Yat Siu says maximising profits over creator royalties may destroy Web3 culture as we know it.
As zero trading fee digital asset marketplaces have become popular recently, many NFT marketplaces have resorted to giving in to compete for market share, and to stay in business.
2/ ….. buying NFTs as if they are a fungible token with a value that is uncorrelated to the underlying project and community. In turn Blur has turned collecting NFTs into trading NFTs for value that is totally irrelevant to the NFT itself and made it all about themselves(Blur).
— NFTSALES 💫 (@nftsales) February 25, 2023
Mid February, creator-focused marketplace OpenSea’s announced it will drop trading fees and the enforcement of creator royalties, following in the footsteps of zero-fee rival Blur. Just months after its launch, Blur surged ahead of OpenSea in trading volume in NFTs.
While there’s much pressure to go zero-fee, creator royalties provide a source of ongoing income to NFT projects and creators beyond their initial sales – usually in the form of a 5% to 10% cut of an NFT’s sale price.
While some prefer to maximise profits, Animoca Brands Chairman and Founder Yat Siu thinks that this trend is leading many companies astray. Animoca Brands is Hong Kong-based game software company whose projects include Ethereum-based metaverse game The Sandbox.
“This is all about grabbing market share, and it’s at the expense of the creators,” he said at NFT Paris, adding that the recent shift away from royalties is “wrong for many, many reasons.”
According to Yat Siu, royalties are an essential part of the NFT creator economy and its culture, comparing it to fuel that drives an engine – or even the gas fees charged to process each transaction on the Ethereum network, which keeps it running.
Siu adds that we may be losing culture in the NFT space by the second.
Highlighting that culture is the cornerstone of economic activity in today’s society, whether in Web3 or not, Siu believes that culture shouldn’t be taken for granted.
“Culture is the biggest soft power and perhaps the biggest driver of economic growth,” Siu said, pointing out that the world’s richest man is co-founder and CEO of LVMH Bernard Arnault, which owns brands including Gucci, Tiffany & Co., and Hennessy.
Siu continued, saying that without an economy based on culture, there wouldn’t be streaming services like HBO and Netflix, or gaming consoles made by Sony or Microsoft, saying that culture is the fundamental reason why people engage with these technologies.
If royalties were to be reduced for creators, the Animoca Brands chairman says, the NFT space’s existing culture will erode and do more damage to the digital assets industry than good.
“If you kill the royalties, you kill the very industry that fed you, so it has to be protected,” he said.
Prioritising profits over giving NFT creators their fair share is part of a mindset that’s rooted in traditional finance – and some actors in Web3 have given into that influence, says Siu.
“There’s a small percentage of people, as we have in the finance world, that are basically from crypto Wall Street, and what they do is just look at profit maximisation,” he said. “Unfortunately, for people in the finance world, that’s their lens.”
Yat Siu on the significance of Web3 culture
Siu points out that unlike financial items like stocks, people don’t often trade cultural items or assets like NFTs.
While NFTs are often assets that signify the ownership of an item in the digital realm, purchasing one is just like purchasing items in the physical world.
“Think about all the things that you buy in the physical world; they form who you are,” Siu said. “You choose to buy a certain shoe, not because you think you can flip it—you choose to buy it because it says something about you.”
Noting that some items people purchase in the physical world would have meaning attached to them, and may have contributed to one’s self-perceived identity, Siu believes that this very type of purchase will be a key driver for the adoption of Web3 – where people buy a particular digital asset for self-expression, or maybe more.
“Whether it’s a district in Sandbox, or just [living] within L.A., it’s saying something about who you are, or who you want to be,” Siu said, saying that even the location in which someone chooses to spend their time has cultural elements. “These are all the points of a sort of culture that really is relevant and important.”
