The Complacency of Crypto Art
This is the time to leave the art market behind.
By Beatriz Helena Ramos
“Blockchain feels like it’s either the wild west or the Renaissance,”
said Judy Mam, our cofounder, at Christie’s Art & Tech Summit back in the Summer of 2018. People in crypto are either attracted to the gold rush or to the promise of real change. The beauty of the crypto art movement is that it was all about the latter.
It was late 2017 when it all started to bloom. You could feel big energy rumbling underneath the surface. I imagine that the buzz of the first Rare Art Fest in early January 2018 must have felt like joining the Dadaist movement in Zurich a hundred years before. Sadly, framed by the wild success of Cryptokitties, it all became about speculation.
The New York Times took interest in the Rare Art Fest, not because of its incredible innovation and potential disruption of the art world, but because of some scam art that referenced artist Richard Price. Since DADA helped Rare Art Labs organize the festival, Judy spoke with the Times’ journalist on the phone for an hour. She had the impression that all he cared about was the famous name, which became evident in his article Will Cryptocurrencies Be the Art Market’s Next Big Thing?
For The Paris Review, the highlight of the Rare Art Fest was the $40K sale of Homer Pepe, as it reported in How Much for That Pepe? Scenes from the First Rare Digital Art Auction. Soon after the Rare Art Fest, Jason Bailey connected me with Oliver Roeder, a journalist who was writing an article for Five Thirty Eight. Jason wanted him to hear the other side of the story, about building a community and a fair system for artists. I had a long conversation with Oliver and he seemed to have sincere concerns about speculation and crypto art. Then his piece came out: The Blockchain Is Just Another Way To Make Art All About Money. While he had a point, he chose to ignore our conversation and prefaced my quote with this mischaracterization: “Beatriz Helena Ramos founded DADA.nyc and knows that money is part of crypto art’s allure.”
DADA built the first Ethereum marketplace for crypto art in September 2017, before Cryptokitties came out, but it was precisely the kind of price fetishism and speculation we saw with Cryptokitties and Rare Pepes that made us stop developing our marketplace. In my keynote at the 2018 Ethereal Summit, I warned: “We have an opportunity to not fuck it up this time.”
Fast forward two years. Crypto art has become precisely what it claimed to disrupt: a crypto version of the conventional art market.
Naturally, a Museum of Crypto Art that buys a transparent pixel for $15,000 from an artist with a large following on Twitter may be exactly the kind of museum we deserve. But is it the kind of museum we intended?
For me, whatever artists do is art. I’m not interested in debating whether pixels are good or bad art. But I care about artists. I wonder how artists that sell for $50 feel when they see a white pixel sell for that amount.
Here’s a quick survey. Let me know how you feel.
I write this for the people who are sincerely on the side of the artists and are invested in figuring out ways to create a more equitable system for the arts. I believe this includes most people in crypto art. I hope this article helps reframe the conversation away from an expensive pixel to how we can really do things differently than the art market.
To me, the biggest issue with the crypto art ecosystem is not that it bluntly replicates the current art market, but that it does so while still claiming to be revolutionary for artists. It is not. As long as we use the same incentives as the art market we are going to have the same results: a fetishization of rising prices instead of a focus on the art. This is not a coincidence.
Currently, all the crypto art marketplaces are systems known as winner-take-all markets or star systems. As we explain in our paper The Invisible Economy, “Star systems come about when a single attribute (top-selling, or popular) is sorted among many participants. For example, leaderboards that present top artists based on sales will inevitably exponentially amplify their sales through positive feedback loops. Those appearing on the top of a list have the most visibility and benefit from social proof; that is, people are more inclined to buy their art since other people are already doing it. The more people buy their art, the longer they’ll be at the top, the more people will buy their art, to the exclusion of others who are equally deserving.”
The crypto art ecosystem defines success by sales, the assumption being that the more money that goes to artists, the better. Milestones are measured by how much collectors spend. Every time an artwork gets a high price or sells immediately, everybody celebrates it. I understand the initial need to attract collectors and prove the market. In this sense, SuperRare’s million-dollar milestone is indeed a remarkable achievement. One million dollars went to artists and that is a wonderful thing. SuperRare’s well-deserved success brings validation to the entire ecosystem.
