Character-based NFTs have become a status symbol for owners who regularly use their animated creatures as avatars on social media. Sure, it’s signaling access to a community (and a level of cachet given how much these NFTs can go for), but that’s usually all it is.
— NFT (@NFT) December 31, 2021
However, some NFT holders, namely those in the Bored Ape Yacht Club, are at the forefront of what could be the next wave in the space: NFTs as intellectual property.
The restrictions within NFT licenses vary depending on the company or developer behind the collection. While most of the major players, including NBA Top Shot and CryptoPunks, prohibit owners from commercial use of their NFTs, Bored Ape Yacht Club, which recently passed $1 billion in sales on NFT marketplace OpenSea, gives full rights to the NFT owner.
That means whomever owns a Bored Ape can spin it into whatever film, music, TV, book, or media project they want.
“I thought from the very start that was extremely powerful,” says Jim McNelis, an NFT collector and CEO of NFT brand-building platform NFT42. “That was definitely one of the draws of the project for me. And believe me, when I was curating my collection, I did that with that mind.”
Last November, McNelis and Universal Music Group’s label 10:22PM packaged four of his Bored Apes into a band called Kingship. 10:22PM describes itself as a Web3 recording label designed precisely to turn NFTs into media properties. They’re not alone: Around the same time, mega-producer Timbaland announced his metaverse entertainment company, Ape-In Productions, that will discover and amplify artists who are Bored Ape owners. Way back in September, an anonymous collective signed with talent agency CAA to develop projects for their Bored Ape Jenkins the Valet.
In contrast, Larva Labs, the developer behind NFT breakout CryptoPunks, signed with the talent agency UTA last August for representation across entertainment. But Larva Labs is reportedly weathering backlash from some of its NFT owners who feel as if the company hasn’t been clear on what their licensing arrangement will be under this UTA deal. One CryptoPunks owner told the crypto-centric media site Decrypt that it was “time to move on,” explaining why he decided to sell his CryptoPunk for $10.25 million.
While it’s still early days for most Bored Ape media projects, there seems to be considerable traction if for no other reason than the owners have the ability to act independently. It is the clearest test case for whether the Web3 rhetoric about ownership and decentralization can truly be fulfilled, especially when there’s so much money at play for the highest-profile NFT art collection, with the highest sales floor. Who owns Web3? Bored Ape holders—and how they take advantage of their intellectual-property rights—will start to answer that question.
License to go ape
The early licensing rights in NFTs were crafted by Dapper Labs, the NFT company behind NBA Top Shot and Flow blockchain, which drafted the early language for NFT licenses in 2018 when it released its first NFT project, CryptoKitties.
“With the NFT, we’ve helped create an entirely new class of asset, and existing licenses simply didn’t cover true digital ownership adequately,” the company wrote in a Medium post. “So we created the NFT License: a public license, available to anyone, that defines what people can and can’t do with their NFT and its associated art.”
The NFT License, free to use to any creator of an NFT project, grants certain rights to NFT holders, namely merchandise commercialization of their NFT up to $100,000 in gross revenue each year. The NFT License became a standard for NFT projects, including Cryptopunks, which adopted the license in 2019, but then later created its own. That apparently has led to the confusion as to what holders are actually entitled to under parent company Larva Labs’s deal with UTA.
— RahulChhabrani.ethᵍᵐ ???? (@RahulChhabrani) January 14, 2022
Bored Ape Yacht Club has made it clear that NFT holders have full commercialization rights to their ape, i.e., it’s not constricted to just merchandise and there’s no monetary cap.
“I was like, this has to be a mistake,’” says Nick Adler, former SVP of business development at marketing collective Cashmere Agency. “I don’t know if their intention was, ‘Let’s create something that people go and monetize,’ or if they thought it would be a smaller project and it didn’t concern them. I don’t think anyone expected it to become such a cultural phenomenon.”
Fast Company reached out to Yuga Labs, Bored Ape Yacht Club’s parent company, for an interview and will update this story if it responds.
Adler, who’s also Snoop Dogg’s business partner, recently left Cashmere to start his own NFT-focused company The Unified, leveraging his expertise in entertainment production, licensing, and branding in the NFT space.
