OpenSea’s Royalty Controversy Created a Unionization Movement in Web3

Two weeks ago, when OpenSea announced it might drop royalties enforcement for existing collections on its platform, it sent an earthquake rippling through the NFT community. Nearly every big name in the space, from Beeple to Yam Karkai to FVCKRENDER and FEWOCiOUS, took to Twitter to express their solidarity with the community and collectively urged OpenSea to uphold its enforcement policy for the countless collections that helped make the platform the number one NFT marketplace in the ecosystem. Fortunately, the story has a happy ending: OpenSea reversed the decision and stated it would continue to uphold creator fee enforcement for those collections.

The saga was as instructive as it was dramatic. The NFT community had made their voices heard, and, as a result, a massive Web3 entity altered its thinking on a significant business decision. Was this an example of the often-touted Web3 ethos of creator empowerment made manifest? Or just an exception to the rule of Web2 business, as usual?

Organizing solidarity in Web3

One of the leading voices in the fight to preserve royalties enforcement on OpenSea was Betty, the CEO and founder of Deadfellaz, the zombie-themed PFP project co-created by crypto artist PsychStreetFight. On November 7, Betty opened her DMs on Twitter, calling on project founders to get in touch and register their interest for a group call to discuss the implications of what OpenSea was proposing. While that call never happened, as OpenSea reversed their decision, Betty and the project leaders who reached out to her collectively decided to work toward a more unified community front nonetheless. It’s a lofty goal requiring serious collaboration in the space. So, who reached out?

“Every leader for every top project that you could think of is now a part of that list,” said Betty while speaking to nft now. “Every single one of them reached out. People I haven’t yet spoken to have reached out. It’s everyone. The fact that there are so many is quite amazing, and it’s almost an emotional thing to see the list. There is literally every type of project. Small projects, community-focused ones, charity-driven ones, utility, gaming — everything you can think of.”

“Artists and creators are the ones who arguably created this industry.”

Betty, deadfellaz

After fielding hundreds of messages and inquiries, Betty is convinced that the volatility of both OpenSea’s abandoned plans combined with the calamitous fall of FTX has the community more committed to seeking ways to protect and empower each other than ever before. Collaboration, she said, is a founding ethos of Web3, yet there hasn’t been nearly enough of it at this point in the ecosystem’s infancy.

NFT royalty flag-planting

Crucially, the royalty debate has provided a rallying point for a Web3 unionization movement. Betty believes that if that movement is to succeed, it must convince skeptics of the vital role that creators and artists play in the whole Web3 system.

“This industry has been built through the context of using NFTs for art,” Betty offered as a reminder. “Artists and creators are the ones who arguably created this industry through the creativity they’ve put out into the world. One of the reasons any of them have engaged in Web3 is because it solved problems that artists have faced forever — being exploited for our creative work. Royalties answer that. It provided people with newfound value. It changed and continues to change a lot of lives. By pandering to the zero percent royalties crowd in this race to zero, it places too much focus on the flipping side of the NFT industry. But, if you pull royalties out, it all collapses.”

To Betty, the NFT ecosystem depends on the preservation of a circular dynamic between creators and consumers. If marketplaces take royalties out of the mix, it means the artists who created the value that is now being bought, sold, and traded on the market have fewer resources with which to create new value.

Apart from the logistical incentive to preserve royalties in Web3, there’s also the more intangible (and arguably more important) aspect of solidifying the rights and powers of artists and project builders in Web3. If the space is to truly leave some of the more unfair and exploitative paradigms of Web2 behind, then creator control and autonomy will need to exist outside the walls of rhetoric.

“I don’t believe that one organization not made up of a body of artists should have the power to block anything.”

betty, deadfellaz

“Royalties allow [artists] to do something without going to giant corporations to ask for help,” Betty said of the freeing nature of creator fees. “Without royalties, that stops. It hinders innovation, it slows the speed of innovation, it devalues work — creative work — which is one of the most positive things to come out of the last few years. Value for creative work that has been rekindled is being degraded again by tipping the boat one way instead of keeping it on an even course. I understand that we’re in a bear market, and people are trying to make money, but the culture and community and artistic value [of the space] cannot be conflated with the value that comes from the crypto base.”

Balancing decentralization with enforcement

It may seem ironic that actors like Betty, who are firm believers in the Web3 ethos of decentralization, are among the strongest supporters of having marketplaces enforce royalties. However, that debate has never been as clear-cut as decentralization purists would make it seem. Furthermore, the concept of “centralization through decentralized means” is one that Betty believes the space needs to thoroughly and seriously entertain.

“I don’t believe that one organization not made up of a body of artists should have the power to block anything,” Betty elaborated. “Instead, artists should be able to control where their work shows up, how it’s received, and how it’s being paid for. If an artist is making these choices personally, that is decentralized. It’s a matter of getting those tools to the artists. How do we do that outside of these markets? [The answer] is us coming together as creators. There are enough smart people in this industry that have been here this whole time. It’s just a matter of them coming together and making it happen.”

Hope for the future of NFTs

The havoc wreaked by FTX has the crypto markets hurting badly. People’s faith in the ability of the Web3 space to bounce back has been equally damaged. But for Betty, the activity she sees behind the scenes has never been more fervent and inspiring. There is every reason, she believes, for a healthy, cautious optimism, but that optimism is best placed in a long-term context.

“Artists and creators made them, and if artists and creators leave, they have nothing.

Betty, deadfellaz

“For me, I’m still feeling as bullish as before. I think that it’s a long game, and I’ve always thought that. I didn’t jump into this space thinking it was going to happen overnight. By mid-last year, we could all see there is a space for creating and building regardless of the ups and downs of the turbulent crypto world. For me, that’s a huge signal. If you’re not part of the behind-the-scenes building, you might not see what’s going on. I have never been busier in my entire life, and it’s the same for every other founder of every other project I know. Despite the turbulence of the foundation we’re built on, sentiment is high.”

But such high sentiment could run into sustainability issues if efforts to consolidate artist and builder power, for whatever reason, run out of steam. The litmus test of NFT community unity that OpenSea and other marketplaces have begun to put creators through is unlikely to wane as time passes. Recent events could prove to be a cornerstone in crypto history, sparking a movement that causes Web3 to truly inhabit the egalitarian ideals on which it was ostensibly founded.

“I understand these companies are often driven by their investors and boards,” Betty concluded. “Hopefully, they’ve learned that artists and creators made them, and if artists and creators leave, they have nothing. Listen to those people, engage with them in a respectful way, and everything will be fine.”

Much depends on how marketplaces respond. In the coming months, these NFT platforms will likely position their royalty stance with creator empowerment in mind. If nothing else, the community’s response to OpenSea’s proposal seems to be causing a seismic shift in how everyone in Web3 perceives such empowerment. And that alone could make all the difference.

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