Monday AM Briefing: Bored Ape Yacht Club, Hello Sunshine, World of Women & New Frontiers for IP
First, in case you missed it, I had an opinion piece in The Information last Friday: Why Disney+, Paramount+ and Legacy Media Streamers Can’t Escape the Past.
You can read it for free (with login) at the link above.
I wrote Where Web3 & Legacy Media Overlap a few weeks back. In the essay, I took a stab at reverse-engineering the meeting point between the exclusive value proposition of Bored Ape Yacht Club (BAYC) and the non-exclusive value proposition of mass media.
On this point, there were two headlines this past week that both reflected an interesting, emerging trend of intellectual property (IP) rights in media. They were at NFT collectives BAYC and World of Women (WoW).
World of Women
Variety's Brent Lang reported last week:
Reese Witherspoon’s Hello Sunshine has forged a storytelling partnership with World of Women (WoW), the NFT collective that is cracking open the male-dominated world of crypto currency while celebrating inclusivity and equality. World of Women launched in July 2021 with some 10,000 artworks from women creators, quickly becoming one of the most popular and profitable purveyors of non-fungible tokens.
As part of the partnership, Hello Sunshine will build out the World of Women character universe and franchise into entertainment properties including feature films, scripted and unscripted TV series. The move is another sign of the growing popularity of NFTs and the potential they hold for traditional media companies on the prowl for intellectual property.
They will also launch a Hello Sunshine x World of Women live event in conjunction with other diverse women-led NFT projects. The goal is to educate women about this new space.
Hello Sunshine is owned by Blackstone's Candle Media, and the move seems to fit neatly into the broader thesis that Candle Media co-founder Kevin Mayer has been telling the market:
“We have a thesis, and that thesis is content, community, and commerce. We feel that high-quality content with high-quality creators at the right brands create great connections in social media with large audiences.”
WoW seems to sit at the heart of all three. As it says on its website, benefits of WoW ownership include Ownership of the underlying artwork and IP.
The opportunities sound promising, but BAYC highlights why these opportunities are not as clear-cut as they may read.
Bored Ape Yacht Club (BAYC)
Yuga Labs is the start-up behind BAYC - it was in the news this week after Buzzfeed did some basic legal research and found the real names of BAYC's pseudonymous founders. That led to this piece from Maxwell Strachan, a reporter for Vice's Motherboard - Bored Apes, BuzzFeed and the Battle for the Future of the Internet - and this interview with Yuga Labs CEO Nicole Muniz where she accused Buzzfeed of "doxxing" the founders (but "not everyone in crypto world agrees it was a "doxxing").
The tweet, above, highlights its ambition for becoming more the brand to expand from an exclusive club of owners whose NFTs average price is $250K (musician Justin Bieber recently bought a Bored Ape NFT for $1.29MM, and a second for $470K).
That said, Mia Sato of The Verge reported last week about BAYC owners "who see the apes as a launching pad for something bigger than even the Yacht Club." The key variables driving it are the IP rights uniquely attached to the apes:
NFT purchases come with specific usage rights to the art depicted — the original artist typically retains ownership of the copyright, but buyers can set the NFT as their profile picture, for example. But Bored Apes are different: when you buy an ape, you also get the rights to it. You can put your ape with pink fur and a military-inspired hat on a skate deck, as streetwear brand owner Nicky Diamonds did. Or lend your closed-eyes, pierced-ear ape to a music video.
Sato profiled a "subgroup of BAYC members entering the brave new world of Bored Ape weed marketing and branding". The interesting quote in the piece is from a BAYC member who saw the appeal of licensing "from the beginning":
“You see Mickey Mouse or Alvin and the Chipmunks — these characters that have come along and been able to stand the test of time. I really think that could be where my ape goes,” Rob says. “That’s why I’ve been very cautious on actually licensing it out and actually using it.”
