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Much to the relief of NFT creators, OpenSea today announced it will continue to enforce royalties on its collections. The announcement comes amid severe backlash from the community when the marketplace mulled introducing optional royalties earlier this week. The move came after multiple other NFT marketplaces either made creator royalties optional or outright rejected them.
So, what made OpenSea continue with creator royalties? And what is all the recent buzz around creator royalties?
OpenSea enforces creator royalties: What happened?
This Saturday, OpenSea announced it was launching a tool for on-chain enforcement of creator royalties for new collections. Additionally, the marketplace said it was considering introducing optional creator fees and “some subsets of collections,” among other changes.
For context, royalties are how artists earn every time their work is resold. To be sure, for many artists, this is their sole source of income. While creator fees were one of the biggest selling points of NFTs, things took a turn amid the crypto winter and the subsequent NFT market crash. Faced with losses, many marketplaces moved to an optional royalties model—buyers get to decide whether they want to pay royalties and how much.
This includes Solana giant MagicEden. Meanwhile, OpenSea rival LooksRare scrapped royalties altogether. Under these circumstances, the possibility of OpenSea—the largest NFT marketplace in the industry—making royalties optional was met with outcry.
Prominent NFT creators such as DeadFellaz’s Betty and Bored Apes’ Yuga Labs were among the many who were vocal about their displeasure. In fact, streetwear brand, The Hundreds cancelled the Badam Bomb Squad launch on OpenSea amid the dispute. The collective backlash forced OpenSea to reconsider its plans.
What was OpenSea’s latest announcement on royalties?
“We will continue to enforce creator fees on all existing collections,” OpenSea wrote in a Twitter thread today. “We’re awed by the passion we’ve seen from creators and collectors alike this week. We were looking for your feedback, and we heard it, loud and clear.”
The marketplace, however, added, that there has been an increasing trend of both creators and collectors moving to marketplaces with optional royalties. According to OpenSea, in the past week alone, around half of the creator fees set by the top 20 collections were ignored, amounting to over $1 million.
“Unless something changes soon, this space is trending toward significantly fewer fees paid to creators. No policy that we implement will reverse this trend if this behavior continues.”
What is the way forward?
Furthermore, OpenSea suggested some immediate measures that creators and collectors can take. The former, for example, can consider moving to on-chain enforcement for their existing collections. Alternatively, they can offer more incentives for continued royalty payments or even remove links to “fee-avoiding” marketplaces from their website.
Meanwhile, collectors can choose to buy from platforms that enforce royalties. “We’re at a collective inflection point,” OpenSea added. “If everyone left in this ecosystem who believes that creator fees are important to our future links arms on this, we WILL ensure that fees are durable.”