17 June 2022
Are NFTs Art?
By Amalyah Keshet
“Long before Beeple and Pak there was Yves Klein, who mastered the art of convincing people to pay money for not really anything at all.”
Is the answer to the question “‘Are NFTs art or not art?” important from the legal perspective? In practical terms, yes. But as usual, “it depends.” The question was addressed by a panel of experts in a webinarhosted by the Institute of Art Law (IAL) this last March. Significantly, one area where the distinction may be very important is anti-money laundering (AML) regulation.” More on this point can be found here: https://ial.uk.com/can-an-nft-be-art-and-why-it-matters/
In fact, because the NFT gold rush has been “investment-driven, with the art world following the economy rather than the other way around,” the question “is it art?” has been both highlighted and blurred by a flood of marketing language.
“…the NFT boom and surrounding hype profoundly diluted both an understanding of what digital art is and how this art (or any art at all) is tied to NFTs.
The term “NFT art” suggests a medium like video art or performance art, but the vast majority of so-called NFT art simply employs non-fungible tokens as a sales mechanism, not a medium. As non-interchangeable units of data stored on a blockchain, NFTs ultimately are nothing but digital certificates of authenticity. They reside on a blockchain, but the assets they authenticate usually do not. [NFTs technically authenticate the minting or sale, not necessarily the asset found at the URL they point to, which can be deleted or changed.]
The NFT boom has reduced the public image of digital art, which covers a broad range of creative expression, to individual reproducible digital images, animated gifs or video clips—the standard forms of digital collectibles and meme culture. There may be a segment of the crypto world that, through NFTs, has discovered the breadth and history of digital art and started supporting it, but that segment seems to represent only a small overlap in the Venn diagram of traditional art collectors and NFT collectors.”
This helps us understand why Wikipedia editors decided not to classify NFTs as art. Simply put, an NFT is no more a work of art than the entry in a museum’s collections database is, or the ID on an artwork’s shipping crate is, or the printed receipt for its sale at a gallery is. It is a tag, an address or locator and a proof of minting or sale. Like the crate, it can be discovered to be empty, the digital art file having been “rug-pulled” from its URL. (I suspect this trick has already been described somewhere as “performance art”.)
In a further instance of hype hijacking terminology, we find phrases like “curators in the NFT space.” The expression “curated collection of” has lately been applied to everything from recipes to travel experiences, but how does one “curate” blockchain metadata, a few lines of code that are little more than a data entry for a collectable? It’s another reason that semantic confusion has led many to think that NFTs are art.
In a characteristically excellent article in the New York Times, Adam Gopnik quotes Michael Bouhanna, a specialist at Sotheby’s in London who “…thinks that before too long, as the novelty of NFTs wears off, people will just talk about ‘digital art’ and leave the NFT off to one side, as a detail in the transfer of ownership.”
“Sales, rather than aesthetics, were the reason NFTs were created.
…about half of all NFTs that sell go for less that $400 — hardly enough to cover the blockchain costs when a creator ‘mints’ an NFT [and] that’s not counting the untold number of NFTs that don’t sell at all.”
Going back to the original question “are NFTs art?,” we can look at a fascinating discussion by David Joselit titled NFTs, or The Readymade Reversed. Joselit proposes that:
“The NFT, or non-fungible-token, reverses this long genealogy of contemporary art by hijacking the category of art as nothing more than a tool for designing a new asset class, ripe for exuberant speculation. In short, the readymade—whose purpose was to demonstrate the fungibility of artworks when shifted from one discursive category to another—has been reversed.”
Royalties are only royalties until they’re not.
Then one must consider the NFTs market’s promise of salvation for the cultural heritage world, with new platforms cropping up to ease the way:
“Artwrld will also benefit nonprofit organisations, with fifty percent of sales going to creators, forty percent to the platform, and the remaining 10 percent to charities. The co-founders explained that “because NFTs have the potential to distribute funds automatically and in perpetuity whenever the art changes hands, artists can use their work to help build and sustain an art world they—and we—care about.”
One can’t help but asking, forty percent to the platform? Ten percent to the arts foundation, museum or other non-profit? When the odds for re-sale are low at best and declining daily, and only theoretically “automatic” and “perpetual”?
Cutting out the middleman was originally perceived as one of the great advantages NFTs would provide for digital artists – who then found themselves needing and joining NFT platforms — i.e., middlemen.
But even platforms come with complications. The “smart contract” in an NFT entry may stipulate a resale royalty for the original creator or minter. However, the technology that makes such a payment possible is not tied to the NFT, it is tied to the platform. If a collector buys an NFT on one platform but re-sells it on a different platform or marketplace, the royalty requirement won’t execute.
