Billionaire Mark Cuban says the decision by prominent non-fungible token (NFT) marketplace OpenSea to shut down its royalty system is a huge blunder.
Earlier this week, OpenSea’s CEO Devin Finzer said announced that while creator fees will continue, their unilateral enforcement will cease.
According to Finzer, this move will better “reflect the principles of choice and ownership that underlie it [the OpenSea] ecosystem.”
In a recent thread, Cuban, who has invested in OpenSea, say that the protocol’s new policy of not collecting and paying royalties is a bad move that hurts both the industry and the NFT platform itself.
“Failure to collect and pay royalties on NFT sales is a HUGE mistake by OpenSea. It reduced confidence in the platform and harms the industry. And I say this as an OpenSea investor…
The buyer knows what the royalties are before they buy it. The creator can set the royalty to zero. They are part of the smart contract that the NFT coin uses. It’s not smart. It’s desperation.”
The business magnate continues pitch his idea of how the system should work, saying there is a way for both content creators and OpenSea to get paid.
“Make the transactions free for NFTs who pay their royalties and then take a percentage of the royalties as compensation. The promoters still get paid most of the royalties, which is clearly better than nothing, and OpenSea gets paid an amount that is probably better than the [transaction] rate.”
Cuban he says supports creator royalties because they are a way for content creators to continue getting paid even if their products are sold in secondary markets.
“It creates unique opportunities where creators can be paid for future sales. Textbooks are resold. Authors/publishers get nothing. As a result, they charge higher prices for new books, knowing that they will be sold and resold until they fall apart. Make them a royalty-free NFT that has built-in DRM (digital rights management) and a reader and textbook prices drop like a rock.”
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