If you’ve ever made something, a song, a drawing, a video, you probably know that weird sting when someone else sells your work, and you get nothing from it. Online, this hits even harder. Stuff gets copied, shared, and resold in seconds. Sure, NFTs helped with tracking ownership, but real change came with royalties. Suddenly, artists could actually earn something every time their work changed hands, which felt a lot fairer.
So, what exactly are NFT royalties? How do they work? That’s what this article is digging into here. It’ll break down why creators care about them, how different marketplaces decide what gets paid out, and why people still argue about royalties in the NFT world.
By the end, you’ll get the ups and downs, and a sense of where this all might go, especially for anyone trying to make a living from digital art or music.
What Are NFT Royalties?
NFT royalties are recurring payments that creators receive each time their non-fungible token (NFT) is resold on a secondary marketplace. Unlike traditional art or digital rights, where creators are typically compensated only at the first sale, NFT royalties enable ongoing earnings as the NFT changes hands over time.
When minting an NFT, the creator typically sets a royalty percentage, typically between 2.5% and 10% of the resale price. This royalty rate is embedded in the NFT’s metadata and serves as an automated fee that marketplace protocols or smart contracts honour each time the NFT is traded.
A CryptoPunks NFT sold in October 2021 for $11.8 million. Assuming a 5% royalty on secondary sales, creators in similar protocols could earn significant ongoing returns as prices rise.
How Do NFT Royalties Work?
NFT royalties are governed by built-in rules that trigger payments whenever an NFT is resold. These rules ensure that creators receive their share without manual tracking or follow-ups.
Role of Smart Contracts
Smart contracts store the royalty terms at NFT minting. When the NFT is sold on a supported marketplace, the contract automatically sends the royalty amount to the creator’s wallet. This process runs on the blockchain, which keeps transactions transparent and traceable.
Setting Royalty Percentages
Creators choose the royalty percentage during minting. Most select a moderate rate to keep their NFTs attractive to buyers. Once set, this percentage usually stays fixed and applies to every qualifying resale of the NFT.
Also Read: How to Book NFT and Token Sale Royalties
How Are NFT Royalties Calculated?
Royalty payments are calculated as a percentage of the NFT’s resale price. For example, if a creator sets a 7% royalty and the NFT later sells for 1 ETH, the creator automatically receives 0.07 ETH from that transaction. If the NFT is resold again at a higher value, royalties are recalculated based on the new sale price, allowing creators to benefit as market demand grows.
Distribution of Royalty Payments
When a resale happens, the total sale price is split. A portion goes to the creator as royalty, while the remainder goes to the seller after marketplace fees are deducted. Payments are processed automatically, reducing disputes and delays.
What Role Do NFT Marketplaces Play In Royalties?
NFT marketplaces pretty much set the stage for how royalties work. They connect creators with buyers, but more than that, their rules determine whether creators are actually paid when someone resells their work.
Enabling Royalty Settings During Minting
When you’re minting an NFT, these platforms let you pick your royalty percentage right then and there. It’s simple: creators choose how much they want to earn on each resale. The marketplace saves this information and ensures buyers see it up front before they make a purchase.
Enforcing Or Ignoring Royalties
Some marketplaces automatically enforce royalty payments, while others make them optional for buyers or sellers. When royalties are optional, creators may not receive payments even if they set a fee during minting. This creates uneven outcomes across platforms.
Cross-Marketplace Limitations
NFTs often move between different marketplaces. When a platform does not support royalty enforcement, resale transactions may bypass creator payments. This limitation has fueled debate and led some creators to block certain marketplaces.
Also Read: OpenSea NFT: Beginner’s Guide
Are NFT Royalties Legally Protected?
NFT royalties sit at the intersection of technology and law, making their legal protection less clear than many creators expect. While blockchain records transactions, legal rights still depend on traditional frameworks.
Copyright Ownership And NFTs
Minting an NFT does not automatically transfer copyright ownership unless stated clearly. Most countries protect digital works under existing copyright laws, and creators typically set royalty rates between 2.5% and 10% during minting. This means creators still hold rights to their work, but royalties depend more on platform rules than copyright enforcement.
Country-Specific Legal Differences
Copyright and digital asset laws vary by country. Some regions offer stronger protection for digital creators, while others lack clear guidance. This variation makes it difficult to rely on legal remedies if royalties are not paid.
Pros and Cons of NFT Royalties?
NFT royalties reshape how creators earn from digital assets while also influencing collector behaviour and marketplace activity. While they create sustainable income opportunities for artists, they can also introduce challenges that affect resale dynamics and platform participation.
