{"id":3020,"date":"2021-04-19T16:34:59","date_gmt":"2021-04-19T20:34:59","guid":{"rendered":"https:\/\/journals.law.harvard.edu\/jsel\/?p=3020"},"modified":"2023-07-25T11:40:34","modified_gmt":"2023-07-25T15:40:34","slug":"nba-nfl-nft-how-nonfungible-tokens-are-making-an-impact-in-arts-entertainment-and-sports","status":"publish","type":"post","link":"https:\/\/journals.law.harvard.edu\/jsel\/2021\/04\/nba-nfl-nft-how-nonfungible-tokens-are-making-an-impact-in-arts-entertainment-and-sports\/","title":{"rendered":"NBA. NFL. NFT? How Nonfungible Tokens are Making an Impact in Arts, Entertainment, and Sports"},"content":{"rendered":"

This post is one article in a two-part series on NFTs. Read along to learn more about how NFTs work and where they\u2019re leaving a mark in the arts, entertainment, and sports industries. Then, read our next installment<\/a>, which covers in more depth the legal implications of the proliferation of NFTs.<\/span><\/i><\/p>\n

Trading cards are in the midst of a renaissance. The crisp collectibles have long been ingrained in the fabric of American sports, but the trading card market is now experiencing such a notable boom that the popular sports and pop culture media and podcast network, <\/span>The Ringer<\/span><\/i>, just launched a new show, \u201c<\/span>Sports Cards Nonsense<\/span><\/a>,\u201d where the hosts advise eager listeners on what to buy, what to sell, and how the market is trending.\u00a0<\/span><\/p>\n

When I was born, I was gifted a box of Major League Baseball trading cards by a family member. The intent, of course, was not that I would start slinging cards from the crib, but that I would leave the box unopened and perhaps sell the cards as an adult, assuming the set had risen in value. Trading cards are an asset, and that\u2019s why people like collectibles–either to play the market to cash in, or for the intrinsic value of owning something of which others are envious. And of course, the better condition your collectible is in, the more valuable it is–which is why my baseball cards remain unopened, sitting in a box in my parents garage.<\/span><\/p>\n

With the increasing presence of nonfungible tokens (\u201cNFTs\u201d), however, physical deterioration may no longer be a concern to collectors of memorabilia (although there are far more important implications of the introduction of this new technology as well). This is because <\/span>NFTs<\/span><\/a> are allowing people to become the proud owners of their own digital assets, including images, artwork, videos, GIFs, and songs.\u00a0<\/span><\/p>\n

It\u2019s worth reading <\/span>more extensively about NFTs<\/span><\/a> and how they work, but we\u2019ll do our best to provide a useful summary here. Like Bitcoin and other cryptocurrencies, NFTs are a type of cryptographic token–their main difference being that they are <\/span>non<\/span><\/i>fungible, which essentially means they\u2019re not mutually interchangeable–that are used to represent ownership of a unique asset. In this way, NFTs are like a deed for an item, and because they\u2019re verified using blockchain technology, they\u2019re particularly well-suited to recording ownership. Tying an NFT to an underlying asset essentially makes that asset \u201cone-of-a-kind,\u201d which is why NFTs are being used to represent digitally scarce goods such as pieces of art and collectibles. The biggest use of NFTs today is in the digital content realm. As the <\/span>New York Times<\/span><\/i>\u2019 helpful primer explains: \u201cNFTs make digital artworks unique, and therefore sellable…Now, artists, musicians, influencers and sports franchises are using NFTs to monetize digital goods that have previously been cheap or free.\u201d<\/span><\/p>\n

Let\u2019s just say…NFTs are having a <\/span>moment<\/span><\/a>. Twitter CEO Jack Dorsey\u2019s first-ever tweet was sold as an NFT for $2.9 million. The artist known as Beeple entered the record books when a JPG he created and \u201cminted\u201d as an NFT <\/span>sold for $69.3 million<\/span><\/a>, the highest price ever paid for a piece of artwork that exists only digitally. Kings Of Leon\u2019s eighth album \u201cWhen You See Yourself\u201d became the first major rock album to be <\/span>released as an NFT<\/span><\/a>. A <\/span>New York Times<\/span><\/i> writer <\/span>auctioned off a column<\/span><\/a> as an NFT. Professional athletes are entering the fray too–including Major League Baseball pitcher <\/span>Taijuan Walker<\/span><\/a>, National Hockey League player <\/span>Matthew Tkachuk<\/span><\/a>, and National Football League superstar <\/span>Patrick Mahomes<\/span><\/a>–by auctioning off artwork that doubles as digital collectibles.\u00a0<\/span><\/p>\n

