techinsight360

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The impact of blockchain on luxury brands and its part in reducing counterfeiting in 2023

In the last decade, blockchain technology has grown into prominence as adoption has increased significantly. The technology has found its way into several different sectors, including payments, agriculture, and healthcare, among others. The retail luxury sector is another industry that is using blockchain technology to improve its offerings to customers.

In addition to this, luxury retail brands are also seeking to utilize the technology for reducing counterfeiting, which is causing billions of dollars in losses for businesses in the sector. Although retail brands cannot stop the production and sale of replicas, they can use blockchain technology to make it easier for genuine luxury buyers to validate their purchases. Consequently, the adoption of blockchain technology is expected to grow significantly over the next few years, as more and more retail luxury brands seek to enhance the buying experience of their customers.

In 2021, prominent luxury brands such as LVMH, OTB, Prada Group, Mercedes-Benz, and Richemont joined forces to establish the Aura Blockchain Consortium. The consortium aims to combat the issue of counterfeiting and deliver an enhanced buying experience for luxury shoppers.

In addition to this, the consortium was also developed to promote the usage of blockchain among luxury brands for authentication processes, supply chain transparency, and facilitating ownership transfers among luxury products. Since the founding of the Aura Blockchain Consortium in 2021, 20 million units have been ingested on the blockchain.

The authenticity use case offered by blockchain technology is a goldmine for luxury retail brands. As a result, many brands including the Swiss watchmaker H. Moser & Cie are joining the consortium. Loro Piana, the Italian clothing brand, is one of the most recent ones to join the consortium in March 2023. The firm is seeking to use blockchain technology for enhancing the traceability of its products from the supply chain through different phases of ownership.

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Ownership of the product is one of the critical elements for luxury brands, as high-quality goods are often created with the expectation that they might be passed from one generation to another.

The blockchain tool offered by Loro Piana offers customers a QR code. This QR code is used for tracing the production journey of the product through the supply chain. Furthermore, it also provides customers with a certificate, which uses blockchain to transfer ownership.

Vacheron Constantin, the high-end watchmaker, uses the blockchain solution Arianee for registering the watches and providing customers with a digital passport. This digital passport can be transferred between owners. Blockchain technology also enables investors to insure their product, declare it lost or stolen, and share or prove the ownership.

LV Diamonds, another luxury brand incorporating the use of blockchain, also provides customers with an encrypted digital file. The file maintains different records including the weight, color, purity, and cut quality. As the information is stored using blockchain technology, the brand ensures a reliable, safe, and efficient data transfer process.

The Aura Blockchain consortium seeks to use blockchain technology in such different ways, and as a result, is aiming to raise the standard of luxury brands. The use of blockchain technology by these retail luxury brands also provides peace of mind to shoppers, who are often worried about the authenticity of their products.

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SK Telecom expands global metaverse presence through strategic alliances with telecom operators

The metaverse ecosystem has grown leaps and bounds in South Korea over the last 12 months. The growing investment from government institutions, coupled with innovative projects undertaken by private organizations, has driven the competitive landscape in the South Korean metaverse industry. Naver and SK Telecom, two of the leading private players in the metaverse market in South Korea, have reported strong growth in monthly active users in the domestic market.

To replicate their success in the global metaverse industry, both of these firms have been expanding their geographical presence through strategic alliances. In September 2022, Naver announced that the firm had partnered with True Corp., one of the leading telecommunication service providers, as part of its strategy to expand its metaverse presence in Thailand. A similar strategy has been adopted by SK Telecom, which owns the metaverse platform ifland.

In March 2023, SK Telecom announced that the firm had entered into strategic alliances with telecom operators in the United States, Europe, and Southeast Asia. Notably, the firm signed the memorandum of understanding with T-Mobile and Deutsche Telekom in the United States and Germany, respectively. These strategic alliances aim to explore the opportunities for expanding the presence of ifland into the United States and German markets.

As part of the collaborations, the three firms are projected to conduct trial runs in the two countries in Q2 2023. This will include launching a more diverse set of metaverse services, producing content tailored to local preferences, and promoting the metaverse offerings in the region.

