NFTs excite Hollywood, but not because they can solve piracy * TorrentFreak

The fleeting non-fungible token (NFT) craze showed that some people are willing to pay huge amounts of money for digital assets that are not guaranteed to retain their value.

These digital records are stored on a blockchain and allow buyers to prove that they are the legitimate “owner” of an underlying asset or right.

While NFTs do not confer copyright, NFT owners are “rights holders” in a sense, although the specifics may vary from project to project based on the fine print.

Business and public interest

In recent months, interest in NFTs has waned, with some early adopters finding themselves heavily in the red thanks to their purchases. While some of these NFTs are bound to become irrelevant, the underlying technology has a lot of potential.

Many of the largest companies in the world recognized the opportunities and embraced NFTs. Big brands such as Coca-Cola, Disney, Nike and Ubisoft, for example, were quick to jump on the bandwagon.

The interest is largely driven by the potential income the technology can deliver in the future. At the same time, however, there are also challenges; the copyright implications are not always clear, and “pirated” NFTs will almost certainly complicate matters.

The US government takes these issues seriously. Late last year, the Patent and Trademark Office and the Copyright Office launched a joint consultation to take stock of potential legal and policy issues related to NFTs.

MPA shares its NFT views

Dozens of companies and organizations have responded to the call with detailed opinions. They include the Motion Picture Association (MPA), which represents Netflix and the major Hollywood studios.

In the past, large rights holders have fiercely resisted new technologies. When it comes to NFTs, MPA and its members see an exciting business opportunity.

“NFTs represent an exciting business opportunity for MPA’s members to market their core products – film and television programs – in new ways, expand their product offerings and connect with audiences on a deeper level,” MPA writes.

Potential copyright issues are always a concern, but the Hollywood group believes current laws are capable of handling all NFT-related challenges.

“While NFTs are still in their infancy and it is difficult to predict future market developments and potential uses of this new technology, MPA currently believes that existing intellectual property rights may address issues if and when they arise.”

Blockchain technology is already widely used in the film industry with official NFT releases for prominent titles including The Matrix, Star Trek, Star Wars, Jurassic Park, Lord of the Rings, Ghostbusters, Back to the Future, Stranger Things and even Powerpuff Girls.

Some of the same brands have also been exploited by third parties creating unauthorized NFTs. Although a problem, MPA believes that US law, including the DMCA’s takedown provision, is well equipped to deal with copyright and trademark issues as they arise.

Authentication and piracy

MPA’s submission shows that it has made a significant effort to understand the NFT ecosystem and its potential. In addition to being “collectible”, NFTs can also be used as proof of ownership or access.

The MPA says that streaming services can use NFTs as an authentication alternative, for example by replacing the traditional username and password.

“NFTs may have a limited role in the context of streaming content access controls. Specifically, if the user’s license was contained in an NFT, the streaming service may implement a system to ensure that the NFT is in the user’s crypto wallet before the stream starts,” the MPA notes.

There are also projects envisioning the use of NFTs to combat piracy and counterfeiting, including an official EU initiative. However, the MPA does not see blockchain authentication technology as a potential anti-piracy tool.

– This system has been used to a very limited extent so far. Beyond that, there is no reason to believe that NFTs can currently solve the overall problem of online piracy,” MPA writes.

The same applies to the content to which an NFT can give access. Pirates can still copy the content and share it elsewhere, NFTs cannot prevent that.

“While the NFT may be completely certain of the blockchain, this fact does nothing to increase the security of copies of the underlying work or prevent the unauthorized exercise of any of the §106 rights. The NFT simply creates a chain of purported ownership of the relevant the copy.”

MPA has a positive effect on the potential of NFTs. Hollywood does not believe the technology will stop piracy or revolutionize copyright management, but recognizes the commercial potential.

The RIAA sees opportunities and threats

This general sentiment is shared by other licensee groups, including the RIAA. In a joint submission with A2IM, the Screen Actors Guild and SAG-AFTRA, the music industry’s trade association sees endless commercial opportunities. However, piracy remains a concern.

Coming from the RIAA, it’s hardly a surprise. The recording industry group has already sent DMCA takedowns and cease and desist letters targeting unauthorized music-inspired NFT projects.

“While NFTs and online interactive environments provide endless and unprecedented opportunities for rights holders to exploit their works and engage with consumers, they also present new and emerging ways in which works, and digital music works in particular, can be infringed and pirated,” notes RIAA.

Like the MPA, the RIAA and partners do not see NFTs as a substitute for current copyright registration or management options. At least not at this stage.

“Further claims that NFT and metaverse technology will solve problems of digital transparency and accountability are exaggerated and premature, if not outright false,” the RIAA writes.

“The current technology in the NFT and metaverse space, while innovative and promising, is simply not where it needs to be to ensure that rights holders can consistently and effectively manage and enforce their copyright.”

Finally, both the MPA and RIAA emphasize that NFT platforms must properly educate consumers about what they are actually buying. Right now it is often uncertain which rights are linked to an NFT and how these rights can be utilised. Falling prices aside, unmet expectations can lead to disappointment for buyers down the road.

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A copy of MPA’s submission for the ‘Study on Non-Fungible Tokens and Related Intellectual Property Law’ is available here (pdf) and the submission by RIAA and consorts can be found here (pdf)