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Does NFT really make money for most artists?

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A very small number of artists make a lot of money from a very small number of sales.

Most Artists Are Not Making Money Off NFTS and Here Are Some Graphs to Prove It Most Artists Are Not Making Money Off NFTS and Here Are Some Graphs to Prove It

Originally written by Kimberly Parker

Compile: 0x13, beat BlockBeats

The current artist group has an obvious polarized phenomenon in their views on NFT. Some artists have championed the NFT as a way to make more money. However, another part of artists are not optimistic about NFT, to be more accurate, the current NFT market. They believe that the NFT market today is not very different from the traditional art market and is far from the spirit of crypto art.

So what is the truth? Does the NFT market really benefit all artists, how much money do artists get from sales, and how much does it cost to publish an NFT work?

Kimberly Parker, a researcher at NFT, uses data statistics to intuitively show the cost and income that artists need to pay, and makes an in-depth analysis of the problems existing in the current environment of NFT.

Rhythm BlockBeats compiles the article as follows.

More than once, before the NFT market cooled off sharply in April, I heard people saying, "NFT is bringing too many artists to people's eyes." "It's a revolution that's making artists around the world money." "Artists can finally make money now."

So I'm very curious, do artists really make money?

There are several sites that aggregate NFT sales market data, such as nonfungible.com and cryptoartists. IO, as well as the "Activity" pages of OpenSea, SuperRare and other trading platforms that also display recent sales. According to recent data from nonfungible.com, the "average purchase price" at NFT is staggering, in the thousands of dollars. So I wondered if the so-called "average" data had any value. The "average" you get by adding up all the numbers in the list and dividing by their numbers can easily be heavily influenced by very low or very high transaction prices, so it's not reliable. And what is a reliable indicator? It's called the median. You need to sort the numbers in your list in order (smallest to largest or largest to smallest) and then find the numbers in the middle. This will give you a better idea of what it's like to be "in the middle."

So what is the median NFT transaction price, and is it too high or too low compared to what people often say is the average? Some people often refer to selling NFT as a "guessing game" where no one knows how much it will fetch. However, we can try to get sales information from some data sites and calculate the median to help artists get a sense of how much money they are making.

A friend helped me find a set of code that gave me access to the public API of OpenSea, the largest NFT trading platform, as well as sales information from other trading platforms, such as SuperRare, Rarible, Nifty Gateway and MakesPlace.

As you can imagine, this is a huge amount of data, and we can't process it all. However, we can choose to deal with the most representative part of the data. So we narrowed it down to the week when NFT mania peaked, March 14, 2021, March 24.

Note: Number of sales per NFT, each color represents the different number of times an NFT was sold. The size of the circle area represents the proportion of NFT with such sales times in the samples collected by us.

The figure above shows how many NFTs have been sold once or more on OpenSea. The first time you sell an NFT, it's called a primary sale, and all subsequent resales are called secondary sales. Currently, 67.6% of NFTs have not experienced secondary sales, and 19.5% of NFTs have experienced only one secondary sale.

Therefore, we decided to focus our research on primary sales, as this is what most NFTs can go through, and it gives a clear idea of how much money artists can make when they first sell their NFT.

Here's what we found.

The amount of first-tier sales at a given price (adjusted for historical prices). The higher the bar chart, the more NFTs sold at that price (primary sales only), per unit of $100.

Another chart of tier one sales (adjusted for historical prices) at a given price

The highest volume of tier-one sales is $100 or less. (All prices are translated into historical dollar values. For information on how we calculated the price and currency conversion, see the note section below)

The following is a breakdown of the data:

33.6 percent of tier-one sales were $100 or less

20.0% of Tier 1 sales were between $100 and $200

11.1% of Tier 1 sales were between $200 and $300

7.7% of Tier 1 sales were between $300 and $400

3.9% of Tier 1 sales were between $400 and $500

3.3% of Tier 1 sales were $500 to $600

2.5% of Tier 1 sales are $600 to $700

However, most NFT trading platforms would recommend that you set the selling price at 0.5 ETH, which was around $894 on March 19, and only 1.8% of NFTs ended up selling at the platform's suggested price.