The comparison to Disney has been made before but hasn’t proven itself out yet. Aside from a few apes backed by celebrities, most ventures haven’t broken into the mainstream consciousness — ask your mom to name a bored ape off the top of her head, quickly. But the possibility of your ape being a household name one day buoys the hustle.
The point of Mia Sato's piece is the pursuit of licensing apes in the cannabis industry is a particularly interesting case study of whether NFTs mark "the birth of a new media model".
That is certainly the bet of Hello Sunshine, above.
A PARQOR Hypothesis Lens on BAYC & WoW IP
The question is how BAYC NFT owners and Hello Sunshine get from here - IP rights distributed across tens of thousands of owners- to Disney-like IP.
In Where Web3 & Legacy Media Overlap, I used a basic PARQOR Hypothesis analysis to compare BAYC's model with the attributes of an optimal 21st century media business model like Disney's:
✅ an Aspirational Brand
❌ Existing user base at scale
✅ Multiple Avenues to monetizing the same IP, and
✅ Daily value proposition (something new for fans to consume daily)
✅ Sales Channels: Online (digital) and offline (physical) commerce (e.g., merchandise)
The attribute Existing user base at scale is the only one not met by BAYC. For this reason, I concluded that "BAYC reflects how that area of overlap between web3 and legacy media may be found if:
we rethink the Existing user base at scale attribute to deemphasize scale and emphasize exclusive, BAYC-type membership, instead; and
hold all other attributes to be true".
But, these recent developments BAYC and WoW suggest to a different conclusion.
[Author's Note: The rest of this essay will be exclusive to members, only.]
A separate The Verge piece - NFT makers are trying to build the next Disney - from November 2021 highlighted how
To NFT proponents like investor Drew Austin — who’s working on his own community NFT narrative project — that mix marks the birth of a new media model. “We are putting the foundation in place so that people can use their imagination and create stories and content and experiences with their own characters that they own through this because it’s an NFT,” says Austin. “The ability to be able to leverage the community, to be able to expand on IP and to create a universe, I think, is a really exciting concept.”
The dream might sound intuitive in the world of modern media franchises, where giant games and blockbuster movies are shaped by convoluted licensing deals for beloved figures like Spider-Man. Instead of rooting for a giant corporate merger that might let the X-Men hang out with the Avengers, fans could directly collaborate to have their favorite characters share the same fictional world.
The takeaway is that NFTs offer a form of media production is not unprecedented, but has also required a very specific set of circumstances for IP collaboration like "Who Framed Roger Rabbit":
The Wikipedia entry for "Who Framed Roger Rabbit" highlights the "*unless you are Spielberg" reference:
Spielberg convinced Warner Bros., Fleischer Studios, King Features Syndicate, Felix the Cat Productions, Turner Entertainment, and Universal Pictures/Walter Lantz Productions to "lend" their characters to appear in the film with (in some cases) stipulations on how those characters were portrayed
The different conclusion, then, is that NFT characters can become popular organically, and then the BAYC, WoW rights holders can basically imagine any "Who Framed Roger Rabbit" type-collaboration.
But, it's not so clear cut, as Jenkins the Valet - a character built around a Bored Ape Yacht Club NFT - demonstrates:
The team behind Jenkins the Valet says they’ve been collaborating with BAYC since the beginning of the project. “Our teams are working together to make sure that everyone is protected, and we will continue to exercise due care to make sure that their IP is expressed in a positive way that does not contradict what they are building,” they wrote in an email. (That said, they won’t be using the Bored Ape branding in their work.)
This implies that there are exciting possibilities that can move individual NFT owners beyond the constraints of an NFT collective. But, as of now, exclusive ownership within a limited group of owners seems to have clearer paths to payoffs - basically, through a sale of the NFT - than through exploring NFT rights.