Read More - Healthcare providers foresee growth opportunities in the metaverse sector in 2023

Alongside the United States and European markets, the South Korean metaverse giant is also aiming to drive the popularity of its metaverse platform ifland in the Southeast Asian region, the region where Naver has already built a presence through a strategic partnership with True Corp.

In March 2023, SK Telecom announced that the firm had partnered with CelcomDigi, the Malaysian telecom operator. The partnership is aimed at increasing the number of ifland users in Malaysia. Furthermore, the collaboration will also see the launch of new business initiatives, including products that cater to the demand of domestic users in Malaysia.  

Through the collaboration with Axiata, SK Telecom is seeking to expand its presence in 11 more countries in the ASEAN and Southeast Asian regions. These include countries such as Indonesia, Sri Lanka, Cambodia, Nepal, and Bangladesh. Through the partnership with Axiata, SK Telecom is expected to develop metaverse-related business models.

With each of these three telecom giants, T-Mobile, Deutsche Telekom, and Axiata, having over 100 million customers, the collaboration will provide SK Telecom with a strong foundation to expand in the respective markets. Furthermore, these strategic collaborations will also aid the growth of the global metaverse industry, which is still in its early stages of development.

From the short to medium-term perspective, TechInsight360 expects more such strategic collaborations in the metaverse market. With SK Telecom building a strong presence in North America, Europe, and Southeast Asia, TechInsight360 also expects Naver to adopt the same strategy and forge strategic alliances to boost the presence of its metaverse platform Zepeto globally.

Read More - Roblox metaverse ecosystem shows strong user adoption in a boost for the global metaverse sector

ifland and Zepeto, both of which are seeking to build a strong presence in the United States market, is bad news for Meta, which has largely struggled to get its metaverse project up and running. The United States-based firm had invested billions of dollars in the metaverse project and also reported a loss of more than US$13 billion in 2022. Over the next 12 months, the firm had already announced that it is anticipating the losses to grow even more, as continues to make the bet on the future of the internet.

Horizon Worlds, the metaverse platform, launched by Meta had failed to achieve its projected user adoption in 2022. Down from the initial projection of ending the 2022 year with a total of 500,000 users, Horizon Worlds ended the year with only 200,000 users.

In an attempt to boost the adoption of its metaverse platform, Meta announced that the firm is revamping its product to attract and target teens in the United States. The strategic move comes at a time when the firm is facing a serious user retention problem. Notably, both Naver and SK Telecom have achieved widespread success with their metaverse platform among Gen Z users.

Read More - Meta’s metaverse dreams have been outpaced by internet giants in South Korea

With the expansion of Naver and SK Telecom in the United States, coupled with the change in strategy by Meta that is now focusing on teens, the competitive landscape in the North American market is projected to grow substantially over the next few quarters. The presence of South Korean metaverse giant, SK Telecom, will also result in a substantial increase in investment in the United States market in 2023, thereby accelerating further innovation in the fast-emerging sector.

Alongside metaverse, SK Telecom has also announced to increase its investment in the field of artificial intelligence. Furthermore, the firm is also seeking potential acquisition opportunities to build on its existing AI capabilities. Notably, the firm is expected to launch the first of its AI product later in 2023. With the success of ChatGPT, the AI-powered chatbot, many firms have announced a significant investment in the area of artificial intelligence. From Microsoft to Amazon and Tencent, AI is expected to become the next focus area for most technological firms.

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Metaverse adoption in agriculture sector expected to be a key focus area in 2023

The concept of the metaverse has been gaining significant attention in recent years, and its potential applications in various industries are being explored and the agriculture industry is no exception. Revolutionizing the approach to agriculture, metaverse is driving the growth with innovative opportunities towards sustainable agricultural practices and profitability. TechInsight360 expects the adoption of metaverse in the agricultural industry will gain rapid momentum in the coming years owing to its potential to contribute to the growth of the industry.

One of the major advantages of metaverse adoption in agriculture is its prospects to improve farming practices. Farmers can use the metaverse to replicate different scenarios and test the impact of various factors on their crops. The recent partnership between Aerofarms and Nokia Bell labs is an example of how sensing, machine-learning (ML) and immersive technologies can be used to attain operational excellence in agriculture. 

