Wringing hands Overly rejoicing at OpenSea’s triumphant return to the NFT throne. Before you pop the champagne, let's talk about something far more important than market share: the slow death of creator royalties.
We've all seen the headlines: OpenSea is back on top, commanding over 40% of the NFT trading volume. User engagement is high, numbers are up. But zoom out. Look at the bigger picture. Yet even with the spike in buyers, NFT sales volumes are down 92% from last year. Decline in Volume, Increase Buyers? Doesn't that strike you as odd? It should.
Here's the uncomfortable truth nobody wants to say out loud: OpenSea's dominance, coupled with its relaxed approach to royalty enforcement, might be inadvertently fueling the very fire that's burning down the house.
Think of it like this: Imagine a world where Spotify decided that paying artists royalties was optional. Sure, a few listeners will choose to, but the overwhelming majority of them won’t. The result? Artists go bankrupt, creativity withers, and eventually, the music comes to an end. Is that the future we want for NFTs to be able to create? Are Royalties Becoming Voluntary?
The Zero-Royalty Marketplace Incentive
OpenSea isn't explicitly advocating for zero royalties. Their actions speak louder than words. By permitting (and perhaps even unintentionally encouraging) zero-royalty marketplaces to flourish, they’re establishing a race to the bottom. Why would someone pay you a premium on OpenSea when they can buy the same exact NFT for cheaper on a different platform?
This isn't just about OpenSea. It's about the entire ecosystem. The emergence of the zero-royalty, exploitative platforms we see today is an inevitable result of a market-driven focus on short-term profits at the expense of long-term viability. It's like the wild west of finance, where everyone's trying to get rich quick, and the original pioneers (the creators) are left holding the empty bag. A Race To The Bottom?
Now, I know what you're thinking: "But Ahsan, aren't creators getting rich off NFTs anyway?" The truth is, the vast majority aren't. The headlines are grabbing attention by talking about all the million-dollar sales, but those are the exceptions, not the norm. For the average NFT creator who puts in the work and is truly trying to make a living, royalties are a key part of their income stream. This is their juice, their mojo, their intellectual property, their creative output. They deserve to be compensated fairly.
Let's get real for a moment. This isn't just about money. It's about respect. It’s about valuing creativity and innovation. And it’s not just about the metaverse— it’s about creating a new digital ecosystem in which artists can flourish. Respect For Creators Diminishing?
Financial Literacy: A Missing Piece?
The NFT space is so new that there are tons of people participating who simply do not have a basic concept of financial literacy. NFTs don’t continue to have a bad name because people consider them a great long-term investment in art and culture. They don’t realize that without the intrinsic value of royalties, or an understanding of how they help create a balanced healthy ecosystem,
This lack of understanding of local context is a big issue. It’s the equivalent of sending novice drivers onto a formula one racetrack. Accidents are bound to happen.
We need to inform the public about what royalties do and why they matter. We have to do a better job of illustrating how they work, and more importantly, why they matter. We must take steps to ensure that creators have the tools they need to fight for appropriate compensation for their labor. Education: The Key To Success?
The Ethical Dilemma of Market Power
As the primary NFT marketplace, OpenSea has enormous power over the NFT market. With great power comes great responsibility, right? So, the question is: does OpenSea have a responsibility to actively promote and enforce royalty standards? I believe they do.
Or they might, in lieu of new laws, take actions like adopting stricter enforcement policies for royalty law. They can work hand-in-hand with creators to create awareness on the importance of royalties. They might provide encouragements for buyers who select to purchase NFTs with royalties turned on.
Will they? That's the million-dollar question. Their recent actions have demonstrated that they are focused on growth and market share. They’ve got OS2 launching next week, they’re going as far as trading Solana based tokens, memecoins at that! And that's a damn shame.
Don’t mistake this post as open-sea bashing, I’m not saying they are the bad guys! What I’m saying is their dominance paired with their inaction on raising their royalties and is creating a toxic brew of circumstances. Responsibility or Just Profit?
NFT collectors, the time has come for you to rise up and hold creators accountable. The buck stops with OpenSea. So it’s long overdue for OpenSea to take action and set a standard. The future of the NFT ecosystem rests on it. Otherwise, we’re all just doomed musical chairs on a sinking ship. And when the music stops, it’ll be the creators left standing without a chair. And that, dear friends, is a calamity in the making. The good news for OpenSea is that the SEC has largely dropped their investigation. As the leading marketplace, OpenSea has an obligation to the community they built to recognize that.
