As many NFT platforms (previous news about Magic Eden and Looksrare) have moved away from honoring creator-set royalties in recent weeks, major marketplace OpenSea has remained silent on the issue and appears to be considering its options. The $13.3 billion startup finally showed its hand on Saturday night, but many prominent Web3 creators are unhappy with OpenSea's newly articulated strategy.

OpenSea shared a "thoughtful, principles-based approach" to NFT royalties in a Twitter thread, including the launch of a system that would allow creators of new projects to blacklist certain markets that do not require merchants to pay royalties. On November 8, this system will go into effect.

OpenSea stated that it is still considering what to do with current NFT projects and will seek additional community feedback before the December 8 deadline. Following that date, the marketplace will make a decision, which may include optional royalty payments to merchants, as do some other marketplaces.

"In terms of transparency, the evaluation of what happens after December 8 is completely clear, with options ranging from continuing to apply off-chain fees for some collection subsets to allowing creator-on-demand fees, to cooperating on others." The market tweeted, "chain applications. options for creators."

OpenSea co-founder and CEO Devin Finzer detailed the company's history of honoring NFT royalties, which are typically a 5% to 10% fee set by the creator and paid by the seller, in any secondary market sale in an accompanying blog post. Although these royalty expectations are not fully enforceable on-chain, they are frequently met by larger markets (including OpenSea).

Many emerging companies and competing markets have attempted to gain market share in recent months by offering royalty-free transactions or making them optional. After Magic Eden made royalties optional for traders, and Ethereum platforms such as X2Y2, LookRare, and Blur followed suit, almost the entire upcoming Solana NFT market is now using these models.

Many merchants choose not to pay creator royalties when they are not required. Punk9059, the alias Director of Evidence Research, shared data from X2Y2 in late October, revealing that only 18% of merchants bother to pay royalties. "Freeride is very simple," they claimed.

Finzer attempted to take a strong stance in his partially bold text: "Clearly, many creators want the ability to chain upload; and fundamentally, we believe that the choice should be made by them, not by the markets."

However, OpenSea's overall message is not as clear as a single comment, with many NFT creators raising the alarm on social media about what they believe to be misleading comments or vague intentions about the market's true path.

Competitors on the Blacklist

OpenSea's new application system includes code that Ethereum NFT creators can include in their newly launched NFT smart contracts to indicate a blacklist that prevents these NFTs from trading on any listed royalty-free or royalty-free markets. Smart contracts include code that is used to power NFT projects and autonomous decentralized applications (dapps).

It's a similar approach to what renowned artist producer Tyler Hobbs recently took for his new QQL project. Hobbs and his collaborator Dandelion Wist have put in place a similar blacklist that prevents NFT trading on platforms that violate creative copyright. X2Y2 in particular complained about being blacklisted, claiming that it jeopardized the rights of NFT owners.

Other creators have overwhelmingly backed Hobbs and Wist in their project-specific blacklists. However, in the case of OpenSea, the blacklist includes the company's direct competitors: X2Y2, LookRare, Blur, and SudoSwap. According to some NFT merchants and creators on Twitter, the company's directive to creators to block these marketplaces appears to be anti-competitive.

"OpenSea is losing market share to other markets that are cutting creative royalties," said Bobby "Bobby Hundreds" Kim, co-founder of The Hundreds fashion label and the Adam Bomb Squad NFT project. "As a result, this solution represents a viable value proposition. It keeps competitors out while also allowing artists on their platform to profit from secondary sales."

Proof's Chief Product Officer, Angharad "Harri" Thomas, tweeted that the move would only serve to further centralize the platform's market power and dominance. He wrote, "OpenSea royalties are completely off-chain." "They actually say, 'We'll enable royalties for you in our central system if you exclude our competitors from zero royalties in your contract.'"

"Misleading" Messages

The most pressing question is what OpenSea's plans mean for the creators of existing NFT projects. The company said it may make royalties optional for dealers in the future, but it may also apply them to "some subsets of collections" or use other potential enforcement methods. To use these methods, creators may need to change their projects and implement new contracts.

For the time being, it's unclear, and Finzer's claim to respect copyright isn't much of a guarantee for some creators and marketers. After all, Solana's main market, Magic Eden, initially supported royalties and stated that it would continue to honor them, only to reverse its position a few days later when competitors took their market share. Some have claimed that OpenSea used similar deception.

"[I think] the OpenSea announcement is a clever refactoring of existing collections at zero royalties," Betty, the pseudonymous co-creator of the Deadfellaz NFT project, wrote. "This will disproportionately harm emerging artists and marginalized creators, forcing them to seek venture capital financing." Statistically, men receive more than 95% of venture capital funding."

I'm still not convinced after speaking with the OpenSea administrators today. He tweeted, "There appears to be no plan and no clear answer regarding current collections and artist copyrights." "The communication has been deceptive, and the facts are lacking."

According to artist Ryan "ThankYouX," the announcement was "another OpenSea slap to the creators" and "wanted to make people think they just care and are helping us." He also stated that the announcement would be made on Monday and that OpenSea was "in a hurry" to alleviate the creators' concerns about the venture.

By setting a deadline of at least one month, OpenSea takes a more informed and public approach to determining royalties than most of its competitors (although Rarible has already talked about copyrights). Nonetheless, some artists are skeptical of OpenSea's goals and are attempting to bring people together in the NFT space to help spread the word.

"From a philosophical standpoint, abandoning creative copyright destroys Web3/entire NFT's mission," Bobby Hundreds explained. "Until now, the main thesis of this amazing technology has been to pay artists for their work."

"What happens next is up to collectors, creators, and critics," he added. "As the largest market for mainstream NFTs, OpenSea cutting creative royalties will have a significant impact on the entire ecosystem."