NFT Royalties Explained: How Do NFT Royalties Work?

James Anders
Geek Culture
Published in
5 min readDec 6, 2022


Art is the cornerstone of humanity. Without art and the expression it gives rise to, where would any of us be? When we have a sad day, most, if not all, of us turn to music for solace. A simple painting can induce hope in even the most hopeless of times. Art, therefore, is the medium we use when words seem too much. Art is ever-present, from cave paintings that allow us a glimpse into history to artistic renditions of what the future might look like.

However, despite its importance, art and artists are too often overlooked. We hear too many stories of artists and musicians who do not get there due to a wide variety of reasons. Middlemen like art galleries and agencies often intervene and take a huge chunk of sales, making it very difficult for creators to get their fair share, let alone a profit!

Enter NFTs. These tokens allow creators to monetize their work and take back their ownership. By making transactions solely between the artist and the buyer, third parties are completely eliminated from the equation. Furthermore, the artist gets to earn royalties every time their work is sold on an NFT trading platform. Sounds great, does it now? Read on to know more!

What are NFTs?

The word “NFT” is being thrown around a lot these days. But what exactly is an NFT, and how does it work? NFTs, or non-fungible tokens, are exactly what the name implies. They are digital tokens that represent your ownership of a particular asset. And they are non-fungible, meaning that you cannot simply exchange one for another like you would a dollar. Every NFT is unique, making ownership that much more coveted.

What’s more, anything can be an NFT. From simple jpeg images to an entire music album, NFTs can take several forms. But isn’t it easier to just save an image? Sure, but an NFT would give you ownership and all the rights that come with it. And for artists, listing their work on NFT platforms earns them so much more than just the initial sale amount. The royalty that comes from NFTs is one of the biggest draws for artists.

First of all, what are NFT royalties?

NFT royalties are a way for artists to monetize their work far beyond the initial sale. The royalty is a payment that happens every time there is a secondary sale of an artwork. That is, every time their art is resold to a secondary buyer, NFT royalties ensure that the artist gets a stipulated percentage of the total sale price. Terms for the royalty can be coded into a smart contract when the NFT is being minted. After this is done, the royalty is deposited into the artist’s wallet every time their work is sold. The usual royalty percentage is anywhere between 5% and 10%. As an artist increases in popularity and their work is more in demand, the value obviously increases. Even 5% of royalties in such cases translates into quite an amount, ensuring that the artist always has a source of income.

There are no third parties involved since everything is taken care of by smart contracts, drastically minimizing human error. And this system doesn’t just work for digital art! NFT royalties can encompass music, physical items, and even gaming accessories. The latter is, especially, becoming quite the draw. With accessories slated to be an integral part of Metaverse fashion, more artists designing wearables are emerging.

However, only select NFT marketplaces offer an option for artists to earn royalties. This has caused quite a stir in recent times, and deservedly so!

Why are they important?

Royalties have been around for a long time. Every time a musician’s song is aired on the radio, they may get a royalty provided they have a royalty deal with a record label. The same goes for authors when their books are sold. However, the third parties this system calls for are rarely reliable. Furthermore, in the cases of several artists, they could sell it for a price and get the money. However, when the time proved right, the buyer could sell it at an exorbitant price, completely leaving the artist out of the loop.

That’s where NFTs help. The use of blockchain technology and smart contracts enables royalty fees. Now, with NFTs, artists can earn from subsequent sales with a method that is completely automated. Artists can also keep tabs on ownership of their work — something which would have been extremely tedious with traditional trading. Blockchain, or digital ledger technology, also ensures that there are no fakes or replicas being circulated. If by chance, one does appear, it is much easier to trace the counterfeit product.

Another interesting thing about NFTs is that even if the work is sold, the copyright remains with the creator. In some cases, the creator can also sell a portion of the copyright to others. As is evident, NFT royalties give power back to the hands of the creators and artists.

So, what’s all the buzz about?

NFT royalties have been sparking a lot of conversation nowadays. In a bid to bring in more buyers, several NFT marketplaces have scrapped NFT royalties. This move has been hotly debated on Twitter, following which some platforms have relented. The whole idea of NFTs, argued creators, is to allow a thriving platform for creators and artists to monetize their work. And denying creators royalties from secondary sales is antithetical to the premise of Web3.

Closing Thoughts

It is undeniable that NFTs have revolutionized the art world. They allow creators to monetize their work like never before. The usual stereotype of struggling artists is completely shattered with the help of this technology. By ensuring an equitable market, NFTs give creators control. However, the wily can sometimes even get around smart contracts and evade the payment of royalties, NFT marketplaces, therefore, must take stringent measures to make sure that artists are generously rewarded for all the joy and beauty they put out into the world.



James Anders
Geek Culture

I’m James, a blogger by profession who is more into the blockchain, crypto, and NFTS. I’m more like to be a crypto-fabulist.