Selling out an NFT collection is only the beginning
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Photo Illustration: Shoshana Gordon/Axios. Image: courtesy of Magic Machine
The NFT market may have cooled significantly, but companies who turned a big profit in the boom times are ploughing those proceeds back into traditional and new media in order to put eyeballs back on their creations.
Why it matters: NFTs aren't just selling pictures to people who like pictures. Owners place huge expectations on creators to keep driving attention to the collection, because that's what makes the value of their digital items appreciate.
State of play: One NFT creator told us that they do it because communities demand it, despite some making efforts to bypass the creator royalties that have, up to this point, served to fund the effort.
What they're saying: Dotta, an executive at Magic Mountain, the creators of the NFT collection Forgotten Runes Wizard Cult, tells Axios via email that NFT owners never stop demanding more from creators. He said via email, "You're expected to:
- "have a free mint
- "airdrop new tokens to holders
- "build a MMO-metaverse
- "create a tv-show
- "create merch
- "and take zero royalties."
Context: "Everything in this space drives on attention," Dotta says in an interview.
- For teams earning royalties, they make money any time there is attention. If the prices are falling and people are getting out, they still get returns on those sales.
- "Obviously everyone is happier when the price is going up," he notes.
- But that need for attention is why teams that want to be a major NFT project can't stop when the NFT gets released. They need to release more stuff that keeps their NFTs in the conversation.
Zooming in: For the Rune Wizards, the secret sauce is lore. Magic Machine owns the overall collection — the larger IP and the game world. They get to give the big-big picture of their world, but each wizard NFT owner can craft back story and personality for their specific wizard or wizards.
- While it has been more than he bargained for, this creative emphasis reflects what Magic Machine's founders wanted. "My business partner and I have always wanted to create a world," he said.
- Magic Machine has already put out a comic book about their world, a TV show is coming, there should also be games and integrations with different virtual worlds.
The big picture: If someone makes a TV show about, say, six specific NFT characters from a larger collection (there are 10,000 wizards), most people in the NFT world believe that would drive at least some price appreciation to the whole collection.
- This hasn't really been tested yet, of course, but Magic Machine is looking into taking it even further, while ever being wary of securities regulators.
- "We've been working with our legal counsel to develop a mechanism for a way to send royalties back to our holders without violating securities laws," he said. "I have to be a litte fuzzy on the details for now."
Yes, but: Different teams have different approaches. Another big NFT project, Nouns, has a similar aesthetic to the wizards, but it's operating less like a studio and more like a fund.
Of note: He says the one thing taking up far more time than he anticipated was social, just communicating with the Wizards community. He thought that would be something like 20% of his time. It's more like 80%.
- "I think there's something around high personal accountability where you're playing the role of both the artist and the broker and the manager and the art gallery," he says.
The bottom line: "If you think dropping an NFT collection will make you an instant millionaire, it's not really going to. It's more a Faustian bargain," he told us.
