Supporting the balance of the NFT ecosystem with royalties-friendly marketplaces.

By Sophie Lawson | The Smurfs’ Society

Introduction

Recently, many leading NFT marketplaces have chosen to favor traders over creators. As NFT values decline and secondary sales deliver lower returns on investment, projects are struggling to find revenue to innovate. However, innovation is born when people create solutions during the most challenging times. NFTs are far from dead; we have only scratched the surface of how this technology can be used. Those who see beyond the speculation will continue to support royalties and deliver tools that empower builders in the space.

Free market or centralization?

Industry leaders who favor reducing or eliminating creator fees argue that they’re just following the market trend. If sellers flock to royalty-free marketplaces, then competition must follow suit. It’s up to creators to change their products to align with the market needs.

While this argument is valid in principle, the problem is the execution. Rather than allowing creators to adjust their royalty fees and products to fit the market, these platforms are unilaterally making the decision for them. This is a perfect example of centralization and goes against the very foundations of Web3.

If we want to see the promises of Web3 become a reality, we need to move away from centralization. For this to happen, there must be more support for builders, including tools that leverage blockchain technology to put power into the hands of the many and safeguard ownership rights for digital assets.

Why royalties matter

There are many arguments and just as many articles about the importance of royalties for artists. At the Smurfs’ Society, we believe royalties are fundamental to art in the Web3 space. But we feel royalties have a bigger role to play in the overall health of the Web3 ecosystem. From artists and writers to collection owners and communities, when creators thrive, so does the industry.

Royalties encourage creators to create for the long term. Without royalties, creators focus on initial sales and create quickly, and often cheaply, to capitalize on trends. Without royalties, creators are pushed to build purely for consumption: Faster. Cheaper. More. There’s little incentive to create something that will have lasting value or that contributes to long-term growth.

However, when a creator knows their product has the potential to keep earning for them, they put more time into it. Rather than churning out content for content’s sake, artists can produce higher-quality work. Creators can focus on content that stays relevant rather than becoming obsolete. Builders can bring new ideas to the industry that will pave the way for future projects.

Royalties benefit communities

One of the biggest advantages NFTs can bring to the digital world is the ability to create communities. The primary assets driving some of the most successful long-term projects today are their communities. Members are much more than the simple consumers of the Web2 world; they are contributors, decision-makers, and promoters. Royalties are a win-win for creators and their communities because of their ability to create long-term growth.

Today, with the market downturn and uncertainty over secondary sales and returns, many projects prioritize quantity over quality. There are endless drops, where the main utility of NFTs becomes access to more NFTs. But without real utility, more NFTs don’t mean more value. Holders who feel they aren’t getting anything out of being part of a community will leave it.

With royalties, however, the somewhat steady revenue stream (even a modest one) can help projects focus on the long term. They don’t need a new collection every three months. Instead, they can take their time to listen to feedback from the community and adapt their utilities and rewards. Since revenue from royalties increases as a project builds value for the community, this incentivizes them to listen and deliver more to their existing members, thus creating a virtuous cycle.

The Smurfs’ Society launched in November 2022 with an innovative on-chain crafting game. This game allowed players to collect NFTs for free to mix recipes for allow-list tickets to the mint. The game was free to play, and users only had to pay small transaction fees when they found winning recipes, but they paid nothing if the recipe failed. To cover the transaction fees of all failed recipes, we added a 10% creator fee on secondary sales of ingredients. While this didn’t cover the game's operating costs, the revenue on royalties allowed us to continue to cover the transaction fees throughout the game. With over three million transactions recorded in four months, it would have been harder to fund the game without collecting royalties on the secondary sales. By the end of the game’s life cycle, we had amassed a community of 23k members on Discord, 60k Twitter followers, and 80k wallets connected.

How Rarible is empowering creators

Rarible is building solutions that give creators control over their assets, as NFTs were designed to do. This paves the road for the next generation of builders by helping them create tools to manage their assets.

The Smurfs’ Society initially partnered with Rarible to help with the mint because of their technical expertise and dedication to empowering creators. In March 2023, we watched as other brands attempted to launch collections with high mint prices. We didn’t want to pick an arbitrary mint price, but at the same time, we wanted to raise enough revenue to fund the next phase of our project. So, we worked with Rarible to design a Bucket Auction that allowed the market to set the mint price. The collaboration resulted in a custom-built mint mechanism that gave us a solution that was specific to our strategy at the time.

Rarible’s plug-and-play community marketplace solution makes it simple for any collection owner to set up their own Marketplace. For collections with a little more technical know-how, their white glove service for custom-built marketplaces is ideal for a more personalized or immersive experience.

This summer, we launched the Smurfs’ custom marketplace, built on Rarible. This marketplace allows us to design a better user experience that we can use to immerse members in our story and strengthen the community. Additionally, as the decisions over royalties reshape the NFT space, the ability to set royalties and potentially reward buyers and sellers for using community listings can become powerful mechanisms for community building. The Smurfs’ Society is working closely with Rarible to develop features that will make it easy to incentivize using community marketplaces.

Above all, what we love about working with Rarible is their passion to find solutions that work for creators. Rather than making centralized decisions that will dictate how creators use their assets, Rarible is dedicated to building tools that put control in the hands of artists, creators, and communities.

Building forward

Now isn’t the time to race to the bottom and return to the Web2 ways where big organizations control everything. Now is the time to empower builders and deliver on the promises of Web3: control over assets, decentralization, and community. Rarible and The Smurfs’ Society stand for royalties. We believe that the future of NFTs holds incredible potential, and we support the creators who are building the tools we’ll need to get there.

Links:

Official Website | Twitter | Discord | Smurfs Marketplace | Rarible Marketplace

ABOUT THE SMURFS’ SOCIETY

The Smurfs’ Society is the official Web3 project by entertainment icon The Smurfs. The innovative combination of an immersive, fully on-chain gamification platform and a 12,500 3D NFT collection created in collaboration with famous contemporary artists. Operated by a collective of Web3 builders from all over the world, the project aims to unite collective interests with individual rewards.

ABOUT RARIBLE

Rarible is a leading blue-chip NFT company that provides several products designed to lead creators and their communities to success at every stage of their NFT journey. Launched in 2019 by Alexei Falin and Alex Salnikov, Rarible offers a multi-chain, aggregated marketplace for NFTs, a self-serve marketplace builder tool, and a white-glove service for custom marketplaces. Since its inception, Rarible has grown rapidly and become one of the most well-known and highly-ranked NFT companies in the market, backed by Venrock and CoinFund. For more information, please visit www.rarible.com and check out the latest updates on Twitter at @rarible and Instagram at @rarible.