Creators are the backbone of the Web3 space, fueling the content behind NFT projects and uniting culture with the crypto-adjacent world. But many are packing up and moving out as their financial incentives dry up.
“About 80% of my creator friends are done [with Web3],” said Coco, a noted NFT artist and founding member of the digital art collective Stardust Society. Without a steady stream of creators, brands would lose the source of their primary partnerships, and Web3 the source of creative potential.
“If you don’t reward creators, you get a lack of creative output,” said Jeremy Cohen, senior VP and head of Web3 investments at ad agency Publicis Groupe. This means less content for new projects and more emphasis on monetizing existing assets – the very problem that forces creators out in the first place.
The main issue has to do with royalties, Coco said, or fees programmed into NFT smart contracts that allow creators to receive a small cut for each token’s resale. In November, Ad Age reported how these payments were being bypassed by a growing number of marketplaces. Marketing experts warned at the time that brands needed to establish guarantees, such as through contracts, to protect artists.
Read more: NFT marketplaces withdraw royalties for creators
But three months later, the situation has resolved significantly. OpenSea, the largest marketplace for buying and selling NFTs, announced last month that it would temporarily cut royalty protections for creators, reducing the mandatory minimum fee from 5% of the token’s price to 0.5%. The decision rolled back assurances the company put in place last fall, when it insisted on honoring royalties for existing collections, even going so far as to block marketplaces that made royalties optional.
In a Twitter thread announcing the new policy, OpenSea wrote: “We thought we could catalyze widespread enforcement of creator revenue, and we hoped others could come up with more robust solutions – this has not happened.”
Shiva Rajaraman, chief business officer at OpenSea, told Ad Age in an email: “The policy change we made in February was necessitated by the massive cultural shift happening in the NFT ecosystem right now: cost-sensitive collectors and power users dominate supply and demand. and zero-fee NFT marketplaces are emerging to meet the needs of this newly segmented customer base.”