Tech firm Nokia Bell Labs has designed a technology with its advanced ML capabilities and AI-enabled autonomous drone control solution to provide operational insights to Aerofarms on the growth of plants in the farm. 

Multiple drones flying across the farms will monitor various aspects including identifying poor growth areas such as uneven plant height and spotting on plants, and forecasting the production yield of the farm.

Nokia Bell Labs has also created a digital twin of the farm to give a real-time experience and monitoring of the entire farm. The data collected can be used by Aerofarms in optimizing the use of water, nutrients and energy, fixing the issues, maintaining high quality yield and improving the production yield. 

The metaverse offers a great platform for various stakeholders such as farmers, producers and retailers in the agricultural business to connect and collaborate to improve their business prospects. 

Agoverse, a blockchain-based platform, has launched an agricultural marketplace, which is a multiple vendor platform with access to a distinct blockchain advertising metaverse. The marketplace will enable vendors to own an online store and also manage secured payment options, shipping and tracking of orders through the platform. The vendors will also have access to an advertising metaverse that will allow them to make interactive and immersive advertisements to promote their products and services to the global audience.

Another potential application of the metaverse in agriculture that is gaining pace is creating awareness towards sustainable environmental and agriculture practices through an immersive experience.   Farmers can be trained on new farming techniques and technologies, and researchers can use the metaverse to showcase their latest research findings. 

One of the early adopters of metaverse to spread awareness about regenerative agricultural practices through a gaming experience in Roblox was the largest manufacturer of prepared potato products, McCain. 

Africa’s first metaverse platform, Africarare, recently collaborated with the non-profit institution Innovation Africa to give the rural population of Africa access to clean drinking water and use of solar, water and agricultural technologies of Israel. As part of the collaboration, Africarare has designed a customized village for Innovation Africa in Ubuntuland, a virtual world in Africa, to create awareness about the organization and their contribution towards community work. Africarare also plans to launch a collection of 5 Water Drop NFT collections called Drops of Life for raising funds for the cause.

Read more about NFT’s at: https://www.techinsight360.com/view-point/non-fungible-tokens-are-driving-in/55

In conclusion, the metaverse has the potential to revolutionize agriculture by improving farming practices, supply chain management, and awareness towards sustainable agriculture. However, there will be challenges that will need to be addressed to fully realize the potential of the metaverse in agriculture. With the evolution of technology, it will be interesting to witness various ways of metaverse integration into agriculture and its impact on the industry as a whole.

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Innovation in metaverse expected to intensify in 2023 with increased investment

The investment in the metaverse sector, which has been led by Meta, has resulted in investors asking questions about the potential future of the metaverse industry. While adoption of the technology, termed as the future of the internet, has remained below expectations in 2022, tech firms have continued to invest billions of dollars into the development of new projects and metaverse-related infrastructure. Although Meta might not have anything substantial just yet to prove to investors that the metaverse is indeed the future of the internet, other smaller firms have continued to launch innovative metaverse platforms.

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MeetKai, one of the metaverse-focused firms, has launched several products over the last few quarters to help developers in building components of the virtual worlds. At the 2023 Consumer Electronics Show, the firm launched more innovative platforms that are geared toward users and creators of the metaverse. Notably, the firm launched MeetKai Reality, a 3D-digitizing service, that brings various objects and spaces from the real world into the metaverse.

The platform will allow developers and creators to record a video and then upload the footage to MeetKai Reality. The service then renders the captured space in virtual reality. While there are already platforms, such as Matterport, Coohom, and Zillow, which render spaces from photos, the MeetKai Reality service is the first that is specifically tailored for the metaverse use cases. PayNXT360 expects the MeetKai Reality service launched by the firm to further drive innovation in the real estate, interior design, engineering, and architecture fields.

