“Metaverse” quickly made its way into the Hollywood lexicon as an idea, starting out as science fiction but now evolving into an achievable aspiration that companies are striving to achieve.
The metaverse in its full-fledged form does not yet exist, but there are many “proto” metaverses that are available today for reference (think video game platforms). In the most basic terms, the Metaverse will likely leverage Web 3.0 technology to support real-time, large-scale, real-life 3D simulations. Concretely, this means that the metaverse(s) will be a shared virtual space where people can gather, interact, work and play, all in real time.
With this comes a seemingly limitless opportunity to create, modify and interact with the content of these virtual worlds. As entertainment powerhouses compete to launch various iterations of the metaverse, now is the time for creators and content companies to start planning how they will make their mark in this new virtual territory. Here are five key things to keep in mind as you head into this space.
User-generated content in the metaverse: The metaverse will likely be filled with user-created content, as opposed to the hosting platform itself. These users will not only be individuals, but also companies, institutions and perhaps even governments.
While user-generated content offers unlimited creative possibilities, it also means content owners need to be prepared for their content to be manipulated by other users or used in unexpected ways. For example, what if someone decorates their metaverse home using a copyrighted image they don’t own? Or place two third-party images next to each other in a way that portrays them both in an unflattering light?
The primary consideration here is content control. When licensing content for the Metaverse, it will be important to consider who should be able to use or manipulate your content and how they are permitted to do so.
In addition, appropriate technical controls will be helpful in monitoring and enforcing the proper use of this licensed content. Types of controls can be specific to a particular metaverse, but can also be driven by the content owner, especially in the case of a decentralized metaverse (i.e. a metaverse that does not have a part controlling or moderating what happens on this platform). Examples of controls currently in use that may continue to apply are DMCA takedowns or content identification technologies that are used to identify copyrighted or trademarked content. These are the types of things that will need to be employed and probably augmented in the context of the metaverse.
Metaverse and cross-platform content: Many anticipate that digital goods and virtual identities will be able to travel across metaverse platforms. This potential capability raises additional content control considerations, including whether you even want your content to be interoperable with other metaverse platforms.
To the extent that content interoperability is part of your plan as a content owner, consider the scope of the license needed to enable distribution on other platforms, if and how the license will transfer with the content, and how you will monitor and enforce this license.
It will also be important to ensure that the content can actually travel to the desired platforms in a secure way and be presented and used in a way that accurately represents the content to the satisfaction of the content owner and the end user. Interoperability presents both legal and practical challenges to keep in mind.
The persistent nature of the metaverse: The metaverse is likely to be persistent, meaning it will be active by default and will not shut down if you leave the environment. Therefore, an action that occurs when you are offline can still affect your digital existence.
Imagine if you left virtual goods on a street corner in the metaverse – perhaps a virtual wallet your avatar was carrying – and you logged out without picking it up. Another user might come and pick it up while you’re offline, similarly if you left your wallet on a street corner in the real world overnight, it might not be there when you return. pick it up the next day.
The metaverse will also be persistent in the sense that it will support data continuity, which means that there is no resetting of the metaverse when leaving the environment. Your virtual existence, including the effects of your actions during your last visit to the metaverse, will be recorded and will exist in some form. Like in real life, in a metaverse environment, what you do is likely to follow you and it may be difficult or impossible for you to clear your history or start over.
This means that your business operations and customer interactions in the metaverse may require real-time engagement on a perpetual basis. The standards are still being worked on, but we’re probably dealing with a 24/7 interactive environment, and it’s worth considering whether any adjustments need to be made to your brand or customer strategies (eg. example, adding AI-powered customer engagement, for example). Additionally, you could assess what types of agreements need to be in place in order to implement these strategies.
Bringing real-world elements into the metaverse: The metaverse is likely to be a “digital twin” of the real world, as it will contain virtual representations of many places, people, and things found in the physical world. All of these digital recreations can raise questions about the scope of property rights in the real world and whether those rights enjoy the same protection in the metaverse.
The answers to these questions remain to be seen as the law evolves in this area. However, this is likely to be a problem in the metaverse – just as it was in video games that included virtual recreations of real-world elements. Video game developers have been sued in the past (sometimes successfully, sometimes not) for infringement, as well as image rights and privacy violations, in cases where they have copied features too small as a basketball player’s tattoo or signature dance move.
In terms of risk mitigation, to the extent that third party intellectual property is used in your licensed content, it is always best to ensure that you have all the necessary rights. Additionally, taking an active role in the design of virtual content can help ensure that creative and legal teams are aligned on what is acceptable.
The metaverse economy: The metaverse will likely have its own native economy where people can earn, spend, and invest real money in digital goods and services.
And different metaverse platforms may have different capabilities when it comes to accepted currencies, crypto or otherwise, or tied to existing services like Apple Pay or PayPal. In-game or in-app purchases provide some direction to the concept, but the use case for the Metaverse is much broader than that. In-app or in-game purchases are limited to a very specific environment, but in a metaverse platform, you can use cryptocurrency to purchase digital goods related to a number of apps or games.
The metaverse also differs from the in-game or in-app purchase model because in the latter there is a one-way flow of money from users to the platform. In the metaverse, we’ll likely see not only that, but also users earning money from other users on the platform for goods and services, for example.
The economies native to the metaverse, and the goods and services they contain, should have a lot of potential value. Therefore, it should be determined what kinds of risk mitigation strategies need to be put in place in order to protect your digital property and other digital assets that may be worth as much or even more than those in the real world.
For content owners, protecting and tracking digital assets will be critical, especially as they begin to move across platforms. A useful tool can be non-fungible tokens (NFTs), which are unique digital assets whose ownership and trading history can be tracked via the blockchain and whose records cannot be manipulated. Additionally, NFTs can also facilitate the payment of royalties to content owners.
It is important to note that NFTs consist of two distinct components: the token part stored on the blockchain and the content (like an image) which is usually stored separately on a server and to which the NFT is linked. Therefore, while NFTs can be useful in acting as a digital rights management tool in tracking the token, you will still need to track and protect the use of the content itself with the digital rights management tools in place. today, at least for now.
As the potential next iteration of the Internet, the Metaverse promises to be an exciting and valuable new frontier for content owners and creators, and while there are many new questions to consider, there are just as many. in-store opportunities.
Adrian Perry is a partner in Covington & Burling LLP’s Tech/IP Transactions group and co-chair of the firm’s New York-based Music Industry group. Merissa Pico is a partner in the Tech/IP Transactions group of Covington & Burling LLP, specializing in the media industry, based in New York.