NFTs are a nascent technology and the true breadth of their functionality is still being explored. As the ecosystem expands, new boundaries are being pushed in NFT utility, NFT membership and more controversially in ownership of Intellectual Property (IP). Most recently the debate over IP rights came up when Kevin Rose and the Proof Collective announced they were changing the license structure of the Moonbirds NFTs to Creative Commons Zero (CC0), joining a host of other projects such as Loot, Chain Runners, mfers and even XCOPY in open IP waters. But before we dive into the debate let’s step back and understand what a CC0 NFT really is.
What is a CC0 NFT?
As NFT creators (like all digital and non-digital creators) there are a variety of options when deciding how your work gets used. Creative Commons licenses are legal tools to give permission in advance to share and use your work based on conditions of your choice. There are six different standard licenses in the Creative Commons that allow a range of sharing and attribution permissions.
The seventh option is formally called the Creative Commons Public Domain Dedication, or Creative Commons Zero — CC0 for short. CC0 allows creators to give up their copyright and put their works in the public domain, allowing anyone to remix, adapt, build and distribute in any way shape or form without any creator attribution. This is the option that has been sparking controversy as of late.
A couple of things to note before we take a look at the pros and cons of CC0 NFTs as open-source IP. First, once you choose a license or CC0, it cannot be revoked. Second, you must own or control the copyright in the work in order to apply the license or CC0.
Exponential reach
CC0 for art is akin to Open Source for software. CC0 is the way for creators to “open source” their work to the world with no restrictions. By open sourcing intellectual property, the potential reach of a project becomes exponentially larger as it provides the opportunity for anyone in the world to capitalize on the pre-existing brand.
Think about it in terms of your favorite meme content such as the two button meme. If this visual content was under strict copyright it would become less enticing to remix and reshare — forcing most people to abandon that particular image for the next best visual. But because anyone can add their hot take to this image, the meme has become a de facto standard in the crypto world, and has consequently spread far and wide across the internet.
Such is the case for the CC0 NFT collection, Nouns. Started as an experimental project by a group of well-known NFT collectors and developers such as Punk4156 and the co-founder of Vine, Nouns has now become a blue chip offering with almost $50M in its treasury. Instead of a one-time drop, every 24 hours a new Noun NFT is auctioned to the public. What’s incredible is that for the most part, the daily winning bids of these 300+ nouns have stayed above $100k. But there’s more.
Every Noun NFT holder can sponsor and vote on proposals for the Nouns DAO treasury to fund, which has spawned a coffee brand, an eSports team, a documentary film and the infamous Budweiser Super Bowl ad among many other projects. There’s even a current proposal for Noun inspired basketballs. But what do these disparate projects have to do with CC0? Glad you asked.
Anyone can build
Think of it as a flywheel of growth. The more projects that get funded, the greater the underlying brand awareness, the greater the demand for Nouns, the more projects and so on. It’s good to note of course that with CC0 in place it’s easy for anyone to utilize the Nouns IP (even without funding from the treasury) and in turn grow the brand faster and more efficiently.
With traditional licensing in effect, these projects would be difficult if not impossible to create. Take the Bored Apes for example — in order to create the Bored Breakfast Club, you would have to either be a holder of the ape in question, or have gone through the trouble of signing individual licensing agreements for all Apes involved. Not a total deal breaker, but much more difficult for anyone to accomplish than in the CC0 context.
This a16z piece might sum up this point up best:
As Robbie Broome recently explained (in the context of his cc0 project A Common Place), “By giving up my IP to cc0 rather than ‘protecting’ it, it avoids bad rehashes down the line. If, for example, UrbanOutfitters wanted to put my design on a tee, instead of hiring someone on their team to design something that looks like it, they can just use the actual work.” Sometimes, adopting cc0 can effectively turn competition into cooperation. (Flashrekt, Kominers para. 34)
Profits are not always equitable
But this licensing piece does bring up a good point. Who really benefits from CC0? The answer depends on who you ask. In a non-CC0 setting, royalty splits and licensing deals have the potential to create more transaction volume overall, and thus more value distributed back to royalty holders. Just because the overall “pie” has grown, doesn’t mean the size of all the slices grows with it. This means that NFT holders may lose out even while brand recognition and derivative profit grows
Additionally, just because a project can grow, doesn’t mean it should — growth doesn’t always lead to an increase in price. In fact, with CC0, massive growth in derivative projects could actually cause a drop in secondary NFT price as spin-offs dilute the quality of the original project…
Lack of Control
While CC0 allows the project to grow more swiftly, the originator has little control over how that project’s brand and the art itself is used. This can be especially detrimental if these pieces are used to negatively portray the brand. A CC0 license might even turn corporations away from building on top of them as they won’t be able to control who else uses that IP. This could mean low-quality derivatives, poorly received spin-offs or even malicious attempts to promote nefarious or negative things. Take the CC0 project Cryptoadz for example. Anyone could take this project and create an indistinguishable tobacco or weed brand, or perhaps something even far more mis-aligned to the original creator’s intent. Think about this as the physical world and it’s a bit like putting an actual Apple Store selling sleek Macbooks next to a similarly branded “Apple Store” that sells knock-off watches. Confusing at best, brand-crushing at worst.
Questions for the Future
This brings us back to the Moonbirds project and a few outlying questions. The first question is: when should a project irrevocably declare its license? Minted in April of 2022, the Moonbirds project was only declared as CC0 by Rose in early August 2022, who tweeted that “this move honors and respects the values of the internet”. When NFT consumers buy with a certain expectation and particular understanding of IP ownership, when, if ever, is it ok to switch the underlying IP ownership?
This raises the second question and the specter of potentially divergent motivations between NFT buyers and project founders. While the NFT community would like to believe that these will always be aligned, it’s clear that some stand to profit much more than others. If project founders are within their bounds as the originators of the content itself, then what rights do holders really get in the land of digital IP?
Regardless of one’s position, the next few months will be interesting ones as more creators and communities begin to decide the fate of their IP and the future of their projects. Robust hodler communities will ideate on ways to utilize project IP, innovative creators will iterate on existing projects in hopes of making new successful derivative ventures, and rights and licensing will continue to evolve.
