1. Ecological evolution of China’s digital collection industry: compliance and differentiation
(1) The China Office and the State Office set the tone to encourage cultural digital innovation business, and the industry has formed self-discipline
As an emerging industry, digital collections have not yet established a top-to-bottom supervision mechanism in my country. The most recent relevant government document at the highest level is the “Opinions on Promoting the Implementation of the National Cultural Digital Strategy” issued by the General Office of the CPC Central Committee and the General Office of the State Council. Technology integration and innovation, to provide professional services for the confirmation, evaluation, matching, transaction, distribution, etc. of cultural resource data and cultural digital content.
At this stage, my country’s digital collection supervision system is mainly composed of industry associations and platform self-discipline. In April 2022, China Internet Finance Association, China Banking Association, and China Securities Association issued the “Initiative on Preventing Financial Risks Related to NFTs”, which first affirmed the role of NFTs (digital collections) in enriching the digital economy model and promoting the development of the cultural and creative industry. At the same time, 6 codes of conduct are proposed to prevent potential risks such as NFT-related speculation, money laundering, and illegal financial activities.Specifically, Article 1/3 is consistent with the 2012 “Decision of the State Council on Cleaning up and Rectifying Various Trading Venues to Effectively Prevent Financial Risks”, and Article 2/4 is consistent with the 2017 “On Preventing Token Issuance Financing Risks” The content of the Announcement is consistent with the content of the Announcement of the People’s Republic of China. Article 5 of the norm complies with the Anti-Money Laundering Law of the People’s Republic of China.
In June 2022, the national digital cultural and creative regulatory ecological matrix released the “Digital Cultural and Creative Regulatory Governance Ecological Matrix Convention”. The matrix includes 4 initiative sponsors, 8 joint sponsors, 3 support institutions, and 135 member institutions. The prohibitions of the normative convention also focus on virtual currency/non-fungible token business, speculation, money laundering, and illegal financial activities.
(2) Chinese digital collections and overseas NFTs are going to different industry ecology
The business model of my country’s digital collection industry has gradually formed a development path that is differentiated from the overseas NFT market from the early days of “following the gourd and painting the scoop”.
In the first stage, Internet upstarts entered the market. In April 2021, Yuanyu Zhou Technology launched NFTCN, and Super Star Chain launched ibox in May. The business model of NFTCN and ibox is basically the same as that of overseas NFT trading platforms such as OpenSea. In addition to using RMB for settlement, digital collections are also cast on overseas public chains. , the platform provides users with zero-threshold digital collection issuance, consignment and other transaction services.
In the second stage, large enterprises enter the market, including Internet giants and listed companies.Such platforms have stronger brand influence and sense of social responsibility. Considering that my country’s digital collection supervision mechanism, operation system and consumers’ mentality are not mature enough, most of the secondary circulation markets for digital collections were closed in the early stage of the launch, and the use of controlled distribution, Digital collections are sold at a fixed price, so market supply and circulation are limited. This year, each platform will be open to transfer donations one after another.
In the third stage, state-owned enterprises will enter the market, including cultural property trading institutions, official media platforms, and tourism groups. In addition to empowering the platform in terms of technology and content, such enterprises can realize the circulation of digital collections in the compliance qualification and trading system by connecting with digital copyright registration agencies and cultural property trading agencies. At present, Zebra China launched by China Digital Property Industry Alliance and Tianfu TV, China Mobile Games, Beijing Copyright Protection Center, National Copyright Chain Operation Center, and Youyu Art launched by the Northern Culture Exchange all provide the audit and distribution of digital collections on the platform. , registration confirmation, transaction transfer, rights protection and other comprehensive digital property rights services. (Report source: Future Think Tank)
The Chinese digital collection market and the overseas NFT market have evolved into two industry ecosystems. “Digital Collection” emphasizes the content value of digital assets, and “NFT” emphasizes the financial value of non-fungible tokens. At the technical level, overseas NFTs are minted on the public chain, using virtual currency for anonymous transactions; domestic digital collections are minted on the alliance chain, relying on cross-chain interoperability technology to achieve an open ecosystem, using real-name transactions in RMB. From the perspective of the industrial chain layout, the underlying infrastructure of overseas blockchains is complete, and there are no technical and qualification barriers for the issuance and trading of NFT products. Therefore, in the production process, the copyright owner of NFT is generally the product issuer, which is manifested in the circulation process. With obvious Matthew effect, the secondary market transaction volume is concentrated on the OpenSea platform. There are restrictions on the distribution and circulation of domestic digital collections, so there is a separation of roles among the copyright owners, product issuers, and transaction and circulation platforms of digital collections. We judge that the core competitiveness of the production side is IP resources and marketing capabilities, and the core competitiveness of the circulation side is transaction scale and copyright service capabilities.
