The Open Metaverse Alliance for Web3 (OMA3), a consortium comprising several prominent blockchain, NFT, and metaverse companies, has unveiled a working group aimed at standardizing and safeguarding creator royalties on NFT marketplaces.
This working group boasts participation from leading crypto brands, including Yuga Labs, known for the popular NFT collection Bored Ape Yacht Club, and Magic Eden, a multi-chain NFT marketplace that originated on Solana.
Creator royalties, typically ranging from 2.5% to 10%, are additional fees imposed on secondary sales of NFTs, designed to benefit the original creators. These royalties were once considered a fundamental principle in the crypto ecosystem, offering artists and creators significant advantages over traditional secondary markets for art and media. However, the enforcement of creator royalties has been jeopardized by market dynamics.
In response to the crypto bear market, several emerging NFT marketplaces began eliminating creator fees, and some, such as Blur, introduced gamified financial incentives to attract users away from dominant platforms like OpenSea. This strategy proved remarkably effective, with Blur surpassing OpenSea in trading volume by February of the following year. In August, OpenSea, despite previous assurances, also ceased enforcing creator fees.
OMA3 member companies view this shift as not only a threat to the NFT ecosystem but also to the metaverse’s ultimate goal: a seamless online environment in which users’ virtual possessions can freely migrate between platforms, reshaping digital ownership.
Robby Yung, CEO of Animoca Brands, a co-founder of OMA3, emphasized the importance of creator royalties, stating, “They’re also key to interoperability: Why would I want to share my content with other people unless I have the ability to benefit from royalty payments in the future? Otherwise, we should just go back to Web2, where nobody shares anything.”
The OMA3 working group on creator royalties aims to establish mechanisms to protect creator royalties throughout the market. This may involve creating universal standards for NFT marketplaces that member companies will adhere to. Notable participants in the group, in addition to Animoca, Yuga Labs, and Magic Eden, include metaverse game platforms Decentraland, The Sandbox, Alien Worlds, and Upland.
Yuga Labs CTO Mike Seavers expressed the company’s commitment to creating an interoperable and equitable Web3 world through its collaboration with OMA and its standards.
Following recent decisions by NFT marketplaces to stop enforcing creator royalties, influential NFT brands have demonstrated their influence by threatening to block compatibility with these platforms. For instance, Yuga Labs announced that it would cease its NFT brands’ compatibility with OpenSea after the platform abandoned creator royalties. Collections associated with Yuga have collectively generated over $9 billion in trading volume across the NFT market.
