Creator Royalties #008: The Royalties Debate, and What to Do About It

Your weekly newsletter for Web3(-curious) creators! Looking to further your creative practice as a creator in Web3? You’re in the right place! Here’s a weekly rundown of information curated for creators, by creators.

?? This week's edition of Creator Royalties is about exactly what inspired the name of this newsletter - royalties. Catch up on the latest industry developments, and how best to position yourself. Scroll down for our usual rundown of weekly updates, artist grants and opportunities, and our creator spotlight featuring Brittany Pierre.

Creator Royalties — The Latest, and What to Do About It

A couple of weeks ago, largest NFT marketplace OpenSea announced significant changes to their creator royalty and fee structure — the biggest change being that royalties would be?optional?for any collection without on-chain enforcement.

Done in response to losing market share to relative newcomer Blur, this has widespread ramifications for all NFT creators and collectors globally.

Feeling a little overwhelmed by what all this means? We are here to get you caught up on the latest developments, and what you can do in response.

What are royalties, and why do we care?

A marketplace typically charges the seller two types of fees when a NFT is sold — (i) a platform fee which goes to the marketplace, and (ii) royalties, determined by and paid to the original creator.

Royalties have been a huge selling point for artists to sell their work as NFTs, promising them more sustainable business models and livelihoods. Compared to the traditional art world where an artist typically only makes revenue from the initial (or primary) sale, royalties allow artists to make revenue each time their work changes hands, i.e. from subsequent (or secondary) sales.

Why royalties are at risk

Royalties?can?be built into a smart contract, which acts as a tool to implement a sales agreement for your NFT. Similar to a sales agreement, smart contracts contain terms such as the price, number of tokens, who is allowed to buy it, and… royalty percentages.

Up until recently however, it was technically challenging for royalties to be enforced on-chain. This is because when a NFT is transacted, the marketplace acts as an intermediary through which the NFT is transferred. In OpenSea’s case, the transactions are made through its marketplace contract known as Seaport Protocol.

Marketplaces thus effectively have to choose to honor the royalties set by creators — through?social?contract as opposed to?smart?contract. Unfortunately, as NFT marketplaces have continued to vie for market share from each other, this social contract appears to be breaking down.

Enforcing royalties on-chain

Since marketplaces started making royalties optional, there has been an increasing amount of talk around on-chain enforcement of royalties. There have been a number of positive developments, including the creation of the?Royalty Registry ?by Manifold to allow creators to properly document their royalty information on-chain. In addition,?EIP-2981 ?was also developed as a contract standard to signal the royalty payment information for any given NFT.

Today, as opposed to enforcing the payment of royalties directly, smart contract solutions essentially do so by adding a snippet of code that restricts the sale of the NFT on marketplaces that do not honor royalties.

The catch — many smart contracts created prior to late 2022 are not upgradeable, resulting in several creators not being able to implement this solution, and many older collections losing out on royalties they had previously set.

How to ensure you get paid royalties

While innovators and builders continue to work on additional royalty-enforcing solutions, here are a few solutions you can explore today:

• Enable OpenSea’s Operator Filter
• OpenSea’s Operator Filter code blocks the sale of a token on a specific-list of royalty marketplaces determined by?CORI , a consortium of companies that includes marketplaces such as ZORA, OpenSea, Manifold, Foundation, Super Rare and Nifty Gateway.
• If you are minting on your own smart contract via Manifold, you can enable the Operator Filter through their Marketplace Blocker app.
• Key consideration:?Using OpenSea’s Operator Filter will ensure you are paid royalties, but you will have no say in what marketplaces your NFT can be traded on since that is left up to OpenSea and CORI.
• Encourage your collectors and community members to honor royalties
• Many people have likened the payment of royalties to that of tipping culture in the United States and other countries.
• By sharing openly and advocating for why royalties are important for you and your business, you can contribute to a cultural shift in people wanting to pay royalties despite them being optional.
• Key consideration: Advocacy is unfortunately easier said than done.
• Set up your own marketplace through white label solutions
• There are a number of white label marketplace solutions, including Rarible and FirstMate, that allow you to set up your own marketplace, in which you can set up your own rules, including the payment of royalties. You can check out Rarible’s handbook to setting up your own marketplace?here .
• Key consideration: There may not be a lot of liquidity in setting up your very own marketplace, and it may be harder to drive traffic, i.e. buyers and sellers to transact there.

Closing Thoughts

At HUG, we believe unequivocally in upholding and enforcing creator royalties. While there are some solutions available, they remain imperfect. On our part, we look forward to partnering with industry thought leaders to advocate for the honoring of royalties — what we believe is and should be a basic creator right.