While Major League Baseball is currently <\/span>working<\/span><\/a> on getting into the game, the NBA <\/span>announced<\/span><\/a> back in July 2019 that the league would be partnering with Dapper Labs, a leading consumer blockchain company, to develop \u201ca new digital platform for basketball fans to collect, trade and own some of the greatest moments in league history on blockchain.\u201d <\/span>NBA Top Shot<\/span><\/a> is a marketplace that allows users to procure a collection of digital basketball highlights, called \u201cmoments,\u201d that range in designated rarity based on how many copies were minted. Top Shot <\/span>essentially<\/span><\/a> creates the structure and goods necessary for fans to participate in digital card collecting. As of April 19, NBA Top Shot has engaged almost 250,000 buyers in nearly $530 million in sales (see <\/span>CryptoSlam<\/span><\/a> for up-to-date transaction data), and Dapper Labs just <\/span>announced<\/span><\/a> that it received $305 million in private funding to further scale up the platform.\u00a0<\/span><\/p>\n

So what makes someone want to buy an NFT? And why would creators want to sell them? Well, foundationally, buyers covet NFTs for the same reason they pursue physical collectibles–owning an exclusive piece of prized memorabilia. As the <\/span>New York Times<\/span><\/i> columnist selling the NFT version of his article explained, \u201cThe biggest perk of all, of course, is owning a piece of history. This is the first article in the almost 170-year history of The Times to be distributed as an NFT, and if this technology proves to be as transformational as its fans predict, owning it might be tantamount to owning NBC\u2019s first TV broadcast or AOL\u2019s first email address.\u201d Of course, the special properties of an NFT also present buyers with distinct advantages. There is no possibility of wear and tear, and therefore devaluation, like there is for physical assets. And, as a secure and digital representation of ownership, an NFT effectively <\/span>exists<\/span><\/a> \u201cas a piece of memorabilia that doubles as its own certificate of authenticity.\u201d<\/span><\/p>\n

For creators and sellers, NFTs make digital assets <\/span>monetizable<\/span><\/a>. Being scarce, being an original, and being one-of-a-kind is what makes art and other collectibles valuable, but these qualities, without NFTs, don\u2019t exist online. NFTs make it possible to \u201cstamp digital goods with a cryptographic marker of authenticity and keep a permanent record of its ownership.\u201d Sure, anyone can get a JPG <\/span>copy<\/span><\/a> of Beeple\u2019s \u201cEverydays: The First 5000 Days,\u201d but there is only one <\/span>original<\/span><\/a>, which now makes the piece (and other digital items) particularly valuable and something the artist can sell. \u201cBy making it possible for artists and musicians \u2014 and, yes, journalists \u2014 to turn individual works into one-of-a-kind digital collectible items, NFTs could erode the economic dominance of social media middlemen and give more power back to the people who are producing creative and interesting things.\u201d<\/span><\/p>\n

If all this sounds too good to be true that\u2019s likely because people generally don\u2019t totally understand how these things completely work yet. There are a variety of <\/span>unresolved legal questions<\/span><\/a> implicated by this new technology. There\u2019s a <\/span>consumer protection concern<\/span><\/a> over whether buyers understand exactly what they\u2019re acquiring; there\u2019s uncertainty about whether NFTs are <\/span>securities<\/span><\/a> that would trigger government regulation; and, perhaps most saliently in the arts, entertainment, and sports context, there\u2019s <\/span>intellectual property<\/span><\/a> considerations at play. Fortunately, the legal implications seem to be most resolved in this important area.<\/span><\/p>\n

