While artists earn royalties for any secondary sale (e.g. any sale that follows the artist’s original sale of the work, aka the “mint sale”), collectors can now earn royalties on the artworks they trade as well.
Much like Artist Royalties in 2018, Collector Royalties are a new concept for the NFT ecosystem as a whole. Because of this concept’s novelty, the Collector Royalty program underwent a 12 month pilot program to monitor its efficacy and sustainability in practice. This pilot period concluded in July 2022, and we're happily moving forward with this structure – it now also applies to purchases made in $RARE, too!
Which artworks do Collector Royalties apply to?
As of July 13th, 2021 and onward, Collector Royalties apply to any artwork collected on SuperRare. This applies to all SuperRare tokens, regardless of the contract or date on which they were minted.
Royalty payments on pre-07/13/21 works will begin "where the ball lies" (e.g. no retroactive payments, but we'll pick up each royalty stream wherever it is today).
In other words, royalty payments on artworks sold before 07/13/21 will begin with the first collector selling the work on or after 07/13/21.
This first royalty payment will be dependent on how many previous sales an artwork has had. For example, if the first sale of a work after 07/13/21 is mint sale + 5 on an artwork's sales chain, the collector selling the work (and other owners in the chain) will receive 0.125% (see the section below for an explanation of this royalty amount.)
How much is the royalty?
The first collector of an artwork receives 1% after the 1st secondary market transaction to which they are no longer a direct participant (mint sale +2). This 1% is funded from the 3% network fee a new collector pays when purchasing an artwork.
Royalties then decay by 50% for each subsequent transaction in an artwork's chain of ownership (as pictured below):
Why is this important?
Collectors have been integral to both SuperRare and the growth of countless artist careers. We believe collector royalties will make collecting a more social activity, incentivize both primary and secondary sales, and continue to unleash artistic expression.
When do I receive my Collector Royalty?
Royalty payments will be computed monthly and credited directly to the accounts of qualifying collectors on SuperRare. You will be notified if you have a Collector Royalty to claim, and you can do so within your dashboard.
It is within the SuperRare ethos to never directly handle the funds of our users, as all transactions otherwise are carried out via smart contracts. We look forward to bringing Collector Royalties on-chain in the near future, now that the pilot period is complete.
We’re closely listening to feedback from the community to make adjustments as needed. We've been overwhelmed by the positive response so far and welcome further ideation from the community. We’re thrilled to bring this exciting new economic construct to the art market and hope it continues to expand the commercial success experienced by both artists and collectors alike.