A brave new art world — Part 1: delivering resale royalties for artists
This is the first in a series of expanded thoughts on ‘A brave new art world’.
The original article, also covers a sustainable gallery ecosystem; growing the art market through fin-tech; and Education (the next generation).
If you were responsible for a global sports franchise, you’d want to look after the athletes, right? If you were running a music business, it seems obvious you’d want to encourage musicians?
Yet in the $65bn* global art market, the very people who create the art, the artists, are the least supported. Unlike the music industry, for example, which has resale royalties built in to its model, artists today do not get any share of ‘secondary market’** sales, which make up roughly half of that $65bn (annually).
Without an ongoing ecosystem that supports the creators, there is no sustainable creative economy, indeed without artists there is no art.
It’s not a new idea. The idea of artist resale royalties has been around for years. The image above is over 50 years old! It’s not even that controversial — most people broadly think it’s a good idea. So what’s the problem? What’s stopping it happening?
Well, ideas are easy whilst execution is hard. In large part this is a practical, logistical problem to solve. I believe we can get there in 5 years. Here’s how.
There are 3 parts of this problem to solve.
1. Data tracking
The art world currently has no industry-wide system for tracking artworks through their life. Or any system really. It’s a simple concept, every car has a VIN for example.
However artworks do not have any mechanism for registration and there is no global database or standard. Organisations like Art Identification Standard have recognised this and are working toward a solution (my business Art Money is a member).
In the absence of a global art administrator/regulator (like a FIFA in football) an industry supported group likely has the best chance of setting and maintaining standards and the confidentiality that independence brings. (The art world is notoriously private).
The tech utilised for this tracking is less important — maybe blockchain? — although any database would be a good start. Let’s leave aside for now decentralised v not, to me that’s more a political issue than a tech issue.
Surely enough of us can agree on an independent body to manage this and exactly what data (artist, title, medium, size… it’s not that hard) we want to track?
2. Digital to physical
How do we know exactly what we are tracking? We need to link the data being tracked to a unique physical object. An edition of works eg photographs or prints, presents challenges. So does a fake. It’s hard to put a ‘tag’ on a sculpture, or a performance piece.
There are a number of companies working on this right now using an interesting array of technologies, from RFID tag, DNA swab, to very high resolution digital image.
Each has pros & cons, each may suit different mediums better. The solution also needs to be low cost and portable enough to be able to be implemented at scale. (Which is why I like the super high resolution digital image idea, enough to make each scan unique. If it can be done by anyone with a smartphone, that makes it immediately viable at scale. My understanding is it’s more about the software than the camera, so now we are getting warm).
3. Marketplace
Having good technology and agreed standards are fine, but how to incentivise people to use them? In my ideal world we’d draw a line in the sand and say from today the first time any new work comes onto the market (enters the primary** market) it should undergo the agreed process. Match the physical to the digital and enter on the global standard database. Just like a car VIN plate. This tracking would stay with the work throughout its life. Literally from the moment the work enters the ‘market’.
Now hold that thought and consider the following disclosure: We at Art Money have the ambition to be the ‘ApplePay for art’, making it the easiest way for collectors to buy art and for artists/galleries/auction houses & art sellers to be paid. If we are in any way successful in getting close to that, or a group of us are, we will be across most transactions and have an industry wide mechanism for easily adding the artwork and its data to the approved industry database.
From there, with the right incentives***, it’s a lot easier to track resales, and therefore pay artists an agreed percentage on resale. The artist resale royalty. A share of that $65bn annually that is a reinvestment**** in the very artists who are at the fundamental base of the ecosystem.
Some artists and galleries, those with some market power, are trying to introduce this already. They have clauses in their sale agreement requiring a resale royalty component, often linked to first right of refusal on resale of work. It’s a great start.
D’Lan Davidson is one in Australia who has argued it is good business for all involved — he chooses to top up the legally required artist royalty on each sale.
New art-tech startups are launching to solve this very problem.
The mechanics of the solution can seem boring. But what’s at stake is not.
If we don’t find a way to support artists, we aren’t supporting culture and creativity. Whilst it may be hard to measure, the opportunity cost of failing to nurture creative talent in our society is enormous.
A world with artists and creativity encourages problem solving. Encourages creative solutions, thinking differently, outside the square. Empathy. Joy. Understanding.
That starts to sound like the kind of world I’d prefer to live in.
This is the first in a series of expanded thoughts on ‘A brave new art world’.
The original article, also covers a sustainable gallery ecosystem; growing the art market through fin-tech; and Education (the next generation). Those will be expanded upon soon.
This is also my first attempt to get more professional with my writing (building in public!), jumping in at the deep end with Ben Putano’s first cohort of Great Founders Write.
Notes:
- *Art Basel UBS The Art Market 2022 (generally considered the bible for art market data)
- **Secondary market sales are a re-sale of a work by the owner. For example auction market sales. As opposed to Primary market sales, which is the first time an artwork is sold into the market, often by a gallery or directly by the artist or artist platform.
- *** What are some of those incentives? Secure provenance can provide: higher resale valuations, lower insurance costs, directly support artists, easy collections management…
- ****The numbers are significant. Of a US$65bn market in 2021, roughly 50% were secondary market sales. None of that money went to artists. A 5% resale royalty, for example, would have returned over $1 billion into the hands of artists (or their estates). If you are a contemporary living artist, a little goes a long way to supporting your practice. Let’s leave the trope of the starving artist in the garret behind and respect the right of artists to be professional and earn a sustainable living from their work.
