Declining Royalty Payments: Nansen Study Highlights NFT Creator’s Concerns

NFT creators have experienced a significant decline in royalty payments, reaching a two-year low in June, according to data analytics platform Nansen. In April 2022, creators earned a staggering $76 million in one week. However, in June, the earnings dropped to a mere $3.8 million. This downward trend has raised concerns within the NFT community about the sustainability of creator royalties.

TL;DR:

  • NFT creators experienced a sharp decline in royalty payments. The market hit a two-year low in June, raising concerns about the sustainability of creator earnings.
  • The drop in payouts is attributed to the emergence of royalty-optional marketplace Blur and OpenSea’s policies. This allows collectors to choose their royalty contributions.
  • Well-established NFT collections like Bored Ape Yacht Club and Azuki continue to generate substantial royalties, despite the overall decline in payments.

picture of NFT "plugged-in" to different currencies, symbolizing creator royalty payments globally

The Decline of NFT Creator Royalty Payments: Who’s To Blame?

The decline in payouts has been attributed to the emergence of royalty-optional NFT marketplace Blur and OpenSea’s policies. These allow collectors to choose their royalty contributions. While the practice of contributing additional royalties is not widespread, it has had a noticeable impact on overall creator earnings. Still, despite the drop in royalty payments, several well-established NFT collections have continued to generate substantial earnings.

OpenSea requires collections to include an on-chain enforcement method in their smart contract. This ensures creator earnings, while Blur enforces a minimum of 0.5% royalties. However, it seems that the practice of additional royalty contributions by collectors is uncommon.

Yuga Labs, the creator of popular collections like Bored Ape Yacht Club and Mutant Ape Yacht Club, has accumulated nearly $166 million in collective royalties since their inception. Chiru Labs’ flagship Azuki collection has grossed over $58 million in royalties, including its derivative projects BEANZ and Elementals.

creator royalties Nansen data

All Time Creator Royalty Data, Source: Nansen

The decline in royalty payments began before the floor price of Bored Ape Yacht Club reached a 20-month low and before Azuki’s Elementals mint faced challenges. This suggests that other factors have contributed to the decrease in earnings for creators.

While enforcing NFT royalty payments has been a source of tension between platforms and creators, it appears that collectors have continued to forgo paying optional royalties.

Nansen’s report indicates that royalty payments in June hit a two-year low. This report sees creators collectively earning 2,000 ETH (about $3.8 million) during the peak week. In contrast, the peak week in April 2022 saw creators earn 28,000 ETH (nearly $76 million).

NFTs Rise to the Challenge

Despite the challenges faced, blue-chip NFT collections have managed to generate substantial royalties. Yuga Labs has amassed nearly $166 million in collective royalties across its collections. Meanwhile Chiru Labs’ Azuki collection and its derivative projects have grossed over $58 million in royalties.

The significant decline in NFT royalty payments observed in June raises questions about the sustainability of creator earnings in the market. The rise of royalty-optional platforms and flexible policies have influenced overall earnings for creators. However, the success of notable collections indicates the potential for sustainable earnings in the NFT space.

As the NFT market evolves, it remains to be seen how creators and platforms will adapt to ensure a thriving ecosystem for NFT creators. Finding a balance between optional royalties and maintaining sustainable earnings is crucial in shaping the future of the NFT industry.

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