Is this the end of NFT Creator Royalties?

creator royalties
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Creator royalties when buying or selling #NFTs is a hot topic currently. It’s been the ‘norm’ but now there’s a big debate around it. 

The Promise

I bought into how the technology makes it possible for creators (especially artists) to have a better economic reward for their work by receiving creator royalties every time their work is traded. 

My first rude awakening came when I created the Passionless Book NFT using Manifold and I realised creator royalties cannot be enforced at a smart contract level (at least not yet). Instead, it is at the discretion of the marketplace conducting the trade. This means some marketplaces may not adhere to royalty payments. 

The effect

Without creator royalties, collectors and traders keep more money from NFT sales, but many projects that rely heavily (or sometimes wholly) on royalties to generate revenue will suffer. 

-> Should royalty payment be a norm? 

-> Is it fair that an artist continues to profit from subsequent trades of their work?

-> Are all NFTs the same i.e 1/1 artists vs PFPs (profile pictures) with a 10,000 collection vs membership nfts etc.?

-> Will projects that rely only on royalties from secondary sales cope if revenue from royalties dries up?

Many questions but no real answers yet. 

How big can royalties get?

GaryVee’s Veefriends 1 NFT project generated approx $29m in primary sales and a further $9m in royalties from secondary sales (10% royalty) – Source https://lnkd.in/eUq6QczF. This shows what is possible with royalty revenue. 

However, royalty payments will still accrue to a creator even if there is bad news around a project, hype, false claims etc. Anything that creates secondary market activities will bring royalty revenue for the creator, even if it is an unintended consequence. 

There are two well-written but different viewpoints about this that you can read more about. 

Zeneca’s view – https://lnkd.in/epd7eVBc

Swombat’s view – Twitter Thread

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