For the most part, non-fungible tokens, or NFTs, are just a new medium for existing content. Many of the intellectual property legal issues raised by NFTs are the same issues that content owners face regardless of medium, and in particular the same issues that arise with every new technological innovation.
An NFT is a one-of-a-kind digital asset. An NFT represents something else, in some cases something from the real world, such as artwork, images, music or other items, and in other cases digital works.
While NFTs began somewhat as part of the Wild Wild West, many creators focused on the excitement of the new medium, without paying much attention to the ownership of the underlying content.
But like all new media and distribution channels, whether broadcast TV, cable TV, the Internet, digital distribution, audio or digital books, social media and now NFTs , the essence of value resides in the CONTENT distributed. And someone owns this content.
For brand owners in the wine sector, NFTs present risks and opportunities.
The main risk is the appropriation by unauthorized persons of the brands of a wine estate. The first NFT rush saw FT creators take all kinds of existing content and create and sell NFTs. This may include trademarks, logos and other identifying content of a winery or grape producer. Brand owners should monitor NFTs as they monitor media to ensure that their trademarks or copyrighted content is not being misused, or to imply another party’s endorsement when none were given.
The opportunities for NFTs extend to the areas of authentication, brand awareness, and additional revenue streams.
An NFT can represent a brand itself. Since each NFT is unique and only the owner or licensee of a trademark can legally use it, an NFT can serve as a very useful brand identifier to identify the source of goods and services, and as a tool for authentication to fight against counterfeits.
NFT Example: Luxury Goods Manufacturers
Manufacturers and retailers of luxury goods can create different numbered NFTs linked to their product versions and use NFTs to authenticate products. The NFT can be integrated directly into the physical product via an RFID chip or a QR Code. The NFT is transferred to the buyer together with the product.
Producers of products may provide an NFT Certificate of Authenticity (“COA”) with the sale of physical products. An art dealer’s NFT authentication certificate provided this:
“Our NFT Authentication Certificate allows the COA of your physical artwork to live in your blockchain wallet as a non-fungible token, not only for digital preservation and permanence, but also for the ability to own a form of COA smart contract. Using breakthrough technology, this non-fungible token records the date of purchase, the artist’s name, the title and medium of the work, an image of the physical work, as well as the year of creation and the place where it was produced.
Mondavi Winery has partnered with artist Clay Heaton to create a collection of limited-edition wines in porcelain bottles and issued NFTs to authenticate wine, to take action against counterfeits. NFT buyers received a physical bottle of wine when purchasing the NFT.
Additionally, brands are embracing NFTs as desirable assets in themselves that promote the brand and its business.
NFT Example: Taco Bell
Taco Bell created an NFT illustration of its tacos – “NFTacoBells” – which sold out within 30 minutes, some for over $3,000. The brand awareness program included a halo effect: proceeds from sales went to the Taco Bell Foundation and its scholarship programs.
Dole Foods offered a set of NFTs designed by artist David Datuna. The 5-part NFT set sold for over $100,000, with funds going to Boys and Girls Clubs to fight food insecurity.
AMC Theaters issued over 86,000 Spider-Man NFTs to loyalty program members as part of the Spider-Man: No Way Home movie’s release in late 2021. Some of the NFTs traded for over $1,000.
Norwegian Cruise Lines has released a series of 6 NFTs featuring designs by the artist who designed the hull artwork for two of NCL’s newest ships. The starting price for the offering was set at $2,500; proceeds were to be donated to Teach For America. The auction winner would also receive a stateroom with a balcony on one of the new ship’s maiden voyages.
Marriott has teamed up with three artists to create three different NFTs based on travel experiences for its Marriott Bonvoy loyalty program. They launched their NFT program at the Art Basel art exhibition, where NFT winners also received 200,000 Marriot Bonvoy points.
Some brands are hitting on NFTs for their value as a new revenue stream.
NFT Example: Budweiser
Budweiser launched its The Heritage Collection NFTs in November 2021, featuring 1936 unique digital beer can designs to commemorate the year Budweiser created its first can. 1,900 Core Heritage chips were priced at $499. The other 36 were Gold Heritage tokens that cost $999 each. Everything sold out in less than an hour.
Dolce & Gabbana launched an NFT collection during Venice Fashion Week that sold for nearly $5.7 million. Owners of the NFTs also received physical versions of the items depicted, as well as exclusive access to future D&G events.
Nike has acquired RTFKT, a leading creator of digital sneakers and collectibles. Digital sneakers can be used in video games and can also be linked to physical versions of a shoe. The project included a creative element, as the virtual shoes could be digitally crossed with other virtual shoes to create original versions that could be transformed into real-world shoes.
Adidas launched an NFT collection called Into the Metaverse, as a collaborative project between Adidas Originals, GMoney, Bored Ape Yacht Club and PUNKS Comic. Adidas also bought a Bored Ape named Indigo Herz and dressed him in a custom Adidas-branded tracksuit. The project sold 30,000 NFTs for around 0.2 ETH, or around $765 each. The NFTs sold out within hours and Adidas earned $22 million.
The metaverse and NFTs provide opportunities for brand owners, in the wine industry and beyond, to expand brand awareness and explore new revenue streams.