On November 6, 2022 in a blog post entitled On Creator Fees, OpenSea, the largest public NFT marketplace, announced a shift in its approach regarding creator fees such that only NFTs using their new smart contract standards would receive royalties. This would only work for new NFTs that adopted the system or existing NFTs that upgraded to support the new system. Most importantly, the implementation would prevent NFTs using this system from being sold on competing marketplaces that do not enforce creator fees. Of course, not all contracts are upgradeable so this would exclude a number of NFTs that were previously receiving royalties.
After receiving significant public criticism, OpenSea backtracked on the announcement and indicated on November 9th that they will continue enforcing creator fees for all existing collections.
From the artists, creatives, and brands that we speak with, there seems to be a strong feeling that secondary sale royalties of their work should be enshrined, and the pre-web3 status quo of not (necessarily) getting paid for it is a bad thing. See for example ticket scalping and the EU's 2001 Resale Rights Directive, which enshrined these rights in law.
OpenSea has thus far taken the approach of allowing secondary sales within certain set bounds:
- Max 10% secondary royalties
- Sent to a single address - potentially limited to externally owned accounts (EOAs)
- Handled centrally, in that the address gets paid out in bulk on some schedule
- Primarily configurable via the OpenSea web UI
There has been a lot of recent debate online around other NFT marketplaces, like SuperRare, which are either eliminating secondary sale royalties altogether, or making them optional at the discretion of the seller. OpenSea's response is in the above blog post, linked Github repo, and Twitter thread, and they seem to be saying:
- We too might make secondary sale royalties optional if they are configured through the OpenSea web UI - but we haven't decided for sure yet
- We are saying though that for any smart contract who implements (or upgrades to) our new smart contract code, from Nov 8, 2022, will definitely receive secondary sale royalties
Despite industry attempts to standardize royalty payments through proposals such as EIP-2981: NFT Royalty Standard, created in 2020, and Manifold’s Royalty Registry announced last year, the NFT space remains fragmented and inconsistent in its approach to secondary sale royalties.
Image Source: OpenSea
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