The NFT space has proven to be a gateway for users to take their first steps in the Web3 space, especially for artists and creators who use Web3 tools to enhance their work.
Loss of royalties higher than expected
However, recent data from eBit Labs and the LiveArt marketplace suggests that the royalty loss for creators in the NFT space may be higher than originally thought.
According to the data, two leading NFT collections, Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC), have suffered royalty shortfalls worth approximately $20 million since the emergence of the Blur marketplace in October 2022 alone. or approximately €18.4 million.
This new data suggests that previous estimates of $35/€32.3 million in royalty shortfalls are likely too low.
Creator Royalties get attention
The issue of creator royalties has received a lot of attention in the NFT space. After a brief halt to maker royalties and subsequent strong community backlash, the OpenSea marketplace announced that it would enforce maker royalties on all listed collections.
In November 2022, the founders of Bored Ape Yacht Club (BAYC) presented a new maker royalty model that would keep NFT transfers between wallets free.
MagicEden, another leading NFT marketplace, launched its own NFT royalty maintenance tool in September 2022. This tool allows creators to flag their NFTs or blur the image if the offer or transaction circumvents royalty rules.
Creator promise not fulfilled
Boris Pevzner, the co-founder and CEO of LiveArt, noted that the Web3 ecosystem touts itself as a “creator-centric space,” but new data shows that this promise is not being kept. He said the following:
The shortage of royalties clearly indicates that the current system is not working as it should.
Pevzner warned that if the NFT marketplaces continue to fight for market share, it could discourage artists from entering the industry. He said the creative spirit of the space could be lost and it could become more like the stock market.
Pevzner concluded by referring specifically to the “market wars” that began with the rise of Blur, a marketplace focused on OpenSea’s market share.