“How people—whether they’re celebrities, artists, restaurateurs—how they set themselves up on Web3 is going to be groundbreaking,” Adler says. “I’m really excited how people can go out and control their digital rights and own their digital footprint. We’ve given so much of our IP away to the big Web 2 brands, and now we get to take that back.”
Sweet ape music
Adler was the one who first floated the idea to McNelis that he could flip his apes into an entertainment project.
“They passed the litmus test for me, which is do they make a good profile picture on Twitter?’” McNelis says of his initial interest in BAYC. “Each one is distinct and likable. So just at a glance, the collection looked really strong. It’s fun.”
But both Adler and McNelis, who launched his own NFT project Avastars in 2020 and has been a prominent figure in the NFT space, ultimately noticed something different with Bored Ape Yacht Club.
“There was something special about these,” McNelis says. “It’s that X factor that you can’t quite place your finger on.”
That X factor, combined with full IP rights, led to Kingship, the first-ever music group based on NFT characters.
Kingship is comprised of three of McNelis’s Bored Apes, two of which are considered rare because of their golden fur and shooting eye beams, and one mutant, a bizarro subset of the initial original Bored Apes.
The immediate comparison to virtual British band Gorillaz is apparent for more than one reason, but McNelis says Kingship will be a different experience entirely. “It feels like a copy to some people in the mainstream, but it’s really not at all,” he says. “The important thing right now is developing the story behind each of the apes and the personalities behind them. And then from there bringing in the music and some metaverse-friendly experiences.”
Guiding Kingship to their debut is Celine Joshua, the founder of music label 10:22PM.
Launched in 2018 under Universal Music Group, 10:22PM is billed as a next-gen, Web3-focused label for digital creators and brands. In a press release announcing 10:22PM, UMG CEO Lucian Grainge called the label “a progressive home for new forms of digital content,” which has naturally spilled into the much hyped and highly lucrative NFT space.
“I look at all this dormant IP sitting in collectors’s wallets and thought about it like a decentralized Disney,” says Joshua, who, prior to joining UMG, oversaw commerce and strategy at Epic Records. “How can 10:22PM bring these characters to life? Like when Marvel would take a look at their library and say, all right, we’re going to now create a narrative and a dream around this character.”
Details on Kingship are still under wraps, but Joshua says that the apes they chose from McNelis’s sizable collection (he currently owns 72 apes and 95 mutants) was very deliberate, and there’ll be opportunities for Bored Ape Yacht Club members to help build Kingship’s narrative.
“The NFT economy and the independence of being able to create like this is powerful,” Joshua says. “Whether you’re a major or someone in your bedroom, pay attention. It can only go as far as your imagination will allow, because finally the tech and the time is in the right place.”
“I hope that this becomes a model for how to express IP ownership through NFTs and being able to monetize around that,” McNelis adds. “Music and cultural space is so important for adoption of technology and for people to become familiar with new things. This is an opportunity for NFTs to become mainstream through things like Kingship.”
— jimmy fallon (@jimmyfallon) November 12, 2021
Memoirs of an ape
Bored Ape #1798 would become Jenkins the Valet after its owner purchased him during Bored Ape Yacht Club’s initial sale last April. His interest was piqued having seen other people post their NFTs as avatars on social media.
“I have a creative writing background, and so I saw these avatars and just thought those are characters,” he says.
He’s so committed to making Jenkins the Valet a character in his own right that he and his business partner decided to remain anonymous. “I feel like I’m talking as Jenkins the Valet, not as me, this person who owns that NFT,” Jenkins says.
“We really just bought in for fun, because it looked like an awesome, enthusiastic pocket of the internet,” says Jenkins’ partner, who goes by SAFA. “And then as entrepreneurs, we very quickly realized the opportunity that we had to actually carve out a lane within the space.”
After building up Jenkins the Valet’s brand (he currently has more than 26,000 followers on Twitter), Jenkins and SAFA set out to fill what they saw as a white space in the NFT landscape. “We had seen really amazing art have its day. We had seen, like, 10,000 profile picture avatars have their day. We didn’t see any literature,” Jenkins says.
