NFT Royalties —Villan-Speculators or Villan-Marketers? Efficient Marketing Hypothesis (EMH)

Theo Goodman
10 min readSep 6, 2022

In the frenzy of the 2021 bull run countless artists, musicians and creatives were onboarded to various NFT platforms. Some of the marketing tactics used were at best misinformed and at worst overtly deceptive. Preying on the villainization of the evil speculators, the boogyman that sells their work at the secondary market for 500 times the price that they bought it for, and of course the villainous, evil, and in all ways uneducated in what real art is NFT Flippers. In this environment of non-stop Clubhouse hangouts (pre Twitter spaces) the blind led the blind into the bright tunnel of the bull market leading to the blue skies of a lifetime of royalties coming from secondary market sales, and all this due to the technology of BLOCKCHAIN.

Either there is freedom to transact, or there is not, the decision is yours….

As the market efficiencies kick in and the speculator-villains understand the technology, they show the world how blockchain technology works. With both the creators and the speculator-villains having an incentive to understand the technology and what it can and can not do. How is it that one side has failed in an epic fashion in its understanding? Is blockchain technology suitable for royalties at all and are the speculators the real villains here? Let us explore these and many other questions of the day in this adventure of royalty.

What is a bearer asset and why the fuck should artists care?

Bearer Assets, collect them all

A bearer asset is something that you own if you possess it. You might have seen in some classic bank robbery films like one of my all-time favorites Heat where an armored car is targeted for a robbery (watch here). During the heist they ignore the cash and are looking for the bearer bonds, the possession of these bonds denotes ownership in an offshore company worth hundreds of millions of dollars. In a parallel world imagine someone hacking into a meta mask wallet with limited time to act. Instead of emptying out the ETH and USDT they make sure to grab all the NFTs as they are worth many times more than the “Cash”.

Why is this important?

The first application of bitcoin was non monetary

Bitcoin has brought us the concept of the -Digital Bearer Asset-. That is what blockchain is good at. It is very good at issuing at the network level digital bearer assets (BTC, LTC, DOGE, ETH rewarded to miners automatically by the network) and it also allows users to issue their own digital bearer assets (Tokens, NFTs, minted by humans) which in some ways is just a fancy name for, tokens. In order for this to work, there can not be a way for you to reverse a transaction. There can not be a helpline to call, the transactions need to be “as good as cash” meaning in your hand/wallet and you own it. Once I have it I can do what I want with it. All of this is possible -without a middle man- no intermediary needed “trustless”. This is THE breakthrough, this is the reason we are all here, why you are reading this now, if bitcoin did not create the digital bearer asset things would be, different.

Some Strings Attached

Y`all tryin to get around royalties?

Royalties bring with them some strings attached. If you sell the NFT via a platform that recognizes royalties then they will be charged at sale and distributed to the wallet address (or addresses in split payments) that should get the royalties. What is good about this is that it is transparent, anyone can check the who (addresses), when, and how much of the royalties. Everyone is happy, and the collector (nice word for the villain speculators when they behave as the artist sees fit) can post on Twitter about supporting the artists since they paid royalties. Everyone gets ethical and moral high fives, all the while, ignoring how the technology works…………

EMH and Royalties

The market learns from information and pain

The villain-speculators understand this and simply trade on platforms without royalties, trade OTC, or simply inflate the price to reflect what must be paid in royalties, this is all part of the Efficient Market Hypothesis (EMH). EMH is not some evil market powers theory that teaches people how to drain any and all value from creatives, instead, it is a hypothesis that in our case shows that the market will price royalties in, or price them out. The market will show how the technology works or does not work if there is an economic incentive to do so. When royalties first came out people’s understanding of the technology was not as good as it is now, and thus the market has become more efficient.

What happens when there is a sale on a platform that does not support royalties?

HQ of the villan-speculators

Nothing! The sale happens and there are NO ROYALTIES PAID. Yes you heard correctly, this means that in order for royalties to function as promoted by: marketers, moral and ethical high ground want to be influencers and NFT platforms alike that -all- NFT marketplaces(yes A, L, L) would have to “enforce” (support) royalties, but that’s not allALL transactions of the NFT would need to have royalties attached.

Freedom of Transaction or Walled Garden?

Not only do transactions that happen outside of a smart contract or centralized marketplace lack any sales record, but there is also zero way to know if the transaction was part of a sale, or simply moving the NFT from address A to B. The owner of the NFT is either guilty each time they transact the NFT and should pay each time, or is free to do what they want with the NFT, that they own. As you can see attaching strings can change the characteristics of the — thing — the artwork itself. As the NFT is not just a .jpg and not just a token but a Total Artwork (Gesamtkunstwerk) an intersection of technology and art. These strings that are being attached could (in my humble opinion) hold down the artwork and lend the focus away from, the expression, the emotion, the colours, the communication, the thing.

There are a few options for enforcing royalties — right now — that can be implemented:

-Hardcode contract to only allow be transacted or traded via whitelisted platforms. (How long will these platforms exist? 1 year, 5 years, 100 years, as long as your art? )

-Take legal action in the legacy world to enforce royalty payments. (is this what we are trying to build, how is this different from the legacy system, why do you need blockchain or an NFT in this case?)