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Along with MeetKai Reality, the firm also launched another product at the 2023 Consumer Electronics Show. The MeetKai Metaverse Editor, a bit more differentiating product compared to MeetKai Reality, allows users and developers without coding experience to build spaces and structures in the metaverse. Of course, there are tools such as Tripolygon that allow developers to build metaverse spaces, but they are not no-code applications such as MeetKai Metaverse Editor.

The firm is also launching MeetKai Cloud AI, the service that will allow developers to integrate voice assistants into an existing metaverse environment. According to the firm, the voice assistants will take the form of avatars that will be conversing on any given topic in the metaverse. Furthermore, these avatars will have reasoning capabilities when interacting with the end users.

Along with MeetKai, a number of different firms announced various innovative initiatives and projects in the metaverse sector at the 2023 Consumer Electronics Show. LG Electronics, for instance, announced a plethora of metaverse-related initiatives at the 2023 Consumer Electronics Show. The firm has increased its investment to bring the metaverse to smart TVs. Integration of the metaverse with smart TVs can potentially drive mass popularity and adoption of the virtual worlds among consumers globally.

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Like smart TVs, firms such as Sony are also seeking to drive the mass adoption of the metaverse by bringing the virtual world to customers through their smartphone devices. The firm had launched a sensor-based product, which when attached to the human body, allows consumers to experience their movements in the metaverse through their smartphone devices. In 2023, TechInsight360 expects these firms to further increase their investment in the space and launch innovative products and services, thereby supporting the growth of the market from the short to medium-term perspective.

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Launch of a state-backed NFT marketplace in China

Non-fungible tokens (NFTs) had gained widespread popularity among both brands as well as consumers. Many of the leading domestic and global luxury brands have launched NFT projects to better engage with their customers while driving the popularity of their brands in a tough and competitive market. Amid the surging popularity, leading tech giants have launched NFT marketplaces over the last two years, thereby allowing Chinese individuals to buy, sell, and trade their digital collectibles. However, unlike the rest of the world, buying NFTs using cryptocurrencies is prohibited in the country.

Read More - Adaptation of NFTs by luxury brands in China

While the Chinese government had banned cryptocurrencies, it has consistently shown interest in the NFT segment. The launch of a state-backed NFT marketplace is a testament to its interest.

According to a report published by the Chinese official media source China Daily, the government is planning to launch a new NFT marketplace on January 1, 2023. For the launch of the marketplace, Beijing is expected to hold an opening ceremony in the country. The China Digital Asset Trading Platform has been partially built by the China Technology Exchange, the State Intellectual Property Office, the Chinese Academy of Sciences, and the Beijing Municipal People’s Government.

The state-backed NFT marketplace will enable Chinese individuals and businesses to transact digital collectibles, copyrights, and intellectual property rights. The marketplace will use a blockchain called the China Cultural Security Chain. However, it will rely on the trading instruments and settlements offered by China Technology Exchange.

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TechInsight360 expects a lack of interoperability between the marketplace and other blockchains, due to the negative view of the Chinese government towards decentralized cryptocurrencies. The country, however, had made a significant move towards the protection of digital collectibles.

In December 2022, the Hangzhou Court of China announced that digital collectibles are virtual properties and therefore, enjoy protection under Chinese law. Different jurisdictions have opted to place NFTs under property law. In October 2022, Singapore High Court designated digital collectibles as physical property such as fine wine or luxury watches. This trend is projected to further emerge in more emerging markets in 2023, where NFTs are gaining widespread popularity.

Globally, many innovative NFT projects have launched in 2022. Even during the current economic uncertainty, brands and businesses have invested significantly in the space and the trend will further continue in 2023. Over the last two years, industry leaders such as Apple, Starbucks, and Reddit, have launched NFT projects to mark their entry into the segment. The presence of these big corporations explains the growing interest in the space and the future potential of the NFT market.

Read More - Firms are launching innovative NFT marketplaces to serve different industry verticals

From the domestic market point of view, the foray of the Chinese government into the NFT sector will further accelerate NFT adoption among brands and individuals. A favorable regulatory landscape will also lead to greater investment in the space, driving innovation and a competitive landscape from the short to medium-term perspective. This will keep supporting the growth of the domestic NFT market over the next three to four years in China.

