By: Fredner Prevalus
Professor Brian Frye of the University of Kentucky College of Law is a groundbreaker when it comes to creativity and entrepreneurship. He is an artist, filmmaker, and law professor. We talked about how the combination of art and the law inspires him in his writing, his involvement in NFTs, his podcast, and his entrepreneurial spirit.
Act I: Setting the Stage
“It’s conceptual artwork in the form of a law review article.”
Professor Frye obtained his Bachelor of Arts in Cinema Studies with a minor in Philosophy from the University of California at Berkeley in 1995. He later went on to earn a Master of Fine Arts in filmmaking from the San Francisco Art Institute in 1997. He spent several years working on various projects in the independent filmmaking and artistic space before earning his J.D. from the New York University School of Law in 2005. After Professor Frye earned tenure at the University of Kentucky School of Law, he started to unconventionally use his legal scholarship as a medium for conceptual art. This led to the law review article titled “SEC No Action Letter Request.”
The article was a prospectus for the sale of the piece of conceptual art – the piece of conceptual art being the law review article itself. In it, Professor Frye describes how the artwork/article is also a security under the Howey test and why the SEC should not grant the stated request because it would be permitting the sale of an unregistered security. The clever, thought-provoking, and humorous article caught the attention of many on the internet, including a notable Bloomberg financial columnist who praised the article on its exploration of our understanding of the definition of a security. However, the article/artwork was dismissed as a security because of the overly broad implications and the presumption that no one would purchase it. Essentially, a market for it is non-existent.
Act II: Enter NFTs
“I dreamed up a market and then I woke up and there it was!”
Our conversation quickly moved to a discussion about his latest entrepreneurial endeavor, NFTs.
In the middle of 2020, several months after publishing the abovementioned article, Professor Frye found NFTs.
NFTs, or Non Fungible Tokens, are unique pieces of data that are stored on a digital ledger that are typically represented by intangible goods. NFTs are all the rage right now, as you can see from this chart.
Professor Frye explained that NFTs are essentially “a digital token that gives you nothing.” This is in reference to the traditional legal understanding of property ownership that confers an exclusive bundle of rights to the owner – use, convey, destroy. An owner of an NFT does not necessarily have an exclusive right to the good represented by the NFT and in this sense, ownership is separate from the good. All that one “owns” is the NFT itself.
What is the value of nothing? You would be forgiven if you intuitively answered nothing. However, according to Professor Frye, “nothing” has value. According to recent reports, Professor Frye has earned upwards of roughly $65,000 in the NFT market.
One may reasonably ask, what benefit then is someone receiving through the purchase of an NFT?
One possible benefit is that the purchase is an example of the economic concept of conspicuous consumption. With conspicuous consumption, the benefit or utility of a good – called a Veblen or luxury good – is not necessarily exclusively derived from the good itself, but rather the acquisition of the good, which serves as a signal for one’s status, power, or wealth. In contrast to normal goods, there’s a positive correlation between price/exclusivity and demand for Veblen goods. Another possible benefit is that the purchase is an investment in the potential long-term profitability of the artist and their work. In this sense, it’s not dramatically unlike the purchase of a security, such as shares of stock in a publicly-traded corporation.
Whatever the reasons, Professor Frye found an exciting new home for his conceptual art. A couple of months after creating the NFT for the conceptual artwork “SEC no action Letter Request,” a buyer purchased the NFT for 0.5 eths which is equivalent to $1500. Professor Frye subsequently created “Deodand: How to Do Things with Legal Scholarship,” a law review article that consists of a collection of conceptual art in the form of individual poems or “cones,” that reflect on what it means to do legal scholarship. Deodand was sold for a total of $25,000 on the OpenSea NFT market.
Act III: Reflections and Predictions
“If people are actually invested enough in the production of works of authorship that they want to invest in the producer themselves as opposed to investing in the ownership of particular works, I think that might work. I hope it might work.”
