The Final Betrayal of NFTs
Last week, the OpenSea, the largest NFT Marketplace, announced that they were sunsetting their Operation Filter, which was a tool designed to enforce royalty payments and requirements on NFTs that were resold on the platform.
In short, OpenSea will no longer be enforcing royalty payments on NFTs, beginning August 31, 2023.
This move has already proved to be controversial. With both Mark Cuban, an OpenSea investor, and Bored Ape Yacht Club creator Yuga Labs speaking out against the move.
Though smaller platforms have confirmed that they will continue to support creator royalties, OpenSea is by far the largest and, as an industry leader, will likely set the direction for much of the industry.
According to OpenSea, the move was necessary as the tool was not seeing widespread usage and several other platforms had found ways to bypass the protocol, rendering it ineffective.
But whether the move makes sense or not, it represents a betrayal to creators who took to the NFT space, especially during the heady days of 2021 and early 2022.
Perhaps even worse for the marketplace, it proves that the critics of NFTs were always right, that it was never about protecting or helping creators.
The Long Grift
During the NFT halcyon days of 2021 and late 2022, NFTs were largely famous for two things: Attracting eye-watering price tags and playing host to widespread plagiarism and copyright infringement.
The latter reached something of a peak in February 2022 when the prominent NFT marketplace Cent opted to halt sales on its platform due to widespread plagiarism.
While this represented a high-water mark for these plagiarism issues, they were more or less endemic to the entire NFT marketplace. They even remain as such today, more than a year after the market’s decline.
When artists and creators would complain, they were largely ignored by the NFT community. However, those that did respond would do so with promises. According to them, NFTs weren’t simply a home for infringement, but a tool that artists could use to earn new revenue, a means of licensing and regulating the copyright in their work and a system that would ultimately reduce plagiarism and infringement.
Most creators saw through that quickly. The widespread infringement and lack of effective rights enforcement was enough to dissuade most creators. However, some did inevitably buy in. Lured by promises of a big payday, ongoing royalties and promises of ownership/licensing clarity, some did jump on.
However, that facade quickly began to fall off. In August 2022, The Galaxy performed a study looking at the top 25 most valuable NFT projects. They found that only one of those projects made any attempt to use blockchain technology to transfer any intellectual property.
For a tool that was promised to revolutionize both copyright and how artists earn a living, NFTs were not living up to their own hype.
Now, with this most recent announcement, the last piece of that facade has finally fallen off.
It Was Never About Artists
The issue isn’t that OpenSea has abandoned this protocol. The filter was only launched in November 2022 and never played a major part in the NFT landscape.
The issue is the reason why it’s being dropped.
OpenSea is likely correct that the Operator Filter wasn’t being used heavily and that, thanks to protocols to counter it, was largely ineffective. In short, it wasn’t being used even when it was being used, it wasn’t being respected by other marketplaces.
While OpenSea’s decision is a disappointment, the reasons for it paint a very grim picture about the NFT landscape when it comes to respect for artists’ rights. NFTs were supposed to empower artists, let them create scarcity in a digital world, help them prove ownership of their work, license it to others and even make enforcement easier.
These promises always rang hollow. Copyright and trademark infringement always were and still are rampant on NFT marketplaces. But this decision makes it apparent that the NFT community has decided, as a whole, that these issues aren’t relevant to them. They won’t respect the stated wishes of artists, even when the enforcement of those wishes is baked directly into the system itself.
Though Mark Cuban and the Bored Ape Yacht Club may object, OpenSea’s decision is merely a reflection of what the NFT community has collectively decided through their actions.
NFTs are not and never were about helping artists protect their work, gain royalties from resales or controlling their copyright. Nothing has changed other than the already transparent mask falling off.
Bottom Line
Writing about NFTs in 2023 is, to put it mildly, stupid. For most of the world, the fad is over and NFTs are seen as an irrelevant relic from a time that already feels like decades ago.
This is born clearly in the numbers. In early 2022, the NFT marketplace was neck and neck with the fine art market in total value. Just one year later, it had lost more than 80% of its value and has continued to fall, despite a small revival earlier this year.
However, it’s important to remember how NFTs were sold to creators. Even as artists were filing takedown notices with NFT marketplaces to get stolen art removed, they were told that NFTs would be a boon for them, simplifying copyright and licensing, enabling royalties and creating new opportunities for them.
Today, the money has largely dried up, the NFTs have never been successfully used to transfer or manage copyright and now even the promise of royalties is gone.
All the promises made to artists have been broken.
This was always the likely outcome. Those who work in copyright or make their living as content creators could easily see it. However, that’s been the very nature of NFTs and cryptocurrency more broadly, they are solutions looking for a problem they can solve and copyright is just one of them.
As we discussed back in April 2021, well before the NFT craze, blockchain technology can’t solve the issues most creators have with copyright. NFTs didn’t change that, and there was no real way they could.
In the end, it isn’t OpenSea that is breaking promises to artists, it’s the NFT community as a whole. OpenSea’s decision is merely a representation of the norms of the NFT community, both ethically and technologically.
If you’re a member of that community and upset by this, protesting OpenSea won’t make a difference. The issue lies at the very heart of what NFTs are and how they are being used.
The OpenSea move, realistically, is just a reflection of what has always been there.
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