Part 1: Moving Towards a New Form of Digital Ownership in Web3.0
TL;DR — With the advent of blockchain technology, we need to rethink what digital ownership means in terms of copyright, instead of attempting to shoehorn vestiges of an old copyright structure into a fundamentally new technology paradigm. In other words, “No stone bridges out of iron anymore” — Jonathan Mann @ Digitally Rare.
My professional blockchain: A tech entrepreneur since 1997, a Georgetown Law graduate in 2003 and an entertainment attorney until 2013, participant in Blockchain University in 2015, and head of a technology art studio since then, I have been analyzing (and servicing) creative works and the legal frameworks that protect them for the better part of 2 decades. Even though I can remember using a pager in 1994, that year also happens to be when I discovered the Netscape browser at my college job at the UCLA Daily Bruin newspaper. I have over 200 apps on my phone (gah!), have won cash prizes at hackathons, have been architecting payment streams on bitcoin since before SegWit and Lightning Network, and have published over 20 augmented reality apps. I’m laying out my credentials as a Gen X digital native with an above-average background in copyright and creative technology in order to give the reader some context on where the following assessment comes from.
A Mishmash of Copyright History
Bitcoin — the progenitor of all blockchain technologies — launched to little fanfare in 2009, but quite literally 100 years prior to Bitcoin, the US Copyright Act of 1909 went into effect, and it is that legislation that has driven the majority of copyright understanding and jurisprudence (until the 1976 Act that revised the structure and brought the US into international copyright cooperation). Copyright, in general, is a legal protocol around enforcement of creative property ownership, and throughout history “property” has referenced rights around exclusivity of use, exclusion of others, and usage types. So it’s no surprise that copyright property interests revolved around those same foundational principles. Patterned after real property title registries, the US Copyright Office serves as both a notary and a registry — an “official” notarized timestamp on the legal existence of copyrightable materials, and a depository for those materials to serve as proof of state of ownership at the time of registration. It is under this prior regime that “old-copyright-world” behemoths like Disney, Sony, MGM, Turner, Universal Music, Time-Warner, etc. gained their value and distributed their business models as exemplars of what monetizing a copyright means.
Blockchain Update to “Rights”
Since 2009, blockchain technologies have been steadily advancing on previously intractable problems around ownership, transfer, and use of copyrightable digital assets around the world. Blockchain technologies allow us to identify original and subsequent owners of digital files, allow for the permissionless and trustless transfer of those files, and provide economic incentives for the recognition and enforcement of these records. Fast forward to 2019, and we have now have a vibrant crypto-art market where creators can sell original digital files of their artworks (whether that is art that has been created natively via digital tools, or more traditional art that has now been transferred into the digital domain via photo or scanning) to anyone in the world and have both parties rest assured of the mutual transfer of both file and payment. You can buy or sell Cryptokitties, Cryptopunks, and Rare Pepes (not the white nationalist kind), in addition to more traditional imagery files. There are even ArtDAOs: artificial intelligence contracts that can (or will) create their own artworks, sell them online, and reinvest the proceeds into their continued server time to generate more art for sale (although, what’s the point of that, other than just flooding the art market with “output” from an unconcerned, impersonal entity — not a fan).
No More Stone Bridges
Referencing the quote from the beginning of the article, when steel became a construction material of choice, we needed to start building bridges differently than when they were built primarily from stone or concrete — but the first steel bridges were built like stone bridges, in apparent disregard for the new capabilities that steel afforded. The same is true of copyright property — blockchain technology affords new ways of tracking and compensating creators, so why are we trying to force old copyright values onto this new system? Brief answer: familiarity — not intentionality.
New Tech Brings New Property
CryptoArt is a new investable class of artwork that is registered and sold via various blockchain networks, most prominently now via the Ethereum network on marketplaces like SuperRare, KnownOrigin, Editional, MakersPlace, R.A.R.E.Art, OpenSea, and others. These marketplaces offer different kinds of smart contracts for the registration and sale of CryptoArt. Slowly, these marketplace smart contracts are beginning to recognize the underlying foundational changes to digital property rights — like SuperRare’s built in artist commission of 10% of all subsequent sales (presumably modelled after California’s Resale Royalty Act, Cal. Civ. Code 986, set at 5%)
Buying and Selling What, Now?
- With a traditional painting or sculpture, you are purchasing the atoms of the paint and canvas, manipulated by the talent of the artist — if the artist wants to recreate the painting, they have to do this manually and there will likely be some (many) changes to the fidelity of the image as put onto the canvas. There is little worry that the artist will be able to exactly reproduce the painting, making yours one-of-a-kind. The feeling of owning this physical expression from the artist is unique.
- With a photograph or lithograph, you are purchasing a (limited) edition of the imagery printed as chemical reactions on the paper of the print’s dimensions — if the photographer wants to recreate the photo, they just reprint it at the same or new dimensions. Fidelity is close to 100% between prints, so a worry may emerge that the artist may not honor the limited edition numbering. Nonetheless, owning 1 out of 100, or 1 out of 1000 prints does not feel as special as owning a unique and exclusive piece. This is amplified if the limited edition is just on a dimension basis, meaning 1000 4x6’s + 100 8x10’s + 10 20x30’s + … (and there may be many more “artist proofs” floating around). This is definitely is not a unique relationship to the piece or to the artist. But what if you purchase the artist’s negative? How do you know if it’s the only negative?
But with CryptoArt sales and purchases, one wonders exactly: what are you buying? Most of the CryptoArt marketplaces pattern their sales after the photography market — you are purchasing that edition (typically, without any dimension element), not the underlying image, and the purchase does not give you license to do anything with the image other than display it. KnownOrigin and MakersPlace are relatively unique in allowing the new owner to print out the image for his/her own personal use and display. But reuse & derivative rights, lending rights, commercial usage, and extended second-party licensing rights are universally prohibited.
Remember: digital creative works are still copyable with 100% fidelity. Just because creation and ownership records are preserved on the blockchain does not mean that the works themselves can’t be copied and/or misappropriated. Once the work is published, IT IS COPYABLE. And the proliferation of smartphones, tablets, laptops, and prosumer printers has democratized the ability to print any image imaginable. A person can simply wirelessly print an image they like from their phone to their home printer. So ownership of a digital creative work comes attached with the possibility of extraordinary dissemination or dilution.
The buyer is still left to a good-faith basis that the selling artist:
- will not exceed the edition limit,
- will not use the image in derivative works that might harm the value of the work
- will use best efforts to further monetize the work
- will use best efforts to market their own personal brand and/or the work, which is the presumed route (and sometimes the stated route offered by the marketplaces) to enhancing the value of the purchased CryptoArt
- will defend any traditional copyright infringement.
Is this the best outcome for both artist and buyer?
This traditional copyright “squarepeg” regime is one based on control — control over usage of the image and how it’s monetized. But digital art is a round hole of dis-control. Which begs the question:
Does “digital native” art deserve a different understanding of usage, control, derivative work, credit & compensation?
This was Part 1. Part 2 will be posted before I die.
