NFT Royalties

NFT Royalties: Uncovering the Hidden Revenue in the Blockchain World

The blockchain universe, with its innovative NFTs, has ushered in a new era for creators to profit from their work. A standout feature of this digital transformation is the advent of NFT royalties. Unlike conventional royalties that are usually disbursed to creators via intricate legal contracts, NFT royalties are regulated by smart contracts on blockchain networks. This guarantees that creators earn a set percentage of the revenue each time their work is resold in the secondary market.

The Evolution in Marketplace Focus:
Traders Over Creators

In recent times, the most active NFT marketplaces have experienced a significant shift in their marketing and user experience strategies, focusing more on traders rather than creators.

This trend is evident in various marketplaces, including Blur, X2Y2, and even OpenSea. These platforms prioritize facilitating NFT transactions over nurturing the creative process and ensuring artists are fairly compensated for their work.

Regrettably, this trader-centric approach has led to an overemphasis on transactions, sidelining the creators whose works are the backbone of these transactions.

With the most frequented marketplaces overlooking the significance of royalty payments, artists are deprived of their fair share of profits from their work's resale, thereby hindering their financial prosperity in the Web3 world.

The Impact of Royalty Losses in 2023

In the first quarter of 2023 alone, the top 10 NFT projects lost an astounding $82.9 million due to unpaid royalties. To illustrate the magnitude of this figure, consider what else could be achieved with such funds:

1. Seed funding for 82 startups, fostering innovation and business growth.
2. Scholarships for over 2,000 students to pursue a four-year college education.
3. Financing the production of several independent films, amplifying underrepresented voices.
4. Supporting the creation and upkeep of 276 public art installations worldwide.
5. Funding art education programs in every public elementary school in California.
6. Providing one month of free gallery space for 41,450 artists in the U.S.
7. Buying coffee for every Brooklyn resident for two weeks.
8. Clearing the student loan debt of 2,470 millennials.
9. Establishing 184 solar farms, significantly reducing carbon emissions.
10. Purchasing 18,450,970 10-piece chicken nugget meals from McDonalds.

The Future of NFTs and Creators

The NFT landscape was initially conceived as a decentralized ecosystem that would enable creators to monetize their work and engage with a global audience. However, the recent shift in marketplace focus towards traders over creators has led to a substantial revenue loss for artists.

Without creators, the NFT ecosystem would lose its primary source of value and innovation. Creators are the ones who produce the digital assets that are sold as NFTs, and without them, there would be no unique or original content to mint or trade. This would result in a severe reduction of demand for NFTs and, in turn, the value of the entire market would decline.

Moreover, without creators, the NFT space would lose its cultural and artistic significance. The NFT market has already started to gain mainstream recognition as a platform for artists and creatives to showcase their work and connect with audiences. If creators feel that they are not receiving fair compensation for their work, they may be less likely to participate in the NFT ecosystem, leading to a decrease in the cultural and artistic significance of the space.

Finally, the lack of creator participation in theNFT ecosystem could stifle innovation and technological advancement. Creators are often the first to experiment with new technologies and push the boundaries of what is possible. If they feel that their work is undervalued or under-compensated, they may be less likely to innovate and experiment with new technologies, leading to a stagnation of the NFT market.

The Threat to the NFT Ecosystem and the Way Forward

From our perspective, the shift in NFT marketplace focus towards traders over creators threatens the very foundation of the NFT ecosystem. The loss of substantial royalty revenue not only hinders artists' financial success but also jeopardizes the growth, innovation, and cultural significance of the entire space.

But this is just the beginning!

To ensure the longevity and vitality of the NFT market, we must incentivize innovation over marketplaces protecting their own bottom line to weather the market downturn — limiting both possibilities and protections for the group most capable of pushing Web3 ahead: Creators.

Aspen is the new haven for Web3 Creators seeking to build and grow their revenue with industry-leading creation, marketing, and distribution tools.

Ready to stop the revenue drain? Discover our Royalties Tools Now.