The term royalty refers to the economic compensation devolved to artists or, more generally, to the creators of a work protected by patents or certain copyrights.
Authors of a work receive royalties every time their creation is sold or used by third parties.
In Web3, royalties indicate the fee that is due to the creators of a NFT each time it is purchased.
The value of a royalty, expressed in percentage terms based on the selling price, is decided by the author themself when registering the work on the blockchain (minting).
Since the blockchain is composed of a series of ‘blocks’ concatenated with each other and generated each time a new piece of data is entered, all information is recorded immutably and transparently on it.
Web3 royalties therefore, in addition to guaranteeing financial compensation for the work done by the artist, can be compared to a sort of ‘patent’ attesting to the creation of the NFT and which cannot be circumvented in any way.
The functioning of royalty fees differs depending on the blockchain or marketplace used. On Ethereum for example, royalties are regulated by a series of smart contracts, i.e. software registered on the blockchain, which automatically credit the artist with the fee each time the NFT is sold.