What is the NFT Creator Royalty Debate All About?

What is the NFT Creator Royalty Debate All About?

Since the inception of NFTs, creators have been known to get royalties on their works when traded on secondary marketplaces. This notion is widely regarded as the cultural standard in the NFT space, and its existence has remained unchallenged until recently. 

If you are not too familiar with how NFT royalties work, then here is a simple explanation. NFT royalties are set commissions that creators get when their NFTs are sold on secondary markets. Essentially, they have sold their art in the primary market, but still, get a cut each time the art exchanges hands among peers.

The Pro-Royalties Perspective

Making a very good piece of digital art does not guarantee outright success. Creators still have to build their reputation, engage the NFT community, and gradually work their way up the success ladder. 

While they may be able to make sales at the initial stage, it is possible that the funds realized will not be as high as they could be when the art exchanges hands over time and the collection becomes popular. Royalties then create a way to compliment the efforts of a creator when their work eventually gets to the limelight.

In this sense, royalties make sense and can help provide a vital source of income that will further help a creator continue in the digital art space. Otherwise, traders will keep reaping the rewards of someone else’s creativity.

The Debate Against Royalties

You definitely wouldn’t think twice before jumping on this ship if you were about to pay a 5% commission worth $100,000 on a piece of NFT whose value stands at $2,000,000. Paying such an amount on top of the huge cost of the artwork certainly feels unfair to collectors. There is the possibility that you will be a collector if you are found here afterall.

Recently, two NFT platforms have further fueled discussions around the essence of royalties with their moves to remove royalty fees. The first is the decentralized NFT marketplace, Sudoswap which totally eliminated creators’ fees while further lowering its platform fees to 0.5%, and the second is X2Y2 which has made royalties optional and solely at the discretion of collectors.

The question then is about what becomes of creators when their art on secondary marketplaces increases in value after having been sold at very low prices.

Food for Thought

Your perspective on this debate will likely be influenced by which side you belong to. For the neutrals, what makes it even more difficult is the fact that both sides have a unique case to argue, further making for a hard stance between cultural obligations and morality.

Should royalties continue or should they be stopped? And whose plight should prevail - the collector or the creator? Now it's your turn to weigh in.

Did you enjoy this article?

Subscribe to Redlion Gazette

Gazette time units are weeks so our subscriptions follow that pattern. You are always getting your Gazette & ArtDrop plus saving 30% of the minting price! There are 2 tiers of subscription.

        Never miss a thing!

        Find your weekly guilty pleasure in a mailbox.