NFT sales fell as crypto winter passed. NFT sales declined to $1billion in July after nearly two years’ of rapid growth, which culminated in November. This was after the NFT market had been flooded with mainstream culture. It also fell below $5billion in January. Sales on OpenSea, the world’s largest NFT marketplace, fell 79% from May to July, and the company laid off 20% of its staff in mid-July.
But the NFT downturn hasn’t stopped social media companies from launching new features this summer that seem to be built for the NFT-obsessed world of last winter’s crypto boom. Reddit, which had already been in the NFT space for more than a year, announced a marketplace for fixed-price NFTs that it billed as “collectible avatars” on July 7. The Financial Times reports that Snap has begun testing NFTs in AR filters. Meta just announced that Instagram would let users from 100 countries showcase NFTs. This feature allows users to connect their digital wallet, share NFTs with it and display NFT information in posts. To distinguish them from regular Instagram posts, the posts will feature a shiny effect. Facebook has already begun to do the same.
Digital artists who earn their livelihood through their art believe that all the interest shown by big corporations despite a weak NFT market will lead to a rebound in their markets. However, they are concerned about the possibility that big brands and corporations could take over NFT, making it less likely for independent artists to have any influence on the future success of their artwork.
The odd timing of Reddit, Snap and Meta’s new NFT features is probably due to the fact that they’d been long-planned additions—and it’s hard to predict downturns in industries as volatile as crypto.
Sophia Wilson, an artist who worked with Meta in a small cohort of creators on its pilot for the new Instagram NFT feature, said Instagram first reached out to her in November 2021—before crypto peaked and crashed—with its plans for the project. “Of course, more people would have benefited from it if it were released during the boom, but this kind of stuff can’t be turned around overnight,” Wilson says.
Edward Dowling was a product manger on Meta’s team of creator blockchain experiences. SME via email that the company started work on the NFT features prior to the market’s peak last November and that they’re part of Meta’s goal to help creators monetize in as many ways as possible.
Tim Rathschmidt, a communications director for Reddit, declined to comment on the timing of the company’s release during a crypto winter but wrote that the company prefers to focus on “how the blockchain can benefit users and artists on Reddit … rather than the level of hype around a technology.” That could help explain why Reddit’s July launch of a fixed-price “collectible avatar” marketplace avoided the word “NFT” entirely.
Social media companies’ formal entry into the NFT space makes a lot of sense, given how integral social media platforms have been to NFTs’ rise in popularity. By sharing NFTs through platforms such as Instagram and Twitter, celebrities with millions followers (e.g. Paris Hilton, Bella Hadid) helped to spread the NFT hype. Digital artists of all sizes have used social media to promote their NFT projects.
Some companies were able to capitalize on the NFT boom as it grew. Reddit launched its NFT Marketplace at the height of last year’s boom, becoming one of the largest social media platforms to do so. Twitter and TikTok both released NFT-supporting features in January 2022 (January 2021). Discord was also an early gathering place for NFT enthusiasts, although it ultimately shelved its plans for crypto-related features in response to concerns about NFTs’ high environmental impact (one digital artist calculated that mining a single Ethereum-based NFT used enough energy to power a house in the United States for nearly five days).
Up until now, however, Instagram, Snap and Facebook hadn’t done any product support for NFTs. NFT artists spoke out SME that they actually appreciated the timing of the release when the market isn’t as hot as it was last winter. NFTs could signal that they will continue to be supported by large tech firms with billions of customers.
“If companies like Meta are really getting into it, it shows you that there is longevity and stability,” says Jay Alders, a painter and NFT artist known for ocean-inspired work that blends surrealism, cartoon art and traditional painting.
He also joked about big tech’s NFT features as an additional mainstreaming of the technology: “NFTs were like the new indie band in town that everyone loves, that only the cool kids knew about, and now, everyone knows about it, and it’s not cool anymore.”
But his quip underlies a more serious concern: When something gets big, giant corporations are going to want a share—and Alders is worried the “corporate conglomerates and big brands” are the ones that will make the most out of the new NFT features. Meta’s efforts to enter the space may cause artists to be skeptical.
Australia-based artist Serwah Attafuah previously was wary of Meta’s entry into NFTs, but in the past few months, she has come to appreciate Meta’s release of relatively minor features during the downturn. Attafuah is happy that she can share NFTs on Instagram but still sell them through NFT auction sites like Foundation and OpenSea—the platforms that made selling digital art viable for her. She’s not ready to abandon those marketplaces just yet.
For example, one of Attafuah’s first NFTs, a surreal cyber dreamscape of a feminine figure surrounded by fish, sold on Foundation in March 2021 for 10 ETH, or about $18,000 at the time—far higher than the $50 she charged for some non-NFT digital art pieces.
While Meta doesn’t currently deduct fees from creators using Instagram’s NFT feature, it could from future NFT features on Facebook and Instagram, like a marketplace. CNBC reports that Meta plans to take 47.5% of NFT sales on Horizon Worlds’ virtual reality platform. OpenSea takes 2.5%, however.
Meta’s plans to take such a large cut of NFT profits in that instance is an embodiment of the skepticism around big tech’s entry into a space that built itself on ideals of decentralization, whether that’s true in practice or not. OpenSea dominated the market for the past two year, capturing a 97% market share at March. However, that percentage has dropped to 66% over time.
And Meta does, indeed, have plans to expand into a NFT marketplace, the Financial Times reported in January, which Alders called “inevitable” and “just what these companies do.”
Wilson, who often gets Instagram direct messages asking why it’s not possible to buy NFTs on Instagram itself, said it was the “logical next step.”
Wilson suggested that artist could have greater access to the internet. He said, “The more popular the platform, then the wider the audience.”
“We like it,” 3D artist and animator Clara Luzian says of Instagram’s NFT feature, adding that it makes building an audience easier for artists and opens up the NFT world to people who are curious about it but maybe didn’t know much about it before. Luzian is best known for her art, which transports the viewers to fantastical worlds.
With such a big audience, it’s especially crucial that big social media companies uplift underrepresented artists when rolling out their NFT features, Wilson says. She sees it as an opportunity to change an industry that’s currently dominated by white men, who received the bulk of the wealth from last winter’s NFT boom.
Black utopia and female empowerment are key themes in Wilson’s work, and she was glad to see that she was far from the only Black person or the only woman in Meta’s cohort of 16 initial creator partners.
The five NFT-artists who spoke with SME They are hopeful that the NFT industry will stabilize and grow again. They believe that now’s the time to double down on their approach and make the most of the tools—social media and otherwise—that are available to them.
“I know that it’s common for it to go up and down,” says Luzian, who had several NFT projects delayed because of the crash.
Michael Artis’ seminal artwork, which features colorful butterflies representing the loss of his mother to Lupus and his recovery from it, is similar. “Once everything goes back up, everybody’s gonna be rushing into doing everything again,” says Artis, who partnered with Reddit to create NFTs for its mid-July collectible avatar launch.
And even if the market doesn’t return to where it was last winter, Alders predicts that now that the “pump and dump” artists have left, NFTs still provide a good way for “the actual artists doing the real legit stuff” to sell their work, both on the likes of Instagram and Facebook and on the more traditional NFT auction sites.
“I’m very bullish on the technology of NFTs,” Alders says. “Now, when things start turning into another bull run or into a more steady growth scenario, I feel like I’ll be set up in a position that I could never have had before.”