In other words, the key challenge for these NFTs is that they exist at the completely new intersection of regulation (which I wrote about in A Short Essay on “Aggregator Bundling 2.0” & Convergence After Epic v. Apple):
the innovative technological architecture of blockchain ownership, and
the legal regulation of existing intellectual property laws across the globe
As Adi Robertson concludes in NFT makers are trying to build the next Disney, a key challenge at this intersection is solving for how to maximize the value of NFT copyright within existing business deal structures:
...trying to use NFTs as a proxy for copyright raises its own concerns. If you do something like buy a superhero avatar, write a comic book about the hero, and sell the underlying avatar, there’s no clear norm about whether the new buyer should expect the rights to your comic. If Netflix wants to make a TV series about that comic, it’s even less clear how many people it would need to sign a deal with.
Candle Media is run by ex-Disney leaders Kevin Mayer and Tom Staggs, so if there is any team who can solve for this problem it is arguably them working with Reese Witherspoon's Hello Sunshine team and her agents at CAA.
However, some problems are too complex and therefore too time consuming to solve. The completely new intersection of regulation seems appealing for the obvious Disney comparisons, but like the BAYC founders, it also seems vulnerable to the basics of legal research.
Must-Read Monday AM Articles
Emerging "Metaverse"-type convergence strategies
* Why Disney tapped a former theme park executive to lead its metaverse strategy
* Epic Games shared data for the metaverse and emerging 2022 trends for its Unreal Engine
* To achieve anything close to what metaverse boosters promise, experts believe nearly every kind of chip will have to be an order of magnitude more powerful than it is today.
* Audio may be the "metaverse winner"
Aggregator 2.0
* The New York Times went deep into Spotify's podcast strategy, and revealed Ava Duvernay had left her deal because of the Joe Rogan controversies.
* Spotify announced two acquisitions to improve its measurement for Podcast Advertising, both implying that Spotify wants to beat YouTube at audio
* Netflix has partnered with Take-Two Interactive, the game Bioshock's parent company, to develop a potential cinematic universe.
Sports & Streaming
* After the Beijing Olympics, NBCU may be looking for ways to improve its deal with the International Olympic Committee.
* Business Insider's Claire Atkinson speculated on who would be hired to run Warner Bros. Discovery's sports portfolio ($ - paywalled)
Creative Talent & Transparency in Streaming
* Snap announced that it plans to introduce mid-roll advertisements during Snapchat stories for Snap Stars (which is what the platform calls its biggest creators, who must apply for the Snap Star distinction).
Original Content & “Genre Wars”
* Decider's Brett White dove in "What Went Wrong?" with 'The Book of Boba Fett’ given the low fan ratings (62% on Rotten Tomatoes)
* Discovery is “radically changing the way it advertises” by shifting to social media marketing to grow Discovery+ subscribers, according to UK and Nordics boss James Gibbons.
* The backstory of what enables the analysis of Netflix user and operational data to serve subscribers better
Comcast’s & ViacomCBS’s Struggles in Streaming
* A short film, "Unlocked", debuted on Peacock on the NBCUniversal broadband outlet that was produced by HP Inc. and the agency Giant Spoon
AVOD & Connected TV Marketplace
* FierceVideo's Ben Munson argues "Roku building its own TVs might not make sense"
* There are growing signs of pandemic fatigue and people logging off from the digital, content-rich world
* The Trade Desk, which managed $4.2 billion in ad spend in 2020, said it will stop buying ads through a Google tool called Open Bidding, which manages ad auctions for publishers and is one of three major sources of digital ad inventory.
Other
* Eric Seufert argues, "The presence of certain apps is so imperative to the App Store’s broader consumer appeal that Apple has no choice but to allow those apps to defy its various platform rules and restrictions."
* New Peloton CEO Barry McCarthy spoke to The New York Times' Dealbook about the "tough road ahead" and why he took the job. CNBC had the text of the email he sent to staff after taking the job.
* I compared Condé Nast and IAC's DotDash in Netflix & Dotdash, Imitated But Never Replicated by Condé Nast. Condé announced it turned a profit last year, and Dotdash announced it is stopping print circulation of six of the magazines it acquired when it bought Meredith Corp. last year, part of an effort to turn these publications into digital-only brands.