Crypto Creators: On Art Galleries to ‘Tokenized’ Collectibles

This episode features Q&As with two artists who are exploring crypto-powered auction sites and marketplaces – this is part of our ongoing series on the creator economy. The big picture is that emerging “tokenization” models, including non-fungible tokens, or NFTs, are creating new ways for collectors and investors to buy, sell, and trade digital art. More broadly, these innovations open the door to the tokenization of any products or collectibles that can be captured and owned digitally, and many new business models for creators.

Marketplaces powered by NFTs open up new revenue streams for creators, because anytime digital work is resold or their tokens traded on these platforms, the creator automatically gets a percentage of those secondary sales. It’s all transparent and governed by code on the blockchain, and it’s a big shift in creator economies.

Our first guest is one of the biggest names in crypto art, and one of the most mysterious. Pak is the artist and designer who created the AI-powered image sharing site Archillect. Pak has made it a policy to separate their personal identity from their online work, and prefers to keep their quote-unquote real identity hidden, so we conducted this interview by email and converted Pak’s answers to audio using text-to-speech software. As Pak has expressed in other interviews, it’s really the work that matters.

And we do know a lot about the work, Pak has sold more than 60 pieces of digital art this year on the crypto-based auction site SuperRare, for more than $350,000. And that’s just one of the several platforms on which Pak’s work is sold.

In this Q&A, Pak talks with CFI ’s Zoran Basich about NFTs. These “non-fungible tokens” are unique assets that are not interchangeable. Dollar bills are fungible — each dollar bill is worth exactly the same as every other one. But works of art, for example, or any collectible, can be non-fungible — their value varies based on the market for that particular asset. With crypto, these assets carry digital ownership rights that can be easily exchanged.

We start by discussing the whole concept of digital art.

Why would someone pay a lot of money for something that seems like it could be easily copied? 

PAK: You see, that’s a tricky question. Because the newcomer assumes that it can be copied but in reality, the collector of the NFT does not obtain a digital file, they get a unique and signed token that cannot be copied or owned by anyone else. So, assuming that NFT’s can be right-click-save-as copied is very similar to the assumption of going to the Louvre to take a picture of Mona Lisa to own it, or taking a picture of a plane ticket to copy it. NFT is not about the visible object, it’s about the permission and access to a thing.

It’s only a matter of time until it becomes accepted in a wider sense. Every new medium for art had this struggle for acceptance. Having this struggle is not bad, it’s good. When the argument is over, this conflict and resolution will be the thing that will make crypto-based art valid. From my personal perspective, this is not a conflict or questioning of “is this art or not.” It’s more of a questioning of “is this unique enough or not.” And sooner or later it will be understood. 

What was the dominant commercial model for artists in the past, and how might crypto change that? 

I’ve never categorized myself as an artist even though a portion of what I do, design, surely touches art. Therefore, I believe, a better word for a “crypto-artist” should be “crypto-creator.” 

From a design point of view, the options are working full time for studios, working as a freelancer, or having your own studio.  

For crypto art it’s currently closer to the second one, the freelancer model, however, there is an important detail. A design client needs your work, but an art collector wants your work. Sometimes it feels better to be wanted than needed.  

What was your first exposure to crypto, and how did your interest develop? 

I was able to meet bitcoin and make moves before its initial explosion. Being interested in value concepts as long as I can remember, I was instantly charmed by the idea of how value is transformed to this new exchangeable form. 

NFTs, on the other hand, are new to me. The first time I met with NFTs was when CryptoKitties contacted me to create an Archillect kitty when they were forming. 

Today, NFT’s are more than just little fun pieces. I believe in the technology it defends, therefore, I am happy to make waves in this branch of technological revolution, and evolution. 

How do NFTs make it more attractive for creators to become crypto-creators? 

It’s similar to cars becoming electric cars. “Crypto creator” is not a term that defines a special group of creators in my opinion. It’s only this now-new, soon-to-be-norm term for digital tradables. In other words, when it’s so easy to make it happen for any creator, why not?

