The company behind Bored Apes Yacht Club said it would block trading on OpenSea. (image via Todd Van Hoosear on Flickr)

One of the shiniest redeeming qualities of NFTs — the requirement that artists receive payment every time a work is sold, whether for the second time or the hundredth time — is disappearing on OpenSea. The second-largest NFT trading platform announced on Thursday, August 17 that it is phasing out artist royalties, mandatory commissions that provided creators with a paycheck on all sales of their works. Now, the fees will more closely resemble optional tips.

Visual artists are some of the only creators who do not typically receive payouts after the initial sale of their work. Musicians receive a few cents per stream and actors often receive residuals for distribution outside the original intention of their work. Some initiatives, like one effort by artist advocates in Canada last year, have tried to end this discrepancy and help implement a system in which artists are paid when their works appreciate in the secondary market.

On OpenSea, artists decided their commission percentage — normally between 2.5% and 10% — and it was added to the price of their work. In the future, artists will only be allowed to suggest commission amounts on the platform; buyers will not be required to pay them. OpenSea will end royalty enforcement for new NFTs on August 31 and for existing NFTs in March 2024. NFT creators have already pushed back against the platform in the wake of its Friday announcement. Yuga Labs, the controversial company behind the Bored Ape Yacht Club and CryptoPunks NFTs, stated on Friday that it would block the trading of its products on OpenSea in February 2024.

In its statement, OpenSea attributed the decision to an inherent issue with the Operator Filter, a tool that allows artists to restrict the sale of their NFTs to marketplaces that enforce creator fees in secondary sales. “It was meant to empower creators with greater control over their web3 business models, but it required the buy-in of everyone in the web3 ecosystem, and unfortunately that has not happened,” the statement read. The company did not respond to Hyperallergic‘s request for additional comment.

Notably, OpenSea also emphasized an industry shift whereby “the majority of volume continues to move to zero creator fees.” The trading platform Blur, which does not enforce royalties, overtook OpenSea in sales volume this past February.

That’s not the case across the board, though, or at least not yet. In a statement shared with Hyperallergic, John Crain, co-founder and CEO of the NFT platform SuperRare, affirmed the company’s commitment to royalties, calling the fees “core to artist sovereignty and the future of this movement” and lamenting “a trend going back on this as an industry.”

“I think a lot of the creator-focused messaging was really just marketing intended to boost the popularity of NFTs,” Molly White told Hyperallergic. White is a software engineer and writer who exposes unethical practices in crypto through her newsletter and blog Web3 is Going Just Great.

“After all, if the NFT community as a whole genuinely wanted to put creators first, these royalty-free platforms would not be enjoying the success they have, and this fee-based race to the bottom probably wouldn’t be happening,” White added.

Elaine Velie is a writer from New Hampshire living in Brooklyn. She studied Art History and Russian at Middlebury College and is interested in art's role in history, culture, and politics.

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