You might say, "Don't jump to conclusions, these figures don't take into account multiple NFTs. An artist can sell 100 NFTs at $1 each and make $1,000. You have to take that into account."

So, we did an analysis of this situation as well.

OpenSea Tier 1 Median Selling Price by Series A few collectibles have a very high median selling price, but the average price of most collectibles on OpenSea is much lower

Well, most collectibles earn so little relative to each other that you can't even see them in the picture above, so let's use logarithms on the Y-axis.

It's the same graph, but it's a logarithm on the Y-axis

OpenSEA collectively refers to the NFT under a contract as a Collection. So Beeple's Everydays is a collection, and PAK's open NFT collectibles are a collection. This is a convenient way to categorize all related multiple sales. As you can see, the higher numbers in the median collectibles sales are also very unevenly distributed. If you want to make a chart showing the wealth made by a tiny percentage of multi-edition NFT, we have a chart for you to look at.

We also expect to find the same information from all the other major NFT trading platforms, such as MakersPlace, Rarible, SuperRare, Foundation, and Nifty Gateway. But it's surprisingly hard to access their APIs. None of these sites, including nonfungible.com, will display "average sales price" and other data, and it's likely that in the future they will plan to list them as "paid items."

I've written about it beforeA document, which lists all the fees deducted by the top five crypto art platforms.

The largest percentage of Tier 1 sales (34%) were $100 or less. If your NFT is priced at $100, the expected expense ratio will range from 72.5% to 157.5%, with an average of 100.5%, which means you could have a deficit of $0.50 or more.

The second largest percentage of Tier 1 sales (20%) was $100 - $200. If your NFT is priced at $200, the expected percentage of fees will be between 37.5 and 80%, with an average of 54%, and you'll make only $92 or less.

The third largest category (11%) was $200 to $300. If your NFT is priced at $300, the expected percentage of fees will be between 25.8% and 54.2%, with an average of 38.5%, and you'll make $223 or less.

The rest and the sales amount is only 7.7% or less, which is a very small number, so I won't bother to calculate them.

The figures above do not show the democratization of wealth caused by the so-called technological revolution. What they show is that a very small number of artists are making a lot of money from a very small number of sales, and that most artists are being told that they can make huge profits when in fact they don't. To hide this information from artists is to manipulate the market, to rob them of their dreams, and to do them a disservice. NFT statistics sites are obligated to make all this information public, but they do not.

Responses to some possible objections

If you're thinking, "Of course, I get this, OpenSea doesn't have a program to promote its artists, so of course there's not a lot of money to be made from this overinflated market."

(1) The above data includes cross-listed sales data of some websites that plan to promote artists, such as SuperRare, Nifty Gateway, etc.

(2) Ask yourself if you still believe that exclusive NFT trading platforms are as great a democratizing, decentralizing force as you were told. Perhaps on the contrary, they are replicating all the worst aspects of the traditional art market: galleries charge fees, and mature artists can make big money, but the struggling artists who need the income the most are kept out of those platforms because they lack the human connection to get in. Moreover, these sites may not be selling art but just a receipt,Real works of art can disappear at any time.

"That's just one week," you might say. "It's not representative of the success artists have had in the rest of the NFT, and it's not indicative of where the NFT is going. It's just a bubble, and when the bubble bursts, order will return to the market."

For this idea, I think we will face this criticism no matter which week of data we choose. Whether it's the peak of a boom, the week after the peak, or the week when markets quickly calm down, you can say that this week is not representative of the whole. While we would love to process all the sales information from the birth of NFT to the present day, we just don't have the energy to do it. What I'm trying to say is that each of our choices reflects the overall trend of the market at that time. If the market were equal for all artists, a drop in price or sales would be seen for all artists, but as you can see from the data above, this is clearly not the case for the NFT market.

