There were several factors in Non-Fungible Token’s rise to stardom. While some have disappeared over time, many still play an important role in the NFT ecosystem. If you ask many NFT enthusiasts, one of the greatest values of owning an NFT is its monetary benefits. The answer may be the same for creators, but a deeper insight is the intrinsic value of NFT creator loyalty.
NFTs offer a new way to protect creators’ intellectual property (IP). But more importantly, we can now earn royalties on these IPs. Plus, creators get those royalties forever. I’m excited. No wonder NFTs have easily penetrated many industries.
Currently, there is an ongoing battle over royalties for NFT creators. Will it or won’t it? good or bad? Delete or keep? It depends who you ask. It also depends on which platform you consider. The debate over creator royalties shaped the final quarter of 2022 and spilled over into 2023.
This article explores the debate over creator royalties and what’s really going on. Want to know? Read on to the end.
What is a creator’s copyright fee?
Creator royalties are rebates that the original creators of an NFT receive on sales made after the primary sale. These royalties are enforced by mechanisms encoded in the NFT’s smart contracts. Likewise, the NFT marketplace where the pieces are minted and listed will also play an important role in whether the sale is subject to royalties.
Royalties are typically set at 2-10% of sales and are permanent. For many creators, royalties are a means of generating passive income, sometimes exceeding the income generated from primary sales. This situation applies to new artists who don’t have a large following or an active community.
For example, digital artist XCOPY sold several of his digital works for hundreds of dollars early in his career. However, the pieces gained value, and many collectors sold them for far more than they paid at the first sale. With royalties attached, XCOPY made more money from these royalties than it did from its main sales.
For example, if an NFT piece is listed for $50,000 with a 1% royalty, the collector will cover the transaction fees and pay $500 in royalties. This example may seem important, but let’s think in terms of over a million transactions. Moreover, most of these royalties are paid in perpetuity. In other words, if an NFT is sold 100 times, the creator will receive royalties on all of those times, regardless of whether the NFT is sold at a loss or at a profit.
market battle
Loyalty is more complicated than you think, and in fact, the application of royalties in NFT trading depends on many factors. For the loyalty kickback to be effective, it must be programmed into a smart contract, but the smart contract will tell you when the NFT will be sold, or simply transfer it to another wallet (perhaps a collector’s wallet). cannot distinguish between As a result, the NFT smart contract relies on a third-party platform, his NFT Marketplace, to execute royalty payments.
Until 2022, royalties were constant across most platforms and most NFT enthusiasts supported them, but the market started to change. Sudoswap is he one of the first platforms to go against creator royalties. Unsurprisingly, peer-to-peer marketplaces grew in popularity and moderated transaction volumes. However, other platforms such as X2Y2 have chosen the cautious path of allowing collectors to either honor or ignore royalties.
This market introduction has resurfaced the royalty debate. Similar to the conversation on utility bills, the question was whether royalties should be charged given the inconvenience they impose on collectors, while marketplaces have an honorable duty to protect the interests of NFT creators. bottom.
A representative for Solana-based marketplace Magic Eden said in November 2022 that the move to a royalty-free model was aimed at addressing “collectors’ need for low-fee NFT trading.” . Several other markets have followed suit to remain competitive.
This battle has spilled over into 2023 and has turned into competition in the marketplace. high seas and blur. Blur was one of the newcomers who gave collectors more freedom and power with reduced transaction fees and an optional loyalty system. In 2022, Opensea became more hostile to platforms that made royalties optional, blocking listings on them. Creators’ rights remain paramount and should be protected, according to Opensea.
However, with the emergence of Blur as an unexpected rival at the end of 2022, Opensea has changed its stance. By February 2023, Opensea will cut transaction fees to zero and make royalties voluntary. According to Opensea, data showed that users were more willing to trade on the platform with reduced trading fees and options loyalty. It became a battle between protecting collectors and protecting their own business. The latter won in the end.
What do NFT creators think?
The most important question of all this is what NFT creators think about the shifting tide of loyalty. This once-beneficial feature is in danger of being deprecated, and predictably, they are speaking out against the sudden rise in option royalties and the challenges it poses for them.
Deadfellaz co-founder Betty is one of the most outspoken people on the issue. According to her, the issue of optional royalties was expected for her digital artists, and creators need to be prepared for it. Similarly, Dom Hoffman, co-founder of Vine and NFT projects Loot and Blitmap, described the issue of option royalties as “a boring mechanical debate and an interesting cultural debate.”
However, if there are 1-of-1 NFT creators, their concerns may be different. Unlike PFP digital artists, 1-of-1 NFT creators rarely expect royalties from secondary resale. Therefore, they don’t have to worry as much about whether royalties apply.
What is the future of royalties?
Division has many facets, many different perspectives to capture it, and many interests to protect. From a collector’s point of view, royalty is a burden that many want to avoid. Perhaps in the early days of the NFT market they were more receptive, but now many want it. However, copyright fees aren’t the only thing collectors want removed. Transaction costs are also on the list and the market is rapidly adapting to these demands.
NFT marketplaces lean towards collectors rather than creators, as different interests cause conflicting policies. But marketplaces are still in a difficult position. impose royalties, face backlash from the collector community, make them optional, and potentially face withdrawal of creators from the platform. Not only that, the market must protect its own interests from competing interests. The rise of fierce competition has forced many markets to backtrack on longstanding policies.
The battle continues for creators, and the loss of royalties has many dire consequences for artists, collectors, and the Web3 community. Without royalties, artists would have to release NFTs more frequently, which could saturate the market, devalue them, and make them undesirable for collectors. Creators may also be forced to seek out new markets where royalties are allowed and hope the tide turns in their favor.
The last word
Many attribute the royalty-free or optional nature of the prolonged recession that wiped billions of dollars from the market and paralyzed the NFT ecosystem. Losses were so high that collectors began to prioritize profits, flocking to platforms with no trading fees or optional royalties.
As the war between marketplaces, creators and collectors continues, many NFT projects have moved to creator-centric platforms like Manifold. The platform offers code-free minting and has a customizable smart contract model that supports loyalty, thus protecting creators.
Rather than ban royalties, many platforms will make royalties voluntary, leaving the decision up to collectors and leaving the choice of honoring or rejecting royalties a matter of morality. Profit-seeking collectors will likely reject them, but those in tune with the ecosystem and its ethos may choose to respect them.
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*All investment/financial opinions expressed by NFT PLAZA are based on the site moderator’s personal research and experience and are for educational material only. Individuals should thoroughly research any product before making any type of investment.

A blockchain maximalist who believes technology is necessary for the future we are heading towards. An avid researcher and author, he informs the landscape of the blockchain field through his writings.
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