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Arts & Communication Blockchain and royalties in China’s art market

In summary, blockchain technology enhances the way safeguarding their intellectual property rights. Especially,
resale royalties are managed in the digital art market. NFTs that are combined with automatic resale rights and
Using smart contracts, blockchain platforms offer an the underlying artworks can improve artists’ positions
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automated, transparent, and efficient system for royalty within an asymmetric economic power structure. They
distribution, empowering creators while providing expand their audience reach, aligning with the intent to
fairness in transactions. The varied strategies of different foster art and science, allowing artists to establish and
NFT platforms reflect the evolving nature of this space, cultivate a new, extended patron community, thereby
balancing the need to incentivize creators and maintain an increasing their profits and recognition. 80
attractive market for buyers. The adoption of resale rights for digital visual artists
3.3. Potential advantages and disadvantages of in the digital economy is driven by the need for equitable
blockchain in resale royalties treatment and protection, similar to adjustments made
in the music industry. Historically, the music industry
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This section weighs the benefits and drawbacks of underwent significant changes to ensure that artists and
integrating blockchain into resale royalties. For artists, music production companies received fair compensation
it promises fair compensation and broader recognition, and protection in the digital age, especially with the
yet challenges persist, from regulatory hurdles to market advent of online streaming and digital downloads. This
acceptance. transformation was deemed essential for the survival and
3.3.1. Impact on artists fair treatment of artists in a rapidly digitizing world.
(a) Benefits for artists in blockchain royalties Moreover, blockchain technology empowers artists
with greater control over the revenues generated from their
Incorporating blockchain technology into the resale creative products. The diminishing reliance on traditional
royalties system provides transformative benefits, intermediaries, who often insert themselves into the value
particularly in ensuring fair compensation and chain between creative products and audiences, means
streamlining administrative processes for artists. This that artists can now gain a larger share of income and have
adoption, particularly within the NFTs realm, represents a more influence over the pricing, sharing, or advertising of
novel approach for artists to receive ongoing compensation their intellectual property. 81
for their digital artworks. The use of smart contracts on
blockchain platforms dramatically shortens the time artists (b) Challenges for artists in blockchain royalties
must wait to receive their royalty payments, revolutionizing In addition to the benefits, blockchain’s immutable
the traditional payment systems where artists had to wait ledger system offers efficient management of the
9 – 12 months for their first royalty payment. However, administrative costs and efforts required to maintain resale
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the remarkable success stories like Beeple’s, where rights. Its immutable ledger system can effectively collect
blockchain technology enabled significant earnings and and provide information and payments to regulatory
public recognition, are not a universal experience for all agencies and artists themselves. In addition, smart
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artists. Many emerging artists encounter barriers within contracts automate essential functions and protocols
the complex blockchain and NFT marketplaces, often due without the need for intermediaries, making blockchain
to a lack of digital literacy and the increasing saturation of technology cost-effective and reducing the need for
the art market. This discrepancy underscores the pressing multiple employees to handle funds, check information,
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ethical considerations and the digital divide within the art maintain records, and pay artists. 80
world. While blockchain technology and NFTs offer the However, the implementation of blockchain technology
promise of artist empowerment and a revolutionized art in managing resale royalties is not without its complexities.
market, ensuring these benefits are accessible to all artists One significant issue is the limited benefit for a few artists.
is crucial. Addressing the challenges of market saturation Research indicates that an increase in resale royalty rates
and enhancing digital literacy among artists are essential can adversely affect the sales price of NFTs. Specifically,
steps toward fostering a more equitable art ecosystem. 84 it has been observed that for each 1% increase in resale

One of the most significant advantages of blockchain royalty fees, the sales price on the primary market drops
in this context is the provision of fair compensation and by 4%. This negative impact on sales price highlights
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opportunities. The implementation of resale royalties a critical concern: while resale royalties are designed
through blockchain provides artists, especially those to benefit creators by providing them with a share of
from minority communities, with fair compensation future sales, setting the rates too high can actually be
and broader opportunities. NFTs can aid artists in counterproductive. High royalty rates can deter potential
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Volume 3 Issue 1 (2025) 10 doi: 10.36922/ac.2875