Much is being written about the legal issues raised by the surge of developments in the crypto space. But less attention, it seems, is being given to the role of media counsel in how to navigate these issues.
Where and how do we fit in what is being called the new “decentralized creator economy”? How will we use established legal principles in a manner that supports innovation and balances the interest of all stakeholders involved? When does a creator economy overstep the interest of the other key players in the content production cycle, including distributors and public figures? And how, for example, should we be thinking about BitClout?
It’s touted as a “Yelp for People”, where users can monetize and speculate on social media following and other people’s reputations. What could easily be mistaken for a Black Mirror episode plot is the premise of one of the latest developments to hit the crypto scene.
Launched March 24 2021, BitClout is a new type of a social media network operated by its own blockchain and native currency: BitClouts. BitClouts are used for all actions on the platform. For example, to like or share someone’s post will cost you some BitClout.
Its most talked-about feature, however, is “creator coins”: every profile on the platform gets its own “creator coin” that anyone can buy and sell with BitClout, like a share on the stock market. Instead of a company or content, you monetize yourself. The more popular you are or good you do in the real world, the more people buy your coin, and the more your coin is worth (or see BitClout’s formula used to determine price of a “creator coin”).
Here’s the twist: profiles of the top 15,000 Twitter accounts were pre-loaded into the platform, without the account holders’ prior consent. Creator coins for Kim Kardashian, Elon Musk, Barack Obama and Justin Bieber (to name a few) were being bought and sold even though the individuals had not joined, or possibly even heard of, BitClout.
Until a user joins BitClout, the profile is “reserved”. To claim one’s profile, the user must go to BitClout, and Tweet their public key (like a profile link). This function is available only to a verified Twitter account (it is not clear whether a profile and “creator coin” can be issued for an individual that does not have a Twitter account). Once done, the user can claim a certain percentage of the value of their coin (e.g 10%). BitClout has received an estimated $170 million to date, predominantly in the form of funding from prominent crypto venture capital firms, but only a handful of accounts have been “claimed”, including those of Elon Musk, Ariana Grande, Katy Perry and Justin Bieber.
Lawyers reading this will be quick to ask: what about the right of publicity?
The cause of action varies across the US but generally prevents the unauthorized use of another’s name, voice, photograph, and, in many states, likeness on products or merchandise or for purposes of advertising and promotion.
At least one cease-and-desist letter has already been sent to Nader Al-Naji — former Google engineer and crypto-venturer, widely thought to be Diamondhands, BitClout’s “anonymous” creator — on behalf of Brandon Curtis. The letter cites violations of California’s right of publicity statute (Civ. Code §3344). By using Curtis’ name and likeness to solicit a product — i.e. the “creator coins” — the letter argues BitClout is “directly profiting from the likeness of others”. In response, Diamondhands has said BitClout will comply with any removal requests. Exactly what removal entails is unclear, but due to immutability of the chain, one assumes this means being “depublished” on the public facing interface of the BitClout platform.
Are creator coins a “product or service”? Is BitClout using celebrity names and images for advertising and promotion purposes? Or are these questions missing the point and should we be focusing more on the speculative nature of BitClout and the investment of crypto in reputation as more akin to a bet? Most would agree that betting on whether a soccer player will score one or more goals in his next game does not violate the player’s right of publicity.
These conundrums are the stuff that law school exam question dreams are made of. Discussing the legality of these platforms is intellectually stimulating, but it is unclear in practice how this reasoning will be enforced and applied. By their very nature, decentralized systems appear designed to exist outside of traditional regimes and without the oversight of the middleman (be it the regulatory, financial or legal middleman). Indeed, it is not clear who a cease-and-desist letter addressed to BitClout should even be send to, or how that letter can be enforced. While this does not and should not give carte blanche to crypto developers, it does raise the question of the most efficient place to direct our legal efforts and whether earlier dialogue and more partnership on thought leadership between the crypto and copyright/media practitioners is needed.
Taking a closer look at the goals of and/or rationales for these technologies may be one step in the right direction.
Consider BitClout as an example. What greater good can come out of speculating on reputation?
For some, decentralized social media platforms will be attractive as more “cancel proof” than traditional platforms, like Twitter. While individuals who do not want to be on BitClout can ask to be removed, there is nothing as of yet to suggest that BitClout will remove content “it” (whomever “it” may be) deems objectionable. With no centralized platform or moderation policies, there is (in theory) no automated ability to kick someone off BitClout. The value of your coin would just go down, along with your reputation in the real world.
For others, BitClout may be a way to give back to the user. Platforms like Twitter and Facebook generate billions of dollars in revenue from advertisements, in the form of promoted posts or stories. Retweeting, sharing or liking that post, as a user, however, gives you no financial return. Yet, without such user activity, the advertising revenue stream would be meaningless. In contrast, by buying someone’s “creator coin” and retweeting it, the user is invited to participate in the financial success it has helped built, or, in Diamondhands’ words, “ride the rocket ship” with the creator. As an alternative to ad-driven centralized social media platforms, BitClout may be offering a different relationship between social media users and the individuals they back.
Finally, BitClout taps into a fundamental shift we have seen take place over the pandemic: direct-to-fan models. Indeed, maintaining fan engagement and relationships with fans has been a central tenet of the past year. Just last week, Cameo, a platform where celebrities can sell personalized videos and messages to fans, announced its completion of a $100 million funding round. Mirroring this trend, BitClout has suggested a number of ways for creators to leverage “creator coins”, including granting access to special content or holding Q&As with their highest coin holders, all this without the approval of a third party.
These developments may be an attractive proposition to users and celebrities (or celebrities in making) alike, both as a new revenue stream and means of communication. Any press is good press — but could BitClout have generated better press by approaching social media influencers prior to launch; winning them over with a comprehensive social media pitch offering new revenue stream for both the creator and user; and negotiating mutually agreeable terms of use?
Maybe.
One thing is certain: for individuals and brands seeking new ways to monetize their image and IP, developments such as BitClout and NFTs will be both an opportunity and a threat. With an eye on the bigger picture, media counsel could play an important role in helping them decide which.
This post originally appeared on the Klaris Law blog on Medium.com and is reproduced with permission and thanks.
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