FIFA's NFT Gamble: Will Ethereum Solve Royalty Problem?

FIFA’s going all-in on the Ethereum ecosystem with its own blockchain. But beneath the shiny veneer of improved user experience and enhanced scalability, lies a crucial question: can this move actually fix the broken NFT royalty system, or is it just another punt in the dark?

NFT Royalties: A Broken Promise?

Let’s face it, the idea of endless royalties tempted a lot of artists and creators into NFTs. The idea was simple: every time your digital artwork, music, or virtual collectible changed hands, you'd get a cut. A sustainable income stream! The reality? Far from it. To date, marketplaces have consistently facilitated buyers and sellers skipping royalties, essentially deflating the value proposition for creators. We’ve watched royalty rates sink, in some cases, with platforms like Spotify even making it a voluntary fee. The effect? Most musicians can’t afford to be artists anymore. It’s akin to promising an employee a pension and then surreptitiously stopping all contributions.

The ethical considerations here are huge. Artists, designers, and developers jumped on the NFT bandwagon for the allure of equitable pay. As the situation has turned on its head, so too are their livelihoods in jeopardy. Whether bypassing royalties is just shrewd trading or digital exploitation remains a complicated question.

Can FIFA's Blockchain Change The Game?

FIFA’s release of an EVM-compatible blockchain creates an entirely new opportunity. Ethereum’s powerful infrastructure and smart contract capabilities might be used to enforce royalties on-chain, rendering them immutable and unavoidable. Will FIFA actually do it? That's the million-dollar question.

Here's the thing: on-chain enforcement isn't a silver bullet. From a user experience standpoint, changing the currency could result in much higher transaction fees, which may affect overall liquidity in the FIFA NFT market. Collectors, particularly those who are trading hot, might bristle at the additional expense. Not to mention, added cost is just plain unpopular. The possible backlash would be severe, potentially alienating devoted fans and leaving them feeling more like customers.

Alternatively, FIFA could choose to implement solutions off-chain, with marketplaces voluntarily committing to honour royalties. But we know how effective that goes already. Spoiler alert: not well. Without a robust, decentralized system in place, enforcing royalties is based on faith and virtue. In the unpredictable space that is Web3, these traits are in short supply. It’s the equivalent of trusting a handshake in a billion dollar contract negotiation.

Collectors' Choice Or Creators' Right?

If collectors are made to feel punished by strict royalty systems, they may just decide to ignore the FIFA NFT marketplace for good. We can imagine a future where demand evaporates, which would be bad for all the parties involved—even FIFA.

Here's where it gets interesting. What if FIFA took a page out of the innovation handbook and worked to create the most innovative and fair royalty system yet? What if they added in fractional ownership, letting collectors receive a fraction of royalties that their NFTs produce? What would happen if they introduced subscription… Fans can show their support with as little as $2 a month in exchange for access to exclusive content and experiences, while creators receive 88% of every dollar earned.

Whether synchronizations or more novel examples, these alternative revenue models might support or even substitute traditional royalty structures, establishing a healthier and fairer ecosystem. It's about thinking outside the box and finding solutions that benefit everyone, not just FIFA's bottom line.

Unexpected Connection: Bollywood & Blockchain

Consider the entertainment industry in South Asia. The Asian counterpart to Tinseltown, Bollywood, has faced similar woes with piracy and equitable remuneration to artists for decades. Now picture a similar use of blockchain tech to track ownership and licensing for Bollywood movies and music. The same challenges of royalty enforcement or market adoption would still take place. The lessons learned from FIFA’s NFT experiment may have far-reaching implications for other creative industries across the globe.

The Future of NFT Royalties: A Moral Imperative

It isn’t the economic aspect of NFT royalties that should most concern us. It’s the ethical dimension. It's about creating a digital environment where creators are fairly compensated for their work and where collectors feel valued and respected.

FIFA moving their World Cup to Ethereum is a big bet, make no mistake. It’s a worthy and exciting gamble with the potential to greatly reshape the NFT landscape for the better. Whether they decide to do so by focusing on innovation, the needs of creators, and developing a robust ecosystem is up in the air. The nation is tuned in, and the pressure is on. If FIFA succeed in getting it right, they will have an opportunity to set a new standard for the industry. If they fail, they risk further eroding trust in NFTs and perpetuating a system that benefits the few at the expense of the many.

The question isn’t whether Ethereum can provide a solution to the royalty issue. It’s whether FIFA will do what's right.