Many creators struggle to make significant income from their work, despite the fact that NFTs trade on blockchain networks every week for between $100 and 200 million. Why? The reason? Royalties enable creators to receive compensation for their work beyond the initial sale. This makes them vital income sources and helps fund future creative endeavors.
Technically, however, creators cannot impose royalty allocations. Creators are therefore at the mercy NFT platforms hosting their work. These platforms can decide how royalties will be distributed. This is a critical issue. The future of digital artistry is in jeopardy if there is no fair distribution system.
How to navigate royalty enforcement
OpenSea, a leading NFT marketplace, announced in November 2022 that it would introduce a tool to enforce creator fees (artist royalty) on its platform. Problem? The problem?
OpenSea supported artists who created new collections. However, it faced backlash from existing creators. The company decided to keep imposing creator fees on existing collections.
Although this was a win for the community, it is far more than OpenSea. Each marketplace has the right to decide whether or not to honor royalty allocations because there is no technical way of enforcing them. Because there is no standardization, some marketplaces such as LooksRare and Magic Eden do not offer NFT royalty payments to creators. Instead, it is up to NFT buyers whether to honor the artist’s royalty policies for purchases. This can cause problems as buyers are required to read and comply with each artist’s royalty policies.
OpenSea and most other marketplaces do not allow for royalties on individual pieces. An NFT that has its own royalty policy may be sold on platforms like Rarible, and then listed on OpenSea. The original artist might not receive any revenue from the secondary sales. This can make it difficult for artists to monetize work and could lead to inequity and lack of transparency in the NFT marketplace.
Empowering future and current creators
It is crucial to empower creators via NFT royalties. These royalties allow creators to control the terms and conditions of royalties. Creators have the ability to negotiate directly with their fans, and their supporters can act as distributors to create long-term revenue streams.
There are several ways that the NFT industry can create a fair and legally binding system to distribute NFT royalties. Universal standards and protocols for NFT royalty payments would allow creators more control and create a level playing field that all markets can operate within. It would be easier for buyers to read and follow the individual artist’s royalty policies. This would ensure creators are paid fair compensation.
The Ethereum Improvement Proposal 2981 allows developers and users to attach royalty information to NFT assets stored on the blockchain. This is a step towards universal standards and protocols. This creates a common data store that everyone can access and a computation layer that allows them to enforce their royalties. SuperRare is also currently working on an NFT royalty model. However, it is not clear if it uses EIP-29981. This project is a promising first step in creating a robust solution for NFT royalty payments.
This is not all that is needed. We can ensure that digital artists continue to flourish and grow by providing the resources and support they need. These resources are available to thousands of artists, from Udemy to NFT Art Course. They help them to make a living and better support themselves.
The NFT royalty debate is the key to the future of digital art. We can make sure that the industry is vibrant, fair, and dynamic by addressing this issue.
Brent Annells is serial entrepreneur and technology enthusiast. He is also the CMO at Smart Token Labs which connects brands with the NFT ecosystem. Brent has managed branding and partnerships for many technology companies including Uber and Facebook.
The post The Future of Digital Artistry Depends on the NFT Royalty Debate appeared originally on nft.