The arrival of non-fungible tokens (NFTs) is empirically democratising art. The technology is being adopted quickly. Even elements of video games, lines of code, images, GIFs, etc., are undergoing a new form of commercialisation and can be considered art. Isabelle Beyneix writes that NFTs present a challenge for legal experts, in a context where copyrights are difficult to enforce and establishing legal artist resale rights appears complicated.

It seems that tokenisation may allow digital culture to establish a certain level of legitimacy. Nearly anything you see or hear in digital format can be made into a non-fungible token (NFT). It is now possible to create unique assets in a digital world where duplication is the norm, by authenticating specific virtual works and even creating a second-hand market. While Web3 (a term that depicts the next stage of the internet, with blockchain, cryptocurrencies and NFTs) allows for copies to be made and offers no other choice but to accept it, NFTs could bring back a certain guarantee of uniqueness.

The Ethereum blockchain was an essential contributor to these developments, as it was the first to make it possible to create decentralised applications (Dapps) using smart contracts. These operations produce a token, which can be used as currency or for other purposes. The tokens, produced by a blockchain, vary depending on the properties attributed to them. ERC721 is an NFT that represents a digital item, with unique characteristics. These tokens therefore offer a type of rarity, as well as a certain level of traceability and non-replicability. Furthermore, as of January 2023, it is now possible to create NFTs via the Bitcoin protocol using the BRC-20 token standard, an experimental standard for fungible tokens, known as Ordinals. Since June 2023, Ethereum has been using a similar system.

The game has changed, as the more a digital object is seen and shared, the more value it has. The cultural sphere is quickly adopting NFTs, thereby changing the traditional field of art and media. Certain areas of the media (elements of video games, lines of code, images, GIFs, etc.) are undergoing a new form of commercialisation and can be considered art. Art is no longer seen as something private, to be admired at home, but something public, shared both on the walls of museums and on screens.

What’s more, NFTs can be used for funding. Niels Juul, film producer and founder of NFT Studios, announced the first film entirely financed by NFTs. Filmmaker Claude Lelouch also sponsored the creation of Klapcoin, with an initial coin offering (ICO) launched with the aim of funding a film.

Blockchain can also be seen as a way to remove the middleman represented by collective management bodies, such as authors’, publishers’, performers’ and music producers’ societies. The Spotify blockchain, Mediachain, aims to make it possible to upload and trace the circulation of a work. However, legislation is struggling to keep up with NFTs. To be covered by intellectual property law, a work must be fixed on a medium and original. Furthermore, an NFT is simply a way to access the digital file of a work.

The condition of originality is fulfilled if there is a specific intellectual contribution from the author. Some consider that the process of creating a token, as opposed to the digital file to which it is connected, is in no way original, as it is a standardised computer protocol (ERC-721). NFTs are technically a standardised token, published under an open-source license, which itself does not present any originality.

Only if the NFT is a native work, meaning that the work in question is an original incorporated into the NFT by the author, we can consider it as a medium. The work is also original, as it has been programmed into a smart contract by the creator.

We can therefore consider that copyright could apply to NFTs as a support for virtual objects created in the metaverse. NFTs are polymorphic in nature, given the wide range of possibilities available when they are created.

Artist resale rights grant an author a percentage of the sale price when their work is sold by an art market professional. FilmChain uses the Ethereum blockchain to automatically collect and allocate revenue for film, TV and digital content. In the same vein, in 2022, French rights society SACEM signed a partnership agreement with the company Pianity, to ensure that appropriate remuneration is given to rightsholders for NFT music sales. But in reality, these contractual artist resale rights are more like royalties. To this end, platforms have developed a smart contract technical standard, EIP-2981.

Different forms of media are melting into a vast ensemble, where technology, business and creation develop new connections. If Europe is not careful, France’s cultural exception will suffer in this Anglophone audiovisual space, which is leading to a new mass media culture and common law legislation. It is very possible that American law may disrupt France’s various national laws and European law. For now, a certain number of “marketplaces” only award compensation to the NFT creator if the smart contract used is theirs or is compatible with theirs.

It is difficult to know if NFTs symbolise the by-product of a consumerist society, which has pushed commercialisation to the extreme, or the beginning of the democratisation of lato sensu culture promoted by André Malraux. Information, entertainment and culture are fusing together. Is the commercialisation of media inevitable? In any case, the legal context of Web3 must be covered by European law, and for this, legislation must be adapted to these new technologies. For now, NFTs are not considered a work of art and are not subject to artist resale rights in Europe.

• This blog post is based on Law and the extension of art to new digital productions: the creation of NFTs, part of ESCP Business School’s New technologies and the future of individuals, organisations, and society impact paper series.
• The post represents the views of its authors, not the position of LSE Business Review or the London School of Economics.
• Featured image provided by Shutterstock 
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