2. The emergence of innovative digital collections empowers copyright development and marketing
(1) On the platform side: 3 modes of the digital collection business of the China Exchange
According to the “Opinions on Promoting the Implementation of the National Cultural Digitalization Strategy” put forward by the Central Office/State Office, “Cultural property rights trading institutions…provide professional services for the confirmation, evaluation, matching, trading and distribution of cultural resource data and cultural digital content” , the local cultural exchanges accelerated the layout of related businesses of digital collections. Business Model 1: Build infrastructure. Shanghai Cultural Exchange, together with Xinhuanet, China International Cultural Exchange Center, and China Cyberspace Security Association, initiated the launch of a national-level digital cultural and creative normative governance ecological matrix, as well as a national-level copyright transaction protection alliance chain, with the goal of jointly building an efficient Chinese digital cultural Create a normative circulation environment for digital intellectual property and other fields, and provide services such as copyright ownership confirmation, copyright digital development, information release, digital copyright holding, copyright value management, copyright protection certification and evaluation, authorization and trusteeship, and circulation verification for cultural digital content. plate.
Business Model 2: Launch a trading platform. Shandong Cultural Exchange, Northern Cultural Exchange, Gansu Cultural Exchange Center, and Haiwen Communication have launched digital collection trading platforms, while Northern Cultural Exchange and Chengdu Cultural Exchange are preparing to build digital collections trading platforms. These platforms can realize digital copyright confirmation, casting and chaining, storage, protection and circulation. At present, the Northern Wenzhou Exchange has cooperated with Guming Technology (a subsidiary of China Mobile Games Holdings), Beijing Copyright Protection Center, and Copyright Chain National Operation Center. The launch of “Fish Art” supports the free transfer of digital collections.
Business Model 3: Publishing digital collections. Hangzhou Cultural Exchange issues digital collections on Alibaba Auctions, Unique Art, ArtMeta and other cooperative platforms.
The Ecological Matrix of National Digital Cultural and Creative Normative Governance is initiated by Xinhuanet, Shanghai Cultural Property Exchange, China International Cultural Exchange Center, and China Cyberspace Security Association under the guidance of relevant higher-level departments. Co., Ltd. and other 8 institutions were jointly initiated, jointly supported by 3 institutions including the Game Publishing Working Committee of China Audio-Video and Digital Publishing Association, and 135 public trust leading institutions such as Tencent Magic Core, Ali Assets, Baidu Super Chain, Chinese Online, Century Huatong, etc. Market leading institutions and professional leading institutions participated in the joint construction as the first batch of collaborative development partners. The goal of the matrix is to jointly build an efficient and normative circulation environment in China’s digital cultural and creative fields and digital intellectual property, and thus released the “Digital Cultural and Creative Regulatory Governance Ecological Matrix Convention” and the national copyright transaction protection alliance chain.
The national-level copyright transaction protection alliance chain is a highly professional, normative and authoritative national-level comprehensive service infrastructure for digital cultural property rights. The alliance chain, financial blockchain and judicial blockchain have cross-chain mutual recognition, providing non-tampering and distribution for cultural digital content such as digital cultural and creative, digital copyright, digital fashion, digital art, virtual people, virtual world and real interactive industries. It provides comprehensive services for digital property rights such as copyright ownership confirmation, copyright digital development, information release, digital copyright holding, copyright value management, copyright protection, certification and evaluation, authorization and trusteeship, and circulation authentication. The national copyright transaction protection alliance chain has functional nodes such as management nodes, element nodes, and operation nodes, and supports various cross-chain interoperability technologies such as notaries, side chains, and hash time locks, creating a compliant and open application ecosystem.
