OpenSea Mandates Creator Royalties on NFTs Following Community Outcry, Details Here

For artists, royalties are hugely important and gives them more financial freedom to create and produce more art.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 10 November 2022 12:53 IST

OpenSea Mandates Creator Royalties on NFTs Following Community Outcry, Details Here

Photo Credit: OpenSea

Royalties are the fees that NFT artists earn every time their work changes hands

Highlights

OpenSea could lose more buyers in coming days
OpenSea rivals like LooksRare and Magic Eden are not demanding royalties
NFT buyers likely to choose their profits over those of the artists

OpenSea NFT marketplace has officially decided to continue mandating creator royalties on these digital collectibles. The decision comes after OpenSea recently received backlash for reconsidering the enforcement of creator royalties. Royalties are the fees that NFT artists earn every time their work changes hands. This means that creators are paid for their art, even on secondary sales. For artists, this is hugely important and gives them more financial freedom to create and produce more art.

OpenSea has expressed concerns that if all NFT marketplaces do not enforce royalties for creators, majority buyers will flock on those sites that do not make them pay royalties to the creators.

This operational pivot by NFT marketplaces will lead creators to give up on the rewards they could have earned from their art amid market slowdown.

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In a Twitter thread, the platform revealed statistics that NFT marketplaces that are no longer demanding buyers to pay artist royalties have seen a spike in sales as compared to OpenSea itself.

MagicEden and LooksRare are among NFT marketplaces that have pulled back the requirement to contribute to the creators since earlier this year.

“Simply put, in the last week, almost half of the creator fees set by the top 20 collections were ignored. This amounts to well over $1 million (roughly Rs. 8 crore) for creators left on the table,” OpenSea said in its Twitter thread.

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5/ This isn't theoretical, it's happening now, and the trend is accelerating. Here's the data: pic.twitter.com/Tzi4QPd9dc
— OpenSea (@opensea) November 9, 2022

OpenSea had decided to revisit its royalty payment requirement after it witnessed a decline in its sales revenues in recent times.

As per a Reuters report, monthly sales volume on OpenSea plunged to $700 million (roughly Rs. 5,500 crore) in June, down from $2.6 billion (roughly Rs. 20,600 crore) in May and a far cry from January's peak of nearly $5 billion (roughly 40,000 crore).

The outcry from the creator community, however, managed to convince OpenSea to not revoke the fee requirement.

Dear @opensea pic.twitter.com/dkHF2JlbVC
— FEWOCiOUS (@fewocious) November 7, 2022

Quick-and-dirty analysis: opting-in to Opensea's royalty blocklist might be a no-brainer for collections.

Opensea ~92% of all royalties, ~25x more than second place.

As a creator, should you put 92% of your royalties at risk just to have a shot at the remaining 8%? pic.twitter.com/SvB5ClYx5R
— jacob (@therealjfrantz) November 6, 2022

If @opensea really cuts the royalties, so many creators who would have build nice stuff on opensea, would leave the platform. Wasn‘t the creators royalty one of the main facts, why artists and projects start to build and nfts so became pretty cool?:wink:
— raws.eth (@rawsone_) November 6, 2022

A royalty fee is set by the NFT artist and typically falls between five to ten percent of the secondary sale price.

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Further reading: Cryptocurrency, OpenSea, NFTs, Non Fungible Tokens

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More