Royalty and Artists. NFT and the Future.
Did you know that a royalty rights agreement guaranteeing artists 15% of art resale value has existed for 50 years?
The Artist’s Reserved Rights Transfer and Sale Agreement, colloquially known as the Projansky Agreement, championed and passed in 1971, sought to protect the rights of artists. Under this article, the artist holds the right to royalties amounting 15% of resale value. Supposedly more than 70 countries provide Resale Royalty Rights for artists. The EU was required to implement legislation according to the EU directive, and in France, it has been recognized since the 1920s. This concept never gained widespread acceptance and is not recognized in the United States.
As an artist and someone who knows a handful of North American and European artists, I’ll be honest. I’ve never had the pleasure to witness the joy an artist must feel after having to find out that they’ve been graciously rewarded for a resale of an artwork they originally sold years ago.
Law or no law, enforcing Resale Royalty Rights on art sales must be a hard practice. I can’t fathom how much formality and steps must be taken to be able to trace an artist and their bank account potentially years after originally representing them and selling their work.
But, think for a second what a beautiful world might we create if artists were no longer “starving”, colloquially of course. The term “starving artist”, although no longer frequently used, doesn’t mean that artists today don’t frequently take temporary jobs to be able to buy the comfort of more time — the time they so amply invest in exploring their creative expression.
Culture is shaped by art, and society admires the beauty of self-expression. Knowing this, it’s still difficult for society to create the space and opportunities required for artists to be able to create.
The Future
What if I told you that everything is about to change?
A new force is brewing. An innovation that will give birth to a fundamental shift in how art is transacted and exchanged.
NFT (Non-fungible token), due to effects of media proliferation, is synonymous today with digital art or collectibles, and that’s great since it’s a start. However, I won’t talk about that today. I want to open your eyes to the technology which will hand artists the tools for freedom: Freedom to create, freedom to explore, and freedom to express themselves. A guarantee of Resale Royalty Rights.
The NFT authenticating the artwork can be designed so that it automatically pays the artist a commission in perpetuity every time the artwork is resold. I don’t want to focus too much on the technicalities in this article, but if you’re not familiar with NFTs or blockchain technologies, transactions done on the blockchain are managed by smart contracts. More abstractly, they’re pieces of code which follow a defined set of rules and can’t be revised. If I create an NFT artwork and define that I, as the artist, receive a 100% of the proceeds from the initial sale and 15% on all future sales of that artwork, money will appear in my digital wallet every time that artwork is resold, in perpetuity.
Artists, or any other third party for that matter, no longer need to do anything else. Artists sell their work, grow their collector base, and sleep soundly knowing full well that their investment of time and creativity will pay dividends. A defined commission payment on future resale of their work is guaranteed.
Now, although this technology sounds exactly what we’ve been waiting for, it currently does come with limitations. If you sell your NFT artwork today, your Resale Royalty Rights are programmatically only guaranteed if that NFT has been resold on the same marketplace you’ve minted the NFT on.
To date, I can already count seven prominent NFT online marketplaces that provide secondary marketplaces where artwork is freely resold. Some provide the tools for artists to be able to define Resale Royalty Rights commission structure. The problem is that if someone buys my NFT and then transfers the NFT to another marketplace to resell it, I, as the original creator of that NFT, will not receive the originally defined resale commission I’ve defined in my NFT. In other words, the Resale Royalty Rights currently only works locally on a marketplace and not globally on the blockchain.
What’s Next?
We wait. Blockchain technologies are being improved and new solutions developed to support NFT Resale Royalty Rights, no matter where the NFT is resold in the future. Since the Ethereum blockchain is the basis for most of the currently offered NFTs, I’m most excited by an Ethereum Improvement Proposal EIP-2981 to the ERC-721 Token Contract, referred to as the golden standard for NFTs. In summary, it would be a standardized way to retrieve royalty payment information to enable universal support for royalty payments in all NFT marketplaces and ecosystem participants.
What can we do as artists? Be vocal about it. The solution is a reach away. Tell your friends, colleagues, marketplaces owners, and blockchain developers. By solving this very important global Resale Royalty Rights issue, we can be certain that we can increase the adoption of NFTs in the art world. Keep in mind NFTs aren’t limited to digital art. Once we solve for the linkage between the physical and the digital, NFTs will revolutionize the traditional art market as well; but, I’ll leave that for another article. If you’re interested in hearing more about NFTs and the advancements in blockchain technology, you can follow me here as I continue to document my learnings.
