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OpenSea in early November announced that it is updating its policies and the technology behind the royalties paid to NFT authors, going to insert an on-chain enforcement, a piece of code that you can add to smart contracts, which will ensure they continue to receive a portion of the proceeds each time their NFT is exchanged
The move will likely reinvigorate the debate about whether or not creators need to automatically pay commissions when their items are resold. In fact, the trend in marketplaces like X2Y2, LookRare, and SudoSwap is to eliminate or minimize the possibility of creators receiving royalties.
As Devin Finzer, CEO of OpenSea, wrote in 2018, the royalty mechanism was thought of as a way to benefit creators who would otherwise be cut off from the growing value of their work. Initially, OpenSea introduced royalties in an effort to attract artists and companies, and in doing so allowed NFT technology to become an emblem of artists’ rights.
Starting this summer, however, several platforms have started to cut royalties or treat them more like optional tips that buyers can pay. This obviously angered several digital artists, who had begun to rely on that stream of income, especially considering the market recession.
But this is precisely the problem: the decrease in exchanges has led platforms to find new ways to stimulate the market and the elimination or downsizing of royalties in fact benefits exchanges. So, even if abandoning royalties undermines a part of the Web3/NFT mission, the move itself could be seen as healthy for the industry.
However, many say that a distinction should be made between creators and creators. If an artist has the right to receive sales commissions on his works, can the same be said for companies? For example, paying 5%-10% commissions to companies like Ticketmaster, every time you sell tickets to a concert, for many it is an unnecessary exaggeration.
The debate is still open and every platform, creator and buyer is behaving differently: we will see in the coming months or years which approach will be successful, hoping – on our side – that the uniqueness of the NFT market will be protected and valued.