From The BlogNFTHow will NFT Creators Survive Without Royalties?

How will NFT Creators Survive Without Royalties?

NFT Royalties

The days of endless secondary market royalties are over.

Are you ready as a creator to find new methods of monetization?

For the last couple of years, creator royalties have been a prominent value proposition of NFTs. This form of passive income generated from secondary market sales has fueled and sustained creators in the space. More viable long-term revenue options are needed now that royalties are not hard-coded into smart contracts or promised by NFT marketplaces. While royalties are not gone forever, they have become an optional feature primarily enforced by marketplace applications. 

These latest developments around royalties have been expected, but debates on the topic are becoming more common. We are enthusiastic about the creative conversations currently surrounding creator royalties. There are great reasons to support royalties but equally strong arguments against them. Regardless of opinion, serious creators need to explore new methods of revenue generation to sustain their business models into the future. 

Liteflow has been working with creators and businesses to take control of their NFT business model and position themselves for long-term Web3 success. Where secondary NFT sales may have helped sustain creators over the last two years, change is on the horizon. Now is the time to start exploring how to survive without creator royalties. 

Dedicated NFT Marketplaces

The most direct path to controlling your NFT business model is owning the platform on which users trade. Marketplaces set the terms of engagement, enforcing platform fees and delivering the user experience. If you’re a business selling products, it only makes sense to own your storefront. Without a dedicated NFT marketplace, businesses are at the mercy of 3rd party platforms, a risk that could impact revenue, reach and reputation. 

Branded marketplaces will become increasingly common as creators seek new ways of monetization. Not only can creators set royalties using their own marketplace, but they can get creative around platform fees as a competitive advantage. An example is conditional fees, which can be used to improve marketing, increase engagement and boost growth. Our CEO Anthony Estebe recently wrote on the topic, explaining, “Conditional fees can be best understood as a way to gamify your platform activity. Instead of applying a blanket fee to buyers and sellers based on their transaction amount, it’s possible to tailor these fees to your community and provide a unique Web3 experience.” 

The sky’s the limit when you own your platform. Creators can deliver an experience unique to their brand while taking control of revenue models. 

Community Wallets

Community-driven marketplaces will enable various business models, including some that reward active members. “A community wallet is a mechanism built into NFT marketplaces to reward active members for their participation and engagement financially. Funds accumulate through platform fees, but instead of rewarding founders, the revenue generated is paid out to community members,” says Anthony

Financial incentives are a great mechanism for engagement and growth, especially in Web3. Taking transaction fees and redistributing them based on platform activity continually engages community members by allowing them to share in profits. While a community wallet function doesn’t lead to immediate revenue, it’s a key differentiator that can capture attention, increase users, and ultimately drive revenue down the line. 

LooksRare’s community wallet is perhaps the most well-known example in the NFT space. The platform redistributes the 2% platform fee collected with each transaction to users that stake the LOOKS token. The now well-known marketplace used this strategy in its marketing and acquisition efforts to great success, serving as inspiration for up-and-coming web3 projects. 

Where royalties still represent value in NFTs, new approaches to monetization are now critical for long-term success. This need shifts the dynamic, eliminating the ability to make passive income easily. Where rug pulls and moon schemes were once more easily executable, these scam projects won’t be able to coast on little effort using royalties. This will inspire a wave of dedicated projects that aim for sustainability and not just quick money. 

In our opinion, it’s only a matter of time before everyone on the internet interacts with NFTs daily. The roadmap to mass adoption still needs to be clarified, resulting in a lack of direction around the best long-term revenue models. Now is the time to begin exploring new possibilities through innovation, as the space is still growing. 

If you’d like to explore how to bring your Web3 ideas to life, reach out to us here. At Liteflow, we bring the flexibility of building web3 projects according to your needs while helping you own your revenue model for the internet’s next era. 


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