-KYC buyer and make them sign legacy world royalty contract. (see above comment)

-Use Ricardian contract to link the NFT with a legacy world contract

The intention was to destroy the legacy art structures and build new — with royalties, there is no way to enforce them without building new walled gardens, is this what you want?


Since writing this article I have come up with a new concept that is in the spirit of artists earning over time that does not require a third party to enforce anything. This means no more pandering to NFT marketplaces “please please enforce royalties”. This also means no more begging collectors “please please no OTC deals please use the following marketplaces or I will shame you”. Not only that this also gets rid of the need for dystopian blockchain surveillance tools that profile collectors into “targeted” and “non targeted” collectors based on their market behavior and if they have, for example, touched a PFP or the wrong NFT, sold the wrong thing at the wrong time or are just not good enough for whatever reason. What is the concept?


Use the same contract that is used in crowdsales (ICOs) that vests the tokens for X amount of time. This means the tokens are locked in a contract and can not be sold for X amount of time. This can also be done in a way where X % are available at X time and so on. WTF? Let me give you an example.

Mint edition of 10 NFTs

5 of the editon are for sale now

5 of them are put in a vesting contract

The contract releases 1 NFT every 365 days

In 5 years all 10 NFTs will be on the open market


The advantage for artists

The problem royalties are trying to solve is for artists to be able to earn from sales on the secondary markets. Artists often sell something and then find the art sold on the secondary market at 10x 100x or 1000x and they get nothing. With the vesting concept if the art does start selling on the secondary market for 100x then the artist will have the chance to sell at the higher price since there are some still in the vesting contract. No need to hope that a marketplace enforces royalties. The artist has full control of what to do with the NFTs that are released from the vesting contract.

The advantage for collectors (and evil villian speculators ie “non targeted collectors”)

The inital offering of the NFT can “sell out” and there is no threat of the artist “dumping” on the market as there is a clear vesting schedule that can be reviewed without the need to trust a third party. No royalties to pay that inflate the price. No strings attached in the sense that you can or can not sell via this or that marketplace. No public guilt trips for selling OTC.

The advantage for everyone

The price is not inflated by royalties. There is no need to hope that a marketplace will be functional in the future. Since there is are no strings attached (whitelisting, blacklisting, targeting, non targeteing) then the flow of the NFT is increased!

You don´t support artists if you don´t support royalties

Very high elevation

Part of the reason we are where we are right now. In a place where the villain-speculators understand how to use the technology to simply get around royalties is because there are two arguments that get mixed up often with a healthy dose of emotion. There is, on the one hand, the question of if artists should get royalties on secondary markets yes/no, and then there is the question are royalties using blockchain technically feasible yes/no.

When someone (Theo Goodman included) even mentions that it is easy to get around royalties instead of people trying to understand why that is the case the discussion gets buried in stories of how art was sold on secondary markets for millions and the artist lives in a cardboard box on the street. This story does not change the technology and how it works. This story is not addressing the second question, is this feasible or not? This also leads to more artists living in cardboard boxes and many poor art students.

Your cake, and eat it too

Just click here, and here, and here, and here, and here and again here

Marketers, influencers and NFT platforms that did not properly inform people on the nature of how blockchain works, take a look at yourself. Was it worth it to get masses of people to believe in a lifetime stream of royalty payments only for them to be very simply cut out by using another platform? Did you yourself not understand and got caught up in the sob stories of the poor artists? Artists, are you limiting who buys your work because you are obsessed with the chance of your work being sold on a secondary market and you not getting a cut of it?

What now?

Artists: With the ever-increasing sophistication of villian-speculators (aka collectors) being able to get around royalties it could be made harder and more inconvenient for them to do so. Many platforms can and have started to support the same royalty standards in order to make it easy to enforce them across many marketplaces. Even if — ALL — of them did this, it will never stop OTC sales, in this case, only royalty payments can happen voluntarily. Artists can debate making editions rather than hoping for royalty payments to work. If you make an edition of 100 and keep 50 or 25 for the long term then you have a type of insurance if the piece is sold for a significant amount on a secondary market.

Still want to collect royalties? Instead of unclear terms and condtions that are not part of the “smart” contract intergrate a Ricardian contract that clearly state the terms.

Collectors: All y´all villain-speculators, flippers, scammers, and high-brow fine art collectors, pay the fucking royalties if you know that you damn well should. In the end not voluntarily paying the royalties will lead to higher prices, and more editions, and y`all will just get rugged by the artists as the EMH strikes again.

Efficient Marketing Hypothesis (EMH):

The market will find the flaws, lies and inconsistency in all marketing and exploit it for maximum pain.





Post Scriptum

I am more than willing to discuss any and everything on a voice or video livestream with neutral third party host, I have taken part in hundreds of youtube panels, countless real-life panels and informal discussion, ask around. If one would like to see the references of said panels I am more than willing to reference them as to provide evidence to be reassuring to anyone potentially involved that I do indeed debate in good faith.


Theo Goodman