For example, …Alec Soth minted his project Dog Days, Bogota on OpenSea and likely set a healthy commission each time a work is resold. If I buy #53 for its current price of 3.3 ETH ($9,121.20 at time of writing), Soth — who originally minted the piece and sold it for 1.1 ETH — will probably get around a thousand dollars. However, if I buy it and sell it on a different marketplace, Soth will get nothing. This isn’t the hype that we were promised.
What about museums?
There is no lack of warnings about a volatile market that museums and other cultural heritage institutions might want to consider when encouraged to delve into “collecting” NFTs or using them for fund-raising.
“While many have little sympathy for those investing in a market fundamentally built on its lack of regulation and decentralization, there is growing recognition that buyers are at risk and are pushing for clarity.”
“Most people who make or buy NFTs never turn a profit. There is no regulation or consumer protection, and trading them is basically as risky as gambling. Investing in cryptocurrency is high risk and involves a lot of technical know-how and luck; few financial professionals would recommend it, and scams are aplenty.”
In a fascinating plot twist, we have this headline: “We Reappropriated What Belongs to Us’: Congolese Artists Minted NFTs of a Colonial-Era Sculpture—and the Museum That Owns It Is Not Happy.”
“The sale of the NFT is an example of powerful magical thinking: the group felt that the chances that the sculpture will return on loan to Congo were always slim and now the museum that owns the work is not pleased about the NFT, which was made without their consent.”
On the other hand, we discover that there is an “increasing number” of NFT collectors starting to branch out and invest their cryptocurrency in a traditional, physical art collection:
“Critics have scoffed that a marriage between NFTs and the art world is impossible. But catering to the tastes of the crypto nouveau riche has become the frantic obsession of the commercial art world …
Even as they court collectors from the metaverse, art galleries are …embracing the technology that threatens their business model. Many have invested in digital platforms. Industry experts say it is an opportunity for dealers to limit incentives for their artists to cut them out as the middlemen and independently sell their work.
“…In the last three or four months, we have seen a greater interest in physical art from NFT collectors,” said Charles Stewart, [Sotheby’s] chief executive,”
Nothing new under the sun?
But back to Yves Klein: “The original NFT? Sotheby’s to offer a receipt for an invisible work by Yves Klein for €500,000.” It seems Klein created and sold limited edition receipts, which tantalizingly parallel the conceptual nature of NFTs.
“… A receipt, designed to look like a banker’s cheque, was drawn up and the buyer was given two options: either retain the receipt and have the corresponding immaterial zone become transferrable through resale, or burn the receipt in a ritual between collector and artist, which would make the zone become intrinsically part of them and cease to exist upon their death.”
The work of art involved the sale of the ownership of an empty space, for which a receipt was provided … The performative aspect then followed: the buyer could, if they wished, keep the receipt and transfer it in future, or the receipt could be burned in a ceremony which would involve Klein throwing half the exchanged gold into the River Seine. For those who kept the receipt, Klein kept a ledger which recorded all the sales and resales of these empty zones, an old-fashioned version of blockchain technology.”
Fast forward to a recent project by Damien Hirst: “Each of the hybrid painting-NFTs, available to collectors at the low, low price of $2,000, has a very particular stipulation. Buyers would have one year to decide if they wanted to keep the NFT, in which case the physical artwork would be ceremonially burned. Or they could keep the physical work, and relinquish rights to the blockchain-based artwork.”
Back once more to Yves Klein and the fine art of marketing: Sotheby’s cataloguing of the Klein receipt work reveals more about this hypothetical parallel with NFTs:
“Some have likened the transfer of a zone of sensitivity and the invention of receipts as an ancestor of the NFT, which itself allows the exchange of immaterial works. If we add that Klein kept a register of the successive owners of the “zones”, it is easy to find here another revolutionary concept – the “blockchain”.
The icing on the cake? Klein made nine “empty zone” receipt works, which could be paid for only with gold. “One of these receipts is now coming up for sale at Sotheby’s, and its similarities to the modern-day NFT are so notable that Sotheby’s are going so far as to accept not pure gold, but cryptocurrency for it.”
So, are there legal implications? Many. One example of innocent-sounding “art projects’ with criminal implications:
“Police Arrest Two 20-Year-Olds for Allegedly Conning Collectors Out of $1 Million—With Ice Cream-Themed NFT Artworks.” The duo was arrested on charges of conspiracy to commit wire fraud and conspiracy to commit money laundering. They face a maximum prison sentence of 20 years.
There are legal jurisdiction issues as well:
Jeff Koons will send his sculptures to the moon. “Corresponding digital renderings of the lunar-bound works will be sold as NFTs, obviously.”
Because copyright laws differ from country to country, not counting the moon (yet), it can’t get more fun than this.
Highly recommended reading for those who can’t resist going deeper:
NFTs & the Death of Art — by Brian Frye, University of Kentucky College of Law
NFTs and the Definition of Art — by Shinobi, bitcoinmagazine.com
https://www.artnome.com/news/2021/7/28/why-museums-should-be-thinking-longer-term-about-nfts