Join Priya, a young and creative artist from Mumbai. She threw her whole heart and being into producing a gorgeous digital piece, thrilled that NFTs might help make her financially independent. She’d originally licensed her piece, banking on a monthly trickle of royalties to help care for her and her family’s needs. Weeks stretched into months, and the royalties dried up to virtually zero. Priya struggles under acute financial burdens, as most digital artists do. Yet the eroding NFT royalty system eroded her ability to make a living. This isn’t just a story; it's a symptom of a deeper rot in the digital art world: the slow, agonizing death of NFT royalties.

Royalties: Art's Lifeline, Now Severed?

NFT royalties are essential for most digital artists’ survival. They’re a cut of the sale price that artists automatically receive whenever their NFT gets resold on a marketplace. Think of it as a permanent commission. This helps ensure that creators benefit from the ongoing effects of their work. Now, without any royalties, artists continue to provide their great work for free after the first sale. This leaves them susceptible to being taken advantage of. This is particularly important to artists from underrepresented and marginalized communities. So many of these artists, including those based in South Asia, have a hard time breaking into established art market spaces.

These technologies, particularly these NFTs, were supposed to democratize art, to empower art-makers. What do you do when that promise is broken? What occurs when the one tool that’s supposed to safeguard artists’ earnings is systematically eroded?

Data Shows Royalty's Alarming Decline

The numbers don't lie. Royalty payments for NFTs have seen freefall across all major marketplaces. This isn’t a small downturn—this massive and continued drop is the clear and present danger to the development of the entire digital art ecosystem. It’s something like watching a grandmasters’ chess game. The artists, our pawns, are thrown overboard one by one, but the platforms, our king, remain untouchable and unthreatened.

  • Decrease in Royalty Revenue: Reports shows, on average, NFT royalties have decreased by X% since 2022.
  • Marketplace Adoption of Optional Royalties: Blur and other marketplaces started experimenting with optional royalties, leading to a race to the bottom.
  • Artist Impact: The decline in revenue has forced many artists to abandon NFT projects or seek alternative income sources.

Several factors are at play: the rise of royalty-free NFT marketplaces, the lack of robust enforcement mechanisms, and a fundamental power imbalance that favors platforms over creators. Still, countless artists are lured by the siren song of cheaper fees found on royalty-free sites. This beautiful offer can propel them into financial disaster.

Royalty-Free NFTs: Ethical Suicide?

NFTs’ emergence as “royalty-free” is arguably the largest culprit. These NFTs are sold on marketplaces which do not enforce royalties, appealing to those buyers interested in getting a better deal at lower prices. Though this may seem like a great victory for collectors, it’s a crushing blow to artists. It’s similar to changing the rules of the game in the middle of play, prioritizing quick and easy short-term wins over smart, long-term strategies.

I argue they are not. They do so as they blatantly disregard the value of artistic labor. This creates a descent into a race to the bottom where artists are always shortchanged and unappreciated. It’s a toxic race to the bottom, where every jurisdiction loses while the platforms that create this increased trading volume win.

Blockchain's Answer: Enforcement, Not Just Existence

Blockchain technology, funnily enough, provides the answer to this conundrum. The same technology that made NFTs so exploitable can be utilized to ensure royalties are upheld, protecting artists’ rights in kind. Through smart contracts, there are built-in royalty enforcement mechanisms. To do this, they are making sure artists automatically get paid whenever someone resells their work.

Or picture immutable smart contracts, which no one could override, that automatically paid a creator’s royalties with every sale. This is not sci-fi, but it will take a smart tech-enabled solution to make this a reality.

Technology alone isn't enough. What is truly required is a change in attitude, a nationwide understanding that artists should, and must, be paid for their labor. We need to create space for platforms to pursue ethical practices instead of short-term profits. We’re going to need NFT collectors to help artists and other creators by only purchasing and trading NFTs on marketplaces that uphold royalties.

Empowering Artists: A Social Good Imperative

Ensuring artists can achieve financial security isn’t just the right thing to do—it’s the socially responsible thing to do. A vibrant art ecosystem is good for all of us, nurturing creativity, innovation, and cultural enrichment. When artists are more financially secure, they have the opportunity to work in greater artistic freedom, without the persistent fear of economic insecurity. This empowers them to create more diverse, more innovative, and ultimately deeper art.

As a Congressional staffer, I’m passionate about financial literacy. Developing stronger connections between South Asian crypto communities and the larger global community is something that’s really important to me on a personal level. I have seen firsthand how NFTs have radically changed the game for artists of color and LGBTQ+ artists. These digital assets provide them a global platform to showcase their work and livelihood. That potential is being squandered if we let the royalty system go to hell.

For inspiration, recall the tale of Priya, the Mumbai-based muralist. We have the chance to make sure that her story doesn’t become the standard. Together, we have an opportunity to build a digital art ecosystem that’s equitable, sustainable, and empowering for all artists.

Reclaim Art; Support Royalty-Enforced NFTs

The outcome of NFT royalties is not set in stone. It’s now our turn, us artists, us collectors, and us developers to define it. We need to demand better. We should be funding the projects that protect artists’ rights and ensure fair compensation. We need to hold platforms accountable for their actions.

The game isn't over yet. But the next move is ours. Let's make it count.

  • Choose Royalty-Enforcing Platforms: Support marketplaces that automatically enforce royalties.
  • Educate Others: Spread awareness about the importance of NFT royalties.
  • Support Artist-Led Initiatives: Invest in projects that empower artists and promote fair compensation.
  • Demand Transparency: Call on platforms to be transparent about their royalty policies.

The game isn't over yet. But the next move is ours. Let's make it count.