In fact, in my opinion, it would be more unfortunate to have the ability to process all the data and share it than to have only one week's worth of data and share it. This information should be used to help artists decide whether or not to participate in the NFT world. The data we share opens a window to artists in a way that websites could, but they don't. But the good news is, you can also join our team. If you still believe there is a lot of money to be made in these markets, then you should urge websites to be transparent about their sales figures.

Finally, I often hear the phrase, "That's business." "When artists can't make money, some people always use this phrase to quibble. A "business" is anything you want to do and any terms you agree to. There are plenty of other digital art markets that don't charge as much. Some business models pay digital artists directly at a price they set themselves. Do you want to pay $10,000 for an artist's work? Nothing can stop you at all.

This is not surprising

In fact, the most striking thing about these digital trading platforms is how ordinary they look. They look just like any other traditional trading platform. All of this is ordinary, mediocre, predictable capitalism. That's the problem. For all the revolution, equality and the promise of "improving the status of artists", the technology has changed nothing: a few at the top continue to have the greatest wealth.

In fact, this is true of all technologies, blockchain and other technologies. Decentralization has never meant equality of opportunity. Technology deployed within the framework of capitalism will never be released. The only way out is to break the framework.

Artists are perfect targets in many ways: they have long been underpaid, trying to shine in an increasingly saturated attention economy on social media platforms that have trained them to produce endless amounts of fast-moving content. Yet there were glimmers of light in the darkness. More Studios are transitioning to worker-owned models and unions, such as Soft Not Weak, Wild Blue Studios, The Glory Society, Ko-Op, and Floyd County Productions Guild. The Art Babbitt Appreciation Society helps artists understand unions and recently helped major animation company Titmouse promote their union process. The Canadian government is now considering the implementation of Universal Basic Income (UBI).

A popular refrain among recruiters on these sites is that NFT must be our future. But an exploitative structure in which most artists are treated as cannon fodder is not necessarily our future. NFT's success depends on its public perception and our ability as artists to educate ourselves and decide whether we want to be used as neoliberal hype fuel. And maybe, with luck, we can work together to build better institutions that will actually make a difference in everyone's lives.

Finally, to quote Ursula K. Le Guin:

Its power seems to be inescapable. So is the theocracy of Kings. Anyone's power can be resisted and changed by human beings.

Thanks to Cabeza Patata, David Gerard, Amy Castor, Arturo Castro, Mitchell Malloy, and Stephen Diehl for their assistance in the writing of this article.

annotation

Making project

Click on theHere,See the code and procedures used to generate these charts.

Conversion of cryptocurrencies to the US dollar

OpenSea calculates the total selling price in cryptocurrency. However, they are not translated into dollars based on real-time cryptocurrency prices. So, in order to calculate a more accurate selling price, we will group the transaction time by hour and use the Coingecko API to convert the cryptocurrency to US dollars.

A note on the Nifty Gateway

Nifty Gateway is an exception to other Etherium-based crypto art sites as it uses Ethereum but allows users to buy NFT with a credit card instead of having to buy with ETH. Like other sites, the Nifty Gateway makes money by taking a percentage of all sales. The Nifty Gateway claims that this percentage is only used to maintain the site, but even if this is true, it's worth noting that the Nifty Gateway and its cryptocurrency trading platform Gemini are owned by the Winklevoss Twins, who were early investors in bitcoin, Will definitely benefit from any increase in the speculative value of cryptocurrencies.

A note about POS

Have I heard of HIC et Nunc, Tezos' platform? Yes.

I have not mentioned any other issues of NFT in this article, such as environmental impact, scarcity, because others have discussed them in more depth than I have. Inevitably, you will hear someone ask you if you have heard of the XYZ blockchain using POS, and assure you that the development of the technology will solve all these problems. First, the key is to separate NFT from what is now and what might be. Trivially speaking, there may be a lot of things NFT can do in the future (and definitely not just art). What I have done in this article is critically review the ways in which NFTs are being used today, especially in the arts.

