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NFT technology: Essentials for Photographers
This article presents information about NFT technology and the perspectives it gives to Photographers, as well as important measures to avoid Copyright issues when minting an NFT.
NFTs are a hot topic in the crypto and art scenes these days. Highlighted by several record sales last year, this new form of technology is in the spotlight. But what are NFTs, and what do they mean for photographers? In this article, we’ll break down the answers to these questions.
Since their explosion last year, non-fungible tokens (NFTs) have shown their appeal to collectors, investors, and traders alike. They have gained special attention in the art world, where an item’s provenance is everything, and owning the official, unique version of an item is much more valuable than a copy or duplicate. Photography has also found its place among the various art forms to take advantage of NFTs.
NFTs have been around for almost a decade. In 2018 the photographer Kevin Abosch sold a digital image of a rose, titled "Forever Rose", to a group of ten collectors for $1 million. But the popularity of the NFT technology gained only in 2021 after Christie’s offered its very first NFT auction sale featuring Beeple’s “Everydays: The First 5,000 Days” image for a record-breaking sum of $69.3 million. This technology breakthrough has taken the art and tech worlds by storm.
1. What are NFTs?
NFT stand for non-fungible token. They are stored on a decentralized blockchain, which acts as a public ledger. “Non-fungible” just means they’re unique; unlike cryptocurrencies (e.g., ether or bitcoin), where you could trade one coin for another, NFTs aren’t interchangeable, they cannot be reproduced. A token is a digital asset issued by a blockchain. And a blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system.
In other words, an NFT is nothing more than a unique and secured digital certificate/signature that is permanently embedded into a database, along with any future transactions that transfer ownership. It means that we can trace the history of ownership, when or by whom it was purchased, and of course, who created it in the first place. Any digital work, including physical goods, which can be represented in digital form, such as a photo, video, or scan, can be turned into a non-fungible token.
There are various types of NFTs, but the most common is a metadata file containing information encoded with a digital version of the work that is being tokenized. The other type is where the entire piece is uploaded to the blockchain, but these are less common as it is expensive to upload information to the blockchain.
2. How do Photographers benefit from turning their works into NFTs?
NFTs allow photographers to turn digital images into collectible artworks. Transforming a digital good into a token (tokenizing or minting) gives it a unique value. Here are some reasons why NFTs should be on the radar of artists who are not minting their works as an NFT yet:
• Acknowledging intellectual property
An NFT shows the original owner of the artwork. In the real world, without NFTs, finding the copyright owner is always an issue. For example, you see a really good digital photo and want to use it on the cover of your magazine, but you can't find the photograph's owner. What happens? You either (i) use the photograph and then risk having the owner sue you for using the photograph without authorization, or (ii) you don't use the photograph. Now, if that photograph was minted as an NFT, one can easily find the owner and ask for authorization. You can use this awesome photo, and the artist gets paid.
So, while virtual art is a challenging idea, especially in terms of ownership, the blockchain operates as a public ledger that brings clarity and transparency to the industry.
One example that immediately comes to mind is the Canadian photographer Cath Simard. Initially, she shared a photo of a road on a Hawaiian island on her Instagram account. When it went viral, she tried to stop the widespread use of her picture all over the internet, none of which credited her as the owner. Ultimately, after tirelessly tracking down accounts and companies for appropriating her photograph, she minted an NFT of it for approximately $ 300,000 and then made the image free for anyone to use. So, in a sense, NFTs are offering artists a means to claim back and derive profit from their work. This gives creators a way for anyone to enjoy their work while still getting compensation for the artistic talent required to capture an iconic image.
Hawaii ( 2017 Cath Simard )
• The significance of image control
Photography now produces an unprecedented supply of content, and NFTs are a tool to continue accelerating and democratizing content while providing new ways to generate revenue from those resources. Blockchain technology, through NFTs, has allowed artists to define their terms, given the nature of transactions occurring in the open that make the space more transparent.
As you would expect in the traditional art market (for example, print sales), you set the edition of your NFTs, selling one, ten, or even 100 versions of the same image. So NFTs allow photographers to decide what edition they want for their work and the buyer to know exactly what is out there. There is absolute traceability. In general, the lower the edition, the more valuable the NFT, as fewer are available.
• Direct relationship with the customer
NFTs are a game-changer for photographers looking to monetize their work.
The traditional market for photography and other digital art has been limited to stock photography licensing, printmaking, and other avenues of selling tangible copies or intangible rights to a work of art. NFTs represent an entirely new market and mindset for artists. Buyers interested in art and technology are now clamoring to not only support their favorite artists but also to acquire scarce digital assets that offer the potential for appreciation.
In this way, the NFT marketplace facilitates transactions between all those interested in crypto art and art in general. These online communities also give artists the chance to create and sell digital artwork that might not have been noticed otherwise.
