Learning from Tess.Design: Paying Artists Royalties for AI-Generated Art

We launched Tess.Design in May 2024, a marketplace where artists received a 50% royalty for AI-generated art in their style. However, we shut it down in January 2026 due to unresolved legal arguments and lack of adoption.

The Problem We Were Solving

By 2023, AI image generation had become mainstream, but artists weren’t being compensated for their work. We created Tess to solve this problem by providing a platform where artists could earn royalties for their work.

How the Business Model Worked

Artists submitted their work to fine-tune a Stable Diffusion base model, and subscribers paid for access. The artist earned 50% of the revenue when subscribers used their model. We also offered a dashboard to track model usage and a free Tess subscription for artists to use their own model.

What We Learned

We reached out to 325 artists, and almost 50% responded to our cold emails. However, only 6.5% agreed to join Tess, and 22.4% declined. The main objections were ideological opposition to AI, brand dilution, and reputation risk.

Despite the challenges, some artists were motivated by passive income, curiosity about AI, and a desire to offload repetitive work. Unfortunately, Tess generated only $12,172.33 in gross revenue and was a net loss.

Conclusion

We shut down Tess due to unresolved legal arguments, lack of adoption, and the high risk associated with AI licensing products. However, we hope that our experience can provide valuable insights for entrepreneurs looking to build an AI licensing business on top of creative talent.