Imagine you paint a picture, sell it for £200, and then watch it resell for £20,000 — with you receiving nothing from the second sale. That has been the artist’s lot for centuries. NFT royalties promised to fix it: a coded percentage that flows back to the creator every time the work changes hands, forever, automatically. It was one of the most genuinely exciting ideas in the NFT boom — and its real-world story since is a fascinating lesson in how code, markets and human incentives collide.
This beginner’s guide explains NFT royalties from scratch: how they were supposed to work, what actually happened, where things stand in 2026, and what creators and collectors should know.
Royalties in the Traditional World
To appreciate the idea, understand the problem. A musician earns royalties when their song plays on the radio; an author earns on every book sold. But a visual artist selling a painting? In the UK, the Artist’s Resale Right does grant a small royalty (up to 4%, capped) on secondary sales through galleries and auction houses — but private sales slip through, enforcement is patchy, and most artists see nothing from the appreciation of their work. The system is better than nothing and worse than fair.
The NFT Promise: Code as Royalty Collector
NFTs — unique blockchain tokens representing ownership of (usually) digital art — offered a technical fix. Because every resale happens on-chain, a royalty percentage could be written into the token’s smart contract: sell for £1,000 with a 10% royalty, and £100 routes automatically to the artist’s wallet. No galleries, no collecting societies, no chasing payments. Early NFT artists reported life-changing royalty streams as their work traded furiously in 2021–2022.
For creators, this was revolutionary: ongoing income aligned with their work’s success, enforced by code rather than lawyers. For a few golden months, it worked beautifully.
What Went Wrong: The Optional-Royalty Wars
Here is the technical catch the early hype glossed over: royalty enforcement was never truly built into most NFT standards — it was a convention that marketplaces voluntarily honoured. When trading volumes fell and marketplaces began competing for users, several major platforms made royalties optional for buyers, or cut them to near zero to attract volume. Creators watched their royalty income evaporate as the market raced to the bottom.
The result: by 2024–2025, enforceable on-chain royalties were the exception rather than the rule on most major marketplaces. Newer token standards attempt to bake royalties in at the protocol level, but the fundamental tension remains — buyers prefer cheaper, sellers prefer royalties, and marketplaces follow the buyers.
Where Things Stand in 2026
- Enforceable royalties exist on some newer standards and curated platforms that require them — but these are islands in a sea of optional-royalty trading.
- Established artists with leverage negotiate royalties contractually with platforms and collectors, much like the traditional art world — code alone proved insufficient.
- The NFT market itself cooled dramatically from 2021 peaks; trading volumes are a fraction of the frenzy, which reduced both royalty income and the urgency of the debate.
- Legal recognition is evolving: UK courts have treated NFTs as property in several cases, and the Law Commission’s work on digital assets continues The Law Commission’s digital assets project tracks how UK law is adapting. — but royalty enforcement remains primarily a market-structure problem, not a legal one.
Learning About NFTs From Scratch: A Sensible Path
If you are curious rather than committed, learn in this order:
- Understand the underlying tech first — our smart contracts explainer covers the machinery NFTs run on.
- Browse without buying: explore major marketplaces to understand what sells, pricing, and how royalties are displayed (or not).
- Learn wallet basics with tiny sums — our first DEX trade guide teaches the wallet skills NFTs require.
- Study the scams: fake mints, phishing “airdrop” sites and counterfeit collections are rife — the defences in our staying safe on public Wi-Fi apply directly.
- Only then consider participating — as a collector supporting artists you like, or a creator experimenting, with money you can lose.
NFT Royalties vs Traditional Royalties: Side by Side
The comparison is instructive. Traditional music royalties flow through collecting societies (PRS for Music in the UK) — slow, bureaucratic, but legally enforceable and universal. The Artist’s Resale Right gives visual artists a small cut of gallery resales — legally mandated but narrow and poorly enforced. NFT royalties offered the opposite profile: instant, automatic and global, but ultimately voluntary at the marketplace level.
The irony is that each system has what the other lacks. The dream outcome — legally backed, automatically enforced, universal creator royalties — would require legislation recognising on-chain royalty obligations, something no major jurisdiction has yet attempted. Until then, creators live in a hybrid world: using NFTs for reach and experimentation while relying on contracts and traditional rights for reliable income. The technology opened a door; the institutions have not walked through it yet. For now, the wisest creators treat royalties as a welcome bonus — and build their livelihoods on income they control.
For Creators: Practical Royalty Advice
- Choose platforms with enforced royalties if ongoing income matters to you — and verify the enforcement is technical, not voluntary.
- Diversify income: never depend on royalties alone; the market proved they can vanish by platform policy change.
- Consider contractual terms with serious collectors for high-value works, mirroring traditional art practice.
- Understand UK tax: NFT sales and royalty income are taxable — HMRC’s crypto guidance and general self-employment rules apply. Keep records from the first sale.
Conclusion
NFT royalties promised artists automatic, perpetual resale income coded into their work — a genuinely beautiful idea that collided with market reality when platforms made royalties optional to chase volume. In 2026, enforceable royalties survive on select platforms and standards, but creators should treat them as a bonus rather than a business model. The deeper lesson endures: code can enable fairness, but only incentives and institutions sustain it — a truth as old as the art market itself, and as new as the next token standard. The technology is young; the lesson is ancient.
Frequently Asked Questions
What are NFT royalties?
A percentage of each secondary sale of an NFT that is routed back to the original creator — e.g. 10% of every resale. They were designed to give artists ongoing income from their work’s appreciation, enforced automatically by code.
Do NFT royalties still work in 2026?
Partially. Many major marketplaces made royalties optional or minimal during 2023–2024, so enforcement is inconsistent. Some newer standards and curated platforms enforce them technically, but buyers often choose cheaper royalty-free venues.
How do I earn royalties as an NFT creator?
Mint on a platform with enforced royalties, set your percentage (typically 5%–10%), and ensure collectors trade where royalties are honoured. For high-value works, supplement with contractual agreements.
Are NFTs still worth anything?
The speculative frenzy collapsed, but NFTs persist in gaming, ticketing, digital identity and art collecting at far lower volumes. Value now depends on genuine utility or artistic merit rather than hype — a healthier, if quieter, market.
Do I pay UK tax on NFT sales?
Yes. Selling NFTs and receiving royalties are generally taxable — Capital Gains Tax on disposals and Income Tax on royalty/creator income, depending on circumstances. Keep full records and consider professional advice.
