NFTs have not only allowed to create a new type of leverage over an IP for a brand but it has also profoundly changed the nature of the licensing deals brands make with distributors.

In web2, resellers could pay a fixed cost per year + small royalty amount for the right of using an IP to sell merchandising items.

In web3, the fact that IP owners get creator fees from secondary market sells (attribute of NFTs) means that there is an incentive for brands to structure deals with resellers based heavily on royalties.

The revenue growth potential is much more appealing.

That's why dapps, agencies, NFT marketplaces and play to earn games that work with brands are working on a revenue-share basis for their deals (most of the time). Everyone has more skin in the game. Interests are aligned. No up-front money required.

But that creates new type of challenges. Let's try to understand why.

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If you're working with a brand, you need to : 

1. Allow NFT buyers to pay in fiat (mainly with credit cards)

Brands have a fanbase, but most of the time they're not crypto friendly. So how do you onboard and leverage the brand community to make a success out of your drop ? 

-> You can use on ramps services like paper & moonpay or use a PSP like Stripe.

2. Hedge revenues against volatility

You generate revenues from on chain sales meaning you get crypto in your wallet but licensing deals could have a minimum to re-tribute in fiat. What about when the market is not really stable (like these weeks..) ?

-> You can build on flow chain (not ideal for secondary markets sales), swap your revenue to stablecoins manually or buy options to sell crypto at the same price later on (putt options in derivatives that are expensive) 

3. Automate payouts based on revenue share deals

You need to split revenues automatically between different actors and make recurring payouts based on the deal. This one is a nightmare if you have partners/brands that want to be paid in fiat only and deals include secondary markets.

-> You need to use an OTC, a banking system, a KYC provider and make sure that the bank's partner will accept your money.

4. Generate dedicated reports and manage accounting

You need to generate financial reports for the brands.

-> You use Etherscan to track incomes and generate reports...

5. Have a conciliant bank 

Everyone knows this. AML makes your bank afraid of crypto. So you need to find concilient banks in countries like Luxembourg, Portugal or Switzerland to make this work.

-> A number of banks start to emerge but it's not ideal yet

What's really frustrating is that, as a web3 founder, you spend more time dealing with payment infrastructure than actually building your value proposition.