This piece is the second in a two-part series that explores the potential art-world impact of blockchain. Read Part I to find out what blockchain is, what NFC is and why art market participants should care.
LEGAL COMPLIANCE
Legal compliance may also incentivize art businesses to utilize blockchain platforms. In a 2019 article titled ‘Fine Art Certificates of Authenticity: Are Yours Compliant?’, attorney Sam Miller explains that, under California[n][‘s] Civil Code Section 1742(c), galleries and dealers are “prohibited from selling or consigning a fine art print or multiple into or from the State of California unless a certificate of authenticity is provided to the purchaser or consignee on request or, in any event, prior to the sale or consignment”. Californian galleries and dealers are also required to notify prospective purchasers that California law requires written disclosure of “certain information concerning prints, photographs and sculpture casts”.
Considering the warning art experts gave early last year about a surge in forgeries of prints by renowned artists – the most notorious of imitations attributing themselves to Warhol and Lichtenstein – cryptographically stamped COA’s may provide a potentially referenceable system of authenticity for collectors.
PROPER PROVENANCE
The art industry – unlike cars or real estate – lacks a centralized registry for artworks’ ownership. Without a formal database to rely on, dealers and collectors often rely heavily on trust, sorely outdated paper-based systems or on individual authoritative bodies – such as third-party accreditation agencies – to verify the authenticity of works. As a result, lack of price transparency and art fraud remains a major issue.
For dealers, there is significant value in a comprehensive, unbroken chain of title for artworks. A clear provenance – one that provides legitimate proof, including the origin and actual and previous ownership of the asset – can be achieved using an incorruptible blockchain ledger. One start-up aiming to transform ownership documentation is London-based and internationally active Arteīa. The Ethereum-based platform has partnered with publishers Cahiers d’Art to offer the first ever online Catalogues Raisonnés secured on blockchain, to authenticate art by certifying chain-of-ownership.
Not only will this allow artists to record, access and monitor information relating to their works, but collectors are also able to optimise their collections through advanced content management solutions. And, if there’s any takeaway from the legal controversy last year in which Modigliani expert Marc Restellini sued the Wildenstein Plattner Institute for holding his life’s work and research for the artist “hostage”, it’s that certified records on blockchain can prevent competing catalogue raisonnés or other organizations’ claims to rights in the research, particularly where the authenticity of a number of an artists’ paintings are disputed.
Also shaking the international art ecosystem is start-up Startbahn Cert., the COA-issuing service provided by Japanese parent company Startbahn, that delivers and manages secure digital certificates for artworks. User’s can scan the artwork’s unique IC tag (which umbrellas NFC and other tags) to view a range of details – such as the work’s provenance, the certificate issuers or T+C’s related to the work. The information is stored and chronicled on Startbahn’s own infrastructure, using blockchain network, called Startrail. The promising platform is the brainchild of founder, CEO and artist Taihei Shii, who has built a team comprised of experts and already applied for a patent regarding the technology in Japan (including PCT application).
But, even though blockchain-based authentication provides a level of transparency and trust for users involved, there needs to be a good understanding of who is authorised to enter data and what their qualifications are to do so. Just two years ago, distributed ledger sceptic/ troll Terrence Eden was able to get blockchain veterans Verisart to certify him as the author of the Mona Lisa painting, which we all – hopefully – know, is the work of Leonardo da Vinci. The false certificate of authenticity issued to Eden still remains on the site.
ARTIST’S HAVE RIGHTS TOO
“The swift, cruel, incredible rise” of Ghanaian-born artist Amoako Boafo, as reported by Artnet last year, is indicative of the increased value of contemporary art in secondary sales, even in a global health crisis. Yet, despite widespread media attention, the hype overlooks one significant area of discussion: artist’s rights. As Californian art lawyer Susan Schwartz explained in a workshop promoting an artist’s contract project launching this year, “[we are at a point now where] the market has become ostensibly more predatory towards artists”.
While various efforts have sought to introduce an American Royalties Too (ART) Act in the Senate and House of Representatives, no such Artist’s Resale Rights (ARR) provision exists under U.S. law. Boafo’s “The Lemon Bathing Suit” (2019) sold at Phillips for an astronomical £675,000 ($880,971) – more than 13 times its high estimate – while the artist received no royalties from the sale. Not to mention, this sale happened just eight months after the artist completed the work.
Without adequate laws, tech allows artists to achieve ARR through private contractual arrangements. The Fair Artist’s Reserved Equity (FARE) Contract – a redraft of the 1971 Siegelaub-Projanksy Artist’s Agreement to incorporate modern technology, spearheaded by Schwartz and artist Virginia Broersma – have partnered with art blockchain solutions FAL and File Protected to help artists enforce resale royalties, fractional ownership and copyright management solutions for secondary market works, according to set contractual conditions.