By understanding the system we can tweak its design to make it more equitable. It has become clear to me that as long as we reproduce traditional economic models, no amount of technical innovation (NFTs or DAOs) will yield any new results.
At its core, blockchain is about economics, but excepting experiments by Simon De La Rouviere, DADA, and a few others, there has been little experimentation in terms of new economic incentives. Instead, there has been an intentional effort to attract traders and speculative collectors.
We all believe that blockchain can make art more accessible and help artists make a living through their art, but instead of focusing on artists selling more, like the art market, I suggest we focus on making the system more equitable.
If we really want to be different from the art market, we would need to measure success differently: by how many artists benefit from the system; that is, by how equitable is the distribution of rewards.
From this perspective, SuperRare could break down the million dollars and look at the actual distribution of the revenues among all artists, including those who have not sold at all. If it becomes clear that wealth is concentrating on a few artists and collectors then something can be done to fix it.
Snark.art’s new project, In The Age of Quarantine, is an experiment that looks at the same problem by asking a different question: How do we help artists to survive the pandemic? Here, artists receive 60% of their sale price and share 30% with other artists. 10% goes to Snark.
At DADA, we look at the problem by thinking about how we can subvert the extreme inequality that markets produce, which is how we arrived at our own economic model.
For a long time, we made royalties of 30% a big part of our value proposition. But looking at it from the extreme inequality standpoint gave us a different perspective.
Inequality happens when a source of wealth gets transferred from one group of people to another group. I believe that for artists their art is their source of wealth. Secondary markets are a way of transferring the source of wealth from the artist to the collector.
When I think about the ideal art collector, I think of Jason Bailey. He is a knowledgeable and enthusiastic champion of artists who collects art because he loves art. He is also an outlier in that he shares the fruits of his art profits with donations to his favorites causes. Jason believes we should encourage the secondary market to prove the benefits of royalties for artists, which is unheard of in the traditional art market. In his own words: “Always really hard to sell anything from my collection but I believe we need to show the viability of a secondary market. With 10% royalties, liquidity helps artists in this new world.”
Two years ago, Jason bought an artwork from Robbie Barrat for $112 and sold it recently for $4,850. He also bought another artwork from Robbie for $110 and sold it recently for $13,000. Robbie made close to $2000. Jason made over $17,000 in profits. According to Jason, the total sales for the works he sold from Robbie were around $25K. Arguably, Robbie made extra money that he wouldn’t have made otherwise. We can also argue that Jason helped Robbie pump up his market value since he now sells for $13,000 on the primary market.
If we are looking to make the system more equitable for artists, then we are not really effecting a significant change from the status quo.
On one hand, yes, the transfer of wealth from artists to collectors in the art market is 100%, whereas in SuperRare it is 90%. On the other hand, just like in the art market, arbitrary speculation pushed Robbie to the top of a star system that disproportionately benefits him over many other talented artists.
DADA’s royalties of 30% seemed generous at the time, but today even a 70% transfer of wealth from artists to collectors seems egregious to me. We are proposing a new model for art collectors that makes sense under the values of the Invisible Economy in which collectors make a profit on the secondary market but we flip the model so that collectors are the ones who get royalties of 10%, and artists get the rest. By the way, Jason loved the idea when I mentioned it.
I don’t believe that every project should follow DADA’s post-capitalist path, but I think it’s important to look at the crypto art space from a broader perspective to understand where we are replicating the art market’s toxic mechanisms.
It’s great that for the first time some artists are able to live as artists thanks to crypto art. It is laudable that some artists and collectors have used their profits for charitable causes and to support other artists, but this cannot justify the same culture of financial speculation and star systems that we were reacting against.
I don’t think we have experimented nearly enough as a community and I would encourage a lot more collective exploration. This is the time to go back to the original vision of the crypto art movement and collaborate across platforms, open the dialog to the entire ecosystem, and find ways in which more artists thrive.
We are putting together a working group through RadicalXChange to discuss, expand on, and implement some of the ideas of The Invisible Economy. It’s a good opportunity to discuss many current issues as a community and come up with different solutions. John Crain from SuperRare, Jason Bailey, and other talented people are part of this working group. If you are interested in joining, let us know here.