing, he could revoke it. If you make it CC0, you cannot take it back. But then, anyone can do whatever they want with your NFT. So, then what’s the value in owning the NFT?”
Truth Labs is taking something of a middle way here, avoiding the ire of the SEC by crafting individual contracts for each holder of the NFTs in The 187 collection. While promising holders of a 10,000 PFP collection a portion of the royalties would firmly establish those NFTs as securities subject to regulation, individually negotiated contracts do not.
The 187 licensing deals
The two deals that Truth Labs have struck with holders King Kong and Ding Ding are accordingly unique in nature. King Kong is now an official partner of the Goblintown collection and will earn one percent of royalties from both past and future sales, meaning he is guaranteed a 40-50 ETH payout per the retroactive terms of the deal.
Ding Ding’s deal revolves around IRL merchandise, which will feature the production of the beanie and sunglasses of her NFT, The Waldragon. Taub described Ding Ding as an “equal partner” in the revenue from the merch drop. Truth Labs aims to continue building out unique licensing contracts for holders of The 187 and currently has a third deal in the works with The 187 NFT character Fig Bonner. The company’s goal is to build up the narrative arc of all the characters under The 187 banner into a serious storytelling force.
Diving into collaborative NFT licensing is almost a predictably bold move from Truth Labs, which has a reputation for irreverence and has never strayed from controversy. In September 2022, the company launched its own NFT marketplace in the name of protecting royalties and having more control over how the NFTs in its collection are traded.
In April of this year, Truth Labs caused another stir in the Web3 community by temporarily changing the metadata of Goblintown, The Illuminati, Grumpls, and The 187 NFTs. Replacing holders’ usual NFT image was a giant animated hand giving the middle finger with a manifesto of sorts written above: “Fuck royalties. Fuck supporting building and creatives. Flipping is the heart of what makes Web3 special. Honor the flipper, fuck the community. Long live the slow rug.”
Truth Labs upgraded the collection’s smart contracts and claimed the move was an effort to future-proof its collections from traders who had no interest in paying royalties (creator fees). However, some Web3 observers felt the decision was too centralized and that the community should have been consulted beforehand.
Leveraging IP for long-term NFT growth
Many Web3 enthusiasts have been increasingly pondering the value and utility of owning an NFT (even of well-known projects) as the market continues to falter and trading volumes continue to slide in recent months. That question remains largely unanswered by a significant group of NFT community builders. It represents one of the space’s biggest obstacles to being seen as legitimate by mainstream audiences or sustainable even by those within Web3’s walls.
One of the more promising approaches to addressing this issue has indeed been leveraging the IP of NFT projects that have made a name for themselves. Pudgy Penguins has navigated this space particularly well, having built up a successful, feel-good brand image on Instagram using the project’s artwork without once mentioning NFTs. That visibility, combined with the financial success of the NFTs under the Pudgy banner within Web3, has led to the team striking licensing deals for physical toys and even children’s books with members of its community, who will earn a portion of sales revenue.
Truth Labs appears to be aiming for a similar trajectory. Leveraging Web3 IP could be one of the best methods of weathering the seemingly never-ending crypto winter that the space continues to reel from.
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By: Eric James Beyer
nftnow.com