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NFT marketplaces are having a different take on creator royalties

Creator royalties are the incentives that continue to push them to develop innovative projects, while also making a living out of it. For decades, only a handful of commercial, successful artists enjoyed the benefits of creator royalties. However, the advent of non-fungible tokens (NFTs) made creator royalties more mainstream, thereby even providing an average creator to benefit from this mode of compensation.

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Flipkart seeks to accelerate the adoption of metaverse and Web3 technologies in India

In India, many of the leading tech firms such as TCS and Infosys have started to use Web3 technologies over the last few years. The sector is still in its nascent stages of development, and many innovative projects have been undertaken across the country. However, in 2022, Flipkart, one of the leading e-commerce marketplaces in India, made major inroads into the world of metaverse and Web3 technologies.

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Fashion and luxury retail will drive the metaverse industry growth globally

Globally, the metaverse ecosystem has recorded strong growth amid the surging interest in emerging technology. Private organizations and government entities have both undertaken innovative metaverse projects to make further inroads into emerging technologies. The resulting investment in the market has assisted the industry to record robust growth over the last 12 months.

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Starbucks launches Polygon NFT loyalty program for beta testers in the United States

As part of its strategy to move into the world of Web3 technologies, Starbucks has extended its rewards program to the blockchain. In December 2022, the popular coffee chain launched a beta version of its Odyssey program, combining customer rewards with non-fungible tokens and other gamified elements. The new initiative allows loyalty program members to earn a wide range of rewards and has therefore garnered strong interest from consumers.

While the firm did not disclose how many of its customers have signed up for the waitlist or how many have been given access in the beta launch, the firm did announce that Starbucks has received unprecedented interest in its NFT-powered loyalty program. The firm first announced the experiential rewards program earlier in September. Built on the Layer-2 Ethereum scaling protocol, Polygon, Starbucks Odyssey introduces a new platform where members can engage with interactive activities known as Journeys. When completed members are rewarded with Journey Stamps, which are basically NFTs.

Read More - Starbucks bet on NFT is paving the way for future loyalty programs

Notably, members can earn their first Journey Stamps after collecting 500 points. With the program being in its beta phase, the first of the Journey Stamps launched by the firm include those which are designed taking inspiration from Starbuck’s history. Members participating in the program will earn NFTs. These NFTs will have a point value based on their rarity. It means that while the NFTs will be tied to real-world experiences, members can also buy and sell their digital assets on the Odyssey marketplace, which is due to launch in 2023.

Starbucks is expected to launch the NFT marketplace, which will be powered by Nifty Gateway. To make the buy, sell, and trade process simpler, Starbucks is allowing members to buy the Stamps using their credit cards. There is no need to have a crypto wallet. Furthermore, there is no need to have any understanding of Web3 technologies to participate in the NFT loyalty program.

For Starbucks, the program not only engages its most loyal customers but also provides the firm with a potential revenue stream. In 2023, the firm is planning to release limited edition Stamps. Starbucks is planning to give away a portion of the revenue to support different causes. It is expected that the firm will release the limited-edition Stamps four to six times every year.

Read More - Apple's move into NFTs can further accelerate the Web3 evolution

Many of the leading brands have already forayed into the world of Web3 technologies over the last two years. Reddit with its NFT program has amassed millions of users, while brands such as Nike and Gucci have generated millions of dollars in additional revenue through their NFT projects. From the short to medium-term perspective, many more brands across industry verticals are projected to foray into the world of Web3 technologies, including NFT and metaverse.

Read More - Reddit lays out the blueprint to engage the audience and drive NFT adoption

The overwhelming response received by Starbucks towards its Odyssey program indicates that the NFT-powered loyalty program can become mainstream over the next few years. Brands such as Budweiser have already launched such NFT-powered loyalty programs and the trend is expected to further grow from the short to medium-term perspective. Notably, an NFT-powered loyalty program can potentially become a powerful tool for smaller brands that are struggling to compete with bigger brands, that are spending millions of dollars on their customer acquisitions strategy.

