The Euterpe IP-NFT Vickrey Auction was a huge success! The IP-NFT Mystery Box is already sold out!

“What should be owned in the Metaverse, and how? This is a philosophical question.”

In January, before Spice DAO plunked down $2.7 million on a rare copy of Alejandro Jodorowsky’s production book for Dune at Christie’s, the group tweeted its intention to “tokenize” the book. This is a typical common IP misunderstanding related to NFTs – the purchase of a physical book does not necessarily equal the transfer of the book’s copyright. Therefore, Spice DAO has no right to reproduce as they do not own the copyright.

Issuing NFTs raises many issues related to intellectual property rights, such as:

• Who has the right to create and issue NFTs?
• Does the NFT violate the rights of third parties?
• Which rights are transferred and resold?
• How is this transfer of rights carried out?

Although there is no intention to create and distribute NFTs, brands and copyright owners must be vigilant to protect their IPs in the metaverse and web3 industries.

Euterpe – IP-NFT as a service

Euterpe is the world’s first IP-powered NFT as a service. It is a marketplace where musicians, filmmakers and other creators can offer high-quality IP-NFTs of their works to fans. The concept of “IP-NFT” was first described by Euterpe. For the Euterpe team, the true value of an NFT depends on what it is anchored to.

Through IP-NFT,

• Copyright owners may receive long-standing copyright fees;
• Copyright investors can invest in IP-NFTs by participating in auctions and secondary market transactions to obtain transaction revenues and royalties;
• Fans can support their favorite artists and works, earn tokens and earn rewards by playing, promoting, voting, etc.

Euterpe’s whitepaper is the first blockchain whitepaper in the world published by an SSCI law journal and awarded the top prize by the International Machine Lawyering Conference 2021.

Euterpe has built a team primarily made up of Stanford graduates, including several Stanford alumni from the Law School, Scientific Computing and Business School. Members served as a fellow at the Stanford Center of Internet and Society, director of the Intellectual Property and Technology Law Program at the University of San Francisco, counsel for the International Phonographic Association and the American Motion Picture Association and other leading blockchain innovators and IP experts from Google, Tencent Music, ByteDance, Sony Music, Alibaba Entertainment and Warner Bros. The core team members have more than ten years of experience in copyright, law, finance and data fields. Euterpe has also established partnerships with several players in the industry, such as Stanford Codex: Stanford Legal Informatics Center and HKFAEx: Hong Kong Financial Assets Exchange Group. In terms of funding, Euterpe’s seed round of funding was led by Fenbushi Capital.

Vickrey Auction

After several product iterations and copyright negotiations, Euterpe launched its first IP-NFT auction on December 27, 2022. The auction adopted the Vickrey auction mode. This mechanism was developed by two Stanford business school professors (Paul R. Milgrom and Robert B. Wilson), who are Nobel laureates. Bidders submit written bids without knowing the bids of the other people in the auction. The highest bidder wins, but the price to be paid is the second highest bid. This new model gives bidders an incentive to bid their true value.

This auction method has several advantages for IP-NFT buyers:

• The winning bidder pays the next highest bid instead of the highest bid;
• The IP-NFT copyright owner receives its real value and bid value;
• Bidders will be self-motivated and willing to bid the highest price;
• The winning bidder may receive the balance between the highest price and the second highest price.

For example, during the auction, a bidder bids 0.05 ETH for “Hello” to Shan Yichun. When a bidder bids, he won’t bid more than 0.05 ETH because he thinks the NFT’s highest value is that much. But on the other hand, the bidder also doesn’t want to bid less than 0.05 ETH, because he might think that if he bids less than that, he might lose the bid. Thus, we find that in Vickery auctions, buyers are willing to bid on the item that reflects the actual value of the song, and buyers have stronger incentives to bid at a higher price to win the bid (even if he wins the bid, he avoid paying the bid price).

Suppose there are four bidders participating in the bidding process for Zhou Shen’s “Together” in the Euterpe auction. Bidder A bids 0.03 ETH, Bidder B 0.055 ETH, Bidder C 0.035 ETH and Bidder D 0.045 ETH. Bidder B has placed the highest bid and will win the auction bid. In the Vickrey auction, even if Bidder B wins the auction with a bid of 0.055 ETH, he will only pay the second highest bid, which is 0.045 ETH. In this way, he would finally get a profit of 0.01ETH. Therefore, in a Vickrey auction, each bidder can bid with confidence as he will always pay less than his bid, and thus the next highest bid.

