When digital collectibles (NFTs) were first introduced to the emerging tech space, one of the biggest selling points was a new way for creators to get a piece of the pie every time their work was resold – or better known as a ‘creator royalty’. ”
The royalty debate was the biggest conversation in the history of the NFT space, but also the biggest elephant in the room.
On Thursday (Aug. 17), OpenSea changed its stance on maker royalty fees, announcing in a blog post that it plans to move from “mandatory” maker fees to “optional” maker fees this month.
In other words, collectors/sellers are now given the choice of whether to “generously” give back to the original artist they claimed to have supported.
It clarified in the post that “creator fees aren’t going away — just their ineffective unilateral enforcement,” which it says is necessary to “better reflect the principles of choice and ownership” that continue to drive decentralized art.
As of August 31, OpenSea will stop enforcing royalties on all new NFT collections — however, it indicated that it will continue to enforce fees on certain existing collections until at least March 2024.
Imagine being a “regular customer” at a restaurant because you enjoy the chef, the exquisite culinary skills associated with the food, and the service of your waiter(s), which you interact with by returning to the restaurant and tip your waiter(s). But on your next visit to that same restaurant, you order, eat and pay – only this time you just pay the bill without tilting your waiter.
OpenSea remains the elephant in the room
Last November, OpenSea soured its name after launching its “Operator Filter,” a unilateral enforcement tool that prevented the sale of creator collections to Web3 platforms that chose to enforce and mandate creator royalties.
The highly controversial decision by the NFT marketplace came after token-based platform X2Y2 debuted its 0% maker royalty model eight months earlier.
The straw that broke the camel’s back, however, was when the NFT platform Blur made royalties mandatory in February 2023. Blur has since surpassed OpenSea as the largest NFT marketplace by trading volume, enforcing a 0.5 percent fee on most of its collections, where most creators set their royalty fees at 5 to 10 percent.
OpenSea responded by stating that its previous mandatory royalty fee of 2.5% would be reduced to 0% for a limited time – while also picking up another previously controversial plan to move projects that did not use on-chain enforcement tools – essentially any project created before 2023 – up to “optional” royalties.
That, of course, did not go down well.
The NFT royalty debate, which shouldn’t be a debate at all, continues to keep the growth and transformation of digital art and collectibles at bay – a lot of talk, not much execution.
According to crypto data firm Nansen, NFT royalties reached their lowest volume since 2021, and this week’s news that Bored Ape Yacht Club (BAYC) NFTs hit a low of around $51,500 (now $43,000 as of this writing) is a clear evidence of it.
The community has not been shy about speaking up about the detrimental impact these types of mechanisms have on artists, with the majority of users expressing extreme discomfort about the “unsustainable behavior”, “cowardice”, and “killing the ecosystem”.
Weird reactions
On Friday, NFT marketplace Rarible made its stance clear on X (formerly Twitter) with the hashtag #StandForRoyalties, sharing that it “stands in solidarity with creators and artists” by offering a free coin.
And at the end of the day, there’s only one question that matters: Why do we still have to win this debate when it serves as the beating heart of all that “Web3” and decentralized ecosystems are supposed to represent?