Today (Feburary 17, 2023), the world’s largest NFT marketplace, OpenSea, made major waves throughout Web3. Without warning, they unveiled significant changes to their creator royalty and fee structure — changes that will have a dramatic impact on both collectors and creators who use the platform.
Just moments ago, the company published a Twitter thread on their feed. In it, they stated that the 2.5 percent fee that is tacked on to every transaction on OpenSea would be dropped to zero for a limited time. But the announcements didn’t end there. Following up on a controversial plan that the company unveiled back in November, the marketplace said it will be moving projects that don’t use on-chain enforcement tools — which is basically every project created before 2023 — to optional royalties.
In other words, buyers are now free to decide whether or not they want to honor a creator’s royalty preferences. This is a serious problem for many project creators, as royalties from sales are how most generate revenue following their initial token sale.
Finally, OpenSea stated that marketplaces with similar policies would not be blocked by the platform’s operator filter.
Collectors vs creators
These announcements may come as a surprise. However, this move is part of a wider shift across Web3 — one that favors NFT collectors at the expense of creators.
But why have marketplaces shifted in this direction? According to OpenSea, the numbers tell a simple tale. In their thread, the company stated that reports from Dune analytics reveal that 80 percent of total NFT trading volume is attributed to zero-fee platforms. Buyers don’t want to pay royalties, and marketplaces want buyers. So if one must go, the marketplaces will chose to drop creator royalties.
Ultimately, the announcement comes just days after the NFT marketplace Blur, one of OpenSea’s top competitors in the space, published a blog post that told users to block OpenSea.
However, by some accounts, OpenSea was the one who started this war. OpenSea’s policies were framed in a way that didn’t allow creators to earn full royalties on Blur and OpenSea simultaneously. Instead, users needed to choose one platform to earn full royalties on. This happens because OpenSea automatically sets royalties to optional when they detect trading on royalty-optional marketplaces like Blur.
However, it seems that Blur found a workaround to circumvent that blocklist back in January, which helped the marketplace pull even more users away from OpenSea.
In their thread, OpenSea openly acknowledged the role that Blur played in their decision. “There’s been a massive shift in the NFT ecosystem. In October, we started to see meaningful volume and users move to NFT marketplaces that don’t fully enforce creator earnings. Today, that shift has accelerated dramatically despite our best efforts….Recent events – including Blur’s decision to roll back creator earnings (even on filtered collections) and the false choice they’re forcing creators to make between liquidity on Blur or OpenSea – prove that our attempts are not working” they wrote.
Writing on the wall?
The response from creators was swift and harsh. Chris Torres, the 36-year-old digital artist behind Nyan Cat, posted a tweet implying that OpenSea was exploiting artists for their own gain. Meanwhile digital artist and 3D animator NessGraphics called the move to optional creator royalties “pathetic.”
Others, however, noted that the announcement was only logical. Leonidas, a self-described NFT historian, noted that, if crypto markets are an apt comparison, this is where the NFT space will inevitable end up. “People can like or not like this, but, at the end of the day, once the non-fungible market matures it will land at the same 0.25% fee as the fully-scaled fungible token market that has had a decade to mature,” he wrote.
Frank, a prominent member of the Web3 community and DeGods team, seemingly echoed these sentiments. “Harsh reality: NFT marketplaces are all trying to maximize marketshare so they can raise bigger vc rounds and the best way to get marketshare is to have the lowest fees for high frequency trading,” he wrote.
And so while it remains to be seen which NFT marketplace will win the day, it is becoming increasingly clear that creators will not win the royalty war.
This story was a breaking story as was updated.
