How do creator royalties work?

What are creator royalties on NFTs?

Creator royalties allow artists and creators to receive a percentage of future sales of their work on Gamma's secondary marketplace. Royalties apply only to secondary sales and not to primary mints, where the entire sale goes to the creator, less the commission Gamma charges for use of its minting platform, if applicable.

How do royalty payments work?

Once a royalty is defined on the sale of a creator's work, each time a transaction is completed (i.e. once a listed NFT is sold), the defined royalty percentage will be automatically delivered to the artist's address. There is no need to "claim" royalties or to otherwise maintain the royalty configuration, except in cases where the creator would like to update the address where funds are directed, or to change the percentage to apply to future sales. Due to the nature of the blockchain, royalties cannot be applied to past sales or updated to account for past sales.

How can creators add royalties to secondary sales (for custodial listings)?

Once the smart contract for a collection has been deployed and confirmed in an anchor block on the Stacks blockchain, the minting of its NFTs can begin. If a creator has opted to mint their NFTs using Gamma's minting platform, they'll also need to wait for their collection to be reviewed before minting can begin on the platform.
Minting an NFT calls on a creator's smart contract to send the minter an NFT from your collection.  As soon as the creator would like their collection enabled to be listed for sale on the secondary marketplace, they may send a support ticket by emailing support@gamma.io with the link to their mint page or marketplace page for the collection they want enabled for listing. Creator royalties default to 5% but may be requested to be a different amount.

Notice Regarding Custodial Listings: The process outlined in this article applies to custodial trading. This process applies when listed NFTs are held in escrow by Gamma, or, in custody by Gamma. Gamma applies royalty payments when purchasing occurs through this method. For contracts using non-custodial marketplace listings, the creator defines royalties themselves via the contract's marketplace royalty commission traits. Contracts deployed using Gamma's Create Portal support non-custodial listings from a technical perspective, but Gamma does not currently support listings in this manner. In the future, Gamma will upgrade its marketplace to support non-custodial listings by default, at which point these contract functions will become active.

Can creators set custom royalties?

It would be good for creators to consider what percentage they want set for creator royalties on their collection's secondary sales.  While the creator receives the majority of the funds from a collection's initial mint, it is the sellers of the collection's NFTs that receive the bulk of the funds on secondary sales since they now own the NFT.  However, the creator can request to receive a portion from all secondary sales based on the percentage fee set as creator royalties for that collection.

By default, creator royalties will be defined at 5% unless otherwise specified. This default number is most common, but can certainly be altered or removed, or raised to some larger amount. Please note that royalties considered "too high" by the community may discourage secondary trading of the NFTs or may encourage private trading to circumvent royalty payments, which is a potentially dangerous activity that leaves users more susceptible to scams and other mistakes.

When requesting royalties be added to collections, creators can request a different percentage, higher or lower, than the 5% default royalty.