By Amalyah Keshet

“David Hockney does not participate in or collaborate in the creation of any NFTs (Non-fungible Tokens). Any NFT of a Hockney work or derivative of his works or one purported to be by David Hockney is not authentic, is unauthorized, and is illegal.

Do not create, post, sell or purchase any purported Hockney NFT or derivatives as it will subject you to legal action if you do. Upon identifying any such NFT we will have it taken down and have the transaction canceled or remove the NFT from the blockchain. 

Please fill out the form below to report any Hockney NFTs that you might find to us.” 

From:  https://www.hockney.com/contact/NFT_report

While some artists like David Hockney clearly have reservations about NFTs, what reservations do museums, galleries, libraries, archives (GLAMs) have, if any?  Collectors and independent creators like Hockney, and speculators, are free to experiment or not with the latest super-hyped new thing in a risky financial market, but what about non-profit public trust organizations*, cultural heritage institutions, boards of directors and employees entrusted with maintaining authority, reputation and community trust in their institutions?  

The crypto crash 

With the recent cryptocurrency crash, NFT sales have plummeted. Sales of NFTs  totalled just over $1bn in June, compared with peak of $12.6bn in January.  In a single day, 25 March, the average daily value of NFTsfell by more than 85%, from $19 to $3 million. 

“It seems that the real NFT bonanza has come to an end, and now it’s time to grow up,” according to Laurens Kasteleijn of Art Law Services.  Artist Takashi Murakami even apologized on Twitter to his crypto investors when the value of his NFTs fell dramatically.   

What about the hype about a radical new revenue stream for artists?  It turns out that a very small percentage of all the art-based NFTs minted have actually sold, mostly for an average of $200 or less. And that’s before fees. “If your artwork is among the more than one in three NFTs that sold for $100 or less, you can expect to have 72.5 percent to 157.5 percent of your sale deducted by fees [depending on the platform]. That’s an average…of 100.5 percent, leaving you with a $0.50 deficit or more.”   

Blockchain & provenance

On the current list of things NFTs were supposed to do was an immutable, authoritative and irrevocable way to record and track the provenance of works of art (and other goods) on the blockchain. Two rather obvious points spoil the party however:  first, there is nothing preventing the recording of false or incorrect information in an NFT (in computer jargon,  GIGO or garbage in, garbage out). The word immutable means unchangeable, not indisputable.  If there’s a falsification or error, it cannot be corrected; another NFT must be minted to supersede it, meaning more fees and more environmental damage.  (Who of us hasn’t had to correct a metadata entry or a wall label in a museum collection; luckily they  are not “immutable.”)  Second, nothing prevents an NFT platform from going out of business and shutting down its servers, wiping out everything on them. More on that here.

An interesting related provenance story, “NFT twist is latest development in saga of contested ‘Leonardo’ painting hidden in a Swiss vault…”  has appeared.  It seems a painting of a princess “possibly by the Old Master” has been sold digitally “but questions remain over its provenance, the inherent value of non-fungible tokens and who owns what… [the painting] cost more than $103,739 worth of the cryptocurrency Ether via an auction on the NFT marketplace MakersPlace.”  This one makes a good read.  

The dark side of NFTs and the art world

Apparently having stared blankly at this market for long enough, governments are starting to step in. In the UK, a new law is being considered in an effort to deal with some of the more serious issues involved in crypto and NFTs. Digital art attracts digital art crime, and it seems that the crypto market has accelerated the pace.  (Criminal activity superficially concerning NFTs could also support money laundering, human trafficking, and drug networks.)

The Italian government, meanwhile, has instructed museums to stop contracting with NFT companies citing “unregulated terms that could affect the country’s cultural heritage.”  “The move comes after the Uffizi admitted that the tech company they partnered with, and the platform used, took the majority of proceeds from the NFT of a Michelangelo masterpiece.” The gallery made €70,000 from the NFT which sold for €240,000.   More on the story here

On the other hand, going it alone may not be much better, if a museum loses access to two highly valuable NFTs.  

Perhaps the most notable reference to museums’ attempts to exploit the NFT mania may have been this one: “The British Museum demeans itself by selling its works as NFTs and will probably live to regret it.”  The British Museum has recently sold reproductions of Turner and Hokusai pieces as NFTs, which art critic Bendor Grosvenor has criticizedwriting: “Sure, you can call your Turner NFT “art” if you like, but only in the same way a £5 note is art because it has a portrait of the Queen on it.”

On a more promising note perhaps, there was the announcement by the State HermitageMuseum of “a fully virtual research exhibition of “born-digital” NFT art” in November 2021, which aimed “…to explore the artistic, rather than commercial, possibilities of NFTs. “My point is to distance the exhibition from the NFT market,” said Dimitri Ozerkov, director of the Hermitage’s contemporary art department and the show’s curator, “…[by] drawing parallels with the advent of photography, cinema and television, which each prompted people to question ‘whether it is art or not’.”

Is there still opportunity here for fundraising by museums?  

That debate continues, as “concerns surrounding the environmental impact of blockchain technology and the rise of malicious projects, exploiting previously digitised heritage content made available through OpenGLAM licensinghave attracted criticism over the speculative use of the technology.”  The Open GLAM movement has encouraged institutions to make digital images of items in their collections freely available for reuse via open licences. “There is some justifiable concern that third parties could mint openly licensed images of artworks as NFTs,” preventing institutions from creating revenue from their own collections images, or preventing other users from utilizing the open license. This is a major copyright / public domain dispute waiting to happen.  A detailed discussion can be found here.   

