The Art World Underestimates the Power of NFTs
Changing powers in the art eco-system.
Let’s look at the role of artists: In the future, it is not unlikely that every artwork that leaves a studio will be registered by the artist on the blockchain. So when it’s traded the artist not only gets royalties but also knows who the new owner is. This allows them to work more independently and not rely on galleries entirely to promote or authenticate their works. As a consequence, artists will earn more on every piece they sell.
NFTs will bring about a profound structural shift in how art is created, enjoyed and sold.
Traditionally, it’s been a 50/50 split with the galleries. In the NFT space, it’s a 90/10 split in favour of the artists. So, we will end up somewhere in the middle. Additionally, artists and their heirs will benefit from royalty income. Artists will also tap into new revenue streams. for example converting some of their community into paying members for additional services, unique content or early access.
With this change in the commission set up, there will also be a change in the power structures: Similar to the entertainment industry in the 1930s, the power in the art world will shift from the distribution channel (galleries) to the creators (artists). And with more independence for artists also comes more responsibilities. In a world where collectors communicate directly with the artists, who is selling the works, then, when the artist is busy creating? In order to sustain this shift, artists will need to become more entrepreneurial and learn to manage new tasks. Some will hire more staff, others will gladly work with galleries that take on the jobs of selling, promoting, placing and supporting – roles galleries today are already performing. But the power dynamics will have switched.
Collectors will be most impacted by the development of the new art ecosystem. Given that the role of the middleman has shrunk, they will be in closer, more direct contact with artists. When every artwork is registered on the blockchain, collectors will feel more confident buying art because they will know current prices, past prices and comparable prices. And more collectors will enter the market because information on provenance has become clearer and more accessible. And selling artworks in the traditional market is currently very difficult and always requires a middleman. Using NFTs the sale process is much easier and allows for much faster transactions, demonstrating easier ways to get a return on investments.