By Joy Loftus
This week’s NFT.NYC Happy Hour Clubhouse included a panel of VC thought leaders who discussed NFTs and industry disruption. The conversation featured a distinguished group of five VC’s who talked about the ways that NFTs are unlocking industry ecosystems with a particular focus on IP and network effects.
Read on to find out more about:
- NFTs and the Network Effect
- NFTs in the Music Industry and VIP Experiments
- NFTs and Intellectual Property
NFTs and the Network Effect
NFTs on open source platforms create a network effect.
David Pakman @pakman, an early stage tech VC with Venrock, described the abundance of digital ecosystems that NFT adoption can yield. He told audience members:
“What makes NFTs really good investments is that when you make a collectible ecosystem on top of an open standard like blockchains, you can also create network effects by having this open ecosystem for other developers to create around them.”
An NFT smart contract and assets are on an open platform. This open platform ecosystem instantly creates the opportunity for another developer to interact with your NFT.
Pre-blockchain platforms like Netflix or Spotify operate in a sealed digital environment. The structure of these platforms precludes outside users from interacting with the platform’s digital assets which can constrict integrated development opportunities.
NFTs are immediately public and interactive with other developers which creates a network effect.
NFTs in the Music Industry
The featured speakers this week agreed that it’s important to have a long-term sustainable approach to engaging with NFTs. They considered what we can expect long-term from NFTs in the music industry.
Some artists, such as the Kings of Leon, have sold entire albums as NFTs.
Kyle Samani @KyleSamani, a managing partner at Multicoin, predicted that this may not be a long term trend to expect.
VIP Fan Experiments
Kyle pointed to the interesting experimentation with NFTs going on in the music industry.
“My intuition on music is the use of collectibles for preferential VIP fan treatments.”
These VIP fan treatments could materialize as rewards for engaging with an artists’ music in varying degrees, Kyle further explained what he meant:
“NFTs are another lens to augment the degrees of patronage in the music industry.”
NFTs and Intellectual Property
Kelly LeValley Hunt @LeValleyKelly discussed the potential role that NFTs will have on intellectual property and envisioned how they would transform the traditional IP industry. Kelly predicted:
“I think that the IP industry will be most disrupted by NFTs when, for instance, IBM starts writing smart contracts for the pieces of IP that they hold.”
NFTs Can Disrupt the IP Industry As We Know it
IBM has led the patent system in the US since the 90’s and currently holds the record for the number of patents held by a single company.
The contemporary patent system has been widely criticized for being irrelevant and excessive.
IBM justifies their aggressive approach to patenting as the way for them to protect their “investment in innovation” and “freedom of action.”
The critics argue that this strategy used by IBM and others disproportionately rewards large corporations and lawyers over the actual creators.
One of these critics is Elon Musk @elonmusk, CEO of Tesla.
In 2014, Elon released a statement to customers on the Tesla blog ratifying Tesla’s embrace of an open source philosophy towards its technology patents. In the statement Musk wrote:
“When I started out with my first company, Zip2, I thought patents were a good thing and worked hard to obtain them. And maybe they were good long ago, but too often these days they serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors.”
NFTs could have secured generational wealth for Nikola Tesla’s family.
Kelly emphasized the importance of creators recognizing their value in relation to the rights that are attached to their creations. She included Nikola Tesla, the renowned Serbian-American inventor who rivaled Edison’s genius and theories, as a point of reference for the significance NFTs can have on IP:
“If Nikola Tesla had blockchain technology on his side when he was doing research, he would not have died a poor man nor would his family be struggling today.”
NFTs and smart contracts create a free market for people to source their intellectual property and the opportunity to be paid directly from others using their patent.
Unlocking Monetization Opportunities
All five speakers believed that NFTs can enable industries to unlock monetization opportunities by paving the way for new digital ecosystems. These new digital ecosystems exist on an open source platform which creates a network effect and gives creators an alternative pathway for staking intellectual property.
Follow This Week’s Clubhouse Featured Speakers:
- Andrea Bonaceto, @andreabonac_art
- Ayesha Kiani, @ayeshakiani
- David Pakman, @pakman
- Kelly LeValley Hunt, @levalley
- Kyle Samani, Kyle Samani
Next Week’s Clubhouse Topic: DeFi and NFTs
If you’re passionate about NFTs, and have an interesting use case to share with the community, please apply at our website NFT.NYC.
Speaker applications close July 31st, 2021.
Weekly Clubhouse “Happy Hour” sessions will be hosted every Wednesday at 4pm ET in the NFT.NYC Club. Wednesday, May 26th, will feature DeFi and NFT experts.
Follow us on Twitter @NFT_NYC for additional details coming soon.
Still not sure what an NFT actually is?
NFT.NYC is releasing an NFT 101 Guide to spell it out for you.
Sign up for your guide to NFTs here: https://www.nft.kred/creators
Frequently Asked Questions
How can NFTs benefit intellectual property?
Non-fungible tokens present the unique ability to create a digital representation of almost all tangible or intangible property. That can include digital art from artists, and also real-world paintings, musical works, multi-media works, and collectibles like trading cards. Creators and brands can use NFTs as a way to digitally store and transfer elements of intellectual property in an unprecedented way.
How can NFTs be used in the music industry?
The rise of non-fungible tokens is an emerging development throughout the music industry. NFT transactions allow viewers to bid on one-of-a-kind material from their favorite artists in auctions, whether that be VIP experiences or never-before-heard content. Artists from Eminem to Kings of Leon have taken advantage of this opportunity to release NFTs. This seems to be just the start!
Are NFTs experiencing a networking effect?
A network effect is a process in which the importance and value of a product/service increases as the number of people or participants rises. Whereas the new users provide value to the preexisting user base as often is the case. This is the case with NFTs and it will only compound more as congestion eases on major blockchains. The more people interested in NFTs, the more gross value is assigned.
