The Proliferation of NFTs: Skeptical or Spectacle?

The Spectacle is not a collection of images, but a social relation among people, mediated by images.

-Guy Debord from The Society of Spectacle (1967)

2021 brought in a glimmer of hope and ushered in the digital renaissance. In addition, the NFTs have grabbed our attention and disrupted the art world and other industries. Although NFTs have been rapidly proliferating and generating a $22 billion market (see ARTnews' list of most valuable NFTs of the year here), this new asset/medium still baffles many.

(For a refresher on the basics of NFTs and how NFTs changed how we exchange and perceive value, check out my previous article here).

Theoretically, NFTs created solutions for the art market and world by bringing more transparency, autonomy, and perpetual royalties to the artists in the secondary market. However, one of the key controversies in the art world is that the artists, unfortunately, do not reap any profits or fair share in the secondary market, especially when their work appreciates significantly over time. 

The legendary 1973 Robert and Ethel Scull Collection sale at Sotheby Parke Bernet sparked the ongoing debate on whether the artists should receive royalties in the secondary market. It was highly publicized and a blockbuster event that generated $2.2 million of sales of 50 works by living artists, which was unprecedented at the time, thus setting the stage for today's contemporary art market. 

The Sculls built their fortune through their taxi business and were renowned for their collections of abstract expressionist artists, including Willem de Kooning, Barnett Newman, Mark Rothko, and Franz Kline. They also collected works by Pop Art artists such as Jasper Johns, Robert Rauschenberg, Andy Warhol, and James Rosenquist. When Robert Rauschenberg's Thaw (1958) and Double Feature (1959) sold for $85,000 and $90,000, respectively, the artist confronted Scull for profiting from him (Scull purchased the work from Rauschenberg for $900 and $2,500). Scull famously responded that he was also working for Rauschenberg, justifying that he hoped the higher prices would eventually rebound to the artist. As a result of this infamous incident, Rauschenberg lobbied for the resale royalties for artists to U.S. Congress during the early 1970s. The legislation passed when California governor Jerry Brown signed the California Resale Royalty Act of 1976. Rauschenberg continued to pursue nationwide resale royalties legislation throughout his career.

Although the decentralized system and smart contracts offer autonomy yet have been raising more controversy and headaches for artists. Sadly no artists or creators have been immune to copyright infringements and unauthorized minting. Ideally, the transactions run independently and are visible to everyone (despite the anonymity of the creators and buyers). Yet, some authoritative intervention (in our case, the artist’s estates or foundations), vetting, and guidance are necessary to weed out unauthorized minting and protect artists' copyrights. Even reputable artists such as Warhol and Basquiat have been the victims of NFT scams earlier this year. Now the marketplace is flooded with plagiarized NFTs (see more here and here), and there isn't any system in place to verify the work's authenticity before minting. 

What's the moral of this story? NFTs are still at their burgeoning stages, and a lot needs improvement. Just as in real life, the NFT space is just as unregulated as the art market, aggravating the previous pain points for artists and creators (hence more confusion ensues). When Appropriation was introduced, it brought in thornier issues with copyright and intellectual properties (see more in my previous post here). Some NFT platforms charge substantial gas fees to mint an artwork or offer minimal royalties. However, when we see headlines of artists making 6 to 7 figures on NFTs, we overlook the work behind the scenes and interpret their financial success as an overnight success or luck. In reality, many artists struggle to stand out from the crowd from the overly saturated and less curated market. To sell NFTs, like selling physical products in the real world, requires an audience, and it takes a lot of leg work (more mental energy) to create strategies to build communities to support artists' work. Nowadays, NFTs have become another marketing tool for brands or creators to use innovative technology to reach a wider audience.