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Intro Notes, Plugs & Amendments 🔌🔧

Welcome to another edition of Sporting Crypto. Usually, I write and publish these on a Monday. This time around, with a holiday on the horizon, I’m writing it the Thursday prior. So if there are any big bits of news that I’ve missed, that’s the reason why!In this edition, I’m going to be talking about licensing. I want to caveat that I’m not a lawyer nor an expert in this field. So if there’s any feedback that people who are experts in this field have, I’d absolutely love that and will mention it in next week’s newsletter!

🔌 I’m currently OOO so if I don’t respond on any platform, you know why! :)

🔌 If you're interested in sponsoring the newsletter - feel free to reach out to me on Twitter or LinkedIn, or email me back at this address!

This Week’s Deep Dive: To license or not to license?

I’ve wanted to write this piece for a while but haven’t really found a clear ‘full stop’ to the debate.

But I think it’s worthwhile to at least put my thoughts on paper here, whatever value they may add. This will be in essay/rant format that I think works reasonably well when there's no specific story I’d like to dive deep on.

NFTs have opened up a new can of worms for sports rights holders. There’s confusion and misunderstanding, and a lot of people seem to think that there are a lot of grey areas.

The reality is, that there are fewer grey areas than you’d think. 

Remember when StockX tried to sell Nike NFTs without any authorisation?

That’s not a grey area.

That’s IP infringement. 

The issue is that a lot of people working in commercial departments on both ends of the stick (rights holders and rights buyers) think that the above is acceptable.

Many think that because this is an NFT, and it’s hosted on something decentralised that doesn’t abide by any authority, the asset itself is untouchable. That’s wrong.

There are grey areas - but this isn’t one of them. 

A better example of grey areas comes slightly adjacent to NFTs.

Remember when Ibrahimovic, Gareth Bale and a few others kicked up a fuss that EA were using their name & face without permission?

He, Bale and the duo’s respective agents threatened to take legal action but it never went anywhere.

EA’s counterargument was the following:

Whether you think Ibrahimovic is right or not, he probably doesn’t have a leg to stand on legally here.

And ass you can see, Ibra looks pretty happy with his Ultimate team card in 2017…

So what is the relevance here?

The relevance is that within the NFT world - those who have made their own IP, have seen crazy upside.

RTFKT for example have either created their own IP or collaborated with artists to create co-owned IP in the form of digital assets (NFTs), and sold them.

And they’ve done extremely well in doing so. 

It means they’re not reliant on anyone or anything when it comes to licensing, and therefore it doesn’t have a huge impact on their revenues.

That’s the main advantage.

The disadvantage to this is that you have to create something out of nothing from a brand perspective.

Growing a brand and building customer loyalty is very hard in any line of work. And this is becoming ever more difficult when it comes to NFTs as the market becomes more and more saturated.

The world in between?

‘The world in between’ is probably not the best way to describe this specific area of NFTs.

Workarounds have been found by the likes of Panini, Sorare and Dapper Labs with topshots to not have to have recurring licenses for specific players.

Nobody is going to come and take away panini stickers of footballers from years ago.

Same with Sorare cards that were issued and licensed in 2019.

And same with a LeBron James ‘moment’ on NBA Topshots from 2012.

In fact, Roham, CEO of Dapper labs, has confirmed that even before their partnership with the NBA is due to end - he wants to see the NFTs on chain (aka immutable). Something the NBA may not agree to without a lot of convincing, but this again opens up more cans of worms!

These models have great costs attached to them but it also means that your brand and product piggyback off of already existing, well known and loved brands and IP.

IP & Exclusivity

There have been some examples, however, where failing to get new IP deals in place has rendered many projects useless or in poor positions.

F1 DeltaTime was a game by Animoca brands, officially licensed by Formula 1. Games shut down all the time, but one day before this season of F1 launched, DeltaTime announced that they had failed to agree on a new partnership deal.

Now, they have had to shift gears, allow users to swap NFTs, bridge & wrap NFTs to make them something else. It’s all quite messy.

All whilst having to try and regain trust from your users and grow a brand greenfield after piggybacking off of F1 for a year.

It’s a really delicate situation to be in when you’re reliant on licenses.

It’s great when things are going well.

But can be fatal when they’re not, or you fail to renew.

So if you’ve got rights, and you’re being offered lots of NFT deals, what should you do?

Don’t give everything away to one vendor.

NFTs are a technology. Do not give ‘NFT’ rights in totality away to anyone.

This is the same as giving your digital rights away.

…But making your own valuable IP is hard?

Of course, it is…but if you are reliant on licenses, whilst being profitable short term, like F1 DeltaTime, you have to be prepared for your business model to implode should you not get recurring deals over the line.

Default to creating new IP. It’s hard, but not impossible.

And if you’re making deals with rights holders, ensure that those rights are not the absolute foundation of your business.

Like Epic Gaming with Fortnite.

They have their own IP and sell their own skins.

They also made deals with the NFL to sell NFL branded skins on the game. Of which they sold $50m worth…

What happens when more things go on-chain…?

A lot of people who hate on NFTs don’t usually think about things that are on chain.

An on chain NFT can have variable meanings, but mostly, the default is that the actual metadata and image are on a blockchain.

But when they’re on a blockchain, there’s no going back.

They’re immutable and as long as that blockchain lives - so does the NFT.

License holders can ensure that the NFTs are not ‘shown’ on something like Opensea or other marketplaces.

But they’re still there.

And there’s nothing to stop you from selling them OTC or on a decentralised marketplace.

Things will get more complicated from an IP perspective.

I’m curious and excited to see who builds greenfield, NFT native brands.

I’m interested in seeing how the long term relationship grows between rights holders and NFT vendors or projects.

Things will look very different in years to come, I’m sure.

More sports crypto stories & things to put on your radar

• Socios have signed up 13 NFL teams as the NFL goes all in on crypto.

• Blockchain.com formed the first ever NFL-crypto platform partnership

Great reads, great tweeting and more general ‘stuff’ that could impact you

• Punk6259 has to be one of the most influential people in the NFT space. His new project ‘OM’ - looks unbelievable. Somebody had to start building the open metaverse…

• Remember, there are no metaverses - there is just the metaverse.

• What web3 is now won’t be what web3 will become

• A lot of talk about Twitter and the Elon Musk bid. I liked SBF’s thread on what a decentralised

• Epic raise $2 billion from Sony to build ‘a metaverse’. 

• One of web3’s most powerful features.

Thanks!

Thanks for reading the latest edition of the Sporting Crypto newsletter. I’m really happy to see so many people enjoying it and sharing it with their networks. If you enjoyed this, please tell your friends who might be interested - and share it on social :)This newsletter is for informational purposes only and is not financial or business advice. These are my thoughts & opinions and do not represent the opinions of any other business or entity.