Are you Royalty(ies)?

Hi. It’s Dana. Welcome to the Web 2.5 newsletter featuring news, content, musings, and memes at the intersection of Web 2.0 and Web 3.0.

And now, on to this week in Web 2.5.

💥 Breakdown of the Week: Creator Royalties 💥

If you’re not hanging out on web3 Twitter (and why should you be — that’s why you’re subscribed here!), there’s a big, ongoing conversation that you need to know about. So we're skipping the top 5 news stories this week in favor of one breakdown. The topic: Creator Royalties.

In our current, real-life web2 world, many business models do not allow for creators to earn ongoing, perpetual royalties for their work, especially as that work trades in the secondary market. For example, an artist sells a painting and receives a commission. Great. But every time that painting sells in the secondary market, the artist is cut out of the transaction and does not benefit from it financially (and probably doesn't even know it happened in the first place).

Enter web3. The blockchain enables us to track the lifecycle of an asset like an NFT over its lifetime from buyer to seller — and to the next buyer and seller. So, one of the early use cases of web3 technology was embedding creator royalties into tokens that trade on the blockchain. This would mean that every time a token changes hands in the market, the contract associated with that token could specify that a % of proceeds from the transaction would go back to the creator. It has been a way of bringing a participatory economic reward model to creators who have been traditionally cut out.

This week, an ongoing debate was reignited over this core question — should creator royalties be mandatory or not (and more broadly, is this even a good economic model for NFTs). The conversation resurfaced when the Solana blockchain’s leading marketplace called Magic Eden (where you can buy and sell NFTs on the Solana blockchain) scrapped its mandatory creator royalty policy. By going “royalties optional,” buyers on Magic Eden can choose if they want to pay royalties or not, and as a result, creators won’t always be guaranteed to receive a financial payment when people buy their token. The move came after other zero-royalty and royalty-optional marketplaces beagn eating into a big piece (around 30%) of Magic Eden’s 90+% market share in the Solana ecosystem. Turns out, money talks.

I'll leave a bunch of nuance on this topic aside for now (e.g., the enforceability of royalties, the types of projects on Solana in the first place, and on and on). I'll just say broadly that Crypto Twitter is split on this topic. Many artists and creators denounce the move, arguing that royalties are the lifeblood of the web3 creator economy and provide a fair economic model for creators, especially small ones starting out. Others argue that the business model of perpetual royalties makes no sense at all, is not sustainable, or should be a decision made by buyers and/or sellers, not by the platforms.

Why it matters. Technology and values are two different things. For creators, companies, and brands entering this space and scoping out their own projects, what may seem like a very functional, technical, and frankly economic decision (like setting creator royalties) is more than that — it's one of values. And it's manifesting both in how to set up your program — and even what blockchain you choose. So, knowledge is power in web3. Because if you don't understand the web3 ethos in addition to its capabilities, you'll step yourself into a big debate you didn't even know was going on.

Well, that was fun! Now, off we go...

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💥 Weekly Web 2.5 News Roundup 💥

🏈 Sports

It will be another crypto-sponsored Super Bowl Big Game. At least one web3 advertiser, gaming company, Limit Break, has already purchased a Super Bowl LVII commercial spot for the February 2023 event. The price tag: $6.5 million. Let's just hope there were no gas fees on that transaction.

SailGP, a project co-founded by five-time America's Cup winner Russell Coutts and billionaire Larry Ellison, is launching the first professional sailing team owned and operated by a DAO (decentralized autonomous organization). With the goal of building a more participatory model for sailing, the member-run organization is planning to issue both security tokens (representing ownership in the sailing team) alongside fan tokens (with the right to vote on team decisions).

Ballon d’Or, the prestigious soccer award, came with an NFT this year (plus a Ledger to secure it).

🎙️ Music, Movies & Media

The world has been a-buzz with a podcast that never really happened. Podcasting company Podcast.ai generated a podcast episode entirely through artificial intelligence. How do we know? Well, in it, Joe Rogan interviews the late Steve Jobs. The show has some NSFW language, but you can listen here.

Tim Ferriss, the entrepreneur, investor, author, and podcaster, is launching an NFT collection titled Project 555. The sales pitch: "It’s going to be very elaborate and unbelievably bizarre."

Anthony Hopkins sold out his 1,000-piece NFT collection in less than 10 minutes. The collection featured original cinematic art pieces inspired by the actor’s award-winning career.

So you thought Snoop Dogg and Martha Stewart were the team of the century? How about Snoop Dogg and Larry David. Snoop Dogg's "Crip Ya Enthusiasm" music video was just released, and it takes place entirely in a virtual world. To coincide with the video launch, over 11,000 digital donuts, or keys, were also released, giving owners the right to use them to obtain assets from the iconic video.

🖼️ Arts & Culture

Beeple, the NFT artist, is building a physical studio in South Carolina to share his digital artwork with new audiences.

Marvel and Funko debut new web3 integrations at this year's Comic Con in New York.

