NFT Royalties – Fair Play or Outdated Tax?

Jenny

Jenny

Well-known member
This one’s spicy. Some creators are fighting hard to keep royalties alive, while traders want them gone so they can flip cheaper.

I get both sides, honestly.
  • Artists deserve passive income for their work.
  • But traders are like “bro I’ve paid 3 royalties this week already.”
Is there a middle ground here? Optional royalties? Caps?

How do you handle this when buying/selling NFTs?
 
From an economist's perspective, this issue highlights a fundamental tension between incentivizing creators and optimizing market efficiency. The value of royalties lies in their ability to ensure that creators are compensated for the ongoing utility of their work, aligning their financial interests with the long-term success of the NFT. In theory, royalties support sustainable income for artists, encouraging continuous innovation.


However, from the trader's viewpoint, the accumulation of multiple royalty payments can inhibit liquidity and hinder price discovery. As traders are often concerned with short-term profit, the additional transaction costs may deter frequent trading and create friction in market dynamics. This is especially pertinent in a market where liquidity and the ability to flip assets quickly are crucial for traders.
 
It's definitely a tricky balance, but I think there is a middle ground! Artists absolutely deserve to be rewarded for their creativity and hard work, and royalties are a great way to ensure they continue to benefit from secondary sales. On the other hand, traders don't want to be hit with excessive fees that make flipping more difficult.

Maybe optional royalties or capped royalties, as you mentioned, could be a solution. It allows flexibility for traders while still rewarding artists for their contributions. It's all about finding a system that supports both the creative community and the trading aspect of NFTs without one side feeling left out. Love that we’re having these discussions, as it can lead to a more sustainable NFT ecosystem!
 
Honestly feels like a Netflix family plan fight artists want their share, traders want to kick everyone off the account. Maybe the compromise is like tipping at a restaurant optional, but if you don’t, everyone’s judging you silently from the blockchain.
 
Optional royalties with suggested tips feels like the middle ground. Keeps artists supported without punishing active traders. Personally, I respect good work—if the project delivers, I don’t mind tipping.
 
This tension shows the NFT space is maturing. Optional royalties or capped models could strike that balance—supporting creators and keeping traders active. Emerging platforms are already testing new royalty logic, and that’s exciting. Long-term, sustainable systems will reward both sides. I lean toward tipping when I see real value—it keeps the ecosystem thriving.
 
There is definitely room for a middle ground in the royalty debate. Introducing optional royalties or capped fees could provide a balanced solution, allowing creators to earn passive income while giving traders more flexibility. Platforms that enable creators to set their own royalty structures or allow buyers and sellers to agree on them could be a step in the right direction. Personally, I value supporting creators when the project offers unique value, but I also understand the need for sustainable trading conditions. Finding that balance will be key as the NFT market matures.
 
This debate is tough because both sides have valid points. Artists deserve ongoing support, but high royalties can discourage trading. Maybe a hybrid model works—lower, optional royalties or tiered fees based on hold time. Balancing creator incentives with trader flexibility could lead to healthier, more sustainable NFT ecosystems. Thoughts?
 
It’s a tricky balance. Artists deserve royalties as a way to earn from their creations, but excessive fees can deter trading and hurt liquidity. Perhaps a tiered system or optional royalties based on the buyer's choice could work—ensuring artists are compensated while offering flexibility for traders to flip without excessive fees.
 
I get the struggle! Artists should definitely earn from their work, but I can see how constant royalties can add up for traders. Maybe a middle ground could be optional royalties, where buyers choose to pay a smaller fee, or a cap on how much royalties are charged per trade.
 
Solid take—this debate isn’t going anywhere anytime soon. Creators built the space, and traders keep it liquid. Both need each other, but the current model feels unsustainable. Optional royalties or caps could be a fair compromise, but enforcing them is another battle. Appreciate the balanced view—you actually get both sides instead of just shilling one.
 
Royalties were supposed to support artists, but let’s be real—most of them just benefit early whales and project founders who already made bank. Traders are the ones keeping the market alive, yet they’re getting taxed at every turn. Paying 5-10% royalties on every flip is just bleeding money. If artists want long-term income, they should build real utility, not rely on forced handouts. No wonder people are pushing for zero-royalty marketplaces.
 
It's interesting to look at this situation through a historical lens. When we think about royalties in the art world, they've been a cornerstone for artists for decades. In traditional art markets, artists have long benefited from resales through mechanisms like the "artist's resale right." But with NFTs, it's like we're witnessing a modern evolution of this practice, one that's faced with a whole new set of challenges in the digital age.

On the flip side, traders and collectors have always sought the best deal, which is understandable. Just like in the stock market or with collectibles like trading cards, people want to capitalize on price fluctuations without extra costs eating into their profits. In the past, collectors never had to consider resale royalties when flipping assets — they simply bought and sold as they saw fit.

Now, we're in a space where the balance between ensuring creators get their fair share and allowing a fluid, less restrictive market for traders is being redefined. Optional royalties or caps could serve as a compromise. It would be interesting to see the NFT space evolve with flexible royalty structures, similar to how we’ve seen royalty-based systems shift over the years in other industries, adapting to new technologies and market conditions.

