LAB51 logo

The NFT Royalty Debate: A Critical Opinion

opensea royalty
By Luigi Savarese
Luigi Savarese

4 Min

August 22, 2023

The topic of NFT royalty is highly debated in the NFT space. Some people believe that creators should receive compensation for the secondary sales of their NFTs, regardless of who owns them. Others believe that creators should only receive compensation for the initial sale of their NFTs and that any subsequent sales should be royalty-free.

The issue was further complicated when OpenSea decided to make creator royalties optional instead of mandatory. This decision has received mixed reactions from the NFT community, with some creators expressing disappointment while others support the move.

This article will argue that creator royalties are crucial for ensuring that creators are fairly compensated for their work. Finally, it will discuss that OpenSea's decision to remove mandatory royalties might be a mistake for the overall NFT ecosystem.

Why NFT Creator Royalty is Important

NFTs are a new and innovative way to own digital assets. However, they are also a new and complex technology. In fact, there are still many unanswered questions about how they should be regulated. One of the most important questions is whether or not creators should be compensated for the secondary sales of their NFTs.

There are multiple reasons why it is crucial to provide creator royalties. Firstly, it guarantees that creators receive fair compensation for their hard work. When an NFT is sold again, the creator should be entitled to a percentage of the selling price, akin to any other artist or musician. This mechanism ensures that creators can keep producing top-notch content.

Another benefit of providing creator royalties in the NFT space is that it encourages innovation. When creators are aware that they will receive compensation for subsequent sales of their NFTs, they're more likely to produce new and inventive projects. This is advantageous for the whole NFT community because it promotes expansion and acceptance.

Additionally, royalties for creators serve as a safeguard against exploitation. If creators are not adequately compensated for the resale of their NFTs, they are essentially forfeiting their intellectual property without compensation. This can be particularly detrimental for smaller creators who lack the means to enforce their rights.

OpenSea's Decision to Move Away from Mandatory Royalty

In August 2023, OpenSea announced that it would be moving away from mandatory creator royalties and towards optional royalties. This decision was met with mixed reactions from the NFT community. Some creators expressed disappointment, while others supported the move.

Supporters of OpenSea's decision believe that it will simplify the process of purchasing and selling NFTs while also providing creators with greater control over how their NFTs are utilized. However, those who are against OpenSea's decision argue that it could negatively impact creators. They contend that creators may be discouraged from developing new and innovative projects if they are not compensated for the secondary sales of their NFTs and that it could also facilitate the exploitation of creators.

LAB51 on OpenSea NFT Royalty

It is widely acknowledged that providing creator royalties is essential for ensuring fair compensation for their works. The recent decision by OpenSea to eliminate mandatory royalties is not considered wise by many. It is hoped that the company will reconsider and reintroduce mandatory creator royalties. Meanwhile, creators are encouraged to support NFT marketplaces that enforce creator royalties to guarantee fair payment for their efforts and enable the NFT industry to continue to thrive and evolve.

Related Articles: