Popular venture capital firm Andreessen Horowitz (a16z), has recently pointed out the huge gap between Web2 and Web3 creators’ payouts.
In the company’s inaugural “State of Crypto” report published Tuesday, a16z compared the fees charged by the popular Web 2.0 and Web 3.0 marketplaces to transactions conducted by a third party. The analysis revealed that Web3 platforms offer fairer economic terms than the Web2 tech giants.
For instance, Meta was discovered to have nearly 100% take rates across its social media platforms, Facebook and Instagram. On the other hand, the popular NFT marketplace, OpenSea, had a meager take rate of 2.5%.
Emphasizing the outrageous nature of the take on rates by large tech firms, U.S. Congressman Ritchie Torres said,
“You know something is profoundly wrong with our economy when Big Tech has a higher take rate than the mafia.”
Web3 —A “Tiny But Mighty” Industry
Further analysis by the a16z team compared the estimated amount of Web2 platform payouts to creators compared to Web3.
Per the report, in 2021, the primary sales of Ethereum-based NFTs alone plus royalties paid to creators from secondary sales of their works on OpenSea had amounted to a whopping $3.9 billion. This figure is almost quadruple the $1 billion that Meta has designated for creators through 2022, which is less than 1% of the company’s revenues.
Considering that these Web3 platforms just came into existence less than five years ago and have fewer users than the established Web2 platforms.
Based on the number of NFT collections, a16z’s report estimated that there are currently a total of 22,400 Web3 creators. This is a far cry from the nearly 3 billion users posting content daily on Meta’s Facebook and Instagram platforms.
Compared to Meta, YouTube and Spotify paid out more to creators, about $15 billion and $7 billion respectively. However, judging by the per capita amount, the figure is very disappointing.
Per the report, while Web3 platforms like OpenSea paid out a whopping $174,000 per creator, Web2 giants like Meta paid out a disappointing $0.10 per user, Spotify paid out $636 per artist, and YouTube paid out $2.47 per channel. In its concluding remarks, a16z pointed out,
“Web3 is tiny but mighty.”
A16z has recently become one of the most prominent names in the digital asset space, investing in several crypto and Web3 projects. Last week, the venture capital firm participated in the $725 million fundraising event organized by Flow, the Web3 company powering NBA Top Shot.