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Luxury fashion brands are foraying into the metaverse with NFT launches

Luxury brands have turned out to be the early adopters of non-fungible tokens and metaverse technology globally. With both high-end fashion and non-fungible tokens operating on the model of exclusivity and scarcity, luxury brands have been highly receptive to the digital asset class. From Europe to China, many of the global leading luxury fashion brands have already launched innovative NFT and metaverse projects, and the trend is now catching up with players in the United States.

Read More - Adaptation of NFTs by luxury brands in China

The Council of Fashion Designers of America (CFDA) has entered into a strategic partnership with The Sandbox for conducting an exhibition on the metaverse platform. As part of the exhibition, CFDA will present 60 American fashion looks from over the last 60 years to celebrate its 60th-anniversary celebration. Along with the event, exclusive NFTs are also up for grabs from some of the leading fashion brands in the United States. These include Michael Kors, Coach, Tommy Hilfiger, and Carolina Herrera, among others.

A total of seven NFTs are up for grabs, each of which is associated with utility and perks. Michael Kors, for instance, is granting show access and backstage meet-and-greet to NFT buyers, while Tommy Hilfiger is offering an all-expense paid trip to the next show and Hilfiger-signed items. Coach, on the other hand, is offering a tour of its archives, physical handbag, and holiday event access.

Read More - Brands are using metaverse as a marketing tool for reaching and educating prospective customers

The fashion brands and CFDA have developed the exclusive tokens in partnership with Brand New Vision, the NFT platform, and are available for auction from December 12th to 16th. The extensive utility of the NFTs is reflected in their opening bids, which range from US$15,000 to US$25,000. 

Many European brands have been experimenting with exclusive NFT launches and other Web3 projects. Gucci and Louis Vuitton are among the many that have successfully forayed into the emerging markets of NFT and metaverse. These projects have also brought millions in extra revenue for these fashion brands. Gucci, for instance, is expected to earn over US$18 million through NFT sales in 2022, according to TechInsight360’s Predictive Analytics Platform. While some of the American fashion brands, like Tommy Hilfiger, have already forayed into the NFT and metaverse space, the sector is yet to gain mainstream interest among fashion brands in the United States.

Read More - NFTs are turning out to be a major revenue source for businesses

Through this event, the CFDA aims to place domestic fashion brands at the forefront of innovation in the metaverse and NFT space. This event will also force these fashion brands to delve deeper into the space. Furthermore, the push from CFDA is another statement that innovation in the metaverse and NFT space is going to continue and fashion brands are going to lead the projects in the space over the next three to four years.

While the NFT market has been under a slump for the majority of 2022, due to the ongoing sell-off in the crypto market, sales have recorded a strong rebound in November 2022.

For the first time in seven months, NFT sales reached US$530 million, thereby shrugging off the strong decline in the cryptocurrency market following the collapse of FTX. According to a report from CryptoSlam, the NFT aggregation site, sales during November 2022 surged by 13.2% in value terms, when compared to the sales number in October 2022. The NFT sales number were driven by blue chip collections including BAYC and CryptoPunks. In November 2022, BYAC experienced more than US$60 million in transactions.

With the recovery in NFT sales and the growing interest from American fashion brands in the digital asset class, TechInsight360 expects more innovative projects to hit the market from the short to medium-term perspective.

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NFT marketplaces are having a different take on creator royalties

Creator royalties are the incentives that continue to push them to develop innovative projects, while also making a living out of it. For decades, only a handful of commercial, successful artists enjoyed the benefits of creator royalties. However, the advent of non-fungible tokens (NFTs) made creator royalties more mainstream, thereby even providing an average creator to benefit from this mode of compensation.

In 2021 and for a major part of 2022, every NFT marketplace offered creator royalties on primary and secondary sales. In general, the creator royalties varied from 2.5% to 10% depending on the marketplace. Billions of dollars have been paid out in royalties as of October 2022.