Aspect | Advantages Of NFT Royalties | Disadvantages Of NFT Royalties |
Creator Earnings | Creators earn ongoing income each time their NFT is resold instead of relying only on the initial sale. Successful projects continue generating revenue as demand grows. | Some marketplaces allow royalty avoidance, meaning creators may not always receive expected payments despite setting royalties at minting. |
Creator Incentives | Predictable resale income encourages creators to invest more effort in storytelling, community engagement, and long-term project quality. Buyers often benefit from better-supported projects. | Creators who set higher royalty percentages may unintentionally discourage trading activity, reducing visibility and resale opportunities for their collections. |
Payment Transparency | Blockchain transactions allow creators and collectors to verify how royalties are distributed, reducing disputes and improving trust between parties. | Different marketplace policies lead to inconsistent royalty enforcement, weakening trust in royalty expectations across platforms. |
Market Impact | Royalties create a sustainable ecosystem where creators benefit alongside collectors as NFT values rise over time. | Additional royalty costs can push sellers to raise resale prices, making NFTs less attractive and sometimes reducing overall market liquidity. |
Collector Participation | Moderate royalty rates help balance creator earnings with collector incentives, encouraging healthy ecosystem participation. | High royalty fees can lower collector profit margins, discouraging speculative buyers who rely on resale gains. |
Also Read: How to Get Started with NFT Staking
Why Are NFT Royalties Being Debated Today?
NFT royalties have become one of the most discussed topics in the digital asset space. Differences in marketplace policies and trader behaviour have created tension between creators and collectors.
Optional Royalties And Marketplace Policies
Some marketplaces allow buyers or sellers to bypass royalty payments. This approach appeals to active traders but reduces creators’ income. As a result, creators often avoid or block platforms that do not support enforced royalties.
Creator And Marketplace Conflicts
Efforts to enforce royalty payments have triggered disputes among marketplaces. When one platform strengthens royalty enforcement, others may respond by encouraging creators or users to shift to other platforms. This back-and-forth has divided the NFT ecosystem.
Community Driven Enforcement
Since technology cannot fully force royalties, many creators rely on community support. Collectors who value the artist and the project often voluntarily honour royalties. Trust and reputation now play a central role in sustaining creator income.
What Does The Future Look Like For NFT Royalties?
The future of NFT royalties will depend on how technology, marketplaces, and communities evolve together. While challenges remain, several paths could shape how royalties function in the coming years.
Technical Enforcement Limitations
Current blockchain systems cannot fully enforce royalty payments across all platforms. Even with standards in place, marketplaces can choose not to enforce them. This limitation means creators may continue facing gaps in royalty income.
Growing Importance Of Creator Communities
Strong creator communities may become the primary source of royalties. Collectors who care about a creator’s work and values often respect royalty payments. This shift places more importance on trust, reputation, and long-term engagement.
Different Approaches Across Blockchains
Each blockchain handles royalties differently. Some networks support built-in enforcement, while others leave decisions to marketplaces. This variation means creators may choose chains based on how well royalties align with their goals.
Also Read: The Ultimate Guide to NFT Trading Cards 2026
Conclusion
NFT royalties enable creators to earn beyond the first sale by receiving a share each time their work is resold. They rely on smart contracts, marketplace policies, and community support, which explains both their value and ongoing debate. While royalties benefit creators, enforcement gaps and collector concerns continue to shape how they function in practice.
For creators and traders, tracking NFT income accurately matters just as much as setting royalties. KoinX helps you record NFT transactions, calculate income, and stay compliant with tax rules linked to royalties and resales. If you want clarity and control over your NFT activity, now is the right time to join KoinX.
Frequently Asked Questions
Can NFT Royalties Be Changed After Minting?
Mostly, no, you can’t change NFT royalties once you’ve minted the NFT. The royalty rate is typically set in the smart contract when it is created. Sure, a few platforms might let you tweak things a bit, but it really depends on the blockchain and the rules of the marketplace you’re using. So, if you’re a creator, make sure you pick your royalty rate carefully before you hit that mint button.
Do All Blockchains Support NFT Royalties?
Not really. Different blockchains handle royalties differently. Some have built-in royalty features, while others leave enforcement to the marketplace. This can make a significant difference in how reliably you receive your royalties. That’s why many creators prefer blockchains with a strong track record of supporting royalties.
Can Buyers Avoid Paying NFT Royalties?
Yes, buyers may avoid royalties by using marketplaces that make royalties optional or do not enforce them. This is a key reason behind the ongoing debate around NFT royalties. In such cases, payment depends more on marketplace policy than on the NFT itself.
Do NFT Royalties Apply When NFTs Are Gifted?
NFT royalties usually apply only when an NFT is sold for value. If an NFT is transferred as a gift with no payment, royalties may not be triggered. However, some blockchains allow fallback fees even on free transfers, depending on how the NFT was created.
Are NFT Royalties Paid Instantly After A Sale?
In most supported marketplaces, royalties are paid automatically at the time of the transaction. Once the sale is complete, the creator’s share is transferred to their wallet immediately. Timing may vary slightly based on network congestion and marketplace processing rules.
Why Do Some Creators Set Very High Royalty Percentages?
Some creators set high royalties to maximise long-term income or discourage rapid flipping of their NFTs. However, high royalties can reduce buyer interest and resale activity. This is why many experienced creators prefer moderate rates that balance income with market demand.