Welcome to a frontier where art meets technology in ways that are transforming artist compensation forever. Ever wondered how the artist who created that captivating mural or breathtaking digital painting could get paid every time their art changes hands? Welcome to the revolution brought by Non-Fungible Tokens, or NFTs, which are creating seismic shifts in the realm of artist royalties. No longer do artists have to settle for a one-time payment for their priceless creations. This article aims to delve into the groundbreaking changes occurring in the artist royalties landscape, propelled by the rise of NFTs. You’ll learn how you can ‘earn every time it’s sold,’ a dream now achievable in the resale market through NFTs.
The Evolution of Artist Royalties
Traditional Royalty Models
Historically, artists relied on traditional royalty models, often receiving compensation when their work was initially sold or licensed. Whether it was a painting, a sculpture, or a copyrighted piece of music, artists were usually confined to upfront payments or occasional royalty checks from reproductions. The advent of digital platforms began to tweak this model, especially for digital artists, musicians, and writers, but limitations persisted.
The Digital Transformation
Then came the digital platforms—e-commerce sites for art, digital music platforms, eBook marketplaces, and more. These platforms offered artists a wider audience but often with a catch, such as a hefty platform fee or less control over the resale of their work. Nevertheless, they represented a step forward, showing artists the possibilities of reaching global audiences and multiple revenue streams. Still, the digital transformation was not without its pitfalls; artists were yet to find a way to capitalize fully on the resale of their works.
What Are NFTs?
Definition and Core Characteristics
Non-Fungible Tokens, commonly referred to as NFTs, are unique digital assets verified using blockchain technology. Unlike fungible tokens like Bitcoin or Ethereum, each NFT has a distinct value and specific information that make it unique. This distinct nature makes NFTs perfect for representing ownership of unique items or art pieces.
NFTs in the Art World
In the art world, NFTs are akin to certificates of authenticity for the digital realm but with superpowers. Not only can they prove you’re the rightful owner of a piece of art, but they can also include contractual conditions like royalties. Artists can now embed royalty conditions into NFTs, ensuring they get a percentage of sales whenever their art is resold. This technological application has profound implications for the art world, essentially creating a new economic model where artists can continually benefit from the value their work accrues over time.
The Revolutionary Impact of NFTs on Artist Royalties
The Game-Changing Nature of NFTs
The advent of NFTs is fundamentally altering the traditional paradigms surrounding artist royalties. The one-time payment model is giving way to a more enduring, equity-like approach to art. In other words, as the artwork gains value, so too do the potential earnings for the artist. This perpetual revenue model is not only fairer but also more financially rewarding for artists. Smart contracts encoded into NFTs automatically redirect a predetermined percentage of any resale transaction back to the artist, eliminating the need for intermediaries.
Mint Your First NFT and Set Up Royalties
Step-By-Step Guide to Minting Your First NFT
So, you’re excited about the revolutionary impact of NFTs on artist royalties and want to mint your own? Here’s a step-by-step guide to get you started. First, you’ll need to choose a blockchain that supports NFTs, such as Ethereum or Binance Smart Chain. Once that’s done, you’ll have to set up a digital wallet compatible with that blockchain. The next step is to deposit some cryptocurrency into your wallet to cover minting fees. After you’ve funded your wallet, it’s time to choose a platform that will host your NFT. Websites like Rarible, OpenSea, and Foundation offer user-friendly interfaces for minting NFTs. From there, you’ll upload your artwork, fill in details like the title and description, and finally, mint your NFT.
Setting Up Royalties with Smart Contracts
Once you’re on the minting page, you’ll often find an option to set up royalties. This is where smart contracts come into play. You can define what percentage of future sales will go back to you as the original artist. This is usually a straightforward process: you simply enter the percentage you wish to receive (commonly between 10% and 30%) in the provided field. Once everything looks good, proceed to mint your NFT. Congratulations, you’ve not only immortalized your artwork on the blockchain but also set up a revenue stream that will pay you royalties each time your art is resold.
5 Best Platforms to Mint NFTs and Set Up Royalties
OpenSea
Features: OpenSea provides a user-friendly interface for both minting NFTs and setting up royalties. It supports a wide array of file types and offers additional features like bundling multiple items and creating digital storefronts.
