OpenSea, the largest NFT marketplace, announced via Twitter and a blog post, that it would enforce creator fees on all existing collections.
UPDATE: We will continue to enforce creator fees on all existing collections.
🧵⬇️— OpenSea (@opensea) November 9, 2022
OpenSea reported that “in the last week, almost half of the creator fees set by the top 20 collections were ignored. This amounts to well over $1M for creators left on the table.”
OpenSea said they are launching a tool for “on-chain enforcement of creator fees.”
OpenSea said that as the economy has tanked, individuals are looking to sell their NFTs for as much as they can – typically listing them on marketplaces that do not attempt to enforce fees.
5/ This isn’t theoretical, it’s happening now, and the trend is accelerating. Here’s the data: pic.twitter.com/Tzi4QPd9dc
— OpenSea (@opensea) November 9, 2022
CI received a comment from Hussein Hallak, founder and CEO of Next Decentrum, and co-founder of Momentable, who said the reaction by OpenSea, along with the demise of FTX, is a “strong reminder that Artists/Museum marketplaces are not your friends.”
He stated:
“Creators, artists, and museums are not safe even in the age of decentralization. Unless there are protections at the protocol level, marketplaces such as Blur or Looksrare simply chose to stop paying royalties, which is one of the main advantages of NFTs! This means creators, artists, and museums will not benefit from the rise in value of their work. This sends the market back [to] the time before NFTs when artists can only make money from directly selling their art, while everyone else benefits from their name recognition, they don’t! This is why listing on marketplaces is not a valid long-term strategy for creators and creators must have their own online storefronts and develop multiple strategies to protect against this.”
OpenSea is of the opinion that creator fees without on-chain enforcement methods are not viable. The marketplace expressed an amount of frustration as it acknowledged it can not “drive this ecosystem shift alone.”
So will the NFT sector create best practices and get ahead of the problem? Recent events in the broader crypto markets foreshadow a sector that acts short term to the detriment of the long term.