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Home » Understanding NFT Royalties: A Lifelong Revenue Stream for Creators?

Understanding NFT Royalties: A Lifelong Revenue Stream for Creators?


In an era where every click, like, and share can be monetized, the ‘creator economy’ has emerged as the 21st-century gold rush. But what if we told you that this is merely scratching the surface of what’s possible for content creators, artists, and anyone with a craft? Welcome to the world of Non-Fungible Tokens (NFTs) and the profound potential they hold in reshaping the landscape of royalties and lifelong revenue streams. This article will take you on a deep dive into the synergistic connection between NFTs and royalties, providing insights into how this digital evolution empowers the creator economy. As we journey through this article, you’ll understand not only the basics but also the complexities and opportunities that come with this exciting new frontier.

The Basics of NFTs and Digital Ownership: More Than Just a Digital Asset

What are NFTs?

Non-Fungible Tokens, or NFTs, are unique digital assets verified through blockchain technology. Unlike cryptocurrencies like Bitcoin or Ethereum, which are fungible and can be exchanged on a one-to-one basis, NFTs are unique, providing a method of proving ownership of a unique item or piece of content. Think of it like owning a rare collectible card, but in digital form.

How Do They Establish Digital Ownership?

The magic lies in tokenization and smart contracts. Tokenization transforms the ownership of any object, artwork, or even a tweet into a digital token on the blockchain. This process transforms the intangible into something concrete, digitally speaking. Smart contracts, a self-executing contract with the terms of the agreement written into lines of code, further facilitate the ownership and transaction process. These contracts can specify conditions like royalties, ensuring that creators earn revenue each time their work is resold.

The Role of Royalties in Traditional Creative Works: The Good, the Bad, and the Ugly

Overview of Royalties in Traditional Media

Traditionally, royalties have served as a percentage of revenues that creators earn when their work—be it books, music, or art—is used or sold. For example, an author receives a percentage of each book sale, or a musician earns a cut each time their song is played on a radio station.

The Problems and Limitations Creators Face

While royalties in traditional media have certainly provided creators with a source of income, the model is not without its problems. Creators often find themselves entangled in complex legal agreements that can limit their actual earnings. Moreover, middlemen—publishing houses, record labels, agencies—take a substantial share, leaving creators with mere crumbs. Add to this the issue of copyright infringement in an easily duplicable digital world, and it becomes evident that the traditional model has limitations that need to be addressed.

By understanding the intricacies of both traditional royalties and the groundbreaking capabilities of NFTs, we can better appreciate the monumental shift that’s happening in the creator economy. As we delve deeper into this subject, you’ll discover how NFTs are redefining the rules, offering a more empowering landscape for creators worldwide.

How NFTs Change the Royalties Game: The Dawn of a New Era for Creators

Smart Contracts and Automated Royalties

In the traditional royalties system, agreements were often paper-based, and creators had to rely on various intermediaries to collect their royalties. NFTs, powered by blockchain, usher in a transformative solution: smart contracts. These digital contracts are coded with terms that automatically execute actions based on predefined conditions. For instance, every time an NFT is resold, a smart contract can ensure that a percentage of the sale is automatically redirected to the creator’s wallet. This automation removes the need for middlemen, streamlining the royalties process and ensuring that creators get their fair share effortlessly.

Lifelong Revenue Streams for Creators

The automation and trustworthiness of smart contracts don’t just simplify the royalties process; they can also turn it into a lifelong revenue stream for creators. In the past, artists might receive a one-time payment for their artwork, with no share in its potential future appreciation. NFTs can flip this model entirely, offering creators a royalty every time their work changes hands, for as long as the blockchain exists. This revolutionary approach to royalties allows artists, musicians, and creators from all walks of life to benefit from the enduring value of their work.

