I’ve had current and potential clients ask me about NFT’s over the past few weeks, and I’ve seen advocates on both sides of the issue present their perspectives. This isn’t meant to be a definitive statement on the technology and its impact on the industry. It certainly does not constitute business or legal advice. In the end, this can only be the beginning of an evolving perspective from someone who works with the legal issues surrounding comic book art, that can hopefully help increase understanding of this fluid topic.
What is an NFT?
The acronym NFT in this case stands for “non-fungible token”. While there is a more complex definition based on the underlying blockchain technology used to power it, the easiest way to think about NFT’s is as a unique digital file. According to The Verge “NFTs can really be anything digital (such as drawings, music, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art.” On a certain level, NFT’s can be seen as an evolution of the selling of a singular physical art piece, like a commission you buy at a convention in artist’s alley or the single copy of Once Upon a Time in Shaolin that the Wu-Tang Clan sold to pharma-bro back in 2015.
What is the Value of a Digital File?
If an NFT is a digital file, and digital files by their nature can be instantly copied an unlimited number of times, what is the point of paying a lot of money for a digital file? The answer to that question can be traced back to the nature of collection in general and comic book collecting in particular.
Certain people have collected things that interested them from the time we could pick things up. Elite members of almost every civilization have collected works of art as a way to display their power and taste. There is an entire segment of the comic book industry based on the collection of comics and a separate market for original art from those comics.
For example, in 2014 there was a sale for Superman #1 for 3.2 million dollars. The 2021 value of a similar book is currently listed at 23.6 million dollars. But why? If you don’t care about comics or you don’t like Superman, these numbers might seem ridiculous. What is the inherent, universal value of a Faberge egg, a Basquiat painting, or a rare comic?
There isn’t one. The value is subjective. As long as the seller can find a buyer willing to pay the cost, then the value exists for that transaction. So while paying millions of dollars for a digital file doesn’t make practical sense, it makes just as much sense as any other subjective artistic collectible. The only difference in the case of NFT’s is the difference between the object’s digital and physical existence.
What is the Impact on the Environment?
Like many types of blockchain technology, the NFT process harms the environment in ways that override any economic benefit it provides. While the specific harm to the planet is a matter for debate, it should be taken in the context of the wider environmental impact of the comic book industry for comparison.
Before the pandemic, if one artist in New Jersey wanted to sell one piece of original art at San Diego Comic-Con, she would have to take a car to the airport, get on a plane, take a car to the hotel, consume several meals for several days and then repeat the whole process to get back home and she might not ever sell her art. At the same time, hundreds of potential buyers of that single art piece would have to replicate the process on their own.
How much negative environmental impact does that create? I’m not an environmental expert. This scenario is not an apples-to-apples comparison, since both the buyer and the seller here might get more benefit from the trip than just the sale of one piece of art, but the sale of comic book art, and comic book fandom in general, isn’t inherently environmentally friendly.
What is the Impact on Comics Creators?
While any digital file can be sold as an NFT, not all digital files, or their creators, have the same stakes in the process. In my opinion, colorists, letterers, flatters, editors, and designers don’t have much to gain from NFTs. Writers might also find a hard time finding interest in their scripts or pitches without some extraordinary factors. At the same time, cartoonists and creator-owned comic creators who own their work outright appear to have more flexibility to pursue NFT’s than freelance creators. Artists and publishers have the most to lose or gain from the potential NFT market.
Artists, who have been able to supplement their income with the sale of original art in the past, lost some of that capacity as they moved from generating work in a digital rather than physical medium. Publishers, looking for additional sources of revenue from their intellectual property, see NFT’s as a market that could be bigger than the sales of the actual comics. Battle lines are being drawn based on who has ownership and control over these assets.
Who Owns the Comic NFT?
Ownership and control over NFT’s comes down to the contracts governing the underlying intellectual property and the relative leverage between the artists and publishers for any single comic.
In a well-designed collaboration agreement or work for hire contract, there should be language concerning the ownership and disposition of original art. These clauses historically dealt with physical art, but they can be modified or interpreted to cover NFT’s.
Here’s an example of an original art clause. As you read it, keep in mind that the Owner is the publisher, the Talent is the artist, the Project is the finished comic, and the Services is the artwork.
The parties agree that Owner shall own all of the Services. Any original physical artwork created under this Agreement shall be owned by Talent. Talent may utilize up to four (4) pages of the Services in their professional portfolio or any marketing, advertising, or other display of the Services after the commercial release of the Project. Talent may not use any aspect of the Project to create additional materials not authorized and approved by Owner.
This paragraph attempts to achieve four goals. First, it designates that the publisher owns the pages produced by the artist. Second, it designates that the physical artwork (if there is any) is owned by the artist. Third, it allows the artist to use a portion of the pages to get more gigs after the comic is released (to avoid spoilers). Finally, it prohibits the artist from making and selling things without the approval of the publisher. The last sentence can be used to effectively prohibit the creation of an NFT, if the NFT is determined to be “additional materials.”
This is an example of an original art clause, but the contents of this clause can vary wildly based on the relative power of the people signing the contract. For example, an artist with enough leverage could have the word “physical” removed from the second sentence, giving her the potential to sell NFTs.
Leverage is defined as the power one side has over the other side in the pursuit of their interests. Companies like DC are using their leverage to shut down creator's attempts to generate revenue from NFTs that include DC characters. On the other end of the spectrum, publishers like AWA are coming out in favor of artists generating revenue from NFT’s. The difference in position could be based on a dissimilar corporate philosophy, or in the disparity in the market share and popularity between the companies characters, or a host of other reasons. In any event, artists who plan on selling NFTs will have to consider which publishers they work with and what they agree to in their contracts before they start selling.
What is the Future of Comic Book NFTs?
As I said in the beginning, this isn’t the last word on this issue. NFT’s, like page rates and other forms of compensation for comic creators, will continue to be a source of contention in the industry. There will continue to be business, legal and social fallout on both sides of the NFT issue depending on their relative position. The technology might become more efficient, more costly, or ultimately replaced by new technology. The market might stabilize or collapse. Publishers and artists could use the potential of NFTs as a negotiation point or as the basis for ongoing litigation. Whatever happens, creators, publishers, and consumers will have to reconcile with the continuing impact of digital technologies on the business of comics based on their goals, beliefs, and position in the industry.
Have fun with your comic
Gamal
If you have questions about the or legal aspects of your comic book publishing and you'd like a free consultation, please contact me and we can set something up that fits in with your schedule.
PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE AN ISSUE WITH YOUR COMIC PROPERTY, DISCUSS IT WITH A QUALIFIED CONTRACT ATTORNEY OR CONTACT C3 FOR A FREE CONSULTATION