As the crypto winter descended, so did NFT sales. After a rush into mainstream culture and nearly two years of explosive growth that peaked in November, NFT sales failed to hit $1 billion in July for the first time since June 2021, down from more than $5 billion 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. Snap is testing NFTs as AR filters, the Financial Times reported in mid-July. And just last week, Meta announced that Instagram would allow users in 100 countries to showcase NFTs on its platform. Through that feature, users can connect their digital wallet and share NFTs from it as posts that automatically display public information about the NFT. The posts will have a shimmery effect to differentiate them from your average Instagram post. Facebook is set to follow suit.
Artists who make their living through digital art hope that all this interest from big companies despite a cratering NFT industry means that the market for their work will eventually come back. But they’re also concerned that with so many social media giants getting into the NFT space, large brands and corporations will take over, leaving independent artists with less influence over the success of their art.
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, a product manager on the creator blockchain experiences team at Meta, told Forbes 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. Users, namely celebrities and influencers with millions of followers like Bella Hadid, Paris Hilton and Snoop Dogg, helped drive NFT hype among the general public by sharing their NFTs on platforms like Twitter and Instagram. In turn, social media sites have been instrumental to digital artists big and small trying to market their NFT work.
Some companies managed to catch the NFT wave as it crested. Reddit rolled out its own NFT marketplace of sorts at the peak of the boom last year, making it one of the first large social platforms to enter the space. TikTok and Twitter released features supporting NFTs in September 2021 and January 2022, respectively. 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).
But until this summer, after the initial cloud of hype had passed, Instagram, Facebook and Snap had not yet done much product-wise to support NFTs. Some NFT artists told Forbes that they actually appreciated the timing of the release when the market isn’t as hot as it was last winter. When big, mainstream tech companies with billions of users support NFTs with new features, it could be an indication that NFTs are here to stay, a message amplified by releasing them during a market downturn.
“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. Then, the individual artists could suffer, not benefit, from the updates, leading some artists to distrust Meta’s push into the space.
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. According to CNBC, Meta is planning to eventually take a 47.5% cut of NFT sales in its virtual reality platform Horizon Worlds. OpenSea, by contrast, takes 2.5%.
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 has dominated the market in the past two years, hitting a 97% market share in March, although that number has since fallen to 66%.
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.”
The wider access could be good for artists, Wilson said: The more mainstream the platform, the bigger 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 known by the artist name Renderfruit and for art that sweeps the viewer into fantastical dream 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.
All five NFT artists who spoke to Forbes are holding onto hope that the NFT market will either stabilize or get stronger 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, whose seminal work involves colorful butterflies that represent the lupus that killed his mother and how he grew past his grief, feels similarly. “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.”