4 ways NFT artists can handle 0 royalties

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Today's story:

• 4 ways digital artists can thrive without royalties

We're handing things over to Grassverse for a look at NFT royalties.

What is Grassverse? - an NFT community for people who want to “touch grass,” bond over IRL experiences, and post awesome thought leadership content.

Grassverse was founded by web3 maestro Riddles, who brings you today's email.

What you got for us, Grassverse?

How artists can thrive under zero royalties

When NFTs exploded onto the scene, artist royalties were one of the features people got most excited about.

Because it's easy to track NFTs as they're bought and sold, collecting royalties on second-hand sales became a real possibility.

As a result, many creators included royalty agreements when listing digital art for sale.

But now, some marketplaces are letting people trade NFTs without honoring royalty agreements or paying up.

This has started a big debate in the NFT world – should royalties be protected or scrapped?

Riddles thinks the whole conversation is missing the bigger picture...

Here's Riddles' breakdown of why 0 royalties might not be a problem:

1. a brief history of technology impacting artists

2. why understanding economics & business is critical for artists

3. 4 ways artists can make 💰 despite 0 royalties

1. Some history

Let me explain…

Once upon a time, musicians sold records, cassettes & CDs to make 💰

Enter: Limewire, Napster, Kazaa, Piratebay, etc.

**Note for teenagers (i.e. most of web3): those were “free peer-to-peer file sharing platforms.”

These made consuming music FREE & buying CDs *optional*

Free music was technology-driven, just like 0 royalties are today. No longer did you need to pay for music. You paid for it only to support the artist.

🔑 This is the current situation in web3

Many are pushing the “do the right thing” narrative when it comes to keeping royalties across NFT marketplaces. I’m here to tell you all of that doesn’t matter. It’s a temporary solution. It will fade.

🧠 Here's why

Back to 🎵. Do you know how most artists make money today? By touring and playing shows (also streaming, but that’s secondary) i.e. NOT by selling records.

Notice how artists’ entire business model has changed due to changes in technology. Some tried to fight it. Others embraced the change & pivoted. “Free music” became a mechanism to funnel “super fans” into concerts.

Some other wins for the free music model:

• Free music spreads quickly and has a bigger reach

• It promotes music quality vs record label marketing budgets.

What was considered a technological disruption paved the way for a better ecosystem, benefiting artists & listeners.

🔑 Those who didn't embrace change got left behind

🔑 Those who embraced change had opportunities like never before

Great. Thx for the history lesson Riddles, but what do I have to do?

Glad you asked…

2. Artists must be business people

If you want to make art for art’s sake… i.e. the money or size of your audience doesn’t matter, then this newsletter isn't for you.

This is about monetizing your work in order to make your efforts sustainable, & perhaps even hitting it big.

2 ways for artists to have “business” covered

1. learn it yourself & spend a lot of time strategizing

2. hire someone to handle the “business side of things”

Your call. But whatever you do… DO NOT underestimate business.

Name me one successful artist (any genre) who isn't business-savvy or doesn't receive business support… I’ll wait ⌛️

Marketing, PR, tokenomics, legal, etc. simply cannot be ignored!

Many artists are too noble, too fuck the establishment, too the art speaks for itself. But the hard truth is: if you think about money/exposure/fame in a negative way, it will always elude you.

🔹 You’re better off, more focused, and attract a larger audience when your art sustains you financially

🔑 Sales/funding/visibility will unlock more doors than you know

🔑 If you have 0 business savvy/advice, you will underperform your potential & competition

Often, art is valued on the artist’s brand, personal story, charisma, bravery, communication skills, narrative, etc.

Art valuations are NEVER based on the artwork alone. Why else do so many artists only get recognition after they’re dead…? 🤔

3. Fuck royalties – Here's how

I won’t cover royalties in detail since there's been a million threads on them. I assume you know what they are… you’ve probably read all the @beeple stuff… yada yada.

What I will give you are four tactical alternatives to work around 0 royalties 🔹🔹🔹🔹

Hypothetical scenario (for simplicity): Imagine you have 10 items for sale, floor at 1ETH & royalties set to 10%

🔹 Alternative 1: Issue more supply

10 sales at 1 ETH each (on average) would have brought you 1 ETH in royalties (at 10%). Since you'll no longer have royalties coming in, this is what you do:

Increase supply – at the 10th sale, add another item and list it for 1 ETH

Aside from the extra effort needed to produce the 11th piece, the outcome is the same.

In theory, you’re not really taking away the “consumer surplus” as much (by inflating supply) because the unpaid royalties offset exactly that for buyers.

Side note: this is a microeconomics concept I won’t get into details of, but here’s an intro video:

🔹 Alternative 2: Make the mint price higher

If you can anticipate how much money you've lost from 0 royalties, just take that % and add it to the mint price.

i.e. if you expected to get 5 ETH just from royalties, then increase each of the 10 items’ mint price by 0.5 ETH ✅

You might argue this will result in lower sales at the offset… and you’d be right. However, the timeline it would’ve hypothetically taken you to earn all those royalties is also much larger. And in that time, with sufficient marketing & project building, you can still “mint out.”

🔹 Alternative 3: Hold back supply

Imagine you had 10 pieces to sell that are all pretty similar & your objective was to raise 5 ETH in royalties.

Instead of selling all 10, you sell 8 and hold back 2. You then set their prices at 3 & 4 ETH respectively. This allows you to “cash in” on the ladder up and “capture the upside” in the event your collection moons.

My recommendation always is to hold back supply as it aligns your incentives with that of your collectors’ i.e. you both want “price go up” & “wen moon” …amiright?

🔹 Alternative 4: Provide perks to “super fans” at a premium

In place of royalties, why not issue super fan NFTs for more $$? They could provide access perks like:

👉 video meet & greet

👉 custom art

👉 physical signed copy

👉 profile features on own Twitter

This can be your version of the “concert” example from earlier, allowing you to capture some of that “consumer surplus” from your super fans (who would’ve paid much more for your art), while also giving them added benefits. Win-win 🏆

The beauty here is that you don’t have to do just one of the above to tackle the Boogey monster that is ZERO ROYALTIES.

You can combine all 4 (plus more that I haven’t highlighted) as you see fit to offset the funds you would’ve otherwise raised from royalties.

Many will come up with sophisticated (ahem… complicated) ways to tackle the 0 royalty issue. My advice to you is: keep it simple. Occam's razor.

🏁 Conclusion

🔹 this shit is nothing new – tech has disrupted almost every business model & the rate of disruption will only increase

🔹 don’t dismiss business – otherwise 💰 & success will elude you

🔹 relax, breathe – there are plenty of tactical ways to offset royalties

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Disclaimer: Nothing in this article/newsletter should be considered financial advice. The purpose is to inform readers of the current trends and news in the web3 space. We encourage every reader to do their own research and not act upon information put forth by Decentra Daily.