Most of the activity around crypto is financial — trading, borrowing, lending, and investing in cryptocurrencies. What are the characteristics of crypto that might hold appeal for artists, designers, and other creators? 

Creation and destruction of value is always charming for any kind of creator.

What advice would you give creators who are interested in exploring crypto as a new model for selling their work?

Experiment!

You have been working at the intersection of technology and art for some time. Apart from their possible financial advantages for artists, do crypto and the blockchain, or the idea of a decentralized technology in general, hold some deeper cultural meaning or symbolism, in your view? 

Anything can carry symbolism, it depends on the receiver rather than the source. I value innovation, I value creation of value and I try to exist on that line, where something new pushes the limits of what’s widely known. Of course, decentralization of things holds a future of a new culture of technology, many new norms and standards, and many branches in unknown directions, and that’s exactly the reason to be there. Almost like the internet just before it went mainstream. 

Let’s talk about revenue for artists. Will NFTs lead to a relatively small number of creators making good money, as has generally been the case in traditional art-business models, or do you think the distribution of wealth might become more equitable with crypto? 

Art auctions are a completely different world, and it would not be fair to estimate NFTs based on that. Of course, NFT-based and supported art will have its own audience, and I expect to see similar dynamics with the traditional art world in terms of how things are evaluated. 

On the other hand, NFTs can be used for many other things — this is what makes it powerful. Anything that can be digitally owned can be supported with an NFT. It has a lot of uses in media and entertainment, real estate, gaming, identification, or any kind of asset or collectible. It’s a technology that’s slowly going mainstream for art, but it’s not limited to that. Therefore, I do not think it will be only a small number of creators making good money. It’s going to be the base of many new business models of the future norm.  

OUR NEXT GUEST is Signe Pierce, a visual, digital, and performance artist whose work has appeared in major galleries in Paris, Los Angeles, and New York. She’s currently featuring her artwork on the creator marketplace Foundation. On that site, the price of tokens associated with limited-edition works of art is something like you’d see on a stock market – the pricing is real-time and dynamic, fluctuating according to demand by buyers, who might be investors, collectors, or fans. (Signe recently opened NFT-based auctions of single-edition works as well.) Signe discusses why she went from working exclusively with galleries to trying crypto marketplaces, how this move affects her work and her business, and how crypto could change the way she engages with her fans. She also offers advice for creators interested in getting into the world of crypto.

First she talks about how social media popularity several years ago opened her eyes to the idea of new monetization models for creators. 

SIGNE PIERCE: I really had a big swing on Tumblr in the years 2014-2017 when Tumblr kind of popped off. And my pictures were just getting, like, hundreds of thousands of re-blogs.  

And I just kept really returning to this idea of, why is there no valuation around this energy? And maybe how could there be? How could we turn Likes into money? How can I sort of flip the attention economy into an actual monetization form? 

And that was what really got me thinking big about, yeah, I actually really can understand why this blockchain technology and tokenizing artwork could potentially be a really major disruption to the art world way of doing things as well as married to my vision for just a more prosperous world for artists and for people to enjoy art. 

So how did you come to start working with Foundation?  

I was put in touch with the curator, Lindsay Howard. We talked at length about our vision for wanting to find some new ways of doing things and make it so that artists have a little bit more stake in their work. I think partially because there’s a curator that I really trust who was inviting me in, as well as the fact that I could just sense that they had a finger on the pulse, all of that was what swayed me into wanting to work with them.  

Which of your art is there now? Walk us through what that looks like and what’s being presented there at the moment. 

So I have done a specific run of three works which are from what I call the Jangular Lilies series. I’ve offered two prints at editions of 100 and then one video at an edition of 10. I wanted to create a run that serves as this kind of cool, crypto training wheels for people who might be interested in this but that are nervous to get their feet wet. (Note: Foundation enables trading of limited-edition works via redeemable ERC20 tokens, along with its NFT-based auctions for single works.)