Major art hubs in Asia, such as Hong Kong and Japan, also lack resale royalty laws. In Japan, Kodai Kimura, art lawyer and legal advisor to Startbahn, explains how “one of the unique characteristics of the platform is that artists can set contractual terms on the certificate including the payment to an artist when the artwork is resold at a secondary market”. This royalty-type revenue allows artists to receive a payment similar to ARR through the Startbahn platform.
In contrast, while the UK and EU countries do have ARR laws in place, the position on its relevancy is shifting.
COPYRIGHTING CONTENT – AT WHAT COST TO CREATORS?
Copyright infringement is another pressing concern for content creators, particularly in the ‘internet age’. “The easy upload and distribution of digital files online [think: Instagram stories or even Netflix shows…] breeds rampant infringement across social media and search engines” says Andy Rosen of FileProtected, an automatic blockchain copyright registration service helping artists monetize their digital content.
Based in California, FileProtected is co-founded by Rosen and Björn Graf and derives from Sendergram – their initial blockchain platform for digital media creators – as a specialised digital asset management and Intellectual Property solution. While IP protection doesn’t extend to concepts and ideas, the start-up offers to provide a “verified source of origin for digital content; when it was created, who owns it and any modifications”, Rosen explains, in addition to inventions, original literary works and more.
Registration on the platform generates a unique web page which combines a blockchain registration with a “Creative ID”. This Creative ID is akin to a digital COA – or, as the website coins it, a “passport for creative work” – and is publicly available for download. Crucially: wherever the work goes, a web-based and downloadable manifest linked to the blockchain registration is anchored to the work, to be used when sending, sharing, publishing, transacting or delivering content.
UK-native but based in LA, Rosen’s transition from an international photographer to a software developer is in part due to an ugly copyright battle involving images of lead singer Simon Le Bon of acclaimed band Duran Duran. “Although copyright is supposed to protect creative work, it doesn’t offer much protection unless you have the funds to enforce” says Rosen. Now, F.P.’s two-man team is showing “the importance of having a simple, fast and cost-effective copyright and authentication system” as integral to a functioning and burgeoning creative digital economy.
Registration on File Protected of Simon Le Bon. Share, transact, deliver & monetize digital content securely.
In particular, this extends to Instagram, since users can authomatically register their posts by adding #fileProtected in the comments and instantly register their pre-existing posts on sign up. Integration with Google search will also show images as ‘licensable’ and link to the Creative ID, which serves to expedite sales.
But, for Rosen, the main motivation behind F.P. is the bane of the formal copyright registration process. While copyright protection in the UK and U.S. is automatic – that is, original work fixed in a tangible medium of expression is protected from inception – creators in the U.S. must register if they wish to bring a lawsuit for infringement.
“The copyright [reg.] system is overwhelmed and inundated – it no longer serves the purpose it initially set out to achieve” Andy tells us. The recent passing of the CASE Act – which introduces a small claims tribunal in the U.S. Copyright Office – finally means applicants can submit claims and have their cases heard, although participation is voluntary and it’s estimated to take 12-18 months to get things going.
Speaking as an artist, Rosen continues: “The reality is this: artists can’t afford to register the amount of content they have en masse (standard filing fees range from $45 – $125 per claim), so they select a few. But the sheer volume of requests means there’s at least a 3 month wait. In the meantime, other work(s) remain unregistered with no attribution, vulnerable to infringement and without adequately defined ownership or usage rights – while litigation costs are simply out of pocket for most (although penalties for copyright infringement can reach $150,000 (£115,000) in the U.S.)”.
There is also the perpetual question of unfinished artworks. Since creators can only register finished works, at what point in the creative process do you register a copyrighted work that is continuously being updated or revised?
While blockchain is not a replacement for official copyright registration, it provides an audit trail registered on an immutable ledger – protecting works from inception to delivery. This might also protect the by-products of a creative process, which typically provide vital evidence for copyright ownership and infringement disputes – think: ideas, conversations, activities and context around a work or file – but which are all too often exploited for financial gain in the art world.
So, blockchain has obvious potential in the art industry, which could benefit significantly from the application of such technology to provenance, counterfeits, artist’s rights and copyright issues – all of which represent the industry’s most significant challenges. The implications of these blockchain powered art registries also extend to the insurance, shipping and art financing industries. But, to serve all parts of the art ecosystem as they intend, blockchain’s success ultimately depends on the engagement of all participants.
