The Open Metaverse Alliance (OMA3), a consortium of prominent blockchain, NFT (Non-Fungible Token), and metaverse companies, has recently unveiled a working group to standardize and safeguard creator royalties within NFT marketplaces. Creator royalties, typically ranging from 2.5% to 10%, are additional fees attached to secondary sales of NFTs (Non-Fungible Tokens) and are intended to directly benefit the creators. This concept was originally considered a fundamental principle in the crypto ecosystem, one that aimed to empower artists and creators more than traditional secondary markets for art and media.
OMA3 pushes for a standardized royalties system
The recent market dynamics have posed challenges to the enforcement of creator royalties. With the onset of the recent crypto bear market last year, several emerging NFT marketplaces began eliminating these creator fees. Some platforms, like Blur, even introduced gamified financial incentives to attract users away from dominant NFT platforms like OpenSea. This strategy proved remarkably successful, with Blur surpassing OpenSea as the largest NFT platform by trading volume by February of this year. In response to this shift in the market, OpenSea, which had initially resisted the move, announced in August that it would also cease enforcing creator fees.
For the companies involved in the Open Metaverse Alliance (OMA3), this shift is viewed as a potential threat not only to the NFT ecosystem but also to the overarching goal of metaverse development: creating an interoperable online environment where virtual assets owned by users can seamlessly move from one platform to another, thus redefining digital ownership. According to Robby Yung, CEO of Animoca Brands, one of the co-founders of the Open Metaverse Alliance (OMA3), Creator royalties are not just integral to the fairness principle or respecting the authorship of creators; they are also key to interoperability.
He emphasizes that without the ability for creators to benefit from royalty payments in the future, the vision of an equitable, transparent, and democratic online ecosystem remains unattainable. Yung has dedicated years to building an online environment that he believes will be fairer and more democratic than the current internet. However, he acknowledges that, at present, many NFT buyers prioritize short-term financial interests at the expense of their long-term well-being in the digital realm. The working group established by the Open Metaverse Alliance (OMA3) focuses on creator royalties.
Navigating the changing landscape of NFTs and metaverse
Its objective is to determine the best means to protect creator royalties on a market-wide scale, potentially by creating universal standards for NFT marketplaces that participating companies will adhere to. Besides Animoca, Yuga Labs, and Magic Eden, other participants include metaverse game platforms Decentraland and The Sandbox, Alien Worlds, and Upland. Yuga Labs CTO Mike Seavers, emphasizing their commitment to building an interoperable and equitable Web3 world for creators, expressed their pleasure at collaborating with OMA3 and the envisioned standards for success.
Following the recent decisions by NFT marketplaces like OpenSea to discontinue the enforcement of creator royalties, several influential NFT brands have wielded their influence by threatening to revoke their compatibility with these platforms. For instance, after OpenSea’s announcement that it would cease enforcing creator royalties in August, Yuga Labs announced its decision to sunset the compatibility of its NFT brands with the platform. The NFT collections associated with Yuga have collectively generated over $9 billion in trading volume across the NFT market.
This development underscores the evolving landscape of NFTs and creator royalties in the metaverse. The establishment of standards to protect creators’ rights and ensure fair compensation for their work is crucial for the long-term sustainability of the NFT ecosystem. Furthermore, it highlights the ongoing tension between market forces and the original principles of the crypto and NFT space, emphasizing the need for balance between short-term financial interests and the broader goals of the metaverse. The Open Metaverse Alliance (OMA3) efforts could play a significant role in shaping the future of NFTs and digital ownership.
