The Reed Smith Guide to the Metaverse - 2nd Edition

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The metaverse will continue to provide new opportunities for content creation, consumption, and exploitation. However, the successful monetization of such content presents new challenges for stakeholders. In short, rights holders who create and license content will want robust protection to ensure that they are fairly remunerated for each new form of exploitation. In contrast, licensees who acquire and exploit content will want licenses sufficiently broad to adapt to the evolving use cases. End users’ interests will be primarily focused on the user experience, but their interests may also overlap with those of rights holders and licensees, subject to whether they participate in content creation or consumption. Regardless, it is clear that the metaverse is changing the way we think about content licensing.

Key challenges

While the terms of any license will vary depending on the content and use case, among other factors, there are several common factors that will need to be carefully considered when licensing content for use in the metaverse, as further set out below.

Several common factors that will need to be carefully considered when licensing content for use in the metaverse 

The above is by no means an exhaustive list of the challenges the metaverse brings to content licensing, but it represents some of the key commercial and legal issues that will need to be considered by licensees and licensors. Flowing from these overarching considerations are other challenges that will also need to be assessed, such as usage tracking, file format standardization, delivery and ingestion of content, scope of warranties and indemnities, and conduct of claims for infringing use, among others.

Content licensing in the metaverse 

Different perspectives

Inevitably, licensors and licensees will have different perspectives on these key challenges. Licensors will likely seek to maintain a restrictive approach to licensing in the metaverse, for example, by limiting the grant of rights and clearly defining the licensed services, devices, and uses, unless there is a substantial financial incentive otherwise. The underlying considerations will remain the same – licensors want to control how their content (and ultimately their brand) is used and consumed. Licensees typically want as broad a license as possible, as this allows them to be more creative with content exploitation and to take advantage of market developments and trends. This will be even more important in the metaverse, as the rights implicated in certain key use cases, such as the exploitation of NFTs, remain subject to debate. Service providers with existing licenses will need to determine whether such licenses are sufficient. The reach, immediacy, and interactivity of the metaverse will demand the broadest set of rights possible, and it will likely be more important than before for licensees to negotiate rights of first refusal for new forms of exploitation or new digital worlds. Licensors and licensees will need to consider the overarching user experience when negotiating the scope of the grant of rights. The licenses that facilitate content exchange in the metaverse will need to be flexible enough to ensure a seamless user experience between increasingly overlapping and interconnected services. This may force conservative licensors to provide greater flexibility regarding bundling and associated limitations, but equally makes it ever more important for licensors to ensure that their reputations and brands are adequately protected (as further set out in the Deepfakes in the metaverse section).

Key takeaways
  • The metaverse provides new opportunities for content creation and consumption, but also new challenges for stakeholders around monetization.
  • Rights holders want robust protection, but licensees will want broad and adaptable licenses.
  • End users focus primarily on the user experience, but their interests may also overlap with those of rights holders and licensees.
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