Elizabeth Alibhai, Partner at RPC Lawyers and  Dominic Collins CEO of Darabase have co-written an article which was originally published in EG on June 27, 2023 explaining how augmented reality and the metaverse can open up new revenue streams for property owners.

Advances in technology are opening up exciting new frontiers for property owners and managers. Almost two billion people globally use augmented reality (AR) on their mobile phones and nearly 400 million engage in a virtual metaverse reality.

As real world and virtual metaverses become mainstream, the properties around us are increasingly being used as the canvas for digital content. 

In this new, immersive world, there is much to recommend a coherent, permission-based approach to the display of digital content on, or in connection with, properties. 

Property Digital Rights – what are they and why should the property industry take notice?

Property Digital Rights (PDRs) are an emerging asset class, designed to allow property owners to protect, manage and monetise how their properties are used in AR-enabled mobile apps or smart glasses or virtual reality (VR) metaverse worlds. Just as you might grant a third party a licence to use the airspace above a property, or to extract the minerals below it, you can register your property’s digital rights and permit use of the property in immersive environments. At the same time you can select any restrictions or content preferences that should apply to your property to ensure the advertisements or other digital content meet your requirements and preserve the reputation and prestige of your property.

Some argue that immersive advertising, particularly AR advertising in physical locations, and the property digital rights that will control it, are the future of outdoor media. As with traditional screen or billboard-type advertising, property digital rights have the potential to provide a lucrative additional source of revenue for property owners and managers, with no CAPEX and limited OPEX investment.

Property owners already attribute significant asset value to the outdoor media inventory on many of their properties, based on the incremental revenue generated. For example, Landsec’s Piccadilly Lights screen in London has an asset value of over £200m, making it one of Landsec’s most valuable assets, larger than many office and retail properties they own. Immersive advertising represents a unique opportunity for brands to leverage the unique advantages of both digital and outdoor media. As we all spend more time in immersive environments, on mobile for now and in the future with wearable technology, today’s vast advertising spend will shift to immersive AR and VR media.

Legal considerations in the UK

The use of property digital rights in a mixed-reality space is necessarily derivative of the legal and regulatory framework in the physical world. For example, the owners of the iconic Shard building and the intellectual property in it have the primary right to register the Shard and make the property digital rights available, allowing the use of the property, or any part of it, in immersive experiences.

In the physical world, property owners’ rights to allow outdoor media are fettered in numerous ways. Taking the Shard example, individual tenants within the Shard may have rights to restrict advertising or displays in proximity to their spaces. The planning authority restricts the content, placement and nature of physical advertising, and central government applies over-arching regulation. In fact, new legislation is expected to be enacted this year to address light pollution in the City of London which will add further restrictions. Comparable restrictions apply in countries across the globe – for example, Germany recently took steps to ban public screens being active between 10pm and 6am for similar reasons.

In contrast, immersive advertising, using augmented reality content overlaid onto the real world or virtual content in a metaverse, leaves the real world property untouched. The “place-making” and other location-based sensitivities which typically concern a government or local authority and therefore drive most of the restrictive legislation to fall away. As this is a new frontier, tenants’ lease contracts also don’t typically impose restrictions. In any event, even once immersive advertising becomes fully established, we can expect such third parties’ concerns to be limited to the extent the advertising creates safety issues (such as overcrowding or distracting content at busy road junctions), or negative or competitive associations with the property. As a result, many of the significant obstacles to value extraction which exist for outdoor media are removed. In the absence of statutory, copyright or contractual restrictions, property owners are free to register their properties and use their property digital rights to permit immersive advertising.  

There is another important attraction to registering a property’s digital rights. The traditional tools available to a property owner in the face of the unauthorised “use” of their property in an immersive environment are unsatisfactory. The law of trespass, for example, assumes there has been a physical use or placing of items/displays on a property without consent. If the “use” of a property is within a headset, arguably there has been no physical interaction with the property at all. Intellectual property law may offer a remedy in the form of breach of copyright or passing off but clearly, as is often the case, the law is struggling to keep up with technology. A platform for the registration of property digital rights is a welcome first step for many advertisers looking for permitted locations for their content. 

We also expect that a new property digital rights registry and its associated marketplace will act as something of a catalyst to establishing a more appropriate regulatory framework in the digital world. Remember that the high degree of accuracy and oversight associated with our physical Land Registry is what underpins the success of the property marketplace and resultant property values.

You can read more on the RPC website here.