If you’re interested in diving deeper into this topic, listen back to our Twitter Spaces from Thursday at 4:30PM EST, as we explored the future of creator royalties. We were joined by:

• Jakob, founder of FirstMate, to share his perspectives on building your own white label marketplace.
• Adamtastic, SuperRare featured digital illustrator
• A number of independent NFT artists to share their views on the issue.

Listen to the recording here .

In the News

Industry News

• Music streaming platform?Spotify is rolling out token-gated playlists ! This feature is currently being run as a pilot to select NFT communities, including Moonbirds, Fluf, and Overlords.
• Crypto exchange?Crypto.com ?is partnering with over 50 artists to create a NFT collection that will support local relief and humanitarian initiatives in Turkey after the country experienced devastating earthquakes.?Learn more about how you can support this cause here .
• NFT Paris was held last weekend, and attracted 18,000 people over 2 days, up from just 500 a year ago, demonstrating increased interest in Web3 and NFTs from around the world.
• The AI art movement is accelerating fast. Check out the latest pieces exhibited in?Deepfake: The World’s Largest AI Art Exhibition
• NFTs out, digital collectibles in? As the space evolves, some projects are looking into?rebranding around the concept of Web3 , and getting rid of terms like “crypto”, “blockchain”, and “Web3” altogether.

Tools and Resources

• Need some inspiration on how to monetize your digital art ? Check out this piece that goes into fractionalization, dynamic, NFTs, and more.
• Descript recently released an incredible comprehensive list of?AI tools for creators. ?Whether you are a podcaster, video content creator, or writer, be sure to check it out.

Notable Creators

• The original manuscript of Neil Stephenson’s?Snow Crash,?the book that coined the term “metaverse,” was?auctioned by Sotheby’s ?as part of a series called Infocalypse.
• The Monty Report featured founder and artist behind Women Rise, Maliha Abidi, in an in-depth interview of her art and activism.?Read it here .
• British multimedia artist Mat Collishaw is breeding hybridized flowers through dynamic NFTs. Read about his process and this fascinating project?here .
• Gmoney, the founder and CEO of Web3 fashion brand 9dcc, is launching personalized Proof of Attendance Protocol’s (POAPs) move to evolve how 9dcc engages with NFT holders.?Learn more about how Gmoney is integrating Web3 experiences into fashion here.
• Gossamer Rozen, founder and artist behind Tigerbob, has launched a new luxury fashion collection, which is now live for public sale. Check?this tweet ?out for all the details.

Artist Grants and Opportunities

• Have you applied for your HUG Artist Profile??Get your customizable, sharable profile ?to house all of your social links and collections, all while receiving meaningful reviews from adoring collectors.

• The Kala Fellowship Award ?is open to artists producing innovative work in mediums including printmaking, digital media, installation art, social practice, photography, and book arts. Selected artists will receive a $3,000 stipend and a studio residency at Kala Art Institute.
• Applications are open for Meta Angels x Adobe’s artist-in-residence program, which gives you a $1,000 grant, access to Adobe Creative Cloud, mentorship, and more. April’s artist-in-residence will be shortlisted by March 15th. Learn more and apply?here .
• Post your best work to Creatively ?every week, let the community vote, and stand a chance to win a $5,000 cash grant each month.

?? Fancy being part of our creator spotlight? Have an upcoming art drop you’d like to share? Or an upcoming exhibition or opportunity for your fellow artists??Comment below or email?[email protected] ?and share it with us, so we can share it with our readers.

Creator Spotlight: Brittany Pierre

Brittany Pierre is a multidisciplinary artist based in Chicago, IL. Photography, her first love, brought her to Web3 and has allowed her to expand her talents into oil painting, generative, AI, and 3D animations.

Through her art, Brittany strives to depict the daily life of Black Americans outside of trauma. Since minting her first NFT in April 2021, Brittany has become a leading creator, educator, and speaker in the space. She has dropped collections on numerous platforms including Foundation and Quantum, been featured at Consensus by Coindesk, NFT NYC, Art Basel Miami, and was recognized as part of the inaugural?NFT Now 100 ?in 2022.

Brittany has also raised over $70K for Black creators through her BIPOCNFT.eth wallet initiative. Upcoming projects include AVA, a digital universe celebrating Blackness in the future.

Learn more about Brittany via her?HUG Artist Profile , or follow her directly on?Twitter .

We asked Brittany...

Why are royalties important to artists, and how do you hope this space develops going forward?

"Web3 provides artists a new way to find success with their art. As Banksy said when one of his pieces sold for a record-breaking $12M, “Record price for a Banksy painting set at auction tonight. Shame I didn’t still own it.” If we are really about creators — from independent artists to those behind large PFP projects — we would understand that without artists, this space would be nothing. Likewise, honoring an artist’s desire for royalties should be a no brainer." - Brittany Pierre