NFT Creator Royalties – A Guide to Marketplaces
The rise of digital media and online platforms in recent years has made it easier for artists to earn a living from their work. Royalties paid to creators have traditionally been a significant source of income for artists and other creators. This is because they receive ongoing compensation for their work long after it has been produced. NFT creator royalties are the tools artists and projects use to earn passive income from their digital content.
Read our thorough guide to NFT Creator Royalties >> Here
Recently, there has been a divide in the Web3 community over whether collectors should pay royalties. This article compares various platforms that pay royalties to creators with those that do not.
Platforms that fully support NFT Creator royalties
NFTs have greatly helped artists and creators by allowing them to monetize digital content and earn commissions from their work long after their initial inception. There are several platforms where they can earn royalties. Let’s take a look at some of them!
Premier NFT marketplace, Nice gateway, is best for investors interested in digital art, such as artists and top brands. The company believes that secondary market fees are part of what makes NFTs special. It offers enforceable platform-level royalties while honoring on-chain royalties set by creators.
Launched in 2022, Foundation is one of the largest NFT marketplaces operating today. It is unique because creators must be invited to join the community in order to sell their work. It also charges a 5% marketplace rate on all transactions, including primary and secondary sales, which is much higher than other marketplaces. Regardless, this platform still supports creators because they receive 10% royalties from all secondary sales.
Launched in January 2022, X2Y2 was originally one of the first marketplaces to stop honoring royalties to creators. Although it was one of the loudest voices in the debate against royalties, it began honoring them at all gatherings a few months later.
Rarible is an NFT marketplace that was founded way back in 2019, and is considered one of the best in its field. It is particularly known for its Ethereum-based collectibles, and houses a number of different types of NFTs. Rarible honors on-chain royalties and allows users to set their own limits.
Marketplaces that go in the middle on NFT Creator Royalties
As the NFT royalty debate deepened, some marketplaces chose to operate in a middle ground where they would offer an alternative to the standard payment mechanism. This involves offering optional royalties with a nominal minimum fee on existing collections or compensating creators in other ways. In addition, some also provide funds to ensure enforceable fees on the chain. These are:
This is the first, largest and most popular NFT marketplace. Devin Finzer and Alex Atallah founded it on December 20, 2017. The platform has grown so broad over the years that it now includes a variety of digital art, music, and more.
In February 2023, it temporarily reduced the transaction fee from 2.5% to 0% in response to the decrease in trading volume. Likewise, the platform changed its stance on optional royalties. To that end, it mentioned that collectors of NFT projects that lack on-chain enforcement measures will only be mandated to pay a royalty fee of 0.5% on both old and new purchases. However, collectors may pay more if they believe the NFT is worth more.
OpenSea also offers an enforceable royalty model for new collections that will prevent the NFTs from being listed on non-compliant marketplaces.
Launched on October 19, 2022, Blur is seen as one of the fastest growing Ethereum-based NFT marketplaces. It differs from other marketplaces through its fast nature, zero trading fees for NFT sales, a sorting function based on price and a built-in interface. Blur honors optional royalty for creators with a 0.5% minimum fee on immutable collections that cannot use the filter registry.
LooksRare was established on January 10, 2022 and was previously considered the most direct competitor to OpenSea. Nine months later, the marketplace chose to remove the default royalty for creators. Buyers can now decide to either pay royalties at checkout or not, but the platform has also promised 25% of protocol fees to creators.
Platforms that do not support NFT Creator Royalties
In 2022, many NFT marketplaces stopped supporting royalties from creator kits. This change is due to several reasons, for example the different opinions within the NFT ecosystem. The main reason is that while creator royalties are very beneficial to creators, who can receive revenue from collectors every time their work is resold, the same cannot be said for collectors. Here are some platforms that don’t support creator royalties:
Magic Eden was originally created on the Solana blockchain and was later expanded to other blockchains, such as Ethereum. It was founded in 2021 as a marketplace competitor and a solution to problems faced by other existing NFT marketplaces. At the beginning of the debate against creator royalties, Magic Eden fully supported creator royalties and even released a controversial royalty protection tool for creators. However, they backed out of this a few weeks later and made royalties optional. Recently, royalties for creators were not prioritized on the platform, their new model involves buyers, rather than sellers, deciding the percentage they want to pay.
Sudoswap is a decentralized NFT marketplace launched in May 2022. It is a platform where users can create and trade through liquidity pools (smart contract containers consisting of NFT and ETH). This is what creates its uniqueness. Sudoswap became popular because it provides an alternative to traditional NFT marketplaces, but it does not support royalties for creators.
Just like Magic Eden, this NFT marketplace was developed at Solana. Launched in June 2021, its purpose was to provide a platform for creators to share their work, allowing people to buy and sell their creations. It quickly became a popular choice within the Solana NFT ecosystem. However, Solanart has a different attitude towards royalties to creators. Initially, the platform implemented a 3% sales fee, allowing creators to customize royalties. However, as the debate surrounding this issue gained momentum, Solanart made a significant change by eliminating all fees altogether. Consequently, the platform does not currently support royalties for creators.
Yawww was originally launched as a peer-to-peer NFT lending platform. By July 2022, it had made headlines and gradually became a jointly owned NFT marketplace. Yawww was called the “first democratized NFT marketplace” because it placed the power to determine royalty percentages in the hands of the buyer rather than the seller. This means that the marketplace does not support royalties for creators.
What does the future hold for NFT Creator Royalties?
There has been a growing debate in the NFT community regarding the elimination of royalties from major NFT marketplaces and aggregators. Platforms such as Magic Eden and many others no longer make royalties mandatory and have switched to optional royalty payments.
Creator royalties were largely seen as one of the true innovations in the NFT space. It allowed artists to make more money as long as their work was sold. However, everything changed when Sudoswap, an NFT platform, launched its automated market maker. It removed royalties on secondary sales, which again opened up the debate, thereby challenging the concept of creator royalties.
Something to note is that while many NFT marketplaces already made their decisions, OpenSea remained mute in the debate. When it finally addressed the problem, it expressed that it wanted to take a thoughtful and principled approach to the matter in order to come up with solutions.
However, NFT royalties are an aspect of the market that cannot be eliminated. Doing so means creators may be forced to work more and won’t earn passive income from royalties. Therefore, as long as platforms favor creators’ interest over collectors’, royalties will continue to be part of NFT sales.
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*All investment/financial opinions expressed by NFT Plazas are from personal research and experience of our site moderators and are intended as educational material only. Individuals are required to research all products before making any type of investment.
A blockchain maximalist who believes that technology is necessary for the future we are heading towards. An avid researcher and writer who uses his writings to inform the outlook in the blockchain space.