Why Creators Should Care About a Royalties Solution

Why Web3 Creators Should Care About a Royalties Solution

Why Creators Should Care About a Royalties Solution

In the Web3-is-the-internet-you-own era, NFT royalties have become a critical aspect of the creator ecosystem. Ensuring a robust solution for NFT royalties is vital for artists to generate sustainable income from their creative pursuits. 

But finding a solution hasn’t been easy.

The ongoing debate surrounding NFT royalties and emphasize the importance of finding a solution to protect the interests of web3 creators.

The NFT royalties conundrum

As the web3 community continues to wrestle with the challenge of establishing a fair and effective NFT royalties solution, several points of contention have arisen.

  1. Technical limitations: Enforcing royalties on-chain presents numerous technical obstacles. As highlighted by The Block, these challenges include the ease with which users can bypass royalties by moving NFTs between wallets, and the lack of consensus on standardization across different blockchains and marketplaces.
  2. Legal complexities: CoinDesk emphasized the legal intricacies surrounding NFT royalties. Intellectual property rights and enforcement mechanisms vary significantly between jurisdictions, making it challenging to establish a unified, global approach to royalties. But here’s the thing: code isn’t law.
  3. Conflicting interests: Decrypt underscored the differing perspectives among creators, collectors, and platforms. While creators seek fair compensation, collectors may be hesitant to accept royalties that could reduce their profits. Furthermore, platforms might resist implementing royalties due to the added complexity and potential impact on user experience.
  4. Lack of standardization: The absence of an industry-wide standard for NFT royalties creates inconsistencies across platforms and complicates enforcement efforts. As a result, artists may struggle to navigate various royalty systems and secure their fair share of revenue.

Leading the Way to a Living Wage

Digital artists are increasingly finding greater financial success through web3 platforms as NFT sales and royalties from secondary sales offer a more lucrative revenue stream compared to traditional web2 platforms.

A royalties solution is an essential step forward in ensuring that individuals are fairly compensated for their creative contributions.

Let's examine some telling statistics:

  • In 2021, NFTs generated $3.9 billion for 22,400 web3 creators, resulting in an average revenue per creator of $174,000.

  • Comparatively, Spotify paid $7 billion to 11 million artists, translating to a per capita income of $636.

  • YouTube, the world's most popular video publishing platform, paid $15 billion to 37 million channels, equating to an average revenue of $405 per channel.

  • Meanwhile, Meta Platforms (formerly Facebook) distributed $300 million to more than 2.9 billion users, averaging a meager $0.10 per user.

These figures indicate that NFTs are quickly becoming a far more effective means of monetizing creative work compared to established web2 platforms for generating income from intellectual properties.

By championing a robust royalties solution, web3 has the potential to pave the way for a living wage for digital artists and creators. This shift towards equitable compensation can not only attract more talent to the web3 space but also empower creators to focus on their creative endeavors and produce innovative, groundbreaking work.

Now What?

The ongoing debate surrounding NFT royalties highlights the complexity of balancing creators' rights with the practicalities of enforcement and implementation. Nevertheless, it is crucial for web3 creators to actively participate in the discourse and advocate for a royalties solution that protects their interests and sustains the growth of the creator ecosystem.

By uniting in the pursuit of a fair and effective royalties framework, the web3 community can establish a solid foundation for the future of digital art, creativity, and innovation. In doing so, web3 creators will be better equipped to generate sustainable income, secure their intellectual property rights, and contribute to a thriving, equitable creative landscape. 

Sounds good to us.