The essential <\/span>lesson<\/span><\/a> is that when \u201csomeone purchases an NFT tied to a piece of content, they have not automatically purchased the underlying intellectual property rights in such piece of content.\u201d A copyright owner retains that copyright unless and until she transfers those rights in writing. That means, absent that kind of documentation, one who purchases an NFT acquires just an implied non-exclusive license for personal use only. Congratulations! You bought Beeple\u2019s $69.3 million piece of digital art!?!?! Well, you\u2019re not allowed to display it on third-party products, websites, or other platforms! …But, you can show it off (\ud83e\udd28) in your token wallet (\ud83e\uddd0) on the blockchain (\ud83d\ude15)? Similar lessons apply to the minting of NFTs themselves that incorporate the unlicensed use of another\u2019s copyright. <\/span>Nathan Apodaca<\/span><\/a>, a skateboarder on TikTok, recently had to nix plans to monetize one of his signature videos with an NFT release when Stevie Nicks, the writer of the song Apodaca features in the clip, denied permission for use of the song. The key takeaway: \u201cSomeone who creates an NFT using someone else\u2019s work should ensure they have permission from the copyright owner.\u201d<\/span><\/p>\n

Of course, these are just background principles that can be contracted around. NBA Top Shot, for instance, has very specific terms and conditions that prohibit the commercial use of an NFT purchased on their platform. On the other hand, CryptoKitties NFTs are accompanied by a <\/span>license<\/span><\/a> that allows owners to make commercial use of the digital kitties as long as the use does not result in earnings greater than $100,000 in gross revenue per year. Meanwhile, Dapper Labs, which operates the NBA Top Shot platform, has promulgated a <\/span>model NFT License<\/span><\/a> template that sellers can use to detail the rights being licensed to NFT buyers.\u00a0<\/span><\/p>\n

Obviously, this is a fast-moving space, and much is bound to change as NFTs become more popular. If you\u2019re considering entering the market, it\u2019s worth becoming more familiar with the mechanics of the technology and the legal boundaries attendant to NFT transacting. And, if you enjoyed this blog post so much that you want to own the original as your very own, very first NFT…well, I\u2019m sorry to burst your bubble, but there is no way I understand these things enough to actually create (mint?) and sell one. Go buy an <\/span>NFT of a LeBron dunk<\/span><\/a> for $200,000 instead.<\/span><\/p>\n

 <\/p>\n

Alex Blutman is the Managing Editor of Online Content for the <\/em>Harvard Journal of Sports and Entertainment Law and a second-year student at Harvard Law School (Class of 2022).<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

This post is one article in a two-part series on NFTs. Read along to learn more about how NFTs work and where they\u2019re leaving a mark in the arts, entertainment, and sports industries. Then, read our next installment, which covers in more depth the legal implications of the proliferation of NFTs. Trading cards are in […]<\/p>\n","protected":false},"author":39,"featured_media":3021,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[31],"tags":[36,15,93,65,110,14,44],"ppma_author":[382],"class_list":["post-3020","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-highlight","tag-copyright","tag-entertainment-2","tag-intellectual-property","tag-internet","tag-licensing","tag-sports-2","tag-trademark"],"jetpack_featured_media_url":"https:\/\/journals.law.harvard.edu\/jsel\/wp-content\/uploads\/sites\/78\/2021\/04\/blockchain.jpeg","jetpack_shortlink":"https:\/\/wp.me\/peZjrR-MI","jetpack_sharing_enabled":true,"authors":[{"term_id":382,"user_id":39,"is_guest":0,"slug":"jsel","display_name":"JSEL","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/4abb87a025d5a7951a4b4249facf4d22ea8002b216770229a96689038d0f83bc?s=96&d=mm&r=g","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/journals.law.harvard.edu\/jsel\/wp-json\/wp\/v2\/posts\/3020","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/journals.law.harvard.edu\/jsel\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.harvard.edu\/jsel\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/jsel\/wp-json\/wp\/v2\/users\/39"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/jsel\/wp-json\/wp\/v2\/comments?post=3020"}],"version-history":[{"count":0,"href":"https:\/\/journals.law.harvard.edu\/jsel\/wp-json\/wp\/v2\/posts\/3020\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/jsel\/wp-json\/wp\/v2\/media\/3021"}],"wp:attachment":[{"href":"https:\/\/journals.law.harvard.edu\/jsel\/wp-json\/wp\/v2\/media?parent=3020"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/jsel\/wp-json\/wp\/v2\/categories?post=3020"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/jsel\/wp-json\/wp\/v2\/tags?post=3020"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/jsel\/wp-json\/wp\/v2\/ppma_author?post=3020"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}