An Update on Bored & Dangerous Royalties, Podcast Licensing, and More
GM Writer’s Room Holders, Azurians, and those helping us locate Good Boy,
We have a few updates to share with you regarding licensing opportunities past, present, and future.
In this post, we discuss:
- Payouts from Bored & Dangerous (licensing opportunity #1)
- What you can expect from podcast licensing (opening shortly)
- Some learnings we’ve had throughout this process that we believe can help other projects that are embarking on licensing journeys.
Bored & Dangerous Payouts
First and foremost, we appreciate everyone’s patience as we’ve worked through this process with our lawyers across various disciplines (IP, Tax, Corporate). We know this process has taken much longer than expected, and we apologize for that.
As the regulatory environment has evolved, it’s become more important than ever that Tally Labs does everything in its power to operate above board. As clarity around certain regulatory decisions have been made in the last 12 months, there have been precedents set that shine a light on how companies in the Web3 space must operate. In the case of Bored & Dangerous payments, this has resulted in an obvious delay.
Given the changing regulatory environment, we completed a full audit of our payout process. During that process, we uncovered a few key issues that could have negative consequences on not only our business but also on you, our community members.
For that reason, we had to go back to the drawing board to ensure licensors can receive their funds in the most compliant way. After months of work, we’ve identified a path forward and are excited to finally share a timeline, an overview of the process, and an estimate on payouts that include actual revenue and expenses through Q4 2022. The final figure for our first licensing payment will end up being slightly different from our current estimate as it will include Q1 revenue from secondary sales as well as Q1 expenses.
While we’ve had a substantial delay in the processing of these first few quarters of payments, the good news is that this first time is by far the most challenging. We’ve been working with different tax and legal counsel to craft the most compliant way to make these payments, and now that we have all of our I’s dotted and T’s crossed, this process should be much smoother for all licensing opportunities going forward. As you know, our goal for the Writer’s Room is to give our community the chance to co-create content and put their IP to work time and time again. Bored & Dangerous is just the first example of this. Our hope is that our members can look back 5 years from now at all of the opportunities they were provided to exercise their creativity and see their IP appear in works of fiction.
Transparent overview of the issues we faced
Back in July 2022, we were all set to make licensing payouts after the Bored & Dangerous sale ended. Like we mentioned above, prior to making those payments, we underwent an audit of the process we had developed with a new Corporate Counsel.
While running through our plan, they pointed out a potentially massive risk to Tally Labs, to us as individuals, and even to you, our community members. They pointed out that with no identifying information about who we’re paying other than the NFTs in their wallet, there could be criminal consequences in the event of certain mistakes being made.
We’ll outline this in greater detail, but you can think of Tornado Cash as an example of the consequences that now exist for payments being made to anonymous people. To us, when we designed the workflow back in 2021, this was the point! We set it up this way because of our desire to stay true to the web3 ethos and respect our community’s privacy. To put it simply, the regulatory environment was in a vastly different place when we kicked off the process in 2021.
But now we all have more clarity that, while unlikely, if Tally Labs unknowingly paid terrorists or other individuals sanctioned by the United States, not only would we face criminal charges but people who have received funds from us could be in trouble as well. To be clear, offenses like these are overseen by OFAC, who you may recognize as one of the key agencies involved in the Tornado Cash situation.
To put it in layman terms, OFAC has a zero tolerance policy. Regardless of the amount of money you accidentally pay to someone on an OFAC list, it results in criminal penalties. And as you’ve seen from other examples like Tornado Cash, there can be consequences for anyone involved in the flow of funds to anonymous parties — even innocent parties adjacent to the mistaken payments.
Beyond the OFAC issues, our Tax Lawyers identified additional issues for us as well as for you (the recipients of payment) that can arise from paying out thousands of anonymous individuals located all over the world. The US has tax treaties with various countries and these treaties require the paying party (us) to disclose when money is crossing borders. In order to do that, we would need to know where the money is going. If the paying party does not identify where the money is going then both the paying party (us) and the receiving party (you) can be in trouble with the IRS and your local tax authority. Every tax authority has a different process for dealing with misfilings, but in some cases acts of negligence can be viewed and punished as criminal offenses.
Of course knowing where payments are going is impossible without information on the recipient. Much like violating OFAC laws and inadvertently paying out sanctioned individuals, failing to disclose these cross border payments can also have criminal consequences for payers and/or recipients. Our Tax Lawyers have shared that obtaining this information is also beneficial to our community members and will ensure everyone is staying compliant within their jurisdictions.
To put it simply, it’s become abundantly clear that Tally Labs needs to obtain personal information from individuals prior to issuing payouts. If anyone in the space is issuing payments anonymously with no questions asked, they are taking a massive risk. They are putting themselves, their business, and their community in jeopardy. This isn’t a choice we’re making, it’s an obligation to abide by the law. We believe that abiding by the law is the only way to succeed long term as a community.
What the process will look like to claim
We don’t take obtaining personal information lightly. In fact, a decent chunk of the payout delay is related to the back and forth fighting that we did with counsel to try to find ways to avoid it. Ultimately it became clear that with new regulatory clarity, this could not be avoided.
So now we’re trying to do the next best thing. We’re partnering with Jumio, a leader in end-to-end ID Verification and AML Solutions. Jumio comes highly recommended, has processed over 1 billion transactions, and powers leading companies in Crypto, Fintech, Retail, Travel, Gaming, and more. For people who collect payments for Bored & Dangerous and beyond, Jumio will manage the collection of certain personal information so that we can ensure that all payments are above board and that you (and we) are protected.
