Why NFT Royalty Enforcement Will Make or Break Music's Web3 Dream

Marketplaces like Blur and Magic Eden have weaponized optional royalties to capture volume, creating a race to the bottom. This breaks the core Web3 value proposition for artists.

• Secondary sales revenue for artists has plummeted by over 90% on many major platforms.
• Creates a perverse incentive where platforms profit from artist work without compensation.
• Forces a choice between liquidity (on zero-fee markets) and sustainable economics.

Shifting the enforcement mechanism from the marketplace to the NFT smart contract itself. This makes royalties non-optional and trustless.

• EIP-2981 is the emerging standard for on-chain royalty specification.
• Manifold's Royalty Registry acts as a canonical source of truth for royalty settings.
• Requires buy-in from creators at mint and makes bypassing fees technically impossible on compliant marketplaces.

Platforms like Sound.xyz and Catalog enforce royalties through a combination of technical measures and strong community norms.

• Blocklist non-compliant marketplaces at the contract level to prevent listings.
• Foster collector culture where paying royalties is a social signal, not a tax.
• Demonstrates that enforcement requires both smart contracts and social contracts to be effective.

New chains like Zora and Base often launch with default royalty-optional policies to bootstrap liquidity, undermining the enforcement fight.

• Creates a fragmented landscape where royalty viability depends on the chain you mint on.
• Forces artists into a trade-off between low mint costs and guaranteed future revenue.
• Highlights the need for cross-chain royalty standards and enforcement, a problem akin to bridging.

A new wave of marketplaces is differentiating on robust royalty enforcement as a core feature, not an afterthought.

• Highlight.xyz uses a custom contract enforcing a 10% royalty floor.
• These platforms attract premium artists and serious collectors, segmenting the market.
• Proves there is demand for ethical infrastructure, but scale remains a challenge against zero-fee giants.

The future is dynamic royalties managed by on-chain entities, moving beyond static percentages to a full financial primitive.

• Splits protocols like 0xSplits enable real-time, automated revenue distribution to teams, labels, and collaborators.
• Artist DAOs can use treasury funds from royalties to fund future work, creating a flywheel.
• Transforms royalties from a passive income stream into an active capital allocation tool.

Shifts the battleground from the marketplace to the NFT smart contract itself. Royalty logic is embedded at mint, making it inseparable from the token.

• Creator Sovereignty: Artists deploy their own ERC-721 contracts with immutable, on-chain royalty specs.
• Marketplace Agnostic: Enforcement is a property of the asset, not dependent on any single platform's policy.
• Adoption Proof: Powers collections like Art Blocks and Cool Cats, securing fees on ~$1B+ in secondary volume.

A technical specification, not a protocol. It defines a single, backwards-compatible function (royaltyInfo) that any marketplace can query.

• Interoperability Blueprint: Provides a clear, standardized API for all marketplaces (OpenSea, LooksRare) to read fees.
• Reduces Integration Friction: Replaces a patchwork of custom implementations, lowering the barrier for compliance.
• Limitation: It's a standard, not enforcement; adoption is voluntary, creating a classic coordination problem.

Marketplaces that waive royalties gain a short-term volume advantage, forcing others to defect to compete. This race to the bottom destroys the core value proposition for creators.

• Tragedy of the Commons: Individual rational action (waiving fees) leads to collective ruin (artists abandon the ecosystem).
• Blunt Tools: Blacklisting non-compliant markets hurts collectors and fragments liquidity, a poor user experience.
• Existential Risk: If creators can't earn, Web3 music and art revert to being mere speculative JPEGs with no sustainable economy.

Long-term fixes require moving beyond individual market goodwill to cryptoeconomic and social-layer solutions.

• Layer-1/Layer-2 Native Support: Networks like Ethereum with EIP-2981 or Solana with Token Extensions bake rules into the protocol.
• Curated Registries: Allowlists (e.g., Operator Filter Registry) that NFTs can use to restrict sales to compliant platforms, creating a coalition.
• Creator-Led Blacklisting: A nuclear but effective option where top artists collectively delist from rogue markets, wielding their IP as leverage.