1 min read

Royalties are dead...

OpenSea recently made the decision to disable paying creator royalties by default. Buyers and sellers can still make deals that will give creators their cut, but it's no longer required by the world's largest NFT marketplace.

In many ways, this move was inevitable. Royalties can't be enforced. If you think about it in more general terms, a royalty is only paid when an item sells. But you can just gift an NFT to a friend who will also gift something in return. Because these are two separate transactions, the blockchain can't force the royalty to be paid. OpenSea just needed to stay competitive with other marketplaces.

The point of royalties is to support creators long term. If the royalty amount is set to a small percentage, a lot of people are willing to pay. The problem is when royalties start reaching up to 5-10% of the sale price. People will go out of their way to avoid that tax.

If crypto is going to be a welcoming, supportive place for artists, then we need a simple, reasonable replacement for royalties. Personally, I believe real life is the best example to start from. Most kinds of artists don't earn royalties on their work. Most only earn money when they make a sale. NFTs are a certificate of ownership that can be easily purchased online. Artists can continue making more art, sell lower priced copies of their most popular pieces, offer physical prints to NFT holders, etc. We just need to make these activities easier so web3 can be used to make a living by normal people.


P.S. NFT royalties encourage artists to treat their work like a commodity to be bought and sold instead of treating it like art. If your collection's floor price goes up, that means you did a good job and have a good reputation. Build on that success with your next body of work.