Jenkins and SAFA shopped the idea around to literary agents, but couldn’t get them to see their vision. “It kind of crushed us,” SAFA says. “But our buddy who’s a signed author was like, you should meet my agent at CAA. They’re on the cutting edge. They get it.”
“What we were seeing in the beginning was this gold rush,” says Adam Friedman, an executive in CAA’s global client strategy group. “You had a bunch of folks who were jumping out trying to take advantage of a booming market. For us, many of the clients that we work with are universe builders, storytellers, creators, and there’s long-term business implications here with NFTs.”
I learned that the most important skill for a Valet at the #BAYC is discretion. I excelled at my job and never uttered a word of what I saw. Now, there is so much intrigue around @BoredApeYC I’ve decided to ape in and tell the stories of the most fascinating apes I’ve worked for. pic.twitter.com/73lUbfuIlJ
— Jenkins The Valet ???? (@jenkinsthevalet) May 23, 2021
Last August, Jenkins and SAFA created their own NFT that grants holders access to the Writer’s Room, a platform where members vote on the creative direction for the character Jenkins. The Writer’s Room currently has 2,700 members and is working on Jenkins’s debut novel in tandem with New York Times bestselling author Neil Strauss. Members can submit their proposals for ideas, and if they have a Bored Ape NFT, they can also license their apes to be included in the novel.
“We named it the Writer’s Room for a reason, because traditionally, the writer’s room is super hard to break into,” Jenkins says. “If you’re lucky enough and if you’re smart enough and if you’re funny enough, you get to write the stuff that everybody consumes. [Our members] get to join this virtual room from all over the world and participate in what ends up being the content that we hope comes to define the metaverse and the space.”
Swinging through Hollywood . . . and beyond
The idea of ownership has been a huge motivator for creators minting their original works and buyers looking for an authentic purchase. Bored Ape Yacht Club stacks better utility on top of ownership with its broad IP rights that have led to holders using their apes in any number of ways, from branded beer to law firm marketing campaigns.
I created a Bored Ape IPA at my brewery in MI. Alcohol is tough due to liquor laws but it’s been awesome so far. Been able to get to two Bored Ape meetups (LA & Chi) and connect with a bunch of apes. pic.twitter.com/B38cBVv8Xk
— Jay ???????????? (@jay345678912) September 11, 2021
Bored Ape Yacht Club decentralization of rights ownership, to a degree, is creating an interesting landscape of projects that, even though they’re based on same source material, will presumably have radically different visions.
Deeper still is the question of how these higher-profile projects such as Kingship, Writer’s Room, and Timbaland’s Ape-In Productions will impact the broader Bored Ape Yacht Club ecosystem.
Not every Bored Ape owner has connections in Hollywood. And certainly celebrities such as Jimmy Fallon and Steph Curry will have an even bigger advantage thanks to owning their own production studios. Adler sees Bored Ape Yacht Club projects bifurcating into those rooted in more traditional entertainment and those dialed into Web3 entertainment—whatever that’s going to look like.
“I love Jimmy Fallon, but [he’s] not a Web3 native,” Adler says. “He’s probably going to develop his ape [and could] integrate it into his show, but I don’t think the ape is the focus here for him.”
— Jonathan Nash (@offshoot3D) January 13, 2022
Adler is developing NFTs in the more traditional sense, but he made it clear he’s prioritizing more Web3-focused platforms as they develop.
“I think that you’re gonna see a new studio model and new industries and new places where these things come out,” Adler says. “I can’t just think about things as how you traditionally build IP and sell it to Netflix. It’s more like, what is the new Netflix? What is the blockchain decentralized distribution model?”
In that, he sees more equitable opportunities for all NFT holders, not just with Bored Ape Yacht Club, but for the NFT space at large. “This is phase one. I believe that phase two and ultimately phase three, 100% will be for the middle class and the emerging class,” Adler says. “The model of NFTs we’re looking at now is gonna be gone in a few years.”
Other licensing agreements within NFT projects, e.g., Creative Commons, which allows the community and not a single owner to develop intellectual property, could yield more opportunities for NFT holders as the industry sprints toward the mainstream.
“There’s not one model to rule them all,” McNelis says. “I just love the experimentation that is going on here, and licensing is really a nascent part of it all.”