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Bytes & Brushstrokes: Unlocking Digital Art

If contemporary art prides itself on embracing change, why is the art world stuck in a bourgeois cycle of buying and selling expensive, old-fashioned three-dimensional objects?

The commercial art world has yet to welcome “media art.” There are many reasons for this, including education and culture. The main explanation, though, lies in the difficulty of protecting the digital files in which the artworks live. “A child could make a copy of a digital artwork, so there’s a huge risk of forgery. The reason this market is undervalued is because of the problem with scarcity and security,” says Florian Brauenig, Co-founder of YAIR, a blockchain-based platform tokenizing digital art for “Initial Art Offerings.”

teamLab are arguably the world’s most commercially successful media artists. According to Ikkan Sanada, the art dealer representing teamLab: “When a client purchases a teamLab artwork, he receives a very nice wooden Japanese box containing a signed certificate of authenticity, an external hard drive containing the artwork data and a setup manual.” Printed on the back of the certificate are lengthy and detailed terms and conditions: do not show the artwork on more than one computer at a time, delete all files upon the sale or transfer of the artwork to a new owner, etc. Basically, the transaction is governed by a traditional, long-form contract and based on old-fashioned good faith.

Since only ~200 artworks have been sold since 2012, Sanada has been able to keep tabs on every single art collector and institution in possession of an original teamLab artwork, even when artwork has changed hands. That’s because transferees usually contact teamLab to obtain updated files compatible with their own equipment. It is this first-hand knowledge and trust of each collector, Sanada admits, which provides him with security and comfort.

Digital artwork is today’s contemporary art so the art world has to find some way to deal with it.

Two years ago, however, Sanada lost track of the chain of custody for a teamLab artwork. It sold at auction to an unknown buyer, who never got in touch to obtain an operating system update. This set off an alarm bell in his head. Since then, teamLab has been working on a proprietary verification system, which allows it to police the original contract of sale.

Conservation of digital artworks is no less of a headache. There is a dedicated team which guarantees the continued survival of teamLab artworks: “Purchases of editioned artwork automatically include a warranty which covers the first ten years of software upgrades for the artwork. After that, there’s a nominal fee to renew the warranty for successive ten-year periods. We ask the owner to send in the old hard disk with a copy of the ownership certificate. And then we replace the hard disk,” Sanada explains.

The safeguards and systems followed by teamLab are based on the dynamics and contractual obligations of conventional art. This results in prohibitively expensive procedures and systems. “Historically, editions were introduced, first in sculpture, then in photography, to create scarcity,” explains Brauenig. “People began to believe that the value of an artwork lay in restricting its viewing. When the same mentality was applied to digital art, the value of a digital artwork was believed to decline in inverse proportion to the number of times it was viewed. Collectors tended to lock it away. However, the world’s most valuable artwork is the Mona Lisa even though it is possibly the most viewed artwork in history. This is what digital art needs—to be seen by more people.”

 

Credit: teamLab, Expanding Three-Dimensional Existence in Transforming Space – Free Floating, Flattening 3 Colors and 9 Blurred Colors, 2009-2018, Interactive Installation, Endless, Sound: Hideaki Takahashi © teamLab

Credit: teamLab, Gold Waves – Continuous, 2018, Digital Installation, Continuous Loop, Sound: Hideaki Takahashi © teamLab

Credit: teamLab, Drawing on the Water Surface Created by the Dance of Koi and People – Infinity, 2016-2018, Interactive Digital Installation, Endless, Sound: Hideaki Takahashi © teamLab

Credit: teamLab, Impermanent Life: People Create Space and Time, at the Confluence of their Spacetime New Space and Time is Born, 2018, Interactive Digital Installation, Sound: Hideaki Takahashi © teamLab

Credit: teamLab, Abstract and Concrete – Forest Entrance, 2018, Interactive Digital Installation, Sound: Hideaki Takahashi © teamLab

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Luckily, new businesses coming online this year promise to untether digital art from its physical embodiment in hard drives. Using blockchain-based technologies which work with, rather than against, the nature of the artworks, they address the core challenges of authentication, secure transfer, conservation and monetization. These systems should enable many more people to see digital artwork while simultaneously retaining its scarcity.

Blockchain is an elegant, possibly perfect, technological solution for digital art. When combined with smart contracts, it can securely distribute and restrict access to files simultaneously. Just as importantly, though, these new digital art platforms have redefined the art object for sale. They are also developing new commercial ecosystems based on this new definition.