All data that is collected by Jumio is transmitted and stored with strong AES 256-bit encryption. Jumio is PCI DSS Level 1 compliant which speaks to the seriousness that they take data security and privacy.
If you’re wondering about the specific process to claim your payments, the flow to do that will feel very much like past Tally Labs software experiences:
- You will connect your wallet on our website
- You will be issued a unique code that you will take to Jumio
- You will enter that code in a Jumio workflow
- Jumio will collect personal information that is stored in their bank-grade secure database
- Jumio will pass an approval decision back to us based on your personal information
Because we use a unique code rather than your wallet, Jumio will never have a relationship stored between your personal data and your crypto wallet. This means that while we will receive the personal information that we need to process payment to you, no 3rd party will have a relationship between your personal information and your wallet.
Once the process is complete with Jumio, you’ll be able to claim your payout. The payout process may lag the personal information process by a few days to weeks, but not by longer.
We’re proud to announce that in total, we will be paying out roughly $365,000 back into the hands of the community. This is incredibly exciting for us, considering Bored & Dangerous was essentially a proof of concept for what we hope to achieve in Web3 native media.
We learned that folks want to come together to create content and they want to put their IP to work. We’re excited to keep creating opportunities for community members to bring their characters to life.
Below is a chart of estimated payout amounts based on the number of licensing units you have. Please note, these numbers are not final and will change slightly based on revenues and expenses logged during Q1 2023. The numbers below are only through Q4:
We’ve also created a chart that shows a set of anonymized individuals who have entered into some of the most licensing agreements for Bored & Dangerous and have some of the highest expected payouts.
While 1 licensing unit may not be a massive amount, the individuals below have shown what’s possible by using (or partnering with) multiple Writer’s Room NFTs to enter into many licensing agreements.
We understand folks may be reluctant to KYC, and we don’t feel it’s right for us to keep those waived funds from folks who bow out. Therefore, we’ll be taking all waived funds and splitting them out in two ways. A portion will be rolled over into the licensing pool for Jenkins Podcast, and the rest will be put towards funding community led projects. More on this in the coming months.
The work left to do before issuing payments is to finalize our integration with Jumio; do some corporate structuring work for the subsidiary entity that will be remitting payments; and a bit more. We feel very confident that we will be able to open payment claims in mid to late April.
As stated above, this also allows another fiscal quarter to pass where Bored & Dangerous secondary sales can be attributed and factored in. As we’ve mentioned before, even though there has been a delay, payouts continue to accumulate as B&D sales activity occurs.
As the payouts will include both Q1 revenue and expenses related to the book, the figures will likely change slightly between now and claims opening. When it comes time to receive your payout, you will be able to view an exact amount that you are owed. At that time, we’ll also provide more detail regarding the total revenue generated and expenses incurred for the entire Bored & Dangerous project. It’s important to us that you have visibility into the P&L.
Jenkins Podcast Licensing
And now that we’ve explained these elements of Bored & Dangerous payouts, here is the more exciting news regarding licensing for the Jenkins podcast.
Now that we’ve completed the lionshare of work for payouts, we are on the precipice of opening up licensing for the Jenkins podcast. It will be live in the next few weeks, and we’re beyond excited for you all to experience licensing 2.0. The team has put a ton of work into it to improve upon the flow since you last experienced it.
Last time all deals had to be made off-platform, and then folks could solidify a partnership via email. It certainly was chaotic with deals being made in Discord and with emails flying around. Now every licensing deal between you, other parties, and us can be made on-platform in just a few clicks.
If you’re a Writer’s Room holder, you’ll be able to head over and browse all of the characters that were created to help Jenkins find good boy (almost 7700). You’ll be able to click on ones you like and use your Writer’s Room NFT to send them a partnership offer on the spot. Of course, you can create and license your own characters as well without entering into a partnership with anyone else.
Much like Bored & Dangerous, the only way to license to the podcast will be to own a Writer’s Room NFT or to partner with a Writer’s Room holder.
Also like Bored & Dangerous, the tier of Writer’s Room NFT will govern the level of exposure that your licensed character will have in the podcast:
- WAGMI Yacht: Featured as a character in the story, mentioned by name
- Valet Stand: Depicted in the cover art of 1 of the 8 episodes
- Yacht Key: Depicted in a ‘Where’s Good Boy’ map of all of the communities visited
- Valet Ticket: logged in the acknowledgments on the unique site for the podcast
As a refresher, we’d also like to share the breakdown of episodes for this fiction podcast. Jenkins is on a quest to find Good Boy and this journey will take him all across the Metaverse.
- Episode 1: Apes/Mutants
- Episodes 2–6 (voted on by the Writer’s Room): Bubblegum Kids, Inhabitants, Maison de GOAT, Purrnelope’s Country Club, and Goblintown
- Episode 7 (winner for most characters created): The Plague
- Episode 8: ‘Hodgepodge’ episode where anyone who owns the commercial rights to a character can license it
In conclusion, we have lots of exciting things on the horizon for the Writer’s Room. More co-creation opportunities, more licensing opportunities, and a few more partnerships up our sleeve are all on the horizon. As always, we’ll make ourselves available in Discord and on Twitter for any questions you may have.
If members of our community would like to hear more about any of the points we touched on in this article, we’re also happy to host a Twitter Spaces to dig in further.
As always, thank you to the Writer’s Room for being on this journey with us.