Which one sounds better and/or is grammatically right?
Artists shall make a living making art.
Artists shall make a living by making art.
or any other formulation?
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They are both correct, and both sound fine. The word "by" is implied in the first sentence.
Incidentally, the use of "shall" suggests that these are instructions. Is that the intention? If the intention is to state that this is how artists generally make a living, it would be better to say:
Artists make a living [by] making art.