The Decline of NFT Creator Royalties

Key Insights:

• OpenSea has lost 20% of total NFT trading volume market share since its competitors switched to optional royalties in October.
• Since the launch of OpenSea’s enforced royalty toolkit for new collections in November, most competitors have reverted their stance on royalties for new collection launches.
• The effective royalty rate for blue chip NFT collections has been a steep decline, as the majority of trading activity has migrated to platforms with opt-in royalties for preexisting collections.

Creator royalties were introduced across the NFT community as a way for digital artists to receive payment for their work from both primary and secondary sales. Historically, most marketplaces would charge both a creator fee and marketplace fee on all sales.

Over the past few months, many NFT marketplaces and aggregators shifted toward optional royalties, leaving it up to buyers to decide if they want to sponsor the creator. Given the bear market and declining NFT trading activity, platforms were hoping to boost activity on their platforms by creating a better trading experience for their users.

Shifting Market Share