The recent rise in virtual reality has led to many discussions about how it will affect how we do business. Many people, including business owners, are excited about the possibility of the new era of the internet.
What is the Metaverse?
The metaverse is a new burgeoning technology that takes form in a three-dimensional, virtual online world. In the metaverse, users can create an avatar – or a virtual persona that can interact in the space by socialising, shopping, creating, or even working.
Within the metaverse, numerous technologies facilitate those interactions, including:
- NFTs or Non-fungible tokens – These small digital files (tokens) stored on the blockchain identify and verify the authenticity of digital assets such as virtual real estate, music, and artwork.
- Blockchain – Much like a giant database, a blockchain processes, verifies, and stores transactions when paying for goods and services with cryptocurrency.
- Cryptocurrency – A digital currency that users store in digital wallets to pay for goods and services (on or off the metaverse), which are verified through the blockchain, making the transactions very secure.
- Smart Contracts – These contracts contain the terms and conditions that users accept when purchasing digital assets in the metaverse. Like cryptocurrency, a blockchain processes and verifies smart contracts.
How Businesses Use the Metaverse
Nike is a fantastic example of a brand successfully harnessing the power of the metaverse. The iconic brand opened its virtual store inside Roblox’s gaming metaverse in early 2022. In the virtual ‘NIKELAND’, users can play games, explore, and buy NFTs. By September 2022, approximately 22 million people had visited Nike’s new online store in the metaverse.
In another power move, Nike acquired RTFKT (pronounced ‘artifact’) Studios to produce NFTs of sneakers for users to purchase for their avatars to wear in the metaverse.
Nike hopes that dressing avatars will become a representation of our real-life selves, thereby building loyalty to the Nike brand.
In podcast appearances, UFC president Dana White has said that the UFC intends to host fights in the metaverse, where audience members can wear virtual reality headsets to watch fighters engage in actual combat in a virtual arena. Although the UFC has yet to confirm the full details of how the organisation will facilitate this, the concept of watching live entertainment in the metaverse is something brands take very seriously.
The trademarking of the word ‘UFC’ will also allow the group to control and profit from merchandise sales from their Metaverse events and protect the business and its customers against counterfeit virtual goods. In addition, trademark registration in the space will also help the UFC to protect their brand identity in the virtual world.
Investment in the Metaverse
Many companies are investing significant capital into the metaverse. The top 5 leading sectors currently investing in the metaverse market as a business opportunity are: computer and IT (17%), education (12%), finance (11%), marketing and advertising (10%), and medical and health (9%).
Meta, among those companies in the computer and IT sector, invested a massive $36 billion to develop its Metaverse technology.
A Bloomberg study predicted the Metaverse market value will be $800 billion by 2024. With the scale of investment in this technology and Gartner‘s prediction that by 2026 one in four people will spend at least an hour in the metaverse every day, it is essential to prepare your business for both the positive and negative impacts of the metaverse.
Intellectual Property Challenges in the Metaverse
The metaverse provides exciting new immersive and interactive channels for businesses to connect with their customers. However, with opportunity comes new challenges, such as intellectual property rights.
Intellectual property laws protecting rights in copyright and trademarks will continue to be applicable in the virtual world of the metaverse. For example, read the NFT – What Business Owners Must Know.
However, enforcing IP rights will likely be more challenging. For example, it is relatively easy to identify and stop someone from selling counterfeit goods in the physical world. However, preventing others from creating and selling virtual copies of those real-world products in the metaverse is another story. Some argue that the prevelance of virtual copies will devalue the physical version of the original works.
The impact of the metaverse on intellectual property is likely to be complex and multi-faceted. However, with many decades of development likely to be imminent, the full effect and expanse of the technology are difficult to predict. One only needs to contrast the birth of the internet to understand the potential of the metaverse.
New laws and regulations must significantly develop to adequately protect creators’ rights in this virtual world.
While there are challenges in enforcing IP rights, some proponents of the metaverse believe there is reason to be optimistic about how the technology can assist with enforcement. For example:
NFTs, as unique digital assets, cannot be copied. Therefore their authenticity is guaranteed. Further, as the blockchain is famously impenetrable, NFTs can neither be ‘stolen’ nor smart contracts ‘faked’, which reassures customers and businesses who want to guarantee the authenticity of goods.
Smart contracts also protect IP rights, as the owner of a digital asset cannot be questioned.
Another fast-growing technology, artificial intelligence, can enforce IP rights in the metaverse by analysing the data and flagging the unauthorised use of trademarked assets. Moreover, once it has detected an infringement, AI can notify the offending creator demanding the removal of the digital and demand compensation.
Indeed, there are many unanswered questions about enforcing IP rights in the metaverse, such as:
- If several sources create a digital asset, whom do you bring claims against?
- What if AI creates the offending asset? Who is responsible for removing the infringement – the platform or the creator?
- In an industry so averse to governmental regulation, with a central ideological pillar being decentralisation, will governments have the political power to impose regulations?
Interestingly, some experts argue that piracy will be less prevalent in the metaverse than present internet piracy. The argument is that piracy will be viewed more akin to theft in the real world when a party breaches copyright in the metaverse and, therefore, more morally wrong when compared to the illegal streaming of movies.
Like to Know More?
Get in contact to discuss future-proofing your business to ensure you enjoy the full commercial benefits of the metaverse in years to come.