Settlement income is taxed according to the type of income it replaces. This seems to be a complicated area of law that I am not expert it. There is an article here, but I can't vouch for its accuracy.
https://www.thetaxadviser.com/issues/2013/dec/kelley-dec2013.html
Boiling it down to its essence, if you are a working artist, this is business income. But, depending on what work was done, and when, this might or might not be self-employment. If someone used your images or other creations without permission, then I assume the settlement would be in the nature of royalties for a useage license, rather than transferring the property to them completely. In that case, the settlement would be treated as royalties and taxed accordingly. If you don't already understand how to pay taxes on royalties, the article may have some useful perspectives.
