Nouns are Cultural Hyperstructures

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Today's piece was written by Finn Lobsien, a web3-focused copywriter.  Finn is a huge proponent of Creative Commons Zero (CC0), a license that sets intellectual property to be in the public domain.  Subscribe to his writing on Mirror.

On August 20th, 2021, with the NFT mania in full swing, Arizona Iced Tea bought a Bored Ape Yacht Club NFT. The company displayed their Ape on Twitter under the headline “Arizona Aped In!“, along with the Bored Ape Yacht Club skull logo. 

In an exuberant NFT ecosystem, this seemed like more evidence of cartoon drawings conquering the world. But, like an angry neighbor threatening to file a noise complaint on your house party, BAYC's creators Yuga Labs showed up.

Yuga Labs reprimanded Arizona Ice Tea by citing their licensing agreement. Arizona had bought the Bored Ape and gained full commercial rights to the artwork. But they had not earned the rights to the BAYC logo. 

One of Bored Ape Yacht Club’s innovations were commercial rights for each NFT. This enabled enterprising holders to start Bored Ape restaurants, wines and licensing agreements with Old Navy. 

Instead of spending years growing their own brands, they could use their Ape. Guaranteed press coverage, a built-in audience with money to spare… what could be a better way to proliferate IP?

Is Free Art Worth More Than Expensive Art?

As ad exec Rory Sutherland says: “The opposite of a good idea can also be a good idea.“

Soon after Arizona’s Ape purchase, CC0 NFT collections like Nouns, TubbyCats, and BlitMap skyrocketed in popularity, amassing millions of dollars. 

CC0 (Creative Commons Zero) is a copyright standard which puts intellectual property in the public domain. Everyone on the planet has every right to do everything with it. You can legally use CC0 artwork as your brand’s logo and get rich without giving the creator a penny. 

This sounds insane to anyone who’s worked with luxury brands. Nike, Apple, Louis Vuitton, etc. spent millions to protect their trademarks and ensure products with their logo come from them. CC0 does none of that.  

But NounsDAO (the largest CC0 project) has a treasury filled with $44.7 million dollars. With one new Nouns NFT auctioned off daily, another six figures enter the treasury every 24 hours. Even if you’re skeptical of CC0, you have to agree there’s something founders can learn from Nouns DAO.

In this article, we’ll explore why CC0 NFTs proliferate and attract value. We’ll find out how to build a great CC0 brand and what the risks of CC0 are.

Skyrocketing Brand Growth

The best marketing is free marketing. When customers share your product and create communities, you’ve cracked the code. No amount of billboards, commercials, or online ads can promote a product like genuine user-generated content.

CC0 IP seems exceptional at creating grassroots community engagement.  You've probably seen the Nouns glasses (Noggles) on people's profile pictures and memes.  This is the least interesting part. 

There’s something far more interesting. Noggles have appeared in numerous NFT projects, a Super Bowl commercial, as IRL luxury sunglasses, multiple merch stores, specialty coffee bags… the list goes on. Many of these organizations never interacted with NounsDAO. They permissionlessly created value.

Having your logo on this many products so quickly is unheard of for non-CC0 brands. This works for a simple reason: People need to get paid. Conventional marketing is rife with “$20 off if you refer a friend“ to incentivize sharing the brand.

NounsDAO and other CC0 projects also pay people: 

1. The treasury funds projects proposed by community members which grow the brand.

2. Anyone can earn from the IP. Many founders use Noggles in their product or marketing to ensure baseline brand recognition.

But this money isn’t a loan. You don’t have to pay licensing fees to put Noggles anywhere. While “$20 off if you refer a friend“ requires your friend to spend money, you owe NounsDAO nothing.  NounsDAO enables people to do free marketing for them—and the market pays them. 

Cultural Hyperstructures 

If web3 is a teenager, then NFTs are a child and CC0 DAOs are still a newborn. Nouns and other CC0 projects might fizzle out and become a fun memory. Or they might become a global phenomenon as well-known as Nike. 

What’s culturally relevant is valuable to own. You can think of Nouns (and CC0 projects generally) as a cultural hyperstructure: It is a foundation for others to build on with no built-in costs, but gains value from making things easier for others. While protocol hyperstructures make minting, querying, and network effects easier, cultural ones do the same with brand recognition. 

