The Top NFT Marketplaces’ Position on Creator Royalties

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Without a doubt, the main attraction for NFT creators seeking to make a living from their art for the first time is creator royalties. This would allow creators to benefit from this form of payment even if they are small by enabling them to receive recurring income whenever their works are sold on an NFT marketplace.

Only financially successful singers, actresses, and other creatives have had the luxury of using the word “royals” in their vocabulary for decades (albeit they prefer the term “residuals”). The typical creator now has the opportunity to experience this form of payment thanks to the growth of NFTs. OpenSea, on the other hand, came perilously close to upending that dynamic in November 2022 when, in response to a site update, it considered eliminating all royalties on existing collections.

Thankfully, in response to criticism from the community, OpenSea withdrew its commitment to the change. But that begged the question: What are the positions of other NFT marketplaces that the community uses frequently on this subject?

The current situation with royalties in NFT markets

For good cause, the NFT community criticized OpenSea vehemently for even considering taking author royalties out of current collections. It being the busiest NFT marketplace online, this came as no surprise.

So what is OpenSea’s position on giving artists access to royalties? Creator fees, as they are known on OpenSea, will continue to apply to existing collections on the website until December 8 at the earliest, according to a blog post from November 6. As it transitions to on-chain royalty enforcement on the platform, this means that OpenSea may still change its royalty policy for existing collections.

Why? As stated in the blog post from November, OpenSea CEO Devin Finzer thinks that off-chain royalties collection might eventually hurt producers. The voluntary creator fee payment percentage has fallen to fewer than 20% on marketplaces where these payments are optional. Additionally, Finzer said in the blog post, “creative fees are simply not paid at all on other platforms. NFT markets must move the enforcement of royalties to on-chain, where it can be done by code, rather than whoever is in charge of any specific marketplace, in order to properly assure that creative money is safeguarded by code.

And OpenSea might not be the only company that recognizes the significance of moving the enforcement of royalties onto the blockchain. The Royalty Registry is a smart contract developed in partnership with other NFT markets including Rarible, Recur, MakersPlace, Nifty Gateway, and others that enables artists to quickly implement on-chain royalty enforcement to their work.

The initiative, which was introduced in October 2021, hinted at some of the challenges OpenSea would face in moving toward on-chain royalty enforcement by pointing to the challenge of implementing such a feature on older works and collections whose royalty agreements were crafted off-chain. The Royalty Registry noted that given that marketplaces like Rarible have already developed existing on-chain infrastructure to handle creator royalty payouts, NFT marketplaces would eventually need to converge on a standard for on-chain royalty enforcement.

Finzer may also be on the money when it comes to how on-chain royalty enforcement would guarantee the long-term financial stability of NFT inventors. As an illustration, NFT markets like sudoswap and X2Y2 continue to be well-liked by traders precisely because they are royalty-free. Some legacy NFT marketplaces have felt pressure to change in response to this perceived shift in market demand as a result of the growing popularity of this model.

For instance, consider Magic Eden. The top NFT marketplace in Solana changed to making royalties optional weeks before OpenSea made its shocking revelation. Now, when purchasing an NFT on Magic Eden, purchasers have the option of deferring paying the creators this charge. This creates a dangerous precedent for creators even if, on paper, it would encourage collectors to keep using the site because of the cheaper costs. Should creators be concerned as NFT markets work to realize their ideals of zero fees? For the time being, eliminating gas costs may be the top goal, but for some traders, avoiding creator royalties makes the most sense. Fortunately, this response to the trend has not been shared by all markets.

How NFT markets seek to prioritize creators

After the renewed discussion about creator royalties, the market felt compelled to strengthen its creator-first stance in the case of SuperRare. In an interview with nft now, John Crain, co-founder and CEO of SuperRare, said that one of the reasons Web3 is interesting is that it makes new models that were previously impractical possible. “In this instance, there were no real-time royalties for visual art before.”

SuperRare differs from its rivals in that it gives collectors the same opportunity to receive royalties-based rewards as artists do. To the delight of its community, SuperRare launched its collector royalty function in July 2021. Crain went on to say that not all NFT markets could be a good fit for this concept. Since we’re concentrating on art, it makes perfect sense. Perhaps it’s not the best course of action for them if a marketplace is selling other kinds of assets, he said.

Even if creator royalties are emphasized verbally, NFT markets have experimented with alternatives to this model that are more favorable to creators. As an illustration, Magic Eden released MetaShield a month before making their contentious statement and after making royalties optional. By using this tool, creators can prevent their works from appearing on sites that don’t fully honor royalties and keep track of the debt that traders who refuse to pay them have accrued against their works.

Looks fantastic, doesn’t it? Some people are reasonably concerned about the availability of such a tool, and their worries are unrelated to royalties. Some claim that MetaShield poses a danger to Web3’s core value of decentralization even if it is intended to help producers better monitor their creations after mint.

Ironically, OpenSea may have found a better way to prevent works from appearing on marketplaces that disregard royalties yet adding a lot of fire to the licensing argument. A piece of code that creators may add to their NFTs to make sure they remain on marketplaces that impose royalty payments is also noted in its November 7 blog post.

It appears that if the NFT community wants to continue expanding, it will have to swallow a bitter pill in the form of OpenSea’s upcoming relocation. The future of the NFT creator community is tied to on-chain marketplaces, regardless of what OpenSea decides to do with its older collections. It seems more reliable to trust the code to ensure that creators are paid than to rely on a single employee of an NFT marketplace.


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