The Yuga Labs acquisition of Cryptopunk and what this means for NFT IP rights
Yuga Labs are web3 and decentralized but what happens to IP rights when an acquirer isn't?
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Yuga Labs acquires CryptoPunks + Meebits
Major news broke on Saturday March 11, that Yuga Labs, the parent company behind Bored Ape Yacht Club had acquired CryptoPunks and Meebits collection for Larvalabs.
The rumour mill had started earlier that week, though, with the Meebits collection recording a record number of sales the day before the acquisition was made official.
This move sent shockwaves throughout NFT Twitter, not just because it’s the second big acquisition in web3 (the first goes to Nike purchasing RTFKT), but because of how different the philosophies are of Yuga Labs and Larva Labs.
The battle for CryptoPunk IP rights
BAYC came onto the scene with a novel approach when it comes to IP rights: grant the owner’s full commercial rights. Launch a brand, sell T-shirts, put your ape on a TV show. You can do whatever you want with your ape because you own it. The IP rights are connected to ownership, which is tracked on the blockchain.
Yuga Labs spells out their philosophy on ownership: temporary stewards of IP that eventually will be decentralized. Meaning, the community will eventually own BAYC in its entirety.
Larva Labs, on the other hand, have always held a tighter grip. Take their Meebits collection, which launched 20K metaverse-ready 3D models in May 2021. 10K were held for punk owners to redeem for free, while the other 10k were sold in a dutch auction. The IP rights for Meebits were clear: you can commercialize your pfp, but only up to $100K. Not ideal, but better than what CryptoPunks got: nothing. CryptoPunk IP rights sat squarely with Larva Labs. And what did they plan to do with these rights?
Well, in August 2021, the Larva Lab founders, Matt and John, inked a representation deal with United Talent Agency. CryptoPunks and Meebits were going Hollywood with UTA. The plan was to pursue projects in film, TV, video games and other mediums. The representation deal also came with baggage from the old web2 world, four letters that would make any degen cringe: DMCA takedowns - focused on other derivative punk collections, similar to what Larva Labs launched against CryptoPhunks earlier that summer.
The timing of the UTA deal is important too. It was announced late August, at a time when the BAYC floor price was hitting new highs and Apes were utilizing their IP to launch coffee brands, skateboards merch, and write books. Meanwhile, CryptoPunks and Meebits holders had none of that freedom. Naturally, this created animosity between the two camps. There wasn’t any bad blood between BAYC and CryptoPunks. Still, I’d be remiss to say that many punk owners did not appreciate the new kid on the block coming for their lunch money (aka, predictions that the BAYC floor would flip CryptoPunks - which did end up happening in December 2021).
Many Punks wanted the same rights afforded to BAYC holders. punk4156 was especially vocal about his displeasure:
With some internet sleuthing, punk4156 went as far as to find an article from 2018 (no longer available but viewable on archive.org) that stated that one of the founders of Larva Labs had originally wanted each punk to have their own IP rights.
Despite his and other public pleas, Larva labs did not budge. On December 9 2021, CryptoPunk 4156 was sold for 10.26 million. Three months later, with the acquisition of CryptoPunk and Meebits, Yuga labs officially granted IP rights to owners.
Yuga Labs acquisition: mixed feelings in the community
By and large, this move is celebrated in the NFT community. IP rights is what Punks and Meebit owners have been clamouring for months. They can finally unleash their creativity and build products and brands around their online identities. Punk6529 had a positive and measured take, while others like DCinvestor were disappointed. I’ll summarize both perspectives below.
Punk6529 sees the acquisition as an ultimate win because Yuga Labs are web3-native and champion open IP vs. what an acquirer like Disney would do: clamp down further. Second, it’s not unreasonable to think that Larva Labs were planning to monetize their two collections someday - their reluctance to give IP rights + signing with a Hollywood agency point to that. But in truth, Matt and John of Larva Labs are and have been innovators, not businessmen. Whatever they planned to do or could do, Yuga Labs would execute 10x better at it - just look at the last year. Going from a 0.08 ETH pfp project to the big dog in under a year is not easy, it requires god-tier execution.
The converse take, which DCinvestor voiced is simple: if corporations can buy and sell NFT properties like CryptoPunks and change the license, do you really have IP rights or are you renting?
Take this tweet for example:
I reckon that he views Yuga Labs as a good steward for this IP, but is wary about the principle that the IP rights are at the whims of the acquiring company. What if Meta begins to acquire established NFT communities, like they did with app in their web2 days (Instagram, Whatsapp). Perhaps they’ll respect the original IP license for a time, but later decide to amend it to be more restrictive. It’s a worthy question to ask.
I think where both perspectives align is: who really owns the IP of a collection if it can be bought, sold and traded like the individual NFTs that make it up? Yuga Labs has vowed to be a temporary steward for IP, aiming to decentralize it fully - but that’s because that’s what they believe. Their principles and values align with decentralization. What happens when Disney or Meta starts acquiring NFT projects? In a sense, we already have had that happen when Nike acquired RTFKT. The license on RTFKT’s pfp project Clone-X is exactly what you’d expect for a web2 brand: no commercialization rights.
How many other founders building in web3 right now share Yuga’s perspective for ultimate decentralization? How strong is their resolve? Would their perspective change if Disney or Meta threw the bank at them?
Yuga Labs has made it clear that so far that they aren’t in a rush to do anything more with CryptoPunks and Meebits - their focus remains on the BAYC ecosystem. But this acquisition will likely open the dam doors for others to come. Already, there is word floating about Disney acquiring a property in the space. We know they won’t be as kind and concerned about decentralization as Yuga are.
These are the important questions and conversations we need to be having as we move forward. The decentralized future depends on it.
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As more and more big companie enter the NFT space, will it become more about the $ and less about degening w/ fren? I suppose only time will tell...