tl;dr Summary: Meta announced it plans to take a 47.5% cut of creator’s NFT sales on their virtual reality game Horizon Worlds. When compared to other creator marketplaces, Meta’s sales split is competitive with their centralized counterparts but not amongst decentralized marketplaces/games.
Meta has touted Horizon World as a core part of their Metaverse vision, but its reception has had mixed reviews. While the game has reached over 300,000 monthly active users since its release, many players find the experience to be lackluster. Chief amongst these complaints is the lack of quality content available on the platform.
Meta has done a couple of things to address this issue. First, they established a $10 million Creator Fund in October 2021 before Horizon World’s release to stimulate development. And, more recently, they announced their plans for creator monetization through Non-Fungible Token (NFT) sales.
Is 47.5% Competitive?
While the former provides grants and support for development projects, the latter has stirred controversy because of Meta’s plan to take a massive 47.5% of creator’s NFT sales. The crypto community was particularly outraged by the news, quickly taking to Twitter to meme the absurdity of a near 50% sales split.
When Meta was pressed on the backlash, Vivek Sharma, Meta’s VP of Horizon reportedly responded that, “[Meta believes] it’s a pretty competitive rate in the market.”
So, it begs the question:
Is 50% a competitive rate in the market?
To better understand, we need to look at a few marketplaces that sell creator’s/developer’s work.
|Apple App Store(1)||15-30%|
|Google Play Store(1)||15-30%|
(1) Reduced 15% cut only applies to the first million dollars of annual sales
(2) Revenue split on ads
(3) Not including Robux’s cash out exchange rate
At a glance, we can see a striking difference between the cuts taken by centralized versus decentralized organizations. Where the centralized organizations take upwards of 15%, decentralized organizations tend to be more conservative with how much they end up taking. Moreover, the cuts taken by decentralized organizations are often recirculated back into the community through their token or community funds.
So, is Meta’s 47.5% cut market competitive? Well… it depends on who you want to compare them to.
If you contrast them with their most direct comparable, Roblox – who also provide the tools and a virtual world to develop on, then they provide a much better split. However, if you compare them to the split offered by decentralized games like Decentraland or The Sandbox, Meta’s 47.5% take is bound to raise an eyebrow.
The central frustration seems to be with Meta’s use of Web 3.0 technology but not the democratization mindset that comes with it. While the splits listed above don’t account for markups in transaction costs due to blockchain related fees such as gas, it is easy to understand why those in the world of Web 3.0 might see this split on NFTs sales as distasteful.