Solana-based Magic Eden has, albeit reluctantly, become the most recent NFT marketplace to switch to an optional royalties model, following in the footsteps of X2Y2 in August.
Customers Can Choose Royalty Amounts
The optional royalties model allows customers to choose the amount of royalties they wish to contribute to an NFT project, which raises the possibility that some creators won’t be compensated for the sale of their works.
In an October 14 post, the NFT marketplace highlighted that the decision was reached after “difficult reflection and discussions with many creators”. The post also acknowledged that the market has been shifting towards optional creator royalties for a while.
The market for NFTs published a graph demonstrating the dramatic increase in the number of cumulative wallets using optional royalty marketplaces to purchase or sell NFTs in late September.
However, the decision has generated conflicting reactions from Twitter’s NFT community. While some see it as advantageous for the industry’s long-term health, others have compared bypassing payments to “stealing.”
Crypto Twitter’s Varied Reactions
Mike “Beeple” Winkleman, a well-known NFT artist, noted to his 700,000 followers on October 15 that while he doesn’t agree with Magic Eden and others, the move from a seller’s charge to a buyer’s premium may be beneficial for the business in the long run.
Fuego Labs’ CaptainFuego, a different Twitter persona, informed their roughly 10,000 followers that he thought royalties were stupid and shouldn’t exist.
Others criticized the adjustment more harshly. Brocolli DAO argued that royalties were necessary in an “immature ecosystem”, stating that according to their estimations, they have already lost up to $27,000 in royalties as a result of 0% purchases on other marketplaces.
They announced that they would be taking measures to address this soon.
Cozy the Caller, a self-described expert, issued a dire forecast to their 108,000 followers stating “I can see a scenario in which Magic Eden goes 0% and loses their market share to a marketplace enforcing royalties in an innovative way.”
NFTs Not Enforceable On Protocol Level
The NFT market tried to introduce Meta Shield, a tool for enforcing royalties, last month in an effort to discourage NFT buyers from trying to avoid paying creator royalties by providing creators with a way to identify and hide NFTs that sold without paying royalties.
In its most recent post, Magic Eden noted that: “Unfortunately, royalties are not enforceable on a protocol level, so we have had to adapt to shifting market dynamics.”
NFT marketplace X2Y2 announced in August that they would be releasing a comparable feature that would let customers choose the royalty charge when purchasing an NFT. According to data on NFTGo, it doesn’t appear that the change has had an impact on platform utilization.
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