The issue isn’t actually new. The first museum collection to appear on the World Wide Web in the early ‘90s was the WebLouvre. Only it wasn’t. It was a site put together by a student and there was indignant backlash from the real Louvre.  Today, anyone can mint an NFT of a museum’s collection image available on line, and sell it on the blockchain where the problems of anonymity and “immutability” kick in. 

Not only museums are vulnerable. “…Crypto artist Pest Supply…sold an NFT featuring an adaptation of one of Banksy’s works… Even the name of the artist, “Pest Supply”, is misleading because it resembles “Pest Control”, which is Banksy’s authentication body. The NFT itself had nothing to do with Banksy, but despite that, it was sold for nearly a million USD.”  

A solution looking for a problem    

That’s how one Intellectual Property lawyer described NFTs during a recent conference at Tel Aviv University’s Law Faculty. The “problem” is in fact how to create digital scarcity – but that’s a different subject. Regarding copyright, the legal question raised was who actually owns copyright in an NFT: the artist, the minter, the platform? That’s also an easy one: the artist. That is to say, the creator of certain specified types of original intellectual creativity.*  The NFT (the executable metadata code in the “token”) isn’t protected by copyright, rather the work of protectable art, music, etc. it points to.  

Aanother interesting question was raised: in the Renaissance, who was considered the creator – the artist (or rather, artisan) or the commissioning patron?  Who had the greater input? An art historian would immediately understand the question. Before Humanism and Romanticism, the artisan was a skilled worker hired to produce a patron’s concept according to the latter’s instructions. Today the question is dealt with by the legal concept of work-for-hire. The question of how museums can lend NFTs was also posed. Because their value in a volatile, unregulated market is radically unstable, there is near-impossibility of appraising them for insurance, collections management or donation;. More about this issue can be found here.  

Museums can do better digital things

The solution to many of the issues above may be staring us in the face. If anyone knows how to combine creators + digital and come up with great “end products,” it’s museums – and GLAMs in general. They can take creativity, blockchain technology, Web3, the Metaverse… and produce amazing things — products that take financial responsibility, copyright and patent issues seriously, as well as community and environmental impact.  An excellent discussion of this can be found here and more on museum thinking long-term, here.  

One last thought, or warning: “In this fan-based economy, art no longer has to be experienced physically or be historically contextualized. In fact, the object itself no longer matters, leaving only an image that signifies potential profit, nothing more. This should be an urgent call for debate. The potential death blow to a traditional mode of value-making should be of serious concern to anyone who wants to defend the true essence, power, and ability of art to inspire, educate, incite agency, and remind us we are human.”  

You may recall previous mention of Damien Hirst’s NFT project, involving  10,000 uniquely titled dot paintings that were linked to corresponding NFTs and sold for $2,000 each. Buyers could keep the NFTs or trade them for the physical artwork. “The collector … cannot keep both.” The version not chosen would be destroyed, the physical works going up in flames on 9 September.  Recalling that NFTs are immutable and irrevocable, one wonders how the NFTs will be “burned.” Here’s how.

Twenty-four hours before the decision deadline on 27 July, 4180 people had chosen to exchange their NFT for the physical artwork, 5,820 opting to keep their NFTs.  Hirst isn’t finished playing this project for all it’s worth, however:  an exhibition of the to-be-burned works will open in London on September 9, and another during the Frieze art fair in October, with a major closing event during which the remaining artworks will (finally) be burnt.  Hirst will be there, one is promised.  https://www.theguardian.com/artanddesign/2022/jul/26/damien-hirst-to-burn-thousands-of-his-paintings-to-show-art-as-currency

Footnotes

* [For example:] Independent Research Organisations (IROs) are a subset of research organisations that satisfy a list of conditions set by UKRI which allow them to access UKRI funding. To qualify, they must… not be owned, established or receive more than 50% of their funding from business or certain public sector establishments. Examples include… some museums and galleries such as the Science Museum Group and the Tate galleries. The latter form the Independent Research Organisation Consortium, which is a network of IROs recognised by the Arts and Humanities Research Council.

** In the UK:  a graphic work, photograph, sculpture or collage, irrespective of artistic quality, a work of architecture being a building or a model for a building, or a work of artistic craftsmanship.

In the US, the list is similar, and a work must be “fixed in a tangible medium of expression,” i.e. not a mere idea.  Copyright Act,  7 U.S.C. § 102(a)

More links of interest:

Well worth reading in full:    

“…In this paper, we present the current state of affairs in relation to NFTs and the cultural heritage sector, identifying challenges, whilst highlighting opportunities that they create for revenue generation, in order to help address the ever-increasing financial challenges of galleries and museums.”  

https://www.researchgate.net/publication/355548758_Crypto_Collectibles_Museum_Funding_and_OpenGLAM_Challenges_Opportunities_and_the_Potential_of_Non-Fungible_Tokens_NFTs

Also: 

https://www.theverge.com/23141561/nft-boom-token-mint-artists-collectors-auction

https://medium.com/initc3org/copyright-vulnerabilities-in-nfts-317e02d8ae26

https://news.artnet.com/market/think-artists-are-getting-rich-off-nfts-think-again-1962752

Lastly, for British readers: I am assured by Wikipedia that Rubbish in, Rubbish out (RIRO) is an alternate for GIGO.  https://en.wikipedia.org/wiki/Garbage_in,_garbage_out