⚰️ RIP royalties (Issue #61)

We hardly knew ye.

Author

Craig Wilson
February 24, 2023

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DYOR 🔬

The death of royalties

At Metaversal, we’re overwhelmingly pro-royalties enforcement. We believe artists and creators deserve to be rewarded for their efforts. That’s also one of the most valuable promises Web3 offers, and one of the reasons we believe it’s key to the future of culture, creativity, ownership, and the way artists connect with collectors.

We also understand that traders don’t necessarily share that perspective and that marketplaces have significant incentives (AKA, filthy lucre) to prioritize traders’ desires at the expense of artists’ best interests.

We’ve seen this played out before. When Sudoswap unveiled a protocol that let traders sidestep royalties it demonstrated how royalties were enforced through social contracts, not smart ones. Since then, we’ve seen DeGods abandon its royalties and marketplaces like Blur and Magic Eden doing likewise.

Amidst the turmoil, OpenSea attempted to make royalties enforceable on-chain and reaffirmed its commitment to them. That was an easy play while OpenSea was the top dog. It was great for goodwill, and it didn’t meaningfully affect profits. But this week, that changed.

It was all a Blur

When Blur launched, its intended target market was high-end (and high-volume) traders. Part of Blur’s incentive mechanism was only charging a 0.25% fee — compared to OpenSea’s longstanding 2.5% — and its decision to make honoring creator fees (royalties) optional. At that time, OpenSea stuck to its guns.

But Blur’s since upped the ante. By using its own $BLUR token for airdrops to reward traders, Blur has hooked whales and gotten them to trade on its marketplace rather than OpenSea’s. It turns out a few hundred users account for most of the cumulative trade volume across platforms, so when most of them move their activity to Blur, that presents an existential threat to OpenSea.

In response, OpenSea announced it’s dropping creator fees and its own fees (or significantly reducing them).

Unsurprisingly, the result has been a flurry of activity on Blur (see the thread on the epic Machi Big Brother trade later in the newsletter)… and plenty of discussion about the future of royalties, and the potential implications of a zero-royalty future for artists and creators.

Pros and cons

More marketplaces are a good thing. Competition creates resilience, gives participants more options, and incentivizes innovation. But if you’re an artist relying on royalty revenue, or a project creator looking to create a sustainable project, you face a real challenge.

If the only way to make more money from NFTs is to make more of them, that’s potentially bad news for creators and collectors alike. It has the potential to create the wrong incentives for both parties. And that’s bad news for everybody.

To the moon 🌙

  • NFTnow announced its forthcoming “Now Pass” that’ll launch in March and give holders access to the NFTnow ecosystem.

  • One of Blur’s founders, known by the screen name Pacman, revealed himself as a 24-year-old phenom named Tieshun Roquerre:

  • PROOF pulled the plug on its conference, citing its inability at present to put on the sort of bar-raising event it wanted to. Tickets and hotel rooms booked through PROOF have been refunded, and those who had already booked travel can apply for reimbursement.

  • Spotify is exploring token-gated playlists with gaming and entertainment company Overlord:

  • Immersve announced a new partnership with Mastercard that will enable its customers in Australia and New Zealand to transact using a physical card linked to their web3 wallets. The move is especially novel because it doesn’t use a prepaid card or require users’ cryptocurrency to be stored on an exchange.

  • Rug Radio announced Stubs, POAP-like tokens created using Fair.xyz that listeners to its GM Web3 show can claim each weekday that will unlock exclusive artwork to holders each week.

Thread of the Week 🧵

Looks Rare 🖼

We’re proud to announce we’re sponsoring the Lumen Prize for 2023 and introducing a new prize recognizing excellence in generative art. If you’re an artist who uses technology in any way, shape, or form, we encourage you to enter.

Goats Only 🐐

Regardless of where you stand on the great royalties debate, you should be watching or listening to Goats and the Metaverse.

In each episode, collectibles OG and entrepreneur Stan “The Goat” Meytin and Metaversal co-founder and CEO Yossi Hasson talk about digital and IRL collectibles, NFTs, and the week’s news worth knowing.

This week, they dive headfirst into the marketplace fray. Check out the latest episode right here:

Aside from providing invaluable insights into digital art and collectibles, Stan and Yossi have assembled a collection of NFTs dubbed “The Goat Vault.” When the show hits 5,000 subscribers on YouTube, one of those lucky subscribers will win the contents of the vault, which at last count is valued at more than 10 ETH (~$16,100).

Prefer listening? Check out Goats and the Metaverse on Apple Podcasts, Spotify, Anchor, or wherever you get your podcasts.

IYKYK 🚭

🤝 Connect for more from Metaversal 🔌

You can find more rapid-fire updates, insights, memes, and other curated internet goodness from the Metaversal team on any of your preferred platforms, we’re on Twitter, LinkedIn, Instagram, Mastodon, and TikTok.

Metaversal’s content director, Craig Wilson, compiled this week’s edition. You can find him on Twitter or Mastodon.

Until next time, see you in the metaverse!