NFT worthless after 70 years? Digital art meets copyright

Much discussed and little understood: NFTs are overwhelming the art market, leaving as many dollar and question marks behind. With all the euphoria about record revenues, one question has consistently moved into the background: How do the tokens relate to copyright law?

Until a few months ago, NFT was only known to a few initiated cat motif lovers. That was to change suddenly when the first spectacular auctions aroused media interest. In the meantime, the NFT market has broken away from its CryptoKitties niche. Artists like Beeple are already selling their digital works in token form for millions. NFT seem to hit a nerve. In the zeitgeist of digitization, non-fungible tokens form the ideal interface for marketing and selling art, music and memes – internet culture can be monetized. They represent an investment for speculators and investors, artists hope for a bit of financial freedom and platforms earn a lot from trading. But the NFT mania could amount to a zero-sum game in the long term.

NFT and the question of copyright

Because one question has so far remained unanswered in the vast NFT thicket: Can the tokens actually keep what they promise? A key NFT selling point is the transfer of ownership and exploitation rights to the images and music titles represented. The metadata of a Beeple NFT guarantees the owner that it is a unique work, signed by the artist and authorized for further use.

However, this value proposition could conflict with German legislation. Because all artistic content, be it images, musical works, or even naive pixel art, are protected by copyright. And that has a half-life: 70 years after the death of the author, the term of protection expires, the exploitation rights are automatically in the public domain.

Certainly: Very few buyers are likely to be confronted with such a loss of rights for their entire life. However, inheritance is no longer necessary. Even if the NFTs survive on the blockchain: their value in the form of usage rights erodes in the long term. So is there a huge sword of Damocles hanging over the NFT mania?

Legal situation clearly ambiguous

The fact is: Anyone who thinks that with an NFT they also acquire sole and permanent ownership of a digital work of art is deceiving. The legal situation is clear. As Urban Pappi, managing director of the collecting society Bild-Kunst, confirms to BTC-ECHO, “a work whose copyright protection period has expired is in the public domain according to the law”. NFT are no exception: “Token or not, a third party could then use it, for example by taking a screenshot, then printing it on a cup and marketing it”.

But as clear as the situation regarding the term of protection is, there are still some loopholes in copyright law, which dates from a time when typewriters were in vogue.

The legal question of what is meant by ownership is interesting. In the conventional art market, this relates to the art object itself, whereby the copyright rights of use often remain with the artist, so that they can also be exercised via the visual art. In the case of NFT, ownership could be seen in a transfer of the exclusive copyright rights to the new “owner”. I am writing in the subjunctive because there are final exams to be taken here.

Urban Pappi, CEO VG Bild-Kunst

As long as the legislators do not readjust, much in the NFT sector is likely to remain in the subjunctive. The criterion of originality could also be problematic. Because only works that have a degree of “height of creation” – one could also say: a personal touch – fall under copyright law. It is obvious that this already vague criterion has reached its limits in the copy-paste age of digital art. AI-generated NFTs seem to fall out of copyright law per se. NFT generators can also be written off as a nice gimmick with no added value.

Running up against the wall?

Because of the many unanswered questions, the NFT sector runs the risk of huge bubbles forming. The mixture of crisis-ridden artists looking for new sources of income, champagne-laden art patrons who want to call the next Beeple their own and yield-fixated crypto investors creates a dangerous drop.

Nevertheless: The immense potential cannot be swept under the table, despite all justified skepticism. From the artist’s perspective in particular, the tokens create a new basis for livelihood security. Urban Pappi also highlights these effects:

On the one hand, there are advantages for artists through the sale of NFT works: this can be set in such a way that a share is credited to the artist’s account every time the work is resold. This mechanism corresponds to the effect of the resale right.

But even here the buyers could end up being left behind. Because:

The granting of exclusive rights to the “buyer” would have a disadvantageous effect, as this would mean that the author himself would not be able to further market copyrights to the work.

A classification for the music industry would also have been interesting. However, GEMA did not want to respond to a request. The NFT trend does not seem to have got around to all collecting societies yet.