Billionaire Mark Cuban says that prominent non-fungible token (NFT) marketplace OpenSea’s decision to disable its royalty system is a huge blunder.
Earlier this week, OpenSea’s chief executive Devin Finzer announced that while creator fees will stick around, the unilateral enforcement of them would cease.
According to Finzer, the move will better “reflect the principles of choice and ownership that drive [the OpenSea] ecosystem.”
In a recent thread, Cuban, who has invested in OpenSea, says that the protocol’s new policy of not collecting and paying royalties is a bad move that harms both the industry and the NFT platform itself.
“Not collecting and paying royalties on NFT sales is a HUGE mistake by OpenSea. It diminished trust in the platform and hurts the industry. And I say this as an OpenSea investor…
The buyer knows what the royalties are before they buy it. The creator can set the royalty to zero. They are part of the smart contract that mints the NFT. It’s not smart. It’s desperation.”
The business magnate goes on to pitch his idea on how the system should work, saying that there’s a way for both content creators and OpenSea to get paid.
“Make the transactions free for NFTs that pay their royalty and then take a percent of the royalty as the fee. The originators still get paid most of the royalty, which is obviously better than nothing and OpenSea gets paid an amount that is probably better than the [transaction] fee.”
Cuban says he supports royalties for creators because they are a way for content creators to continue getting paid even if their products are sold on secondary markets.
“It creates unique opportunities where creators can get paid on future sales. Textbooks get resold. Authors/publishers get nothing. As a result, they charge higher prices for new books knowing they will be sold and resold until they fall apart. Make them an NFT with royalties that have built-in DRM (digital rights management) and a reader and the prices of textbooks drop like a rock.”