With the wide recognition of NFTs around the world and across different industries, the creative industry among many others is actually seeing how NFTs can be very beneficial to them. Artists and creative creators can earn passive income from their creative works even after they have sold their NFT.
The concept of artists and creative creators getting proceeds from the sale of their NFTs is what is known as NFT royalties.
NFT royalties give you a percentage of the sale price each time your NFT creation is sold on a marketplace. NFT royalty payments are prepared and executed automatically by smart contracts. With most marketplaces, you can choose your royalty percentage. 5-10% of the sale price is considered a standard royalty rate.
The NFT royalties are automatically paid to the author through the smart contracts coded on the blockchain. Every time a secondary purchase happens, the smart contract ensures that the terms of the NFT are fulfilled.
It is important to know that not all NFTs yield royalties. It has to be specifically written into the smart contract terms of the NFT. Once the contract is written into the blockchain, every other aspect is carried out automatically.
Artists and creative creators therefore have the benefits of getting returns for a piece of creative work they produced once on a recurring basis.
The royalty systems differ from marketplace to marketplace. Rarible for instance let you enter your royalties when minting your NFT.
New marketplaces like Bluebox are coming up with new ways in which artists and creative creators can benefit.
Take for instance you created an NFT artwork on Rarible. A fan of your art buys it for say 5 ETH. So you've just made 5 ETH. Let’s say you also coded into the NFT smart contract terms that anytime a purchase occurs you will get 10% of the proceeds.
Now that fan who bought your artwork auctions your art for an even higher price, say 50 ETH. So automatically you get 5 ETH from this purchase.
So with NFT royalty, you stand to gain from every sale of your work for as long as it keeps selling. Every creative stand to gain from NFT royalties.
The wide opportunity offered by NFTs makes it possible for artists and creative creators, in general to sustain, grow and continue producing quality work and getting what they deserve as long as their NFT is sold.