Artists continually embrace the newest technologies and materials. Thus when I read about NFTs, I felt an artistic responsibility to learn more about what an NFT actually was and how it might affect not just my own art making and art selling process, but how it would affect the art market in general.
On its face, the Ethereum NFT marketplace seems to be just another online mall for art and collectables. Albeit fully enmeshed within the blockchain currency of Ethereum. This seems to be a self-serving market for Ethereum and Ben Munster in an article on Vice.com has pointed out that the Ethereum coinage is better protected than the actual artwork and has resulted in vanishing NFTs.
But buried within this NFT transaction architecture is some very promising economic potential for artists. Each NFT sale is attached to a contract wherein the creator (artist) can dictate a certain percentage they shall receive with each resale of that NFT. Thus the artist can continue to realize income from all future sales of their artwork. This is an income source that has been sorely lacking in the current American marketplace and has limited the growth potential of visual artists by denying them royalty income.
Resale royalty rights for visual artists, or droit de suite, is not a new concept. More than 70 countries have implemented legislation to provide these resale rights. In France they have been recognized since 1940 while in the UK, these rights were introduced in 2006 as part of that country’s copyright law amendments. In the United /states, despite numerous attempts, laws regarding resale rights for artists have never been passed. California was the first to establish a limited version of it in 1977 but that law was struck down after the courts considered it preempted by the 1976 Federal Copyright Act. Several variations have been proposed but thus far none have made it into an implemented bill. NFT contracts, however, could sidestep the galleries, auction houses, and royalty laws (or lack there-of) by building the resale payment terms directly into the NFT contract.
The story that illustrates the frustrations of artists and their exclusion from the secondary art market will always be the famous 1973 Sotheby’s sale of Robert Scull’s contemporary art collection. After the sale, Scull was confronted by an agitated Robert Rauschenburg. Scull had sold a Rauschenburg work in the sale for $85000. Rauschenburgs’ frustration was that Scull had purchased the painting from him for only $900. So Scull had recognized a profit of over 9000% while Rauschenburg was still “working his ass off” and would get none of that money. A scuffle ensued with some pushing and perhaps half-hearted but firm punch in the stomach for Scull, but ultimately, an uncomfortable stalemate resulted in uncomfortable laughter. This stalemate is one that recognizes that the collector selling for huge profit at auction may indeed be profiteering, but that is what happens when art becomes a commodity. Indeed, Rauschenburg became wealthy through the continued rise in prices for his artwork and Scull continued to buy artwork from (invest in) up and coming artists. Perhaps with a good resale rights contract, the future Rauschenburgs won’t be so angry and many more of them will be able to invest in themselves sooner.