OpenSea to cease ‘unilateral enforcement’ of creator royalty

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NFT marketplace OpenSea has announced that it will stop enforcing creator royalty fees on secondary sales of NFTs.

This policy change, which will take effect on August 31, means that artists may not receive creator fees when their NFTs are resold. This new measure is expected to make it more difficult for artists to earn passive income from the resales of their works.

“To be clear, creator fees aren’t going away—simply the ineffective, unilateral enforcement of them,” said OpenSea co-founder and CEO Devin Finzer in a blog post.

Existing collections on non-Ethereum blockchains and projects that use OpenSea’s Operator Filter will still enforce creator fees until February 29, 2024. However, new collections released from September onward can implement creator fees optionally.

The Operator Filter is a controversial tool that allows creators to prevent their NFTs from being sold on marketplaces that do not enforce creator fees. Introduced in November 2022, the tool was supposed to grant creators more control over their collections’ sales and royalties. However, it fails to be widely adopted by the Web3 ecosystem.

According to OpenSea, making creator fees optional aligns more with the principles of choice and ownership in the DeFi space. On August 31, the Operator Filter will no longer block any Web3 marketplaces, making it easier for potential NFT buyers to see all listings, including the creator’s preferred fees and the option for buyers to modify the creator fees payment.

“To be clear, creator fees aren’t going away—simply the ineffective, unilateral enforcement of them.”

Devin Finzer, OpenSea co-founder and CEO.

Creator royalty debates

OpenSea’s announcement adds to a long-running debate about the role of royalties in the NFT industry. Royalty fees range from 2.5 to 10 percent. It is considered a key way for artists to ensure ongoing income from their work.

However, the arrival of NFT marketplaces that slash or eliminate the royalty system has challenged this notion. In February 2022, token-based platform X2Y2 experimented with zero percent creator royalty fees. Since then, NFT platform Blur has slashed its creator royalty fee to as low as 0.5 percent. As of July 5, NFT royalties reached the lowest levels in the past two years.

OpenSea had initially been a strong proponent of creator royalty enforcement. However, Blur, with its free-market approach, soon challenged this stance. Since February, Blur has overtaken OpenSea as the top NFT marketplace by trading volume. This situation prompts OpenSea to follow other NFT marketplaces, scaling back its royalty fee protections to remain competitive.

According to Decrypt, OpenSea’s decision to eliminate enforced creator fees shows the company’s ongoing struggle to retain users. It is especially notable in the face of competitors who are willing to abandon certain cultural norms in the crypto community, including the prioritization of creator rights.

Public criticisms

Other NFT marketplaces that still enforce creator royalties have criticized OpenSea’s decision. Many in the NFT community, including notable NFT artists and project creators, have also expressed disapproval on social media.

“OpenSea decided to turn off this last opportunity to earn profit. As a result, we have been working for five months for free,” said Wildcake, the founder of the Posers NFT collection.

SuperRare co-founder and CEO John Crain said he found it unfortunate to see the industry moving away from the practice of enforcing creator royalties.

“Royalties on secondary sales are fundamental to the NFT art revolution… [and] core to artist sovereignty, and the future of this movement,” said Crain.

A creative director at digital platform Lvcidia, who goes by the username @fvckrender on X, said OpenSea’s move could make artists leave the marketplace.