Pros: Ease of use, extensive file support, and a strong community. Allows artists to set royalties to earn a share of future resales.
Cons: As one of the biggest platforms, it can be harder for new artists to get noticed.
Rarible
Features: What sets Rarible apart is its focus on “community governance,” which means users have a say in the platform’s future. It also has an automated royalty distribution feature.
Pros: Community involvement, easy royalty setup, and liquidity mining that allows creators to earn a native token (RARI) for using the platform.
Cons: The user interface can be a bit overwhelming for newcomers.
Foundation
Features: Foundation offers a sleek, minimalist platform for digital artists. It also allows for setting royalties upon minting, ensuring artists earn with each resale.
Pros: Beautiful design, curated community, and ease in setting up royalties.
Cons: Minting costs can be high, especially when the Ethereum network is congested.
Mintable
Features: Mintable offers “gas-less minting,” which makes it more affordable for creators to mint NFTs. It also allows for royalties.
Pros: Affordable minting, user-friendly interface, and easy-to-set-up royalties.
Cons: Smaller community compared to platforms like OpenSea and Rarible.
SuperRare
Features: SuperRare targets high-end digital artists, providing a platform that places a premium on exclusivity. Royalties are a core feature.
Pros: Exclusivity could mean higher sale prices, and the platform takes royalties seriously.
Cons: High barrier to entry; your work has to be accepted to be minted, and there are higher fees.
The Ethical and Legal Landscape
Ethical Concerns Around NFTs and Royalties
As we navigate the exciting potential of NFTs and royalties, we must also grapple with the ethical concerns that arise. For example, there is the issue of energy consumption associated with blockchain technology. NFT minting processes, particularly on networks like Ethereum, require a substantial amount of energy, raising environmental concerns.
Legal Considerations and Copyright Issues
From a legal perspective, the landscape is equally complicated. While NFTs offer a decentralized form of ownership, copyright laws have not yet caught up with the technology. When you mint an NFT, it doesn’t necessarily mean you’ve transferred the copyright to the buyer, unless explicitly stated. Artists should consult with legal professionals to clearly understand how to protect their work in the NFT space. Further complexities arise when artists want to mint works that include elements they don’t own the rights to, such as copyrighted characters or music. These aspects warrant a comprehensive understanding of the legal intricacies involved.
Some FAQs Answered about NFT Royalties
How Do I Set Up Royalties for My NFTs?
Setting up royalties for your NFTs usually involves specifying a percentage that you’ll earn from future resales during the minting process. Most platforms have a straightforward interface that allows you to set this up easily.
How Much Can I Earn from NFT Royalties?
Earnings from NFT royalties are largely contingent on the demand for your artwork and the resale value it garners in the marketplace. Some artists have reported earning thousands of dollars through royalties alone.
Is It Legal to Earn Royalties from NFTs?
While the NFT space is relatively new and evolving, earning royalties from NFTs is generally considered legal. However, it’s advised to consult legal professionals to navigate specific legal frameworks.
How Are Royalties Paid?
Royalties are typically paid in cryptocurrency, most commonly in Ethereum. They are automatically transferred to your wallet through smart contracts whenever a resale occurs.
Can I Change the Royalty Percentage Later?
Most platforms do not allow you to change the royalty percentage after the NFT has been minted. It’s crucial to decide this carefully at the initial stage.
In Conclusion, NFTs are revolutionizing the way artists think about compensation, breaking away from the limitations of one-time sales and ushering in a new era where artists can continuously earn through royalties. The advent of smart contracts ensures this process is automated and transparent. As the art world increasingly moves toward this decentralized model, it’s an opportune time for artists to explore the potentials of NFTs and seize the financial benefits they offer. Make your art work for you, not just once, but every time it changes hands.
Eric Dalius is The Executive Chairman of MuzicSwipe, a music and content discovery platform designed to maximize artist discovery and optimize fan relationships. Additionally, he runs the weekly podcast “FULLSPEED,” featuring interviews with cutting-edge entrepreneurs. As the founder of the “Eric Dalius Foundation,” he provides four scholarships for US students. Keep up with Eric on Twitter, Facebook, LinkedIn, Instagram, and Entrepreneur.com.