In my opinion, this is the promise of CC0—a free cultural movement that rises to cultural significance by enabling others to profit from it. So let’s explore why Nouns has been so successful—and how you might start a successful CC0 NFT project yourself. 

Why has Nouns Been So Successful?

Any analysis on a barely 1-year old project is partly speculation. Nouns haven’t been around for long enough to know whether the model is sustainable. 10 years from now, we might see Noggles atop our local sports stadium—or view them as a relic of the digital past, collecting dust on abandoned Twitter profiles.

But whether you’re bullish or bearish on Nouns, they’ve accomplished impressive things:

• Attracting dozens of millions of dollars without raising money from investors.

• Becoming one of the most recognizable brands in their industry in under a year. 

For these alone, their success is worth studying. So let’s dive in. Here are 3 factors that made Nouns successful:

Sharable IP

A few decades ago, anyone with the necessary millions could buy brand recognition from TV networks. Now, you need people to share your brand. And that only happens when it’s easy to spread your message. Nouns have accomplished this. 

Noggles are easy to share, meme and spread. Anyone with access to a meme generator can put Noggles onto a face and have fun with it. 

Compare that with mfers, another CC0 NFT project. mfers is also successful, but it’s harder to share. There’s nothing you can copy as easily as Noggles. 

That’s one reason Nouns saw success: The message is easy to share. You can replicate this, even if you’re not building an NFT project. Make your message easy to share and identify with. 

Permissionless Building

By being CC0, Nouns gives certainty to creators. While artists have long referenced logos, artwork and other potentially copyrighted material, there was often uncertainty as to what’s allowed. And no creator wants to get sued. 

Nouns gives creators certainty. Even if someone becomes a billionaire from NounsDAO IP without even mentioning the original creators, they couldn’t be sued. 

This enables more people to share the brand. CC0 has definitely accelerated the growth of Nouns. If you want to leverage the faster growth potential of CC0 yourself, it makes sense to explore different options. 

Not everything belongs in the public domain. If you’re running a fashion brand and apply CC0 to your logo, somebody could sell your shirts, but cheaper. But you can create another piece of sharable CC0 IP your community can engage with and build on. 

While the legality on NFT copyrights is fuzzy, most CC0 projects apply the license by announcing their work is CC0, linking to the Creative Commons Foundation and stating it somewhere on your website. 

Auction Mechanism

Instead of selling thousands of NFTs at once, NounsDAO auctions off one NFT every day.  NounsDAO members get governance rights over the treasury, and thus help decide where the brand is going. This auction mechanism has two beneficial effects:

1. It keeps the community of token-holders small. Many NFT projects sell thousands of NFTs, raise millions of dollars—and then have a horde of buyers in their Discord, asking for what’s next. By selling off one Noun at a time, the circle of owners stays small and manageable.

2. An auction creates cash flow. Most “pay x ETH to mint 1 NFT” projects earn lots of ETH on their launch. But then, they have to figure out cash flow before they run out of money. Nouns will keep filling their treasury every day as long as there is demand for Nouns NFTs.

But that doesn’t mean everything should be CC0.

The Risks of CC0

What if the brand gets hijacked?

Many worry that a CC0 license paves the way for terrorists, hackers and other bad actors to co-opt the brand. And they could. But it’s unlikely an evil cabal is holding an emergency meeting in an underground facility and go "Aw shucks, we can’t get the license rights to this IP!“. Yes, bad actors can use the IP, but it won’t stop them.

What if the products suck?

But there are many brands which should never be CC0. While Nouns is a fun cultural movement, many other brands stand for quality. I’d rather not die early because a climbing gear manufacturer open-sourced their branding to anyone. 

So if your brand makes a concrete promise, you better not apply CC0 to it! 

CC0 as a victim of its own success

Another risk is that we reach an "our parents are on Facebook“ moment. What if Wal-Mart carries shampoo, cheese balls and fishing rods, all with Noggles on them? CC0 would’ve achieved its goal—being a dominant cultural force. 

But would it still have meaning? Would we still feel like we’re part of something? Or would Nouns suffer the fate of other subcultures and morph into a corporate cash cow.

Where does CC0 go from here?

It’s too early to say. But it’s fascinating to watch. And for now, NounsDAO is funding public goods, creating creativity and putting smiles on many faces.

Even if NounsDAO fades away, it did a lot of good in the process. But hopefully, Nouns continues to thrive as a cultural hyperstructure.