By Jacqueline O’Neill, Executive Director at Blockchain Art Collective. Originally published on Quora.
Resale rights already exist in a number of creative industries.
To use a song in a commercial, a company has to license it and pay royalties to the musician. Every time a book is purchased, the author gets a small percentage of the sales.
But for many visual artists, once they’ve created and sold a work of art, that’s the last they ever hear about it. Their resale rights are essentially non-existent. If the piece is sold for a few thousand dollars, and then goes for several hundred thousand a decade later, the artist is out of luck.
Fortunately, that’s starting to change. The blockchain is making waves in the art world, and artist resale rights is one area where those waves may end up having an enormous impact for artists.
Here’s how it would work:
One of the major benefits of using the blockchain is improved resale rights.
Right now, when an artist sells their work — or uses a gallery to sell it for them — they relinquish any right to profit from the next sale.
For everyday items like a car or couch, that’s not a problem. No seller would dream of taking a cut for every Craigslist transaction.
The catch with art is that it typically gains value over time. An artist may originally sell a piece for a modest fee, but years later, an auction house sells it for several times that amount. The artist never sees a dime of that new value.
Blockchain can help level the profit playing field by embedding a payment to the artist in every transaction involving their artwork.
That means each time the work of art is resold, a charge akin to a royalty fee is automatically applied to the sale. There’s no haggling or back and forth involved. The payment is all under the hood, so to speak. But the artist is compensated each time the piece is sold.
The size of the payment will likely be on a sliding scale, decided upon by the artist. But let’s say they choose to start at 1%. The first time the piece is resold, that may not amount to much. But perhaps twenty years later the artist has gained some renown and the piece is exponentially more valuable. Now, a 1% cut of the resale value could be immensely valuable to the artist.
Blockchain also allows artists to track the sales of their work, improving provenance.
This is all possible because of the physical-digital link created when a work of art is registered to a blockchain. And that link is created by a CryptoSeal — a tamper-proof adhesive that attaches to the physical artwork.
When a CryptoSeal is applied to a work of art, the physical-digital link it creates allows artists to track their work throughout its life, as well as proving provenance.
Right now, it’s impossible for artists to know what’s happening to their work. Has it been lost? Stored in an attic? Sold for a million dollars? Unless there’s some type of press about the work, they may never know.
But as each transaction tied to the artwork is registered on blockchain, artists will be able to gain a better understanding of how their artwork is being used — and profit from its success in the market.
And having that connection both physically and digitally will increase the value of the artist’s work. Collectors and institutions who purchase these works perform tremendous amounts of due diligence to make sure what they’re getting is real.
If the piece is marked with a CryptoSeal, then its unique identity has been stored on a blockchain. It reduces the amount of time and money someone has to spend to verify the artwork. Because once it’s been authenticated and registered on a blockchain, the physical-digital link is all that’s required for a purchaser to be sure they’re getting the real thing.
As tracking and resale rights improve, art theft will waver.
Most art thefts are about reselling the artwork. There aren’t many brazen art burglars who are doing it simply to decorate their own living room walls.
At the moment, there is no GPS system in a CryptoSeal. If someone wants to steal a work of art and hide it away in an attic, we can’t track that.
But at some point, the work will have to resurface if the thieves want to make a profit. If the CryptoSeal hasn’t been tampered with, but the blockchain register doesn’t align with the seller, it will be clear there’s a missing link. And removing the seal once the original link has been established will crater the value of the piece. It will be obvious the artwork is either fake or stolen.
While a black market for bad actors will always exist, blockchain will make it much more difficult for thieves and counterfeiters to pass along fake or stolen artwork to unsuspecting collectors.
And as more art transactions are accomplished through blockchain, artists will be able to realize the real value of their art.
Thanks for reading!
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By Jacqueline O’Neill, Executive Director at Blockchain Art Collective. Originally published on Quora.
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