The New York Times recently wrote a piece, Art Is Becoming a Financial Product, and Blockchain Is Making It Happen, describing the newfound romance between art and blockchain technology. It’s a perfect example of the dual-edge sword that technologies like blockchain offer – democratization and decentralized ownership on one hand, and the evils of financialization on the other.
It could be good great for the art market. Art lovers, who can’t necessarily buy a piece of an artist they love, but could buy a slice of it (think of all those people who love owning shares of Manchester United or the Green Bay Packers). If the owner of a piece wanted to sell it, couldn’t they draw up a blockchain contract, put it in a museum, and sell that piece to any number of individual investors? That’s going to be a lot cheaper than paying an auction house to sell it.
But might that reduction in transaction costs in art, a market that doesn’t need any more help inflating prices for really no reason at all? Maybe, though that might depend on the current level of enthusiasm around blockchain at any given moment (see: Long Island Ice Tea Company).
But I am willing to consider with a smartly written contract, this could be a way to bring some art out of the dark and into the public light.
The inevitable Steve Wynn reference
So instead of something sitting in Steve Wynn’s private collection, never to be seen until he decides to sell it, any given blockchained piece would become a public good. That’s the true democratization of the art market.
Sure, Steve Wynn could decide to buy 51% of the piece and get voting rights to put it in his private collection. Or better yet, perhaps the contract explicitly states it would have to be in public display? But let’s forget about Steve Wynn for a minute – the top priority of every blockchain enthusiast I’ve ever met was making money, so perhaps real buyers would enjoy the price a billionaire collector would pay to own a majority stake in a work, driving up its value.
Or maybe collectors like Wynn would completely avoid the blockchained works, because they want that piece in their private collections (for all his many, many faults, Steve Wynn does know and appreciate art). As long as the majority owner can’t control the piece, that work could live with the people (again, I question how “of the people” blockchain bros are, but that’s a separate discussion).
So you’re buying into this Rothko ICO for what purpose?
Which brings up the other side of the coin. Blockchained art just treats works as a financial asset class. To be fair, this is what a lot of collectors do anyway. But it could only further formalizes the relationship between money and art. There are a lot of collectors who are incredibly wealthy and can own any piece they want, but they are still connoisseurs of art and have legitimate love for some pieces. Chop up a Rothko between 10,000 blockchain investors, and that passion sort of dissolves.
And besides, this has been tried in similar ways before, and wasn’t terribly successful. Artsy wrote last year about art funds, describing middling success. The number of art funds grew in the aughts, before being crippled by the financial crisis. The article also said that art isn’t liquid enough to produce returns that investors want. Art funds also had high overhead costs – think storage and insurance – which wouldn’t suddenly disappear if the ownership of the work were just digitized into the blockchain.
But somebody’s got to try it… The Kostabi ICO
I’m actually surprised Mark Kostabi hasn’t tried to blockchain ownership of his works, considering his shameless factory production methods to pump out 200+ works a year. As another Artsy story recently noted,
The division of labor at Kostabi World was strictly regimented. The first floor, known as the “think tank,” was where the “idea people” conceived and sketched the high-concept tableaux that celebrity clients like Sylvester Stallone, Axl Rose, Domenico Dolce, and Stefano Gabbana clamored for. The best sketches were bumped up to the second floor, where “drawers” refined the images and traced them on canvas. On the top floor, product rolled off the line. This was the painter’s domain, the place where art academy grads, many from Russia and Eastern Europe, were paid around $5 an hour to copy these urban fables with acrylics in different colors and various formats. Along the way, the iconography was tweaked: remove this hat, fix that hand, add more dollar signs. After a painting had passed through all the inspections and filters, Kostabi would add his signature. The titles (also paid for, at $20 or $50 apiece) came later. The one that sums up the ’80s best still resonates today: Sadness Because the Video Rental Store Was Closed.
If you’re going to just pay low-wage artists to produce your works, sign off on it yourself, then sell it to galleries for tens of thousands of dollars, why WOULDN’T you ICO them?