IP Revenues in the Web3 Digital Landscape - Part I
IP + Web3 Risk Mitigation
Cryptocurrency and blockchain tech is a game changer, as evidenced by the innovation we see taking place across the world of assets (NFTs, Bitcoin, RWAs), applications (metaverse, gaming, defi) and infrastructure (Layer 2 protocols, rollups). It’s a vast and ever-expanding landscape, but real-world uses have not yet proliferated.
Intellectual property, where certain rights to inventions and creative works are attached to a person or entity, is one such case. With ancient roots, the law has evolved over the years to become the modern IP framework that we know today, yet the digital age has presented a series of problems which it must overcome. Regardless, the goal remains the same: incentivize innovation and creativity while setting legal frameworks to protect the rights of creators. All the while remembering the importance of promoting public access to these protected works.
This leads us to the question, how can IP adapt to the unique properties web3 allows, and what obstacles should we look out for?
IP Revenue Generation: Background and Risk Mitigation with Web3
IP has long been a cornerstone of revenue generation, allowing creators and companies to monetize their innovations through many ways, including:
Licensing agreements
Royalties
Direct IP sales
Franchising
Merchandising
Strategic partnerships
Web3 unlocks new possibilities for user-generated content (UGC) platforms like Roblox and Fortnite, which boast billions of players. While securing IP rights for games with brand recognition can be difficult for individual developers, Web3 offers a solution. By combining licensing technology with Web3's risk mitigation features (discussed later), creators of all levels can more easily access existing IP and monetize their own within multiple platforms. This also allows big companies to expand their reach and monetize existing IP through new channels and audiences. Imagine a movie studio not just partnering with fast food restaurants for toys, but launching popular games with their characters, capitalizing on both Web2's resurgence and Web3's potential.
In the digital age, traditional IP protections face more challenges than ever before. While IP rights are traditionally secured through licensing agreements or lengthy registration systems, our ability to protect these assets and revenue generating opportunities hasn't kept pace with technological advancements, particularly in web3. Some protections have been added over the years, including encryption and watermarking. However, the ability to create and monitor such protections has not maintained parity with other advancements. Web3 for instance, relies heavily on blockchain and distributed technology and introduces concepts such as tokenization and cryptoeconomics.
Web3 tackles a major pain point: preventing IP infringement.
The traditional system leaves creators vulnerable, as evidenced by Activision Blizzard's $23 million lawsuit for using infringing technology in games. In the gaming industry, where every element is protected, Web3 offers a solution.
This is where blockchain technology, known for its transparency and secure data storage, comes into play. Unlike cloud storage, blockchain allows authorized users to access IP assets while maintaining an immutable record of ownership and usage history. This addresses two key issues: access control and enforcement.
While some concerns remain regarding broader adoption of blockchain's transparency and data security, major institutions like banks are already embracing it for its operational benefits. This established technology can now be used to securely store IP assets, eliminating the need for cloud storage or less reliable methods. Next week, we’ll unlock how direct IP sales have been impacted by fractional sales and web3. For more information on Spaceport’s solutions contact us.
Tae Mi Lee is Spaceport Head of Finance. Tae Mi Lee brings a wealth of experience in financial strategy and operations, facilitating multiple M&A transactions and funding rounds. Tae Mi was previously Head of Finance at Republic, a crypto advisory and private investing platform across all asset classes. While there she helped Republic raise their series A and B rounds, leading to a unicorn valuation. She was CFO at Nextseed, where she helped facilitate the acquisition and sale of Collaboration Capital. Previously she also served as Director at Cheniere Energy, where she helped raise over $40 billion across all equity and project financing. Her leadership will be instrumental in supporting Spaceport’s ambitious growth plans.
