WOULD YOU PAY TO "OWN" A PIECE OF MICHELANGELO?
Value is an Illusion - NFTs, Art, and the Ethereal
‘An NFT can be anything’ is a common refrain these days - and that is part of the problem for people trying to understand the new mysterious realm of Non-Fungible Tokens.
Want to mint your favorite t-shirt as an NFT? How about a bowl of pasta, a dream, your ancestor’s property rights, the sun? “Oh, I know someone working on that!” is the typical reply to any imagined NFT use case.
In theory, an NFT can be a collectible, an experience, a license, a stream of revenue, artistic accountability, creative liquidity, and more.
We all understand logically that the objects we value are not always directly correlated with their functional utility. A Louis Vuitton purse that sells for $5,000 is not priced based on the quality of its craftsmanship or unique features. Sure, luxury goods like Rolex watches and Lexus sedans are typically of objectively superior quality to other brands in their category. But that does not justify the premium that consumers pay for these goods. The true value of these brands are in the status they carry, and thus exist only the mind of the consumer.
Gold, the most universally accepted ‘block’ of monetary exchange, has real world utility — it can be used in jewelry, cavity fillings, and electronics. But the price of gold is not a product of its metallurgic qualities. Yet despite this knowledge, few people question remote ‘ownership’ of this precious metal as a sound investment. To the contrary, countries that deviated from the illusory ‘gold standard’ were historically criticized as irrational.
Art has always been the supreme example of phenomenological value. And yet with NFTs, we are again faced with the eternal aesthetic critique - are NFTs really art?
Fortunately, the technical answer to this question is simple with NFTs. The purchaser of an NFT does not ‘own’ the work of art in any traditional sense. The artist typically retains the copyright to the work and, with that right, the ability to make infinite copies for distribution.
This concept is nothing new in the art world. For example, the purchaser of a limited edition photograph at auction receives only one copy of the work and a limited license to display that copy in private. The photographer retains the copyright and may make infinite, and nearly perfect duplicate, copies of that photograph for sale to others. The value to the purchaser is the (real or perceived) scarcity of the limited edition copy.
“But the NFT owner doesn’t even receive an actual tangible piece of art to enjoy!?!”
Indeed, the purchaser of an NFT has even less to ‘show’ for their money then the purchaser of a physical piece of art - be it a painting, sculpture, or even piece of music. As with all prior art, the value of NFTs will exist in a specific cultural, technological, and temporal context. But at a minimum, the owner of an exclusive or limited edition NFTs will have a claim over a work or art that carries some cache.
Status is the sine qua non of the modern art market.
Imagine for example that the Sistine Chapel were to auction off the claim to ‘own’ the Ceiling Mural by Michalangelo. The purchaser of this property right would receive a legal, unalterable certificate of ownership over the painting — and nothing else. The painting would remain in the Chapel in perpetuity and the new ‘owner’ would have no special access to the work.
This hypothetical is not far-fetched, at least legally speaking. The concept of ‘owning’ property can be distilled down to a bundle of rights. These rights — to control, to possess, to observe, to exploit, to enjoy, to destroy — can be combined or can be partitioned and divvied out among multiple parties.
If a Certificate of Ownership to the Michalangelo’s famous ceiling mural were to be auctioned off, this pure status property right would undoubtedly sell for millions of dollars. Many art purists and investors would abstain from the spectacle. But many others would bid for sole privilege of being able to say they owned the masterpiece.
Would you pay to ‘own’ your favorite piece of art or music even if you got no special right or access to the actual work?
“Everything you can imagine is real” - Pablo Picasso
WELCOME TO THE LAWS OF CREATION . . .
Good points here! Another angle to consider with NFTs is that the traditional art world in general terms is the terrain up upper socio-economic classes. While the vast majority of my followers can not afford my paintings, the production and sale of NFTs has created another seat at the table. Perhaps that desire to have a seat is status driven, but I would also argue that it is also fueled at least in part by the desire to participate.
Your parting shot is the conundrum! For example, how does an NFT differ from a simple jpg other than the "smart contract" assigned to the art on the blockchain? This is something I'm working on explaining to others!