Embracing Digital

Abstract

One of the most pressing questions in the era of digital media is whether and how to enable digital “first sale”: the statutory right that allows the owner of a copy of a creative work to alienate it as they would any other physical property. First sale is easy to apply to physical copies—an owner simply transfers possession of their copy and thus loses access to it—but much more complex in the digital realm given the ease of copying digital files. The recent craze for blockchain- based non-fungible tokens (“NFTs”) represents one of the most forceful attempts yet at treating digital goods like their physical counterparts. According to the scholars and technologists who advocate for them, NFTs promise a technological end to this grail quest; we are told that they constitute unique, rivalrous objects that enable not only a workable approach to digital first sale but a host of novel, wondrous uses. This Article provides a layered critique of this position by providing the legal literature’s first thorough analysis of the technology behind NFTs. In doing so, it highlights the continued futility of treating digital goods like analog ones and provides the foundation for discussion of NFTs’ desirability (or lack thereof) beyond the issue of first sale.

More broadly, this Article challenges the desirability of a digital first-sale right and provides a necessary corrective to the misunderstandings and misdirection characterizing much discussion of NFTs. It makes three contributions to the copyright literature and the emerging literature on blockchain technology. First, it highlights the unresolvable tensions behind arguments for digital first sale, as well as the significant social costs any digital first-sale regime would impose. Second, by engaging deeply with the technical underpinnings of NFTs, it demonstrates that NFTs are solutions in want of a problem and fail to solve any of the problems that historically plague attempts to create a workable digital first- sale right. Those failures not only illuminate the futility of the quest for digital first sale but call into question NFTs’ utility in many areas of law, including property, finance, and contract. Third, it shows that NFTs, like digital first sale, succeed in imposing a range of social costs that far outweigh any potential benefit of the technology. In light of that dismal scorecard, this Article argues that it is long past time to accept the fundamental differences between digital and physical goods. Better distribution models cannot be achieved by forever unsuccessfully chasing a paradigm rooted in the limitations of physical media.