Are Derivatives the Next Frontier for NFTs?

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It would be an understatement to say that we are in an NFT boom. Artwork is flying off the shelves and everyone everywhere wants in. But where do we go from here? What is the next major advancement we can look to for keeping the NFT train rolling?

Today we will make a case for derivative works as the next major frontier in NFTs. Buckle up and let’s get into it!

What are derivative works?

According to this publication from the United States Copyright Office, a derivative work is “a work based on or derived from one or more already exist-ing works.”

Let’s take Cool Cats as an example. If you look at the header image of this post, the left side features some really awesome looking original Cool Cats, but on the right side, you will notice they look quite a bit different. Those are custom 3D derviative works by an artist who goes by the handle cfw on twitter . Twitter user ILLΞWMINATUS commissioned cfw to create 3D versions of his Cool Cat collection as derivative works.

In this case, cfw gets a nice commission and gets to show off his outstanding artwork and the owner of the Cool Cats gets to add these to his collection. This is a perfect example where the derivative works may increase the value of the original bundle which is for sale. It’s a win-win for both parties.

Sounds amazing right? Except there is one major problem; copyright law.

Legal matters matter

In most nations, intellectual property is protected from theft or illegal use without express written permission from the rights holder. This can be extremely complicated to navigate for everyday Joe’s like you and I and in most cases, getting permission from a license holder is out of the question.

But not with blockchain. With blockchain, the original creator can issue a license with their unique creations. Those licenses can set out a chain of custody of those rights that follow the piece of art, in this case an NFT, from owner to owner.

Why does this matter? Well, in the case of an NFT, a copyright owner can declare that an item is or is not approved for derivative works publicly on the blockchain. By doing so, artists can easily tell if they have the legal right to create derivative works of that specific NFT and in any legal dispute, the immutable record of that declaration is available for all to see.

Interesting, But why do we need that?

If you have followed modern NFT based projects like Bored Apes Yacht Club or Cool Cats , you may have noticed that a lot of users on Twitter and in Discord are offering to create really fun versions of your NFTs. These may be pixel art Cool Cats, designer 3D Bored Apes , or even versions that can be used in the MetaVerse. These are all derivative works of that original NFT.

The benefit of having a built in and intentional system for this is that you could also tie these derivative works to the original piece of art they were based on and make it easy for collectors to discover pieces based on their favorite NFTs.

The problem is, without clear licensing and rights agreements, those artists selling their derivative works could be sued for copyright infringement and it can turn into a mess for the industry.

Everyone would probably agree that the NFT landscape is full of amazing, positive, and friendly individuals who just love art. In 99% of the cases, the intention is to allow derivative works and even encourage them as much as possible. To protect the artists behind these amazing works, it is important that the industry create a clear and concise set of protections for everyone involved so that it can continue to thrive and grow.

Yes, that! Now what?

Well, it’s not something you or I can easily implement. It would require industry collaboration with industry platforms. Someone like OpenSea or Rarible would need to step up and help develop the proper standards and integrate them with their platforms.

NFTs already allow custom properties so it would not be hard for artists to start adding a property for “Derivative Works Rights” = “Yes” as a start. To create fully integrated systems with browsable derivative works however, it will take a much larger team effort.

Derivatives have huge potential

The derivatives market has as much potential as the NFTs themselves. If we can work together as an industry to create a system for derivative works that is as safe and easy to use as the current base NFT marketplaces are, it can take the market to entirely new levels.

The next major breakthrough for NFTs could be anything, but if I had my guess, I think derivative works have a lot of potential and will be the next major frontier for the NFT community.

So what do you say OpenSea? Ready to get started?

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