5 Platforms That Don’t Pay Their Fair Share Of NFT Creator Royalty
With the old ways of making and selling art, artists could never make money from second-hand sales. On the other hand, Web3 wants to pay artists their creator royalty on a regular basis. Creator royalty is when an NFT is sold; the person who made it gets a royalty, which is a certain amount of the sale price. During the process of making the NFT, creators can add royalties to the smart contract. Most of the time, the royalties range from 5 to 10 percent, and when a sale is made, the money goes straight to the artist’s wallet.
What’s the point of NFT royalties?
Imagine that an artist who is having trouble making a living needs money fast to pay his bills. What does he do? He sells one of his paintings for a few hundred dollars and lets out a sigh of relief. Now he has enough money to pay his EMIs, buy groceries, and do other things. But after a week, he sees his painting go for millions of dollars at an auction. He can’t claim the art and won’t get any money from selling it again. Here’s where royalties from NFT come in. They make sure that artists can get money from the sales of their work in the future.
The royalty model is also used in the music business. If an artist is lucky enough to get a royalty deal, they will get paid for every album sold and every time their song is played on the radio. But record labels rarely tell the truth about how many copies they sold. Blockchain technology and smart contracts, on the other hand, can!
Why do traders not like getting royalties?
Artists get paid every time their work is sold again, but traders might not. In addition to the sale price, they have to pay the royalty. These days, NFTs cost thousands or even millions of dollars, so this royalty fee can add up to a lot.
When it first came out at the start of 2022, LooksRare was thought to be OpenSea’s most direct competitor. Marketed as a “community-first NFT marketplace that actively rewards traders, collectors, and creators for participating,” LooksRare quickly became a favourite in the Ethereum ecosystem and is still a popular choice for NFT fans.
But on LooksRare, creator royalties are not paid out. Starting in October 2002, LooksRare decided to get rid of standard royalties for creators. Instead, 25 percent of protocol fees went to creators, and buyers could choose to pay optional royalties at checkout if they wanted to.
Magic Eden is a market for non-fungible tokens (NFTs). It was first built on the Solana blockchain but has since grown to include other blockchains, such as Ethereum. Members of the NFT community started it in late 2021 as a marketplace competitor and a way to fix problems with other NFT marketplaces. It was billed as being focused on the community.
Magic Eden has been at the forefront of the debate about creator royalties. It started by giving creators a controversial tool to protect their royalties, but a few weeks later, it did what others had done and made royalties optional. Creator royalties are not paid out on the platform right now. Instead, buyers decide what percentage of royalties they want to pay. Instead of setting an automatic threshold, creators let buyers decide how much they want to pay. Lately, the decision not to pay creator royalty led to a twitter banter too.
Part of the magic of NFTs is the royalty model – one of the “aha” moments when onboarding people into the space.
I understand Magic Eden’s decision.
But I also believe 0% royalties is not only bad for artists & creators, it’s also a net-negative for consumers long term.
— Roberto Nickson (@rpnickson) October 15, 2022
Magic Eden: “We won’t touch creator royalties”
*The Queen dies*
Magic Eden: England got rid of their royalty so we should too 👍🏻
— Arty (@ArtMcArty) October 15, 2022
Solanart is a Solana-based NFT marketplace, like Magic Eden. It opened in 2021 and quickly became one of the most popular platforms in the Solana NFT ecosystem. On Solanart, anyone can become a collector, but artists need to apply for a creator account before they can mint on the site. Solanart is home to a growing number of NFT projects with a focus on PFP, gaming, and the metaverse, even though it has problems with curation.
Solanart used to charge a three percent sales fee and let NFT creators decide how much of their earnings would go to royalties. As the debate grew, the platform decided to drop all fees. Creator royalties are not paid out on the platform right now.
Sudoswap is a decentralised exchange (DEX) protocol that allows the swapping of NFTs without paying any fees. On the platform, creator royalties are not paid out. Launched in May 2022, the platform became a popular alternative to traditional NFT marketplaces over the course of the summer and fall. It has become a well-known place where collectors can avoid paying royalties to artists.
Yawww started out as a peer-to-peer NFT lending platform. In July 2022, it became a community-owned NFT marketplace, which got much attention. Yawww, which bills itself as the “first democratised NFT marketplace,” gave buyers, not creators, the power to decide on royalty percentages. This means that the default royalty rate on the platform is 0%, which means that creators don’t get any money.