What does the plunge in royalties mean for NFTs? https://youtu.be/9CQ8YJfTKwE

1. By: www.ProfitableInvestingTips.com

2. The NFT world has had its share of problems recently.
Those problems just got worse for creators of NFTs.
Their royalties for secondary sales have just been
slashed by the biggest NFT exchanges. There are
cases where as much money is made in buying and
selling an NFT multiple times than when it was first
sold.

3. Royalties were dreamt up initially as an incentive to
attract talented people into this arena and improve
the quality of the NFTs being produced. Will we see
an exodus of artists working in the niche? What will
happen to the quality of the work? Will this move
by large NFT exchanges relieve their financial
problems? What does the plunge in royalties mean
for NFTs?

4. How Do NFT Royalties Work?

5. NFT royalties are a way for creators of non-fungible
tokens to profit from secondary sales of their work.
The percentage of these royalties has typically
been set by the artist or creator before they first
sell their work. As the NFT market has come under
increasing financial pressure, market places have
been making royalty payments an option or
forgetting about them altogether.

6. When a person sells their NFT to a market there may
be an agreement to pass on royalties if the work is
resold. But how does that work when the person
sells the NFT via another market place? The fact of
the matter is that folks like Picasso got paid for
their paintings but did not get repaid every time
their work was resold.

8. Rise of the Blur NFT Marketplace

9. Less than a year ago in October of 2022 the Blur
platform was launched. It reduced royalties with
intent of creating more incentive for traders to buy
and sell NFTs. Since that time Blur has taken over
70% of all Ethereum-based NFT trading. OpenSea,
the marketplace that Blur pushed out of first place
has since followed suit by drastically lowering
royalties.

10. The sum total of royalties paid to NFT creators in July
of 2023 came to $4.3 million which is a significant
drop from the January 2022 peak of $269.3 million.
Will these changes add to the NFT rout or will the
sector and the fortunes of NFT creators turn
around?

11. How Can NFT Creators Maintain Their Income
Stream?

12. People who are familiar with the world of fine art
may be unimpressed by the current dilemma facing
NFT artists. Afterall, traditional artists get paid
once for their work and not with every resale. On
the other hand, actors in the worlds of TV and
movies are familiar with residuals where getting
paid for reruns of a TV show or movie is the normal
practice.

13. The reason that Blur got by with reducing royalties is
that they control not only their marketplace but
the bulk of NFT trading on Ethereum. What has
been proposed by those who want to protect
royalty rights of NFT producers is to include
royalties in the coding of the NFT and not just as
part of a contract with the marketplace.

14. Maybe what we might see next is a strike like by the
actors and screen writers that has brought
Hollywood and TV show production to a standstill.
In this case, a selective boycott of marketplaces
that have reduced royalties and continued use of
those that honor royalties could bring about some
sort of agreement that both parties would be
satisfied with.

15. Will the Reduction of NFT Royalties Save NFTs?

16. The NFT sector is being stressed. Trading volume is
down and prices are down. Like with any
marketplace, people are dropping their prices to
keep selling or, in the cases of traders, to get out of
assets that they think have run their course in
value. Those familiar with the fine art market know
that top prices rise and fall with the economy and
other factors.

17. A difference in the NFT world is that many are in it
just for the trading just like if they were buying and
selling Bitcoin. Traders expect profits and when the
profits go away the traders follow whether artists
are getting royalties or not.

18. For more insights and useful information about
investments and investing, visit
www.ProfitableInvestingTips.com.