The downturn in the broader crypto market, coupled with the declining NFT sales on NFT marketplaces, forced firms to evaluate their creator’s royalty policy in a bid to make the sector more appealing to traders. Notably, without the royalties, NFT trading will become cheaper, and the marketplaces will gain more users, thereby driving their market share. Consequently, in Q4 2022, some of the largest NFT marketplaces stopped implementing creator royalties, which also resulted in a major backlash from the creators’ community around the world. For instance,

In November 2022, OpenSea, one of the largest NFT marketplaces in terms of trading volume, came close to disrupting the entire dynamic of the NFT market when it considered removing the creators’ royalties altogether on existing collections. However, after facing serious backlash from the community, the firm announced that it will continue to enforce creator fees on all its existing collections.

Notably, the reconsideration of its royalty policy came after several of NFT marketplaces either nixed such fees or made them optional for traders. For instance,

In August 2022, X2Y2, one of the leading Ethereum-based NFT marketplaces by volume, announced that the platform will no longer support royalties for creators. Instead, the firm made it an option for traders to pay royalties in the form of a tip. In a similar move, Magic Eden, a Solana-based NFT marketplace, announced that the firm is making the royalties optional in October 2022.

LooksRare, another NFT marketplace, made a similar announcement in October 2022, when it stated that collectors are no longer required to pay royalty fees to creators when purchasing the NFT platform. Instead of the royalties, the firm announced that it will distribute 25% of the platform fees to creators and collection owners to offer a more competitive solution to creators.

The shift away from royalty fees for a lot of these NFT marketplaces started when new NFT marketplaces, Sudoswap and Yawww, nixed them in a bid to garner market share in a competitive space. Rather than charging royalties, Sudoswap charges a 0.5% trading fee and lets the buyers get NFTs at a significantly cheaper rate. On the other hand, creators can take the trading fees from the pool, which can be more than what they make through traditional NFT sales.

Read More - NFT lending is turning out to be the next big business in the digital asset space

With slashing royalty fees not received well by the creator community, the growing backlash forced a few of the marketplaces to roll back their announcement. Like OpenSea, X2Y2 also rolled back its optional fee policy in November 2022 and announced that it will continue to enforce royalties on secondary sales. These policy change announcements were part of the strategy to revive the market growth which has suffered major headwinds due to various macroeconomic factors, such as rising inflation and interest rates.

Read More - NFT sales continue to decline amid the downturn in the cryptocurrency market

At the time when many marketplaces were making fees optional, new players entered the market to leverage the backlash among the creators’ community. For instance,

In November 2022, Find Satoshi Lab, a Web3 gaming and development studio, announced the launch of a multichain NFT marketplace that supports royalties. Notably, the firm is positioning its marketplace as a platform that provides fair rewards to creators.

In a separate move, Exchange.ART, a fine-art-focused Solana NFT marketplace announced a Royalties Protection Standard in November 2022. Notably, the Royalties Protection Standard enforces royalties on every secondary sale completed on the platform. The protection standard offers creators surety that their work cannot be sold on the marketplace without their consent.

Notably, the NFT market is still in its early stages of development. Of course, bypassing the royalties is one way to make NFTs cheaper and more attractive to buyers, thereby resulting in more users and market share for marketplaces, it is not sustainable from the long-term perspective. Many of the creators turned to NFTs because the centralized institutions were not offering fair rewards for their work, and by making those royalties optional, NFT marketplaces followed a similar path.

Read More - Firms are launching innovative NFT marketplaces to serve different industry verticals

The fight over market share and adopting policies, such as nixing royalties, can further dampen the growth of the NFT market. There needs to be a way for the creators to make money from their work, whether it is royalty or something else, a constant revenue stream will ensure that quality NFTs continue to enter the market. This will not only drive the industry growth, but it will also keep the enthusiasm high among collectors, thereby driving growth for NFT marketplaces as well as the overall industry.

One of the ways in which NFT marketplaces can improve incentives and rewards for creators is by bypassing the royalties in exchange for a larger piece of the primary transaction. In fact, the NFT marketplaces can share this on both sides of the trade by making collectors pay up a buyer premium fee.

Slashing or nixing the royalty fees is not a sustainable solution and will certainly impact the industry's growth. Notably, the fight over market share, by implementing such policies, will only result in a further downturn for the global NFT market. Consequently, NFT marketplaces need to adopt a more proactive approach that works well for both creators and buyers.