NFT Marketplace Opensea is Set to Make Creator Royalties Optional Amid Market Pressure
Leading NFT marketplace yields to growing competition, phases out royalty enforcement
TL;DR: Due to growing competition from royalty-free NFT marketplaces like Blur, OpenSea has announced it will stop enforcing creator royalty fees starting in March 2024. This signals the collapse of a key part of the NFT value proposition – ensuring artists get paid on secondary sales.
Leading NFT marketplace OpenSea revealed on Thursday it will cease enforcing royalty fees on secondary sales starting March 2024.
Currently, artists can set royalties of 2.5-10% to receive income when their NFTs are resold. However, OpenSea said unilateral royalty enforcement has proven difficult as rival platforms opted out.
In November 2022, OpenSea launched its ‘Operator Filter’ to enforce royalties. But competitors bypassed the filter, and as volume left OpenSea, the company feels it must become royalty optional to stay viable.
The change represents a blow for creators relying on royalties to fund projects. “Emerging artists will never, ever see the headstart almost every single major brand and artist received prior to all of this – innovation will stall, reliance on VC funding will need to become the norm,” said Betty, co-founder of the Deadfellaz NFT collection.
Some argue royalties are fundamental to Web3 creator empowerment. “NFT royalties never got a chance to improve on the existing model because marketplaces raced each other to 0,” said NFT collector Pranksy.
Even OpenSea investor Mark Cuban criticized the move, tweeting: “Not collecting and paying royalties on NFT sales is a HUGE mistake by Opensea. It diminished trust in the platform and hurts the industry.”
With the NFT market down 90% from its 2021 peak, buyers and sellers will happily trade without fees. But for creators who thought Web3 would ensure they participate in their work’s success, the end of enforced royalties deals a bitter blow.