One of the big revolutions that NFTs and blockchain bring to the table for artists and creatives is ownership. This new technology transforms the way creatives are actually going to define this concept.

In the context of the NFT (Non-Fungible Token) space, rights and royalties refer to the ownership and compensation structure for creators and original content owners when their NFTs are sold or transferred in secondary markets. Here’s how they work:

  1. Rights: When a creator mints an NFT, they retain certain rights associated with the original content. These rights might include the right to reproduce, distribute, display, and perform the content. Depending on the terms set by the creator, these rights can be specified for both the primary sale and any subsequent resales of the NFT.
  2. Royalties: Royalties in the NFT space refer to a percentage of the sale price that the original creator receives every time the NFT is sold in a secondary market. This is particularly important because, in traditional art and content markets, creators often don’t benefit financially from the increased value of their work after the initial sale. With NFTs, the use of blockchain technology enables automatic royalty payments to creators every time their NFT is resold.

Here’s how the process generally works:

  • Minting and Primary Sale: The creator mints an NFT representing their content. When this NFT is sold for the first time (primary sale), the creator sets the initial price and the terms of the sale. This can include the percentage of royalties they want to receive from any future resales of the NFT.
  • Secondary Sales: When the owner of the NFT decides to resell it on NFT marketplaces, the blockchain technology ensures that a portion of the sale goes back to the original creator as royalties. This is typically automated and transparent, as the blockchain records and enforces the terms set during the minting process.
  • Smart Contracts: Smart contracts, which are self-executing contracts with the terms of the agreement directly written into code, play a crucial role in enabling automatic royalty payments. These contracts are programmed to distribute royalties according to the percentages specified by the creator.
  • Marketplace Support: Not all NFT marketplaces support royalties, so it’s important for creators to choose platforms that offer this feature. Marketplaces like OpenSea, Rarible, and Foundation are known to support royalties and automated payments.

Royalties and rights in the NFT space bring a new level of fairness and empowerment for creators. They enable creators to receive ongoing compensation as the value of their work appreciates in the secondary market, and they ensure that creators’ interests are upheld even as NFTs change hands multiple times.