Cost calculation

For a full explanation of the calculation of these charges, including Gas charges, seeThis article.

Superrare

Gas fee is required for casting NFT

Primary sales: 15%

First sale price: $300

Cost of casting: $70

SuperRare fee: $45

Total cost: $115

Artist's net profit: $185

Cost ratio: 38.3%

First sale price: $200

Cost of casting: $70

SuperRare fee: $30

Total cost: $100

Artist's net profit: $100

Cost ratio: 50%

First sale price: $100

Cost of casting: $70

SuperRare fee: $15

Total cost: $85

Artist's net profit: $15

Cost ratio: 85%

Rarible

Gas fee is required for casting NFT

A one-time "Approve Wallet" fee for allowing Rarible to connect to your wallet.

Auctions do not require a "List for Sale" fee

Priced sales require a "List for Sale" fee

A Gas fee is charged to the buyer when the NFT is purchased and priced for sale.

When an NFT is sold at auction, a Gas fee is charged to the artist. For example, a work sold for $5 might cost $40 to $80 in Gas.

All sales charges: 2.5%

These calculations assume that this is the artist's first primary sale and include a one-time "wallet approval" fee. If you want to assume this isn't the first time, subtract $15 from the total cost.

I've divided the Rarible example into two parts, auction and pricing.

The auction

First sale price: $300

One-off wallet approval fee: $15

Cost of casting: $70

Rarible fee: $7.50

The artist pays $70 for Gas at the time of sale

Total cost: $162.50

Artist's net profit: $137.50

Percentage of expenses: 54.2%

First sale price: $200

One-off wallet approval fee: $15

Cost of casting: $70

Rarible fee: $5

The artist pays $70 for Gas at the time of sale

Total cost: $160

Artist's net profit: $40

Cost ratio: 80%

First sale price: $100

One-off wallet approval fee: $15

Cost of casting: $70

Rarible fee: $2.50

The artist pays $70 for Gas at the time of sale

Total cost: $157.50

Artist's Net Income: -57.50

Expense ratio: 157.5%

Priced sales

First sale price: $300

One-off wallet approval fee: $15

Cost of casting: $70

Rarible fee: $7.50

Pricing for sale: $15

Total cost: $107.50

Artist's net profit: $192.50

Percentage of expenses: 35.8%

First sale price: $200

One-off wallet approval fee: $15

Cost of casting: $70

Rarible fee: $5

Pricing for sale: $15

Total cost: $105

Artist's net profit: $95

Cost ratio: 52.5%

First sale price: $100

One-off wallet approval fee: $15

Cost of casting: $70

Rarible fee: $2.50

Pricing for sale: $15

Total cost: $102.50

Artist's net profit: -$2.50

Cost ratio: 102.5%

OpenSea

One-time account setup fee

Initial account fee: $60

Wallet approval fee: $10

Gas charges are levied at the time the work is sold

For example, a work sold for $5 might cost $40- $80 in Gas.

If artists accept bids before the auction closes, they are required to pay a Gas fee

When the work is sold for 1 ETH or more, OpenSea will be responsible for the artist's Gas (at the time of writing, 1 ETH= $2,018).

If the buyer wins the auction, the buyer pays the Gas fee

First-level sales commission: 2.5%

These calculations assume that this is the artist's first tier-one sale and include a one-time account setup fee. If you want to assume this isn't the first time, subtract $70 from the total cost.

First sale price: $300

Account setup fee: $70

OpenSea Fee: $7.50

Total cost: $77.50

Artist's net profit: $222.50

Percentage of expenses: 25.8%

First sale price: $200

Account setup fee: $70

OpenSEA Fee: $5

Total cost: $75

Artist's net profit: $125

Cost ratio: 37.5%