Setting Up NFT Royalties—Your Guide to Financial Empowerment

A Step-By-Step Guide on Setting Up Royalties for Your NFT

Creating NFTs with royalties doesn’t have to be complex. Here’s a straightforward guide to help you set up your own:

  • Choose a Platform: Select an NFT marketplace that supports royalties and smart contracts.
  • Create a Wallet: You’ll need a digital wallet compatible with the platform you’ve chosen.
  • Upload Your Work: Add the digital art, music, or content you want to tokenize.
  • Define Royalties: When creating your NFT, look for an option to set royalties. This is usually expressed as a percentage of future sales.
  • Deploy Smart Contract: Once you’ve defined your royalties, the platform will generate a smart contract for your NFT.
  • List NFT for Sale: After double-checking all details, list your NFT on the marketplace.
  • Monitor and Receive Earnings: Thanks to the smart contract, you’ll automatically receive your royalties whenever your NFT is sold or transferred.

Necessary Platforms and Tools

Several platforms can help you get started, such as OpenSea, Rarible, and Foundation. You’ll also need a digital wallet like MetaMask and the digital file you want to tokenize.

Top 5 Platforms for NFT Royalties—Maximizing Your Earnings


Features: Supports a wide range of digital assets, allows customizable royalties. Pros: User-friendly, large user base, strong reputation. Cons: Somewhat high gas fees.


Features: Community-driven, supports “liquidity mining” to earn additional tokens. Pros: Unique community voting feature, lower fees. Cons: Smaller user base compared to OpenSea.


Features: Focused on digital art, allows customizable royalties. Pros: High-quality artwork, well-curated. Cons: Exclusivity can make it challenging for newcomers to enter.


Features: High-end digital art platform with fixed 3% royalty rate. Pros: Strong focus on quality, reliable payouts. Cons: Lack of customization in royalty rates.


Features: Dynamic pricing model, allows creators to capture more value as their work appreciates. Pros: Innovative pricing, more profit for creators. Cons: Complex to understand for beginners.

By examining these platforms carefully and considering your needs, you can make an informed choice about where to mint your NFTs for maximum royalty benefits. This newfound financial empowerment is truly changing the game for creators, making now the perfect time to step into the world of NFTs and secure a lifelong revenue stream.

Ethical and Legal Considerations—The Murky Waters of NFT Royalties

Ethical Implications of NFT Royalties

While NFT royalties have paved the way for a more equitable distribution of revenue for creators, the technology is not without its ethical concerns. For instance, the environmental impact of minting NFTs on energy-consuming blockchains like Ethereum is a significant issue. Furthermore, the NFT space has been rife with issues of plagiarism and art theft, as anyone can mint an NFT of a digital work, regardless of whether they own it. This raises questions about how NFT royalties can be ethically managed to ensure rightful ownership and fair compensation.

Legal Landscape Surrounding NFT Royalties

The legal framework governing NFTs and royalties is still in its infancy. Intellectual property rights can be complicated, as traditional copyright laws are not fully adaptable to the decentralized nature of blockchain. This gray area creates vulnerabilities, as creators may not be adequately protected under current legislation. Additionally, jurisdictions vary in how they treat digital assets, adding another layer of complexity. It is crucial for creators to consult legal advice when entering this space, to understand the implications and how best to protect their work.

Some FAQs Answered On The Relevant Topic

What platforms should I use for setting up NFT royalties?

You can use platforms like OpenSea, Rarible, or Foundation, among others, to set up royalties for your NFTs.

How much can I earn in royalties?

This varies depending on the platform and the percentage you set for your royalties. Some creators have earned significant amounts from secondary sales.

Can I change the royalty percentage after minting?

In most cases, the royalty percentage is locked once the NFT is minted. Some platforms may allow changes, but this is generally rare.

What are the legal requirements for setting up NFT royalties?

The legal landscape is still evolving. It’s best to consult a legal advisor familiar with blockchain and intellectual property rights for specific guidance.

How can I ensure I’m ethically creating and selling NFTs?

To act ethically, make sure you’re only minting work you have the rights to. Be mindful of the environmental impact and consider using eco-friendly platforms.

In Conclusion, the landscape of NFT royalties is both revolutionary and complex, offering unprecedented financial opportunities for creators but also posing ethical and legal challenges that are yet to be fully addressed. As the industry matures, it’s essential for creators to stay informed and adapt to emerging best practices. With this in mind, there has never been a better time to delve into the potential of NFT royalties to create lifelong revenue streams. Act now to empower your creative journey and secure your financial future.

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