Royalties VS No Royalties, The NFT Debate

Royalties baked into smart contracts have been heavily touted as one of the benefits of NFTs. When discussing the opportunities NFTs provide creatives, artists and builders, royalties and the passive income that comes with it is often highlighted the most. However, the latest drama-filled debate in Web3 centres around whether projects or creatives should incorporate royalties into their NFTs.

The origin of the debate, that has taken over the crypto/NFT news cycle and many Twitter feeds, stems from?Sudoswap?— a decentralised NFT marketplace — not allowing for creators to earn royalties for their NFTs. This means initial holders who sell do not have to give a portion of their sale of an NFT back to the original creator. This is strikingly different from other NFT marketplaces which uniformly enable creators to make use of royalties, such as OpenSea which gives creators up to 10% royalties and takes 2.5% fees for the transaction. Sudoswap’s recent rise in popularity has fuelled the spread of the current debate.

Some of those in the no royalties “camp” put forward the notion that royalties are not enforceable on-chain anyway so ultimately, it falls on the creators to create followings that are willing to respect the royalty and carry out secondary market sales in a way that the creator receives the monetary rewards.

Michael Joseph Winkelmann, aka Beeple, is surprisingly also of this opinion as he took to Twitter to share his thoughts on the debate with the wider NFT space. The lack of enforceability of royalties on-chain comes from the idea that NFTs can be “gifted” from one wallet to another, circumventing the royalty split that is taken off when a sale is made.

Those who are in the pro-royalties camp are of the opinion that royalties are a fundamental utility of NFTs and have revolutionised how creators are able to earn. To them, any narratives that legitimise the idea that creators should not expect royalties only hurts creators. Web2 platforms like Patreon, OnlyFans, Twitch, and more, already operate on a no-royalties basis and rely on subscription fees of donations, so the unique value proposition of NFTs is weakened without leveraging smart contract royalties.

Others take a more nuanced view on the debate, suggesting that how they approach royalties depends on the type of creator. Many proclaim that they would happily support independent individual creators with royalties. However, they’d rather skirt royalties than contribute more to lining the pocket of project founders for a run-of-the-mill “roadmap 10K PFP NFT project” that could potentially be a rug pull.

Whichever side of the fence you are on, royalties are a utility to be used as the creator sees fit. What Sudoswap has brought to light are the various nuanced takes on royalties that people in the space have. This is a reflection of the sentiment shift that has occurred following developments in the NFT world.

There’s no denying it, royalties in smart contracts have done wonders for creators that have seized the opportunity and allowed many artists to flourish creatively. As a web3 community, we need to support and promote narratives and initiatives that protect the ability for creators to continue working on their craft. However, the burden still falls on creators to build and nurture a community that respects royalties and supports creators’ livelihood in such a way.

SO-COL supports creators by enabling them to monetise their content and grow their communities while keeping more of what they have worked hard for than on other web2 or web3 platforms.

SO-COL only takes a 2.5% fee which is standard for the majority of other NFT marketplaces. They also benefit from tapping on the expertise of the SO-COL’s team to develop utility ideas for their NFT, and can get support in NFT designs as well. This is also in stark contrast with web2 creator community platforms, such as OnlyFans and Patreon, that take 20–30% revenue fees from creators. If creators on our platform make use of different artists to illustrate the NFTs for their community, those NFT artists may also take additional royalties.

Despite the debates that come and go on Twitter, SO-COL believes in empowering creators and communities. This is reflected in how we approach building our platform for creators and communities. We want to see creators and communities leverage web3 technologies in innovative ways that will benefit as many people as possible.

If you haven’t already, sign up for the waitlist and be one of the first on SO-COL by filling out the form?here.

If you’re a creator interested in finding out more about how you can get set up on SO-COL, get in touch with our team at?[email protected]