Let’s see what happens, you know? And at the end of the day, you can experiment with the crypto. And it’s been really exciting to watch the trading aspect of it, when they trade in their tokens and they get to have the exchange. It’s just kind of been a new frontier for me personally. 

And the interesting wrinkle is that people can come, fans, collectors, and they can buy your artwork at the price at which it’s listed. And when you are ready to produce that artwork they will get a physical copy of it, right? 

Yes. 

Or, while they’re waiting for you to complete the artwork and fulfill that order, they can also trade the token that is associated with that artwork. And so the price of that artwork is going up and down in value, or it’s dynamic, right? It can go up and down. 

Exactly. 

So that goes to the point of what you were saying about people being able to trade it. And that’s really what makes it interesting here because now you’re talking about not this static price but rather a dynamic price that can lead more people to perhaps get involved with this from sort of a purely trading or investment aspect on top of the collectible or fan aspect of it. 

I know not all artists are gonna like this, and not all artists are going to find this to be their jam. But I see this as kind of an interesting way to think about our works like stock, in a way. I’m interested in watching the way that that’s playing out in this sphere because it’s new and it needs to be pioneered in order for it to become normalized. 

So from the buyer’s perspective or from the collector’s perspective, they can wait for the price to go higher and trade it and make a profit on that and not end up owning your physical piece of art, correct? 

Yes, exactly. And I think that’s kind of also a cool way for people to support the artist. You might not necessarily end up with a print if you don’t decide to redeem your token. You’re still supporting me, the artist, in a little way just by engaging with the trading. And I think that’s, again, a cool way to get people into the world of crypto and supporting the arts.  

And one thing we should mention, you just touched on it, is that every time anyone trades one of these tokens you receive a cut of that. The artist receives a cut of that. 

Exactly. That, plus the fact that as the editions decrease, the more editions that are sold, the price increases. And that is also a really exciting aspect of this.  

And how do you think about pricing? How do you decide what the initial price will be? And how big the limited edition will be? 

I’ve spent a lot of time thinking about this. I’m going to kind of keep my works that are dealt through gallery systems and the art market, I’m going to purposefully keep them low and, you know, rare. They come with the full package of framing and serious fabrication. With these works, they’re high quality, digital C prints. It’s just larger editions, and therefore the price kind of matches the fact that there isn’t as much scarcity attached to them. 

But again, I’m finding there’s a sweet spot for me wherein I’m still able to work with the fine art market, but I’m also able to make it so that the work is accessible to more people. I think my work is valuable. I take it very seriously, and I want it to be valued appropriately. And I want it to appreciate over time. And I think the fine art market finesses that opportunity. 

But I don’t want it to be completely forbidding to everyone else in the world because that goes against my general ethos of art being for the people. So to me that’s my personal approach. Again, not everyone’s approach, but this is my way of making it so that we can kind of play both fields. I’m not giving up on the fine art market or the fine art world, but I’m also really interested in trying new things and inviting more people into that, into the opportunity to become a collector. 

So when you go to the site and your artworks are there, it’s like a stock market, right? There’s a price, and it shows how much it’s risen or fallen. I think I looked this morning and all of yours were up over 100%. Congratulations. 

Yeah, we’re doing pretty good.  

How often do you look at that? And what’s that like? It’s just a whole different kind of insight. It’s a real-time look at how people are responding to your work, right? 

Absolutely, and that’s exciting. It feels very modern. I’ll be super honest and say I’m not, like, a finance guy, you know? I’m an artist. But I’m still, you know, I’m a modern artist, and I really, I’m interested in modernity and the future as well as looking at the way it works, understanding it in order to better think about it. So when I get to see in real time the valuation of the work, that’s kinda thrilling because, again, I’m so used to this kinda Tumblr culture where you get to see your numbers going up. You’re watching Likes and re-blogs happen. But there’s nothing actually attached to it for me other than minor dopamine bursts. So this is actually creating a little bit of capital to it to make it a little more fun at least, rewarding.

