What are NFT royalties and how do they work?

As you may have already seen, NFTs can be anything from digital art to tweets and sports highlights videos, and they can be sold for thousands or millions of dollars. Some blockchains will allow NFTs to integrate royalties, which are payments made to the creator, for example a musician, author or artist, every time a copy of their work is being bought. So basically NFTs allow you to receive royalties not only on the original sale but also on future resales.

  • How does it work?

The artist or person creating the NFT, might include a smart contract in the code in order to send a portion of the earnings from the resale to the original creator. Basically, this is a code that activates when a specific event occurs, which then causes something else to happen: in this case, the transfer of earnings or royalties from the resale of the NFT on a particular marketplace.

With Rarecubes, creators can easily monetize their work and operate in a dynamic environment. Here they can find the best way to be rewarded for their efforts.

Sales can take place through several mechanisms. For example, if we consider the music industry, the most successful NFT sales strategy is one that has a fixed price from the beginning of the sale. As you can see in the diagram below, the silent auction, on the other hand, is the least efficient strategy.

Source: copyrightcoinsnews.com

This kind of auction works as follows: for a limited period of time, users will only be able to make one bid. Once the time is up, the highest bidders will receive one of the editions, and pay the price they bid.

For example, let’s imagine that an NFT is an edition of 10, and the silent auction is open for 10 minutes. After 10 minutes, the people who made the 10 highest bids will win the auction. The user who placed the highest bid will receive edition n.1 of the collection, the one who placed the second highest bid will receive edition n.2 of the collection, and so on.

  • The benefits

NFT royalties can actually benefit creators in many different ways. A lot of artists, especially musicians, don’t get to collect all of their royalties due to a lack of transparency, either because they aren’t recorded properly or because they remain unclaimed and go to publishers. These are called unallocated royalties, and it has been calculated that artists lose several hundred million dollars due to these missed payments.

The blockchain can ensure that artists don’t lose their money due to a malfunctioning royalty system, and Rarecubes provides the best blockchain infrastructure to make sure you have the best possible experience, whether you’re a creator or an investor.

  • Some use cases

Many artists, including Steve Aoki, Ozuna, Kings of Leon and others, are taking full advantage of the possibilities offered by the new blockchain technology in order to generate new types of income through sales and royalties.

Now let’s take a closer look at some more practical examples, like the one of the musician Jaques Green, to whom his song, produced in 2011, earned about $27,000 in royalties.

Then there’s Mike Winkelmann, who broke the news by selling his artwork for a huge sum of money, has set his NFT up to earn 10% royalties from each future sale. As you have certainly noticed, royalties can be an important source of income for its creator or owner.

  • Always keep your guard up!

The idea of receiving royalties has partly inspired interest in making NFTs. Usually the amount of royalties depends on the platform and the type of NFT, for example if it is digital art or a package of concert tickets linked to the NFT.
Either way, users should always be very careful and fully understand what they are actually agreeing to.

If you are a consumer, you need to read the terms of service to be sure about what you are going to get when you purchase the NFT. And on the other hand, if you are a creator, you need to read the terms of service to make sure that you are okay with what you are providing to the platform.

Relying on royalties raised by NFTs is an excellent way for artists and creators to earn money for their work, even when the token is no longer in their possession.

In this way, the practice of allowing middlemen and other businesses to gain profit while the artist is left impoverished can be forgotten.

This makes it possible for artists and creators in general to sustain and continue to produce high-quality work and get what they deserve, of course, as long as they sell their NFT.

And you, what are you waiting for? Seize the opportunity and embark on the adventure to discover the NFT world with Rarecubes, your trusted companion!



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Rarecubes : NFT Studio

Rarecubes : NFT Studio


We are a leading Entertainment NFT studio working with celebrities to create NFTs with respect for copyright and transparency.