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NFTs Will Shape The Future of The Creator Economy: Web3 Royalties and Copyright Explained

Image description: Immutable, How NFTs Will Shape The Future of Creator Economies, Web3 Royalties and Copyright Explained
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When Batman first graced the pages of Detective Comics in 1939, readers were instantly hooked. Nearly 85 years later, through countless iconic appearances in comic books, television, film, and video games, the Caped Crusader stands firm as one of the most valuable intellectual properties in the world.

Although the character was co-created by Bob Kane and Bill Finger, Kane made a series of moves early on in the character’s existence that would grant him sole ownership of all royalties (ongoing payments made to creators for the sale and use of their work) and revenue generated by the World’s Greatest Detective from that point onward. As a result, Finger died penniless and was forgotten by the general public decades later.

Although it might not always involve such a grave betrayal, creators often find themselves in situations where they are unfairly compensated for their work.

In music, Spotify’s paltry streaming royalties, ensure all but the biggest artists can earn a liveable wage from their original music. The same injustice applies to Hollywood and acting, as the current writer’s strike will tell you everything you need to know. The situation has gotten so dire that Squid Game director Hwang Dong-hyuk has reportedly received zero royalties from Netflix despite creating one of its most successful series ever.

NFTs Are Shifting The Creator Model

In a healthy creator economy, making a living off of your work would be a simple affair. There would be no need to go through an endless carousel of intermediaries to ensure you are fairly compensated whenever your work is purchased, used, or built upon. Although the legal frameworks intended to protect the rights of creators are sound ideas in theory, much of their value is lost in practice.

With the current web2 model, most of the value is captured by a tiny sliver of the industry, with a few centralized entities holding all the power. This not only deprives creators of fair compensation and the ability to capture their work's legacy value but also complicates the process for smaller creators to fairly use assets from their larger counterparts.

But Web3 and NFTs are ushering in a change, fundamentally shifting how creators think about ownership and revenue. By replacing the centralized middlemen of Web2 with the trustlessness of the blockchain, this new era will greatly increase the creator economy's value while ensuring every creator—big or small—has a fair and secure means to benefit from the ownership of their work.

Let’s explore how. 

An Introduction to Blockchain

A blockchain is a digital ledger that records transactions across a decentralized network of computers instead of a singular server. Once a transaction is verified by the network, it is grouped with other transactions in a “block” and linked to previous blocks, thereby forming an immutable chain of transactions.

As data is stored and processed over a large network of devices, blockchains are inherently more resistant to attacks and possess multiple points of failure. Decentralization also enables all users on a blockchain network to access the same information and transaction history, allowing them to independently verify the accuracy of any transaction logged on the network.

A wide range of data can be stored on blockchain networks, including non-fungible tokens (NFTs). An NFT is a unique digital token of information that lives on the blockchain, used to represent art, music, collectibles, and more. Unlike cryptocurrencies such as Bitcoin or Ethereum, which are fungible and can be exchanged one-to-one, NFTs are distinct and non-interchangeable. 

The Power of Smart Contracts

At the heart of all NFTs lies smart contracts, self-executing computer programs that automatically enforce, verify, and execute the terms of a digital agreement when certain conditions are met. 

For example, smart contracts can be used for:

  • Facilitating the distribution and sale of digital content without the need for a third-party intermediary
  • Automating the enforcement of licensing terms for their work
  • Automatically forwarding royalties to artists whenever their works are sold, used, or licensed in the secondary markets

By minting their work as an NFT, artists can automatically earn a royalty from every resale of their, establishing a continuous revenue stream. This not only provides creators with a steady income, but also ensures they capture the enduring value of their artistry.

When multiple artists collaborate, smart contracts can automatically split payments to respective creators, reflecting a pre-agreed division. This mechanism promises fairness and ease, especially when works are remixed or sampled, directly addressing many challenges smaller creators face when using others’ assets in their own works. 

How NFTs Are Reshaping Royalties, Copyright, and IP Ownership  

In a few short years, NFTs have dramatically altered how creators produce and monetize their work, with well over $2 billion in secondary royalties generated across all creators. This shift has not only benefited established artists and provided emerging creatives with a sustainable income model. It's more than just immediate profit; it's about securing a creator's legacy and ensuring they derive the true value of their craft.

A big part of this value capture is enforcing copyrights (creators exclusive rights to their works) and trademark (unique symbols identifying a brand)  protection over their intellectual property, a feat often taken advantage of by large web2 organizations. For entities like independent game studios operating on a smaller scale, protecting their creative outputs is paramount. In expansive markets, safeguarding their work against unauthorized copying, distribution, and usage becomes a vital tool for competition and survival.

NFTs offer a powerful remedy to reduce the onset of expensive and lengthy legal disputes. Beyond their function as smart contracts, NFTs carry in-depth metadata detailing copyright, licensing terms, and unequivocal ownership. This not only demarcates the boundaries of use but also distinctly identifies the rightful owner of the asset.

How Immutable is Championing Creators

At Immutable, we believe all creators should be entitled to royalties on their works. Without royalties, the promise of Web3 would be no different from the norms most creators outside of our community continue to operate under. That’s why we’ve fought for enforceable royalties across all Immutable collections and creators; guaranteed royalties are one of the biggest advantages web3 can have over our current paradigm. 

With our cutting-edge Immutable zkEVM infrastructure, we empower studios and individual creators to bring their digital assets to life with unprecedented speed and scale. From our Passport and Magic Wallet to Immutable Mint and Global Shared Orderbook, the Immutable ecosystem has everything creators need to quickly scale their communities and continue to profit from their work.

It’s clear that the future of IP lies in Web3. We can’t wait for you to join us on this journey. 

If you are a builder or creator, we'd love to hear from you.

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