In addition to finding a space where individuals can share in the joy of conceptual artwork, Professor Frye is excited about the educational possibilities in this new arena. As an academic, he argues that there is a responsibility to understand what the market is. In addition to legal scholarship, he explores the market through discussions with participants in his podcast “ipse dixit.” Although not certain about what the future of the new market entails at this early stage, Professor Frye envisions that the market will become a plurality of different markets. Also, through his new article “After Copyright,” he’s hopeful that the new market means that we may be able to “do away with property as a way of incentivizing works of authorship.”
Act IV: Limited Laissez-Faire
Professor Frye acknowledges that government regulation and oversight can be a good instrument to promote efficiency, safety, and fairness. However, he cautions that short-sighted, uncreative policy-making that lacks sufficient insight and understanding of the new market can potentially be problematic in this space. The prudent approach at this early stage may be to allow the market some room to develop before deciding on the most effective means of placing reasonable safeguards. The process can be informed by taking lessons from self-regulatory practices already being developed by market participants.
Act V: A Look-Back
“I’m a problem solver. I like to solve problems. When I see a problem, I want to solve it no matter how ridiculous the solution is.”
In addition to his recent endeavors in the NFT space, Professor Frye’s curiosity and intellectual creativity have led him to produce a wide variety of significant and influential pieces of work.
For instance, his first published law review article, “The Peculiar Story of United States v. Miller,” was cited by the late justice Antonin Scalia in the landmark SCOTUS majority opinion in District of Columbia v. Heller. The article was also credited by the late Justice John Paul Stevens for influencing his approach in Heller. Moreover, as an independent filmmaker, one of Professor Frye’s most notable pieces of work was co-producing “Our Nixon,” which is an archival documentary highlighting key moments of the Nixon presidency. The film was featured on CNN, screened at numerous film festivals, and won a significant number of film accolades.
Act VI: OFF Stage & Parting Words
“Nothing is stopping you from just innovating in any space you happen to be in, including legal scholarship and producing work that people actually want to consume.”
Outside of his professional and intellectual pursuits, Professor Frye enjoys the simpler things. At home, a typical day might involve waking up late and making breakfast for his wife who is also a law professor, taking the dog for a walk, doing some work in the bathtub, and having dinner with his wife. For up-and-comers, Professor Frye encourages budding legal scholars to pay attention to the needs of the audience and “produce something people actually want to read.” Not enough thought is given to the interest of the audience in legal scholarship. It’s important to consider both the style and substance of a piece of work in order to help maximize its impact.
“I hope, or I wish, people would spend more time thinking creatively about what they’re doing and why they’re doing it and how to maximize the impact of what they’re producing.”
Social Media
Professor Frye’s Twitter: @brianlfrye
Professor Frye’s Podcast: https://shows.acast.com/ipse-dixit
Fredner Prevalus, at the time of this post, is a second-year law student at Penn State Dickinson Law. He is a Haitian-Canadian from Toronto, Canada. He earned his MA in Economics at McMaster University in 2014 and worked as a broker in the financial services industry prior to law school. He is the current Treasurer of the Animal Legal Defense Fund, Student Bar Association Budget Committee Member, Law Lion Ambassador, and is participating as a Leading Law Student with the Carlisle Borough Council. His general interests lay at the intersection of law, economics, business, and finance. His special interest areas are in corporate and antitrust law.
Sources
(1) Newman, Jack. (2021, Oct2). A Law Professor Made $65,000 Selling NFTs. Here’s How. Business Insider. Retrieved November 11, 2021, from https://www.businessinsider.com/law-professor-made-65000-selling-nfts-how-he-did-it-2021-10
(2) Person, & Howcroft, E. (2021, July 6). NFT sales volume surges to $2.5 bln in 2021 First Half. Reuters. Retrieved November 11, 2021, from https://www.reuters.com/technology/nft-sales-volume- surges-25-bln-2021-first-half-2021-07-05/.