Apple charges 30% per NFT sale – this may not be as bad as it sounds
Apple Inc (NASDAQ:AAPL) has established itself as one of the most influential tech giants and is currently the most valuable company with a market value of nearly $2.5 trillion and over 1.23 billion iPhone users worldwide in 2022. Being the most valuable company brings a lot of praise, but on the other hand, a lot of opposition as well.
That was the case recently when news broke that Apple officially announced that they will allow apps on the App Store to sell NFTs. The catch was that sales are to be made through in-app purchases in fiat currency, which means 15% sales fee (30% if you exceed $1 million annually), no Web3 integration, and no crypto accepted for NFT sales.
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This provoked strong negative reactions in the industry with CEO of Fortnite developer Epic Games Tim Sweeney literally tweeting “Apple must be stopped”, complaining that it is “killing all NFT app businesses it can’t tax”.
With all the buzz around the topic, our team at BestBrokers decided to analyze what Apple actually offers and whether it makes sense to actually sell your collection via an iOS app, considering that marketplaces like OpenSea only charge 2.5% in selling fees .
A deal breaker for marketplaces
Apple’s In-App Purchase model is definitely prohibitive for NFT Marketplaces. Their fees usually do not exceed 5% and there is no margin to pay the Apple fee of 15% – 30%. The only possible way would be to transfer the fees to the end customer.
This would not make much sense as users would be able to buy the same NFT at a price 30% lower directly on the market. This essentially means that marketplace apps will continue to only allow users to connect to their profile and browse collections. Transactions must remain outside of the App Store.
A new hope for independent NFT creators
NFTs have seen an unprecedented boom in the second half of 2021 with daily transaction volumes often exceeding $100 million. The number of daily transactions remains high in 2022, despite the falling value of the dollar due to the plunge in cryptocurrency prices.
This hype has created a whole new sub-market for NFT Marketing with many big players dumping huge sums to promote their NFT collections and make quick sales. This has increased the cost of entry to a point where it is simply unaffordable for independent artists to market their NFT items/collections.
BestBrokers received an actual offer from a prominent NFT marketing agency to an NFT startup, to give you a perspective on the budgets involved in selling a limited NFT collection. Here are the proposed KPIs and amounts:
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Let’s summarize this
For a six month campaign, you are supposed to invest a minimum of $100,000 in ad spend, influencer marketing and management fees plus give out up to 20-22% revenue share on all sales for a “guaranteed” 1,800 sales and 3,000-5,000 new members on Social Media.
We put the guarantee in quotes because the only amount subject to refund is the $8994 administration fees. With a price point around $100 per item, this seems like a very risky investment for an independent creator or even a team of creators, trying to start up a project and not dependent on a lot of financial support.
How Apple can turn this around
If you search for the highly competitive keyword “NFT” in the App Store right now, you’ll get two types of results:
Apps from established marketplaces like OpenSea, where you can just browse collections on the secondary market and link to your profile. Transactions are made outside the Apple infrastructure.
Apps that allow you to “design” NFTs using libraries of stock graphics. These are pretty much free riding on the NFT hype and moving away from the original NFT idea.
With their move to allow NFT sales on the platform, Apple is actually creating a blue ocean market for NFT creators, who conduct primary sales of their own NFT. With a relatively easy to build app, which integrates in-app purchases, they will gain access to Apple’s over 1.5 billion active devices.
Many independent NFT creators will be more than happy to give up 15% of their earnings after that to gain access to a virtually unlimited market. With the low relevance of current App Store search results, the first developers who manage to send NFT-selling apps live on the App Store can earn hugely.
We contacted Miro Nikolov, Marketing Director at Pigletz NFT to get his take on the subject:
“Over the past 9 months, we’ve spent big budgets on Facebook, Google Ads, Twitter and Discord to build our community, and we’re seeing our cost per user acquisition constantly increase.
When you advertise through influencers, especially in crypto, you’re not only spending thousands up front, but you’re also often asked for payments in crypto. This can lead to both accounting and accountability issues – we were scammed by “influencers” with fake views and fake followers.
Our entire team is very excited about the news that Apple is finally allowing integrated NFT sales through in-app purchases.
This is something we expected and hoped for. We identify this as a great opportunity to do direct sales and we have already started the development of our own iOS app with integrated in-app purchases.“