The first application of Vickrey Auction in Web3

The Vickrey auction at Euterpe, which started on 27 December, was a great success. 213 IP NFTs (3 copyright songs, 71 NFTs for each song) were auctioned at the same time and all sold out. With the auction reserve price of 0.01 ETH, the total bid price reached 11.4 ETH and the total purchase amount reached 5.68 ETH. The highest purchase price for a single NFT reached 0.03 ETH, which was 3 times the reserve price.

3 copyrighted songs that were auctioned were:

• “Stay Together” by Zhou Shen
• “Hello” by Shan Yichun
• “Dance Underwater” (feat. TITIAN) by Pet Conspiracy

All successful bidders can collect their items and shop on the Euterpe website at 18:00 8 January 2023 (UTC+8). One of the major buyers who participated in the bidding shared his experience in the community. When asked why he bought more than 10% of the auctioned items, he mentioned his childhood idol – The Beatles. “Yesterday”, one of the Beatles’ biggest hits, is said to have been written by Paul McCartney in 1964 and earned $30 million in royalties and became one of the top 10 songs that have generated the most royalties for copyright owners. “Every Breath You Take” by British rock band Sting has earned him $20.5 million in royalties since its release. Sting still gets $730,000 in royalties annually.

JK Rowling’s series “The Wizarding World of Harry Potter” is one of the most famous IPs in the world. Since 2000, the IP has generated around £820 million for its owner, JK Rowling. In those areas with good laws and regulations, royalties from literary and artistic works (including but not limited to music, movies, books, etc.) are magical. Once a work is recognized by the public, the owner is able to live on the royalties of this work for the rest of his life. Euterpe adopts the smart contract to protect the interests of NFT owners and allow the royalties generated to be distributed among the NFT owners.

Whether you are a professional NFT investor, a music lover or an artist fan, you can get Gold NFTs by purchasing a Mystery Box and earning the royalties generated. You can trade the Gold NFTs 2 days after the mystery box mint ends on January 8, 2023. Copyright royalty will be generated from music streaming media, offline KTV, entertainment venues and secondary development, etc.

In addition, the IP-NFT holders can enjoy other benefits such as future creator/singer autographs, hits, awards and collectibles.

For those hoping to make high profits through NFT investments, several factors must be considered before entering the market.

First, we need to know what differentiates NFTs from other digital assets such as cryptocurrencies or stocks. NFTs are created when someone takes ownership of a work of art or music, which is stored on the blockchain and tradable in exchange for payment in cryptocurrency (such as Bitcoin). Each NFT has its own unique identity that cannot be replicated by anyone – making them more valuable than traditional investments because they are not subject to inflation like fiat currencies. Euterpe provides NFT holders with copyright protection (and generated copyright royalties).

Secondly, we need to know which platforms can provide liquidity. The partnership between Euterpe and many labels indicates that Euterpe is recognized by the traditional music market as an entry into the Web3 world. If you think about your determination to change your music app to follow your favorite singer, you can understand that traffic comes with copyright.

Third, we must take into account the possibility of continued profitability. Euterpe’s built-in SocialFi gives users an opportunity to earn token rewards by playing, sharing and voting. This innovation makes Euterpe a community where all players are motivated to benefit from each other. The logic behind it is simple: as more and more people join Euterpe’s SocialFi, OG members will receive more token rewards. By engaging a larger user base, it creates a self-sustaining cycle where everyone will benefit from their contribution to the community.

In addition to SocialFi’s token incentives and potential royalties from NFT sales, Euterpe’s IP-NFT can also provide users with exclusive experiences behind NFT creation or three-dimensional special benefits (such as meetings, signatures, etc.). At the same time, the social nature of the platform connects fans all over the world with similar interests in music styles – creating a completely unique social experience of its own kind. Individuals in the ecosystem benefit from each other instead of being the disadvantaged groups – so that everyone involved (artist/creator/listener) can make sustainable profits over time.

To put it simply, investing in NFTs is likely to lead people to their first fortune. It is a smart choice to choose a reliable platform with higher probability! In the long run, Euterpe sees NFT as an important infrastructure for the metaverse and a gateway to the design of the metaverse, where most assets other than homogeneous tokens exist in the form of IP, which can be represented in NFT. Euterpe starts from music IP and will gradually expand to video, books, games, offline concerts, celebrity peripherals, patents and trademarks in the future. Euterpe will expand to a wider application scenario in Metaverse. Amazon started out as a book-focused company, but eventually became the Everything Store of the Web 2 era. Euterpe will go on to become the Everything Store of the Web 3 era.

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