What Makes Bored Ape Yacht Club so Valuable?
When it comes to NFT collections, none are more valuable than Bored Ape Yacht club. What makes BAYC so valuable to their collectors?
BAYC overtook Larva Labs' CryptoPunks in late 2021 to become the most valuable NFT collection. The current market value of the BAYC collection according to crypto.com is 832,889.02 ETH (~$2.5B) as of 1/10/22. This compares to a collection value of 724,992.89 ETH (~$2.2B) for CryptoPunks. A quick look at the terms and conditions of each collection may reveal why that is, or at least, why the market values BAYC so much. CryptoPunks owners are not actually given full license to the copyright of the specific Punk they own. In fact, in an article titled "The Cryptic Case of the CryptoPunks Licenses: The Mystery Over Licenses for CryptoPunks NFTs" by IP Professor Edward Lee at Chicago-Kent College of Law (note: Chicago-Kent is my alma mater), "it's still unclear what content licenses- meaning the licenses that set forth how the associated copyrighted CryptoPunks content may be used-- the acquirers of the CryptoPUnks NFTs received as a part of the transaction." (Lee).
CryptoPunks owners are not actually given full license to the copyright of the specific Punk they own.
In contrast, in 2021, Larva Labs included a detailed, written set of Terms and Conditions for its new NFT collection, Meebits. Meebits License: The Meebits license says buyers of Meebits NFTs get "a limited, worldwide, non-exclusive, non-transferable license to use, copy, and display the Art for your Purchased Meebit for the purpose of commercializing your own physical merchandise that includes, contains, or consists of the Art for your Purchased Meebit (‘Commercial Use’), provided that such Commercial Use does not (a) include any form of collaboration or involvement of any brand or other third party, or (b) result in you earning more than USD$100,000 in gross revenue each year.” Larva Labs The NFT License: Larva Labs adopted The NFT License for CryptoPunks and Autoglyphs in 2019 in a Discord post by co-founder, John Watkinson (@pents90). On that post in Discord on May 17, 2019, Watkinson wrote: "to clear up any license confusion, we are going to adopt the standard NFT License for CryptoPunks and Autoglyphs, detailed here: https:''niftylicense.org."
Under the NFT License, NFT owners have "broad rights to use the art associated with [their] NFT." However, NFT owners receive a limited license for certain commercial uses of the associated art to "use, copy, and display the Art for your Purchased NFTs for the purpose of commercializing your own merchandise." The commercial merchandise use is capped at $100,000 annually and does not grant the buyer the right to make derivative works other than limited uses for merchandise.
Yuga Labs' Bored Ape Yacht Club License: In contrast with the cryptic CryptoPunks license status, BAYC offers unlimited commercial use for BAYC NFTs, which includes the right to make derivative works, thereby maximizing decentralized collaboration.
The difference? $100,000 limited merchandise annually versus unlimited commercialization, including the right to make derivative works. The result? BAYC is now the most valuable NFT collection in the world.
What does unlimited commercial and derivative use license actually mean? In copyright terms, it is in line with the ethos of the decentralized economy and sets a new standard on what it means to be a part of an NFT collection "community." For BAYC, it also led to a massive brand partnership deal with Adidas, which took BAYC up on their unlimited derivative use license by creating derivative versions of Bored Apes brandishing Adidas apparel. Adidas sold out their 30,000 NFT Bored Ape collection for a cool $22.5 million dollars.
Celebrities like Post Malone, Eminem, and Jimmy Falon all own Bored Apes. Every time a celebrity buys a BAYC NFT, the cultural impact on also owning one, from being invited to exclusive NFT holder's events where such celebrities are present, to the raised awareness and value of NFTs in the same collection, makes being a part of the community an exclusive and desirable perk. It is no different than owning an exotic car like a Lamborghini or Ferrari (other than the fact that you can actually drive them), and the marketing value will play a significant role in the value of holding such collectibles. Many will scoff at the "value" of holding jpeg images that can easily be screenshotted or right-click saved, but the real value is being part of an exclusive (and digitally verifiable) club that gets harder and harder to get into as the floor value of each NFT goes up. This is not new in society, as flashy luxury brands have always played a big part in cultural influence and simulated scarcity. Diamonds are not valuable because they are rare, they are valuable because their supply is kept scarce and the perceived cultural value is very high. Cultural icon and marketing guru Gary Vee (Vaynerchuk) notes this is the case for the "blue checkmark" on social media platforms, "rare" trading cards, and high-priced luxury brands like Gucci, Supreme, Rolex, etc. There is no point in focusing on the utility for such cases, as the cultural influence IS the value in owning such items. In this case, ownership of BAYC or even CryptoPunks is no different, and the proof is in the pudding, with both collections making up a combined 20% of all of the value of NFT collections, which currently have a collective market cap of $22 billion dollars.