It's no secret that the NFT industry has been struggling, meaning that marketplaces are being forced to find new, creative ways to hold onto market share. One especially unpleasant — even by cryptosphere standards — new trend to do just that? Doing away with creator royalties.
Well, the industry hasn't totally done away with royalties. As Decrypt reports, most — including Solana, X2Y2, and LooksRare — have just made them optional. Which might be a win for the sales-hungry trading platforms, but already isn't looking so great for creators who were led to believe that the digital assets would represent a long-term income stream.
"A month ago, around 75 [percent] of NFT buyers opted-in to paying royalties on x2y2, when given the choice," tweeted @punk9059, the Director of Research at the well-known industry collective Proof. "Now that number is around 18 [percent]."
"The idea of 'tip jar' royalties where buyers can opt-in or opt-out will likely prove to just be a 0-royalty policy over time," they continued. "Free riding is too easy."
A month ago, around 75% of NFT buyers opted-in to paying royalties on x2y2, when given the choice.
Now that number is around 18%
The idea of "tip jar" royalties where buyers can opt-in or opt-out will likely prove to just be a 0-royalty policy over time
Free riding is too easy pic.twitter.com/BAG9VfI18q
— NFTstatistics.eth (@punk9059) October 28, 2022
To further complicate the issue, the world's largest NFT trading platform by volume OpenSea responded to its royalty-optional competitors by laying out its own extremely confusing new guidelines. Unlike Solana trading site Magic Eden, which moved to a tip jar system just a few days after declaring its loyalty to royalties, it hasn't folded to the allure of the royalty-free system yet. Yet, however, is unfortunately the operative word.
Leaning on its already-massive marketshare, OpenSea CEO Devin Finzer announced in a Sunday blog post that it'll attempt to "enforce [creator] fees on-chain" for "some subsets of collections" if creators insist on royalties — a promise that OpenSea, as Proof's Angharad "Harri" Thomas pointed out, might not be technologically capable of keeping — while additionally "blacklisting" NFT resales on fee-optional platforms.
Finzer, however, also wrote that OpenSea will decide once and for all if it'll switch to a tip jar policy in December — a seemingly convenient way to test whether they can honor fees and maintain market dominance, but leaving creators in limbo in the meantime.
"It feels like there is no plan, and no clear answers were given in regards to existing collections and artist's royalties," one popular creator wrote on Twitter after allegedly speaking with the OpenSea team. "Communication has been misleading and facts are not there."
Of course, losing out on royalties sucks for creators, and the chaos of the situation — due in large part to OpenSea's wishy-washy take — certainly doesn't help. And as if there couldn't be an extra kick to to the creators while they're down, some have pointed out that the move away from royalties is even a betrayal of the control that Web3 once promised the artists behind these assets.
"Philosophically, abandoning creator royalties throws the entire mission of Web3/NFTs off," Bobby Hundreds, another prominent NFT maker, wrote in his own Twitter thread. "Until now, the primary thesis for this remarkable technology has been ensuring that artists get paid for their work."
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