The Dilemma of Balancing Market Share and Creator Royalties in NFT Projects

02/27/2023 01:58 • AI & Tech Insights • 64 views

On February 27th, Yat Siu, co-founder of Animoca Brands, said that creator royalties provided NFT projects with a continuous source of income that exceeded their initial sales (usually 5% to 10% when the tokens were resold). However, in order to seize market share, many companies are being led astray at the expense of creators.

Animoca co-founder Yat Siu: Giving up NFT royalties will “kill” Web3

Interpretation of the news:

The explosion of Non-Fungible Tokens (NFTs) is shifting the paradigm in the world of digital art and collectibles. Investors and collectors have been paying millions of dollars for digital art, memes, and other digital assets backed by blockchain technology. NFTs offer creators the option to tokenize their art, giving them a share of the profits and ensuring provenance and authenticity. According to Yat Siu, co-founder of Animoca Brands, creator royalties provide a continuous source of income for NFT projects that exceed their initial sales. However, many companies are being led astray at the expense of creators by focusing on market share.

Creator royalties serve as a means of incentivizing creators to produce quality work while providing them with passive income streams that will continue to generate revenue long after the initial sale. This serves as a fair means of compensation and keeps creators engaged in the creation of further works. However, market share has a significant role to play in the success of NFT projects. Without a sizable market share, the prices of the tokens can be highly volatile, which can impact investor trust and ultimately harm the project’s overall profitability.

Many NFT project companies have therefore focused on market share rather than creator royalties. They have prioritized the immediate success of the project rather than its long-term sustainability. This often leads to creators receiving a lower share of the revenues, which may not be enough to sustain them. This creates a dilemma where companies must balance the need to capture as much of the market share as possible while also providing adequate compensation to creators.

To avoid this dilemma, companies must strike a balance between market share and creator royalties. This requires a long-term perspective, putting in place the necessary structures and agreements that guarantee fair compensation for creators while also creating a conducive environment for investors to thrive. This requires companies to be transparent in their dealings and ensure that the creators are the main beneficiaries of the project. As NFT grows, it is critical to adopt solutions that adequately compensate creators, provide a stable market for investors, and ultimately support long-term success.

In conclusion, creator royalties and market share are two critical components of NFT projects. While prioritizing market share can yield immediate success, it can come at the expense of creators. Therefore, it is crucial to strike a balance between these two elements to ensure long-term sustainability and success.

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The Dilemma of Balancing Market Share and Creator Royalties in NFT Projects

Animoca co-founder Yat Siu: Giving up NFT royalties will “kill” Web3

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