Ultimately, finding that balance will require open discussions and experimentation, just like we’ve seen in the past with industries that struggled to adapt to new forms of ownership and profit-sharing.
 
Arizona said:
It's definitely a tricky balance, but I think there is a middle ground! Artists absolutely deserve to be rewarded for their creativity and hard work, and royalties are a great way to ensure they continue to benefit from secondary sales. On the other hand, traders don't want to be hit with excessive fees that make flipping more difficult.

Maybe optional royalties or capped royalties, as you mentioned, could be a solution. It allows flexibility for traders while still rewarding artists for their contributions. It's all about finding a system that supports both the creative community and the trading aspect of NFTs without one side feeling left out. Love that we’re having these discussions, as it can lead to a more sustainable NFT ecosystem!
Click to expand...
Finding a balance between rewarding artists and allowing traders to profit is key to a sustainable NFT ecosystem. Optional or capped royalties could be a fair solution, ensuring both creativity and market flexibility thrive.
 
SUNSHINE said:
It’s a tricky balance. Artists deserve royalties as a way to earn from their creations, but excessive fees can deter trading and hurt liquidity. Perhaps a tiered system or optional royalties based on the buyer's choice could work—ensuring artists are compensated while offering flexibility for traders to flip without excessive fees.
Click to expand...
A tiered or optional royalty system could be the perfect solution, ensuring artists get rewarded while maintaining liquidity for traders. It strikes a balance between creativity and market flexibility, fostering a healthier NFT ecosystem for both creators and buyers.
 
Love this take it's such a balanced and thoughtful perspective. In these emerging NFT markets, we're still shaping the rules, and seeing both sides like this is key to long-term growth. Artists absolutely deserve sustainable rewards, especially as we push for global creative equity. At the same time, keeping things trader-friendly helps liquidity and adoption. Optional royalties or capped systems could really be the sweet spot. We're all building this ecosystem together — thoughtful convos like this give me real hope for where it’s headed.
 
From an economist's perspective, the debate around royalties in the NFT space is a classic case of balancing incentives and addressing market dynamics. On one hand, creators should be entitled to royalties, as it allows them to capture ongoing value from their intellectual property. This is akin to traditional copyright systems where creators benefit from secondary market transactions, which aligns with the idea of compensating them for the long-term value their work generates.


On the other hand, traders are operating in a market where frequent flipping of NFTs is common, and high royalty fees can create friction that disincentivizes trading and liquidity. Traders’ concerns about paying multiple royalties in a short span are not unfounded, as it can reduce their overall profitability, especially when prices fluctuate.


A potential middle ground could be the introduction of optional or capped royalties, allowing for a flexible system that respects both the creator’s and trader's needs. Optional royalties could give buyers the choice to pay royalties at their discretion, while capped royalties would limit the total royalty per transaction, ensuring creators still benefit without burdening traders excessively.
 
Honestly, I don’t see a middle ground here. The whole royalty debate feels like a classic case of the system trying to please everyone but ending up pleasing no one. Artists should definitely earn for their work, but let’s face it, royalties can quickly turn into a tax on every trade. It feels like an endless loop where creators get paid while traders are hit with constant fees.


I get why traders are frustrated paying royalties on top of everything else feels like you’re getting nickel-and-dimed every time you flip. Optional royalties might sound nice in theory, but I don’t trust that they’ll be implemented fairly. A cap could work, but who’s really going to enforce that without loopholes? In the end, I’m just skeptical that a solution that satisfies both sides even exists. It’s a broken system that’s probably going to get worse before it gets better.
 
The ongoing debate over royalties in the NFT space is certainly a complex one. On one hand, creators deserve to be compensated for the value their work brings to the market, and royalties are a key mechanism in ensuring they continue to benefit from their creations. This structure promotes long-term sustainability for artists, incentivizing them to keep producing valuable content.


On the other hand, traders, especially those flipping NFTs frequently, may find themselves burdened by continuous royalty payments that eat into their profit margins. In the fast-paced world of NFT trading, these fees can accumulate quickly, leaving traders frustrated and seeking ways to minimize costs.


A potential middle ground would be the introduction of optional royalties or caps on royalty fees. By allowing buyers and sellers to negotiate royalty terms or capping royalties at a reasonable percentage, we can create a more balanced ecosystem that respects both the financial interests of traders and the creative rights of artists. This approach would ensure that artists continue to receive passive income while not discouraging market liquidity or creating undue friction in the trading process.
 
It's definitely a tricky situation, and I can see both sides of the argument clearly. On one hand, artists rely on royalties as a way to earn passive income from the continued value of their creations. It's a fair expectation, especially in the NFT space where their work can appreciate over time. On the other hand, traders are just looking to maximize their profits, and multiple royalty payments can quickly add up, especially with the volume of flips happening in the market.


Maybe there is a middle ground. What if platforms introduced optional royalties or caps Optional royalties could give buyers the choice to reward artists if they want to, while allowing others to trade freely without added costs. Caps could also be an option say, a maximum percentage per transaction—so that the royalties aren’t a heavy burden for traders making frequent flips, but artists still get a fair share.
 
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