As opposed to a three-dimensional object, a piece of media art, like a video, can be sliced and diced according to various parameters: temporal access (“6 months”), resolution (“720 x 1280”), number of plays (“10 times”). Moreover, the same artwork can be enjoyed simultaneously on a limitless number of viewing devices and sold, over time, again and again. The nature of digital art creates unprecedented opportunities for monetization and popularization, justifiably triggering comparisons to music, entertainment media (movies/video/TV) and software.

Niio is a new platform for storage, distribution and display of digital artworks. The automated platform digitally thumbprints each artwork file as it is uploaded. It then records all subsequent transfers of the artwork on the blockchain, based on the applicable smart contract. This reassures both buyers and sellers that their rights and obligations will be respected and enforced. The automated, encrypted system provides the sort of bulletproof memorialization of an artwork’s chain of custody, which can only be approximated by the strenuous manual exertions of an art dealer keeping track of the same movements on a spreadsheet.

The reciprocal benefits to both artists and collectors are enormous and should foretell a rapid and widespread adoption. However, the art world is not ruled by common sense, though, but rather consensus, prestige and reputation.

Niio and its competitors realize that buy-in from the world’s biggest media artists and collectors is necessary if they are to receive approval from the industry. Therefore, it is providing immediate monetization opportunities for participating artists by selling Netflix-style corporate subscriptions to monitor-based art. This gives artists an incentive to use the service immediately. Corporations which own and control a multitude of screens are Niio’s natural clients—real estate developers, monitor-based advertising networks and hotel companies. In theory, media artists can earn revenue as soon as they upload their files to the platform. And for those artists who have no wish to see their artwork projected on a hotel-room TV screen ever, they can use Niio in its simplest form—for purposes of authentication and secure transfer by designated edition or usage. According to CEO Rob Anders, the platform, which launched in 2015, is now “blockchain-ready” with its subscription business model set to launch during the first half of this year.

YAIR offers another model which promises to unlock the value of media art. Like Niio, it capitalizes on the unique properties of digital art. YAIR’s concept—Initial Artwork Offering (IAO)—is based on the same principles as Initial Coin Offerings (ICO). A crypto-trading platform, like Maecenas conducts ICOs to enable investors to purchase fractional ownership in very rare artworks like Renoirs and Warhols. But the artworks remain locked up in a safe. A YAIR is the artwork itself, with the token holder able to view and enjoy the digital artwork as long as she possesses the token.

Say a video artist seeks to sell his artwork on YAIR for $500,000. If there is enough demand on the platform to issue 500,000 tokens for $1 each, then the IAO goes ahead and 500,000 investors can, in theory, ‘consume’ the artwork. As equity, YAIRs can appreciate in value if demand for an artwork increases or the number of tokens in circulation for that artwork falls over time because they’ve been traded or cashed out.

Demand for the artists on YAIR’s platform is central to the success of the venture. Lovis Lupertz—Co-founder and son of celebrated German contemporary artist, Markus Lupertz—is charged with selecting the artists to be featured on the platform. “In order for YAIR to become big, we need killer artists who are in museums like the Guggenheim and Whitney. In order to inspire the public about the game-changing nature of what we are doing, we will be holding exhibitions in major institutions and giving away tokens [to exhibition visitors]. This will allow us to reach more art enthusiasts. These people love art but don’t ordinarily think about art investment because it’s out of their reach. Giving them a small stake in the artwork is the perfect way to show them that they can be co-owners of the artwork and show it in their home and talk about it with their friends. The beauty of YAIR is that we make the entry barrier into the super-exclusive world of art collecting very low.”

Even then, YAIR’s concept is probably too newfangled and exotic for the typical art punter to digest immediately, so the first investors are likely to be crypto investors and art funds. But the long-term vision of the curated platform is to enable artists to monetize more easily while putting digital art into the hands of more people. Promotion of YAIR’s first IAOs is slated to take place this September in Linz, Austria at Ars Electronica, the world’s most influential media art fair. There, the company will unveil video and other artworks, by Maria Marshall, Julius von Bismarck, Robert Montgomery and Wu Juehui, intended for IAOs in the fall.

The business models for digital art proposed by Niio and YAIR reconcile the conflicting imperatives of traditional and digital art by creating scarcity for a product which can be produced at zero marginal cost. But they also knock down two central pillars of the traditional art order: art as artifact and the notion that fine art is for the elite. Is the art world ready for such a revolution?

Gerfried Stocker, director of Ars Electronica, believes that the art world has no choice: “It is a matter of survival for the art market because the identity of contemporary art is based on being in the avant-garde. Media art is today’s contemporary art so the art world has to find some way to deal with it.”

→ for more on digital art, visit the blog of Ars Electronica, the grand-daddy of media art fairs based in Linz, Austria founded in 1979

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