Many photographers wonder if it is possible to use NFTs to sell photos (and stock footage), especially since agencies keep reducing the commissions for the photographers. The most significant difference between the traditional stock agencies and marketplaces that allow you to sell NFTs is that the price of the work is set by the artist (or through an auction) and not by the agency itself. Also, there are no middlemen who take most of your earnings in commissions.
With NFTs, there is a cost to create the file, but the cost is related to the blockchain used and not the site used to sell the work. After the initial cost, you can keep all the earnings (if and when you manage to sell the file). The downside (quite big, honestly) is that it is up to you to promote your work.
Crypto art is also appealing to photographers because of the possibility of setting a royalty. That means that every time the NFT is sold and changes hands, you receive a percentage of that sale.
3. How do NFTs affect Licensing?
You can sell your photo as an NFT and still continue to license it for commercial use, as long as you haven’t transferred your copyright. The NFT collector buys the verified, authenticated artwork, while the commercial client would be paying to use your image for their own purposes, such as advertising and marketing materials.
As the photographer and copyright holder, you have the right to print your photos and sell them as artworks while selling licenses for commercial use, if you wish. The same principle applies to NFTs.
If an image becomes a highly popular NFT, this may also increase the sales potential of that same image for classic licensing. Perhaps in some cases, the opposite could hold true as well: as your photo is licensed and used more frequently, it could become more famous, making the single NFT of that same artwork more valuable.
With that being said, NFTs are still relatively new, and the relationship between cryptocurrency, crypto art, copyright, and licensing could evolve over time. For that reason, it’s crucial to stay up-to-date on the law concerning photography.
4. What about Copyright implications when minting NFTs?
With the increasing demand for "minting" related to creative works, this phenomenon inevitably raises questions on copyright ownership and ownership enforcement issues. It is vital to remember that NFTs are subject to copyright law and other IP laws in the same way as traditional artwork.
One of the critical issues is the often widespread confusion surrounding the rights that buyers acquire when they purchase an NFT. There is a huge lack of insight into what a purchaser receives when buying an NFT. Some buyers think they acquire the underlying work of art and all its accompanying rights. However, in reality, they are simply buying the metadata associated with the work, not the work itself.
Some of the confusion may be caused by the amount of money spent on the tokens. When pixel art can be sold for over USD 1 million, it is easy to assume that the purchaser has acquired more than a string of code.
One of the big problems with the NFT marketplace, where NFTs are sold and purchased, is that most platforms don't provide any licensing language for the digital asset that the owner attaches to the NFT. If you're selling an NFT, you need to know what you are selling and the buyer should be aware of it too.
To give the NFT purchaser more transparency on its purchase, it's imperative that the NFT seller clearly states the terms of the license in writing. With a license, the purchaser is now aware of what they can, and cannot, do with the creative content. It's also good business practice for an NFT seller to provide a license. It shows that you're taking into consideration your consumer by providing this clarity on use.
The sale of an NFT usually does not transfer the underlying copyright in the work which exists "off-chain" to the purchaser. Such is the case when selling a physical copy of nearly any type of creative work — the transfer of the underlying copyright is up to the creator or most recent copyright owner.
If you have transferred your photo's copyright to someone for whatever reason, and this would be explicitly stated as part of the sale or auction, then they might be able to submit your photo for licensing and earn money from it and also enjoy the other rights of a copyright holder.
As stated below: unless an external agreement is made between the artist and the NFT purchaser, the bundle of copyrights to an NFT still belongs to its creator. The NFT buyer owns nothing more than a unique hash on the blockchain with a transactional record and a hyperlink to the artwork file.
Typical rights when buying an NFT:
• You don't necessarily have to provide the right to copy as the copyright owner, but the standard is to give that right and the right to display the works.
• Additionally, the grantee cannot create derivative works, which means they cannot take this digital asset and turn it into something else by attaching it to another type of asset (digital or non-digital).
• The NFT buyer cannot transform the work. He only gets the work as the owner provides it.
• Lastly, the NFT purchaser may not make commercial use of the works except to resell the copyright license. Only some NFT licenses allow limited commercial use of the pieces.
Not stating clearly what rights will be granted to an NFT purchaser may often lead to a Copyright infringement.
This is one of the numerous examples that show us that people often commit copyright infringements unconsciously, just because of a lack of knowledge and clarity. Otherwise, they would have bought a license or haven´t used the image at all. That is why in some cases, it would be beneficial to contact the infringers directly, build a positive relationship with them and let them to right their wrong by buying a license. We at Fair Licensing gladly help you with that.
Check out our The Ultimate Guide to understanding and enforcing Image Copyright to learn more about Copyright.
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