(2) Product side: development and use functions of digital collections, empowering copyright development value and marketing value
On the platform side, Internet giants, listed companies, and state-owned enterprises have entered the market one after another, and the market size and industry ecology of digital collections are developing vigorously.On the product side, the types of digital collections are becoming more and more abundant. The initial digital collections are mainly digital pictures/3D models only for viewing, and subsequent innovative digital collections continue to emerge, superimposing digital copyright, virtual rights, physical assets and other functions. Digital collections use the Metaverse channel to amplify marketing scenarios, use blockchain technology to confirm rights and safeguard rights, and accelerate the realization of the value of cultural digital content.
(1) Digital pictures/3D models/music/videos, etc. (excluding copyright), can be used for personal viewing and display, and cannot be used for any commercial purposes. At present, domestic digital collections are mainly of this type. The ownership certificates, related holding rights and fingerprint information of digital collections are stored on the blockchain.
(2) For virtual skins/virtual real estate/game props, etc., the usage scenarios are limited to a certain virtual world, and blockchain technology ensures the uniqueness and non-tampering of usage rights. For example, the immersive experience platform “Datang Lingjing” created by Xi’an Digital Lightyear, its exclusive architectural collection is a 96-grid architectural space with specific coordinates in the Datang Lingjing. Users can rest and restore physical strength in their own exclusive architectural space. Store and display other digital collections, and remodel or operate your own building space to your liking. (Report source: Future Think Tank)
(3) Digital collections with copyright. For example, “The Victims of the Metaverse” released by Yuan Vision, the content of the work is a 24-second video material, and the buyer enjoys the ownership of the digital copyright work and other copyright property rights (including the right of reproduction, Distribution rights, rental rights, exhibition rights, performance rights, screening rights, broadcasting rights, filming rights, adaptation rights, translation rights, compilation rights, etc.).
(4) Digital collections + rights. For example, the digital souvenir collection of Gulangyu issued by Yuanyu, in addition to a digital picture, also has offline rights. Buyers can enjoy the right to use Xiamen Ferry’s Gulangyu ticket once. For the National Speed 1 collection issued by Bu Xingyun, buyers can get a Xtep membership black gold card at the same time.
(5) Digital collections + physical objects. For example, in the National Speed 1 issued by Buxingyun, buyers will receive an AR digital collection and a pair of customized physical running shoes in Buxingyun’s Metaverse. For the Qin Universe commemorative wine issued by Qin Universe, buyers will receive a digital collection and 500ml of Maotai-flavored liquor.
Blockchain technology empowers the copyright development value of digital content. Taking the copyright service function of the national copyright transaction protection alliance chain as an example, firstly, the digital content is registered and confirmed, and the ownership certificate of the digital collection, related holding rights, fingerprint information, etc. are stored on the blockchain; secondly, the whole network is carried out. Infringement monitoring, to conduct full-time infringement monitoring for all platforms and all categories of works, save the infringement evidence on the blockchain; synchronize the relevant data to the blockchain system of the judicial institution, and provide legal rights protection services to cooperative institutions such as law firms.
Digital collections empower online + offline marketing scenarios. The second digital collection “Guosu No. 1” issued by Xtep is priced at 1,888 yuan per copy. The rights and interests of Guosu No. 1 include: (1) A physical gift box containing a pair of customized running shoes. (2) An AR digital collection in the Buxingyun App. Step Nebula App is a Metaverse running application. Users can equip the purchased digital collections in the universe scene of the App, convert the accumulated steps in real life into “stars” to travel to various planets, and PK with friends through the leaderboard. . (3) Xtep membership black gold card rights. (4) Buyers whose collection number is 1/10/100/1000/2000/3000 will be invited to participate in the Mars base experience tour (offline activity). There were nearly 50,000 users who purchased Guosu No. 1. This event successfully sold 3,812 pairs of customized running shoes from the perspective of the brand, which further enhanced Xtep’s brand influence and fan stickiness.
3. Recent developments in the overseas NFT market: the trading enthusiasm has cooled, and OpenSea continues to lead
In the first chapter, we summarize the ecology of the overseas NFT industry. First, NFT products emphasize the financial value of non-fungible tokens, and second, the circulation link shows obvious Matthew effect.Judging from market data, the scale of overseas NFT transactions fluctuates due to the popularity of top projects and virtual currency prices. According to Cryptoslam’s tracking data, the transaction volume of overseas NFTs from January to May 2022 was $17.069 billion. In May 2022, the overseas NFT transaction volume was US$3.066 billion, a decrease of 17% month-on-month; the transaction volume on May 1 peaked at US$638 million, mainly because Yuga Labs (the issuer of the popular NFT project BAYC) issued new NFTs on the same day. For the project “Otherdeed”, the daily transaction volume after May 15 dropped to less than 50 million US dollars, which is equivalent to July 2021, when the overseas NFT market just started to increase its volume.
