Last week, OpenSea revealed they were launching an on-chain tool that ensures creators enforce royalties for any new collections created on the platform.
However, they disclosed that the tool would not apply to current collections on the platform because of its difficulty in implementing. They explained that they would develop a suitable arrangement for royalties on all existing collections within a month.
It did not take long before the announcement received several criticisms from the public. The announcement did not get the expected responses from creators, as many suggest that there is a covert shady play behind the announcement, which OpenSea needed to clarify as fast as possible.
Royalties have allowed artists to sustain themselves in a previously impossible way in the traditional art world. Artists could earn money through the primary sales of their NFTs while receiving a cut every time the token changed ownership in the future.
According to a late October study by crypto firm Galaxy Digital, more than $1.8 billion in royalties have been paid out to the creators of Ethereum-based NFT collections. OpenSea has paid out the most royalties to creators by a wide margin.
Public Opinions About OpenSea’s Announcement
Many creators and NFT enthusiasts were happy with the decision to support artists and new collections by introducing a tool that restricts NFT sales to marketplaces that enforce creator fees. However, a larger part of the community expressed worry that OpenSea was abandoning its existing collections.
Bobby Kim, an NFT creator, and co-founder of The Hundred, mentioned on the 9th of November that they had decided to stop the release of their intended nonfungible token (NFT) collection on OpenSea, disclosing they were “patiently waiting to see if OpenSea would choose to stand with the choice of preserving creator royalties for existing collections.
“Unfortunately, that announcement has not arrived in time,” he noted.
Wylie Aronow, Greg Solano, and Kerem Atalay— Bored Ape Yacht Club (BAYC) knelled into the ensuing debate via a blog post, revealing that the decision from OpenSea was “not great” and stated its goal “to transit with the rest of the herd and expunge creator royalties for legacy collections from their platforms.”
“Unfortunately, the bitter pill is that, to the best of our knowledge, the only way to achieve on-chain creator fee enforcement for existing collections with non-upgradeable smart contracts is to take drastic measures with their communities, like shifting the canonical collection to a new smart contract,” wrote OpenSea CEO Devin Finzer in the blog post. “In our opinion, by far the better option is for existing creators to explore new forms of monetization and alternative ways of incentivizing buyers and sellers to pay creator fees, and to ensure that future collections enforce creator fees on-chain.”
The pushbacks got to OpenSea, and the NFT market place reversed its decision following public reaction. A post on November 9 on Twitter established that it would continue enforcing creator fees on all existing collections.
The NFT marketplace said it was “awed by the passion we’ve seen from creators and collectors alike this week.” “We were listening for your feedback, and we heard it clearly.”
Farokh Samad, an NFT influencer, tweeted: “Some light in the darkness,” after OpenSea clarified its previous announcement.
In a whirlpool of ecstasy, the community has accepted OpenSea’s announcement as a creator-friendly option on the issue of relinquishing royalties altogether.
Bobby Kim, the co-founder of fashion brand The Hundred, tweeted: “OpenSea is losing market share to other marketplaces that are excising creator royalties. So, this solution is a convenient value proposition. It blocks their competitors AND ensures that artists on their platform get paid on secondary sales.”
Angharad “Harri” Thomas, Director of Product at Proof, tweeted that the move may only further centralize market power and dominance for the platform. “OpenSea royalties are completely off-chain,” she wrote. “They are actually saying, ‘If you block our zero-royalty competitors in your contract, we’ll turn on royalties for you in our centralized system.’”
OpenSea claims they will begin open-sourcing our data on creator fees for everyone to use in the coming weeks. This highlights how much OpenSea considers the opinions of its users before pushing a policy out. Thus, OpenSea’s decision to overlook the revenue in the short term by allowing creators to receive royalties generates remarkable cordiality between creators and the marketplace.
Langlois, a representative of OpenSea, said, “Royalties were the reason the art community flocked to NFTs in the first place. Ditching royalties is backward progress for artists and the community at large.”
The biggest argument favouring the digital art market and cryptocurrencies is that it offers a ” decentralised ” space.
So, while the debate on creator royalties will continue for the foreseeable future, the major win for the NFT community is that it influenced one of the industry’s largest organisations.
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