NFT marketplace OpenSea is facing criticism after announcing plans to make payment of royalties optional for secondary sales. Investor Mark Cuban and project creators including Yuga Labs objected to the change.
On Thursday, OpenSea said it will stop enforcing creator royalties, which are typically 2.5-10% fees paid to artists when their NFTs resell. The move aligns OpenSea with competitors but represents a reversal from its past defense of royalties.
"Not paying royalties is a HUGE mistake," wrote Cuban, an OpenSea investor, on Twitter. "It diminishes trust and hurts the industry."
Yuga Labs, creator of Bored Ape Yacht Club NFTs, plans to disallow OpenSea from trading its projects by February 2024. Other artists called for boycotting OpenSea for abandoning decentralization principles.
They argue the change will disadvantage underrepresented creators who relied on royalties before gaining prominence. However, some users welcomed wider access to blue-chip NFTs without royalty fees.
The backlash highlights tensions as NFT marketplaces balance creator interests with attracting volume.
While smaller platforms touted their royalty support, some fear OpenSea's decision represents a broader move away from royalties. But artist Fvckrender urged continued consumer pressure to uphold royalties.
OpenSea may hope to appease critics by developing new creator support systems to replace lost royalty income.
The company could also enable royalty opt-in functionality during minting. Ultimately, the path forward likely involves compromise between platforms, investors, and creators.
Should NFT Marketplaces Voluntarily Enforce Royalties?
Voluntary royalty enforcement upholds creator rights and incentivizes quality projects. But mandates disadvantage platforms competing for volume.
A balanced solution could be rewarding royalty compliance via features like promotion, while leaving enforcement optional. This allows artists to align with supportive platforms, without forcing policies on others.
How Can NFT Platforms Best Support Artists Without Royalty Requirements?
- Funding programs - Provide grants and investments in promising projects.
- Data transparency - Share analytics to help creators understand sales trends.
- Profile-raising - Spotlight and promote standout artists through curated features.
- Community forums - Facilitate discussions and feedback between creators.
- Tokenized incentives - Develop platform tokens that reward artists for engagement.
With creative solutions, platforms can add value for creators beyond direct royalty payouts. The ultimate path forward requires open communication and good faith efforts on all sides.
In summary, OpenSea's royalty policy shift represents a contentious decision with arguments on both sides. While disappointing some creators and investors, it aims to bolster platform competitiveness. Ensuring artists can thrive even without mandatory royalties will require proactive collaboration between platforms, users, and creators.