Cashing in on Cryptocurrency

A handful of licensed properties are starting to enter the world of cryptocurrency, which consists of virtual “coins” enabled by blockchain technology. As with physical currency, consumers can utilize cryptocurrency to pay for things, or as an investment.

Blockchain involves a decentralized digital ledger or database of transactions, ownership history, and/or other data associated with a “coin” or other specific item. It creates a permanent, unchangeable, and secure record of an item’s history. In the case of cryptocurrency, users remain anonymous.

The original and most famous cryptocurrency is Bitcoin, but there are thousands more, many of them created for specific uses (and some considered more legitimate than others). Cryptocurrencies are bought and sold through secure platforms, including Coinbase (the biggest to date) and a large number of competitors.

In these early days, licensors are taking different paths to become involved in cryptocurrency:

• Branded coins. James Rodriguez, a top-scoring soccer player who is currently on the roster of the Bayern Munich football club, launched the JR10 Token, which became available on the SelfSell app in May. Consumers who hold the Rodriguez branded coins receive exclusive offers, including merchandise, much as they would if they joined a fan club. Meanwhile, Atari teamed with Infinity Networks to create Atari Tokens and with PariPlay to create Pong Tokens, the latter for use in online casinos. (Cryptocurrency has taken off among video gamers as a way to purchase or sell virtual goods and make side bets on games.)
• Promotions. In May, Oscar Mayer offered Bacoins, which consumers could buy and sell on a page on the Kraft Heinz website. They were encouraged to tweet about their purchase to increase the value of their investment before cashing out for actual Oscar Mayer bacon. In January, KFC Canada marketed a Bitcoin Bucket, available online for a limited time, priced at $20 worth of Bitcoin.
• Specialized computers. Kodak licensed its name earlier this year to Spotlite (also its LED lighting licensee) for a computer called the Kodak KashMiner, which is configured to mine, or create, cryptocurrency. Consumers can rent a machine for $3,400 for a two-year period—they are housed at Kodak’s headquarters and operated by Spotlite—and then share the profits from any coins created on their leased machine 50/50 with Kodak. This deal has generated some controversy among analysts and other industry watchers.
• Digital rights management. Kodak also introduced a DRM platform, along with a branded coin, the KodakCoin, in partnership with WENN Digital. The initiative is intended to help photographers create a blockchain-enabled record of IP ownership and to receive payment digitally.
• Marketplaces and exchanges. LINE, the messaging app, announced that it planned to launch an exchange that would enable the buying and selling of various forms of cryptocurrency by smartphone; details have not yet been released.
• Payment mechanisms. Playboy Enterprises announced that it would launch an online payment wallet that would allow consumers to use cryptocurrencies, including Vice Industry Token (VIT) and others, to pay for its content. Users would also earn tokens for viewing, be able to comment on and vote for new content, and receive other perks, first on Playboy.TV and ultimately on other Playboy content and gaming platforms.

Cryptocurrency is just emerging as a licensing opportunity, and potential players are often understandably confused about how it works and how they can become involved. But the licensing business will certainly see many more property owners entering the market in some fashion in the near future.

It also should be noted that blockchain technology’s use in the licensing business will ultimately go well beyond cryptocurrency. Blockchain is likely to play a role in anti-counterfeiting efforts, product approvals and quality control, efficient payment systems, and much more.

Raugust Communications’ monthly e-newsletter comes out tomorrow (Tuesday, June 12, 2018). The topic of the month is a look at omnichannel retail strategies in light of recent moves by Amazon, Fanatics, Nordstrom, and other players. The Datapoint research spotlight focuses on the types of properties involved in pet products licensing. If you have not subscribed to this free publication, you can do so here.