How Can NFT Creators Bypass Royalty Payments?
Royalties are usually enforced by the marketplace, not the NFT itself — which means they can be bypassed. Here's how, and why it matters for buyers too.
Secondary sale royalties are often advertised as a core benefit for NFT creators — a percentage of every future resale, paid automatically. In practice, royalties on most NFT platforms are enforceable only up to a point, and several methods exist to route around them entirely.
Why Royalties Aren't Enforced at the Same Level as the NFT Itself
An NFT's ownership and transfer are enforced directly by the underlying smart contract — that part is genuinely automatic and unavoidable. Royalty payments, in most common implementations, are instead enforced by the marketplace facilitating the sale, not by the NFT contract itself, which creates a gap wherever a marketplace chooses not to enforce them.
How Marketplace-Level Royalty Bypass Works
Because royalties typically depend on the specific marketplace's own policy rather than the NFT contract's code, a seller can move a transaction to a marketplace that doesn't enforce royalties, or use a peer-to-peer transfer outside any marketplace entirely, completing the sale off-platform while sidestepping the royalty mechanism completely.
Why Some Marketplaces Made Royalties Optional
Competitive pressure between NFT marketplaces has led some platforms to make royalty payments optional for buyers, or to not enforce them at the protocol level at all — a buyer given the choice can select to pay zero royalty, and a marketplace competing for trading volume has an incentive not to force the issue.
Newer Contract Standards Attempting to Fix This
Some newer NFT contract standards attempt to enforce royalties at the smart contract level directly, making them harder to bypass regardless of which marketplace facilitates the sale — though adoption of these newer, more enforceable standards varies, and many existing collections still use older contract structures that don't include this protection.
Why This Matters for Buyers, Not Just Creators
Beyond the direct impact on creators losing expected revenue, a collection where royalty bypass has become widespread can signal something about the broader trading environment around that collection — if royalty avoidance is common, other market-integrity assumptions specific to that collection's marketplace activity may also be less reliable than expected.
How This Connects to Overall Collection Health
A creator relying heavily on royalty income for ongoing project development, in a market environment where royalty bypass is common, may have considerably less actual revenue than the royalty percentage advertised in their collection's marketing would suggest — worth factoring into an assessment of a project's likely longevity.
What to Check If Royalty Structure Matters to Your Decision
Whether the specific NFT contract enforces royalties at the code level or relies entirely on marketplace policy, and which marketplaces the collection is primarily traded through and their specific royalty enforcement stance.
Check an NFT contract's structure and royalty enforcement mechanism if a project's stated royalty income is a factor in your evaluation of its likely longevity.