NFTs And Arts Management
By Professor Brett Ashley Crawford, Director, Arts Management & Technology Laboratory
ART, POWER, MONEY, AND DISRUPTIVE TECHNOLOGIES
As Executive Director and Publisher of the Arts Management and Technology Laboratory, a research center at Carnegie Mellon University, I have a long history with technology, blockchain, and the blockchain trending sweetheart—NFTs (non-fungible tokens). Thus, as the world seemed to erupt with NFTs in spring 2021, it seemed an appropriate time to curate a collection of essays on the emerging, some might say exploding, world of NFTs with a focus on the arts and technology’s disruptions. The following article provides context to the arts marketplace, ownership, and the disruptions caused by blockchain technology, especially NFTs, and concludes with a short commentary on the forthcoming collection and an existential thought to send you along your way down the rabbit hole of NFTs and blockchain.
TRANSACTION-BASED MARKET PLACE
The arts marketplace is an interesting thing, particularly when it comes to technology. The two are not always friendly or comfortable bedfellows. The contemporary arts world is modeled on an intermediary-based sales system. There is an artist, their work, a buyer, and someone in-between mediating the transaction. For example, a gallerist or a web platform coordinates the sale between the artist and the buyer and takes a commission for the exchange. In a brick-and-mortar marketplace, like SoHo in the 1980s, this transaction model feels normal, with a producer, gallerist, or auctioneer managing the experience and the transaction.
The digital space has injected myriad complications to this intermediated relationship. Some web platforms simply mimic the brick-and-mortar transaction pipeline. Yet other models have emerged—from low-commission platforms where artists have more control to environments that allow direct (more or less) to consumer transactions as seen in social spaces like Instagram. But, truth be told, most often the technology has benefitted the buyer or the salesperson at the transaction moment via modes of control, power, and most assuredly with respect to ownership.
WHO OWNS WHAT?
Ownership. That is a critical aspect of the arts marketplace. For economic, legal, and tax purposes, purchasing a piece of art is purchasing an asset—one that can accrue or lose value. Thus, the question becomes who owns what, when, and where?
The artist owns the work at the moment of creation. In the United States, artistic work is covered under the United States Copyright Act. It was their concept and their creation. However, traditional practice holds that at the point of sale, all rights to the object are transferred to the purchaser, including future sales profits and other rights, such as digital or print reproduction or merchandising. These rights can be negotiated unless the work is a work for hire. In response to visual artists’ suits after changes to their work were done without their permission, the Visual Artist Rights Act (VARA) of 1990 conveys moral rights. VARA:
recognizes only attribution and integrity as legal causes of action. Attribution includes the rights to claim authorship of a work, to prevent attachment of an artist's name to a work which he did not create, and, where there has been a subsequent distortion, mutilation, or modification of the work prejudicial to the artist's honor or reputation, the right to disclaim authorship and to prevent identification of the artist's name with the work.Visual Artist Rights Act (VARA)
How Does Blockchain Fit In?
Blockchain technology is one more entrant into the ecosystem of ownership. Many artists and conservators laud its ability to provide an accurate pathway for tracking provenance, especially for newer works with known histories. All future sales are entered in the blockchain, and contract terms can be automated. This feature enables artists to maintain a share in future proceeds of sales or other modes of merchandising, something often lost downstream from the moment of creation or from the first sales point.
Blockchain can further democratize the system with fractured ownership, be it with NFTs or with any blockchain sales transaction. People can buy a share of a piece instead of the piece in its entirety. This tokenization of art is cognizant of the piece of art as a legal and financial asset, and much like a corporation, portions of the object, akin to shares of stock, are being bought and sold instead of the object itself.
But the marketplace is designed to find means of manipulation of these systems, seemingly wanting to make more money for money’s sake with the process or means provided by a mediator. For NFTs or any blockchain, that intermediate step is in the form of DApps.
A DApp stands for a decentralized app. A DApp is similar to a web app, but using web 3.0 technology, it serves as a mediator to a blockchain(s) and runs on a smart contract. Downloading a DApp that specializes in NFT art allows you to buy, sell, or trade art on the blockchain without having to know code or blockchain technology yourself.
Figure 1. DApp system visualization for a blockchain transaction. Source: Blockchainhub.
DApps are the engine of NFT marketplace, allowing any individual to engage as seller or buyer.
Our e-book includes five essays that analyze the current legal frameworks of the technology and the business, an artist perspective on the opportunity and cost afforded by NFTs, a counterargument analyzing the climate cost of blockchain, and a market analysis of the experience economy behind the exchanges. The goal of the e-book is to offer diverse and often divergent opinions and perspectives on the future of NFTs. Want more? This podcast with Darren Mok, co-founder of Pyx_Labs, offers a glimpse into some of the topics.
 While this essay utilizes the singular artist, please note that collectives, ensembles, and other artist formations are included in the singular term.
This piece was originally published in The NFT Marketplace, an edited collection published by the ETC Press. The research collected was first conducted for publication on the the Arts Management and Technology Laboratory (AMT Lab). A research center of Carnegie Mellon University’s Master of Arts Management Program, the AMT Lab serves as an exchange, a catalyst for innovative ideas, and a conduit for knowledge circulating at the intersection of arts, management, and technology.