Is it an experiment where, yeah, you might make a little bit of cash? Is it a significant amount of cash that’s possible? Like, how much of a revenue stream does this represent for you? 

At the end of the day, I’m making money making my work, and that’s exciting. And there is profit. I’m making a profit from this, and it’s another avenue for revenue for me to make my art and get it out to the people. To me these are all wins. While the profits are not as gigantic as if it was on, you know, the fine art market immediately, but that’s for one work, you know? This is multiple works that, over time, it is similar numbers, you know? In fact, sometimes more. 

So maybe it doesn’t make that much sense for me to only be having, you know, extremely high prices, and there’s only one period, and then you have to wait for that appreciation and valuation. And then if it flips on the secondary market, I don’t get to really see, I often don’t get to see that unless I’ve contractually negotiated it.  

How do you think about digital art versus physical art? Because I think in this case right now you are gonna produce physical pieces that you’re gonna send to people. There’s, like, a reproduction cost involved there, which presumably cuts into your profit, whereas digital work is more easily reproduced. 

Totally. 

But then also, digital art historically has been hard because, like, how do you stop it from being copied? But with crypto there’s this kind of additional thing of the token, where you know the provenance, and you know it’s this unique piece of art that cannot really be owned in that same way. So how do you think about those things as part of a business model? 

That’s a really great and important point/question. And I think that people are and have been struggling with getting their head around the idea of, like, paying for a video or paying for a GIF. And how can it have value if it’s not tangible, if it’s not a physical artwork? And it’s taken a lot of thinking and pioneering from a lot of artists and, you know, technologists. And to me, like you said, the provenance of blockchain technology, which guarantees authenticity of the work, is essential to make this possible. 

Once we can kinda get the collective consciousness head around that, I think it could be really revolutionary for how art continues to be made and traded and collected. 

I want to talk about fan engagement too because this opens up really interesting possibilities. And it’s happening now with your artwork where people are engaging with it in a financial way, but tokens also potentially enable other kinds of engagement as well. People can become “super fans” or have access to certain things in your life or in your work that non-token holders may not have. So have you thought much about the evolution of fan engagement as it relates to crypto? 

I think that there’s totally so much potential for this. Accessibility, the access points are what’s gonna be a really big part of that fan engagement generation. There’s all kinds of different ways to approach this. 

I just want to do it in a way that I think is actually cool. That’s honestly one of my big things about what I’m trying to design is, like, I want it to work in a way that I would actually want to do it. I’m interested in figuring out how we can work with fan engagement in a way that I really would feel comfortable asking my fanbase to participate in, when I kinda, like, flip the script and I think about an artist that I love, what would I be interested in paying to gain more access to their work? And that really is kind of the decision of the artist to configure what the different tiers of value are. 

So I’m interested in your perspective on what artists who are kind of interested in this, who are trying to break free of this rut, this traditional kind of commercial system around art, what should they know as they look to explore crypto? And how much do they need to know about crypto before they get started? 

I think it’s always helpful to have someone hold your hand a little bit. If you don’t have a natural direct resource to introduce you to this, throw yourself into some research and teach yourself about it. I mean, I’ve really had to do that for myself with this. I barely scratched the surface of fully understanding how all of this works because, again, I’m an artist. So it’s not necessarily my 9-to-5 attention span to be reading about advanced blockchain technologies. But, because I’m an artist who’s interested in future models and methods, it’s important for me to sit and focus on these ideas to get it into my head. So that’s part of it. 

But another part of it I think is just this fearless entrepreneurial spirit of, what do I have to lose? If you’re currently not making much money or any money wheeling and dealing your art, what do you have to lose but to throw yourself into something new and see if it sticks, you know? And I think that’s a really important energy for people to hold in general is just this kind of, “Let’s go. Let’s try something. Let’s try something new.” And if enough people host that innovative spirit, that’s when things start to crackle and spark and change.  

Awesome Signe. Thanks so much for being with us. It’s been a pleasure to talk to you. 

Absolutely. I had a great time. Thank you for this opportunity. 

Featured image: Pak, “The Balance”