🏘️ Real Estate

Roofstock, a real estate technology company, sold an NFT tied to a real house in South Carolina for $175K.

💰 Business & Finance

BNY Mellon becomes the first large U.S. bank to hold clients' cryptocurrency alongside traditional investments on the same platform.

FTX, a cryptocurrency firm, is facing an investigation over whether it is providing unregistered securities to Texas residents.

MetaMask, the popular web3 wallet, will now allow users to make instant bank-to-crypto transfers, shortening the often painful waiting period that was required when transferring money from a traditional web2 bank into a crypto wallet.

👩‍💻 Tech

Microsoft and Meta have collaborated to create new virtual work experiences together. I would have rehashed the details here, but when I got to the part about Sharepoint being available in virtual reality, I threw my hands up. Here's hoping a Microsoft Teams meeting in VR is way better than IRL.

Another update from Microsoft, who is adding AI-generated art to its suite of Office software. A new app named Microsoft Designer will use text-to-image technology to generate greeting cards, social media posts, PowerPoint illustrations, business logos, and more. Basically, it's an AI-powered clip art generator that allows users to generate new designs with minimal effort.

🥞 Food

Cheetos spooks the metaverse with a Halloween-themed Meta Horizon Worlds neighborhood named Chesterville.

🧸 Fun & Games

Bicycle, the OG playing cards brand, bought a Bored Ape Yacht Club NFT with plans to create NFT-themed card decks.

❤️ Social Good

New York Cares, the NY-based non-profit organization, embraces the web3 world by selling NFTs to fundraise for Stand with Students. Championed by TIME's Keith Grossman, the initiative supports local public schools that have faced socioeconomic struggles since the onset of COVID-19.

Yuga Labs, the creator of Bored Ape Yacht Club, pledged $1 million to Miami-based education and arts initiatives. The programs work to close the opportunity gap for many Miamians.

The Princess Charlene of Monaco Foundation SA and South African artist, Junaid Senechal-Senekal, have partnered to create a 15-piece NFT collection. The duo plans to use the proceeds to feed underprivileged children in South Africa.

💵 Funds & Fundraising

Uniswap Labs, the crypto exchange, is valued at $1.66 billion in its $165 million Series B funding round.

Jasper, the AI content platform, raises $125M at a $1.5B valuation.

Stability AI, the company supporting Dance Diffusion and Stable Diffusion, raised $101 million with the help of Coatue and Lightspeed Venture Partners.

Stardust, the crypto gaming startup, raised $30 million in its Series A round with the help of Framework Ventures.

🎲 VC Corner

Union Square Ventures' Fred Wilson shares the tech stack the firm used to display NFTs in the office.

a16z Crypto announced the launch of its new seed accelerator, Crypto Startup School.

✨ Web3 Deals, Drops & Alpha

Doodles is launching DoodlePutt, an IRL experience in Miami during Art Basel.

Lex, a word processor with artificial intelligence baked in, announced its launch this week along with a demo. Founder Nathan Baschez's tweet garnered significant traction, leading to a 26K waitlist build in just a few days. NGL, the demo is pretty sweet.

Azuki announced the launch of its Physical Backed Token (PBT), which ties a physical item to a digital token on the Ethereum blockchain through a "BEAN chip."

📰 Weekend Reading

Phygital Marketing in the Metaverse. How Brands Are Merging Digital and Real-Life Experiences. AdAge.

Digital LeBron vs. Analog Mantle: Sports Collectibles Remain Hot Despite NFT Boom. NBC News.

The Fashion Exec's Guide to Web3. Vogue Business.

'Try Your Best' Swaps Instagram for Web3 to Connect Brands and Customers. Vogue Business.

Five Reasons Big Companies Are Having An Impact On The Arrival Of Web3. Forbes.

Web3 Isn’t Dead, Despite What Critics Might Say. CoinDesk.

Decentralization vs. Growth: A Practical Way to Bring Web3 to a Billion People. Fortune.

™️ Trademarks Don't Lie

Hot diggity dog. Our favorite update of the week is always in the land of trademarks. This week, we spotted Kraft applying for web3-related trademarks for its Weinermobile.

🧰 Jobs

Refresh that resume and let's hit the job boards.

• Senior Director, Metaverse Development, Warner Music Group. Apply.

• Director, Head of Consumer Marketing, Roblox. Apply.

• Director, Art Management - Avatars, Meta. Apply

• Corporate Counsel, Web3, DraftKings Inc. Apply.

💀 And Finally

Jimmy Kimmel asks Magic Johnson about "digital collectibles."

Does it remind anyone else of this historic moment?

🫶 And that’s a wrap! Thanks for reading Web 2.5. See you out there in the interweb3s.

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DISCLAIMER: This newsletter is strictly educational. None of this is financial or investment advice — and not a solicitation to buy or sell any assets or to make any financial decisions. Please always Christian DYOR (Do Your Own Research).