The strong financial attributes of overseas “NFT” products are reflected in the fact that NFT transaction volume is concentrated in the secondary market. According to the tracking data of Non Fungible, the proportion of secondary market transactions of NFTs on the Ethereum blockchain has basically remained above 80% since July 2021. At the same time, the number of transactions in the overseas NFT market is limited. According to the tracking data of Cryptoslam, except for May 2022, the number of monthly active buyers and sellers is basically below 1 million.
The strong financial attributes of overseas “NFT” products are reflected in the correlation with virtual currencies. NFT is stored and circulated through the blockchain, and settled in virtual currency, which itself is related to virtual currency. According to the tracking data of Cryptoslam, in the nearly 30 days as of June 17, 2022, the Ethereum main chain Ethereum accounted for about 81% of the overseas NFT transaction volume.Due to factors such as the Russian-Ukrainian conflict and the Fed’s interest rate hike, the price of ether against the US dollar as of June 17, 2022 has decreased by nearly 71% compared with the beginning of the year, which has led to a cooling of the trading heat in the overseas NFT market since mid-May.
The strong financial attributes of overseas “NFT” products have led buyers to pay more attention to the popularity and circulation value of NFT projects, rather than the content or use value of NFT projects, and the market popularity focuses on a small number of leading projects. According to the tracking data of Cryptoslam, in the past 30 days as of June 17, 2022, CR3 and CR10 were 22% and 39%, respectively. 6 of the top 10 NFT projects by sales are PFP avatars and 4 are virtual assets in games/virtual worlds. In conclusion, the success of NFT projects depends on the issuer’s popularity, marketing events, community operation capabilities, etc.
In overseas markets, there are no technical and qualification barriers for the transaction and circulation of NFT products, and the circulation link shows a clear Matthew effect. According to Dune Analytics tracking data, in May 2022, OpenSea’s transaction volume accounted for about 74%, while LooksRare’s 25% market share has a large number of “wash sales” transactions. Judging from the number of users who actually participated in the transaction, the MAU of OpenSea in May 2022 was 422,300, significantly ahead of other NFT trading platforms such as LooksRare, Rarible, and Foundation. (Report source: Future Think Tank)
4. Investment Analysis
The ecological infrastructure of the overseas NFT industry is complete, and there are no technical and qualification barriers for the issuance and trading of NFT products. Therefore, the copyright owner of NFT is generally the product issuer, and the demand side pays more attention to the circulation value rather than the content value. The core competitiveness is the issuer’s popularity, marketing ability and community operation ability. The trading market shows a clear Matthew effect. The core competitiveness is the scale of platform transactions. Currently, OpenSea is the only one.
With the introduction of the “Opinions on Promoting the Implementation of the National Cultural Digital Strategy” and the national digital cultural and creative normative governance ecological matrix, my country’s digital collection market has begun to build a normative circulation environment from the level of industry collaboration and autonomy, forming an ecological differentiation with the overseas NFT industry. The development path of digital collections, the development and use functions of digital collections, and empowering the copyright development value and marketing value of digital content. Due to the restrictions on the distribution and circulation of domestic digital collections, there is a separation of roles between the copyright owners of digital collections and the distribution and circulation platforms.
At the production end of digital collections, the core competitiveness is IP resources and marketing capabilities; at the circulation end of digital collections, the core competitiveness is transaction scale and copyright service capabilities (such as copyright ownership confirmation, copyright value management, copyright protection, certification and evaluation). , circulation authentication, etc.). It is expected that in the future, my country will form a normative circulation environment for the digital collection market, continue to develop innovative digital collections to amplify the marketing value and copyright value of cultural digital content, and open up a broad blueprint for the development of my country’s digital collection industry.Follow-up suggestions should pay attention to the progress of the digital collection business of the my country Cultural Exchange; pay attention to the leading digital collection platform in China, which is expected to open up secondary transactions in compliance scenarios and bring about increased performance.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/metaverse-s-nft-industry-analysis-chinas-digital-collection-industry-is-expected-to-become-standardized-and-differentiated/
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