By Stacy Marcus and Deborah Bessner.
The metaverse presents tremendous opportunities for brand and advertising growth, with brands ranging from Balenciaga to Microsoft and the NBA dipping their toes in the metaverse pool through NFTs, virtual worlds, and sponsorships. But what exactly is the metaverse and how can brands and advertisers unlock its potential?
The metaverse blends the line between digital environments and the physical world. Plainly, it is a collective space where you can interact with virtual objects in your real, everyday life, or apply real world characteristics to an online environment (think virtual worlds). Both sides of the metaverse provide endless advertising opportunities and broad audience reach. In all the excitement, we must not forget the real-world legal considerations associated with the metaverse.
The latest metaverse buzzword to hit the industry is NFTs (non-fungible tokens), with the NBA even creating its own NFT Network called ‘Top Shot’. By offering consumers a limited or unique brand-themed asset, brands (and celebrities) can generate buzz around themselves, while also generating revenue.
In addition to NFTs, many brands are creating virtual worlds, including Burberry and TOMS. Brands can create worlds that allow consumers to interact directly with their products or services, and even make purchases, and many brands have begun to capitalise on these trends. An added benefit of virtual worlds is they allow brands to easily and quickly adapt to ever-changing consumer preferences and trends. Even one of the most traditional forms of advertising has moved into the metaverse — billboards. Not every brand wants to invest in the creation of a virtual world, but that does not mean they cannot benefit from advertising in the digital space.
With all of this great opportunity, comes great legal responsibility. Advertising in the metaverse presents both unique and familiar legal challenges. Recurring legal concerns involve questions of ownership (who owns the content created), copyright (whether existing licenses cover the use of copyrighted work within the metaverse), and content licensing (the application of collective bargaining agreements or rights of publicity issues). This list is far from exhaustive, and anyone looking to advertise in the metaverse should do their research.
Ultimately, as the world continues to move to all-encompassing digital spaces and experiences, advertisers and brands should be ready to operate and capitalise on the metaverse in the future.
Stacy Marcus (left) is partner, and Deborah Bessner, associate, Entertainment and Media Industry Group, Reed Smith LLP.