Magic Eden Enforces NFT Creator Royalties

On December 1st it was stated that Magic Eden from there on enforces NFT Creator Royalties on every Solana NFT Collection. Creators can set how much they receive with royalties through the Open Creator Protocol (OCP) tool, which is built on top of Solana’s SPL token standard.

Jack Lu, CEO of Magic Eden, mentioned, on Solana Breakpoint on November 5th, the need to ensure a “sustained revenue model” for creators. Now, this idea became reality and NFT creators can earn in two ways. When their community members mint the NFTs and also when trading happens on Magic Eden with these assets. This will allow creators to get passive income out of their collection. This decision creates a higher incentive for creators to launch their artwork through NFTs.

Besides being able to set their own royalties when launching a new collection, creators can also ban marketplaces that do not enforce creator royalties through OCP. Unfortunately, OCP can only be used in new collections. For old collections, their creators must burn and re-mint all their NFTs in order to enforce creator royalties.

OCP also allows creators to set up dynamic royalties which get lower as the price of the NFTs of that collection increases. This will prevent users from paying an absurd amount of money in royalties in expensive NFT collections like DeGods.

Magic Eden, before launching OCP, had optional fees implemented. Paying royalties was optional and it was a decision for buyers to make. With OCP, the power is now in the hands of creators.

This decision could have been influenced by Open Sea’s decision on November 7th announcement to also enforce creator royalties. This change of mindset can create a new trend among NFT marketplaces. NFT creators might decide to launch their collections only on NFT Royalties-friendly markets. If this happens, then the rest of the NFT markets will start to get pressure to change to identical market policies.

Last Thoughts

NFT Creator Royalties are a controversial topic in web3. If the power is on the creators side then, in some cases, royalties might be a large piece of the cake. On the other hand, royalties is an extra incentive to build and launch new projects. Obviously, users want to pay as little as possible. But NFT creators also need to put bread on their tables.

Personally, I am pro Creator Royalties. Back in the bull market every low-quality NFT collection would ‘go to the moon’. But now the ecosystem has changed and we are in ‘crypto winter’. This means that the majority of NFT projects that succeed have a hard working team behind them. In my opinion these teams should be rewarded for the time, energy, and money spent in developing quality projects.