Jul 14, 2020 - 4 days read

CryptoArt: Challenges in Copyright Law

Bengi Baydan 18.1k

Via Medium

CryptoArt is a contemporary collaboration of arts and blockchain technology. Basically, the concept relies on the ‘digital scarcity’ which allows people to trade digital goods as tangible mediums…

Fewocious-NYC Skyline, sold for 21.350 USD

CryptoArt is a contemporary collaboration of arts and blockchain technology. Basically, the concept relies on the ‘digital scarcity’ which allows people to trade digital goods as tangible mediums.

Digital art has multiple advantageous considering that reproduction of these artworks doesn’t cause loss of quality but it is also easy to duplicate them in digital platforms without a print. So tracing the fake versions of digital artworks is a challenge for artists. Here, crypto art plays a significant role in eliminating the possibility of trading fake artworks. Thanks to this method, artists, art galleries and collectors try to guarantee a safe transaction of digital artworks. Accordingly, it became preferred system in creative industry. For instance Maecenas, the online art platform has tokenised a multi-billion dollar Andy Warhol painting and also sold it on blockhain. Another example is an international electronic musician and independent producer Gramatik that he has tokenized his future intellectual property. He sold his GRMTK tokens that he raised $2.25 million in the first twenty-four hours, and valued the token at $9 million.

In crypto fine arts, the process is based on the attachments of a unique and constant digital file into an artwork. In Blockchain, this attachment is called ‘tokenising’ or ‘minting’. This non-fungible token (NFT) represents a value of rareness for the related artwork. Only the holder of the token can enjoy that value by selling or giving as a gift to someone else. Although unsigned copies of artwork are available, only the token holders can ‘own’ that very unique blockchain-signed work. In this regard, we can imagine crypto in a work is similar to the signature of an artist on his painting in traditional art. A signature placed at the bottom of a painting is a way to authenticate the work which means that the work was created by the signatory.

The record of authentication is on the Etherium blockchain and it is distributed to millions of machines. This record consolidates the artist’s ownership and the collector’s investment. The artist has a right to decide the number of limited editions. Each edition has its number and tracked separately on the ledger. Even the artist can not increase the number of limited editions because this number is a public record on the blockchain. The information regarding a trade of the artwork are decentralised and can not be contested which provides security in the process. Overall, the blockchain technology eliminates the middleman who is responsible for the deal between the artist and collector. This ultimately reduces transaction costs.

DADA is one of the most famous crypto art online platform and acccording to the website:

“The DADA art collection becomes permanently embedded in the blockchain and can no longer be modified. This allows a user to verify that there are indeed only a certain number of limited-edition DADA artworks, that the artwork you buy belongs to you, and that it was created by a specific artist.”

As seen, the concept is based on increasing the security level of trading digital works in fine arts. Considering that these works are sold for high amounts, the market will become more competitive in the future.

The Development in Art and Economy

Crypto Art is a different way of thinking economic values in the creative industry. These are the high amount of investments behind artworks and this fact enhances the importance of rethinking economy in the art. Besides, the collaborative character of this field leads us evaluating the economic perspective in highly advanced technological works.

In fine arts, crypto art allows artists and collectors to have a secure transaction of actual work. Besides, transactions between collectors are cryptographically secured. I do believe that crypto art may change the ‘investment’ idea in art. While some people buy and keep these works for themselves, some prefer buying artwork as an investment. For those who use works as investment material, crypto art may be a more accurate and safe choice.

Experimental Character of CryptoArt

The scope of digital art is expanding very fast. Generative art, Artificial Intelligence’s (AI’s) creations, digital illustrations, glitch/gif art, artworks made in VR are very unprecedented applications of technology. There is no doubt that these artworks are results of experimental use and curiosity of intelligent artists. In this respect, crypto art may overrule the fundamental points in the artistic world.

We often hear that artists do not care about money and primarily think about producing qualified artworks. While crypto art is an experimental choice of artists, it may reveal the economic incentives in artists. At the end of the day, cryptography helps the artist on selling his works in a safe environment which results as supporting digital art and making more money over it.

How Does CryptoArt Impact Copyright Law?

Yet, there is not an adequate number of academic research about crypto art however I would like to raise some issues that shows crypto art may be a new way of practicing copyright.

The challenge in producing digital artwork is how easily and rapidly it can be duplicated. The main concept of copyright law is to reward the artist and protect his work which is relatively hard in digital art. What blockchain offers is basically introducing ‘digital scarcity’. The process is simple: issuing a limited number of copies and connecting them back to unique blocks which serves to protect ownership. This ownership should not be confused with copyright ownership because the common approach is that the artist still holds the copyright. However this may change according to different creative industries.

As mentioned above, crypto art in fine arts is basically a tracking method in digital platforms which ultimately supports copyright. Blockchain technology may help to improve licensing the rights as well as tracing an infringement. Another option of using tokens in a creative industry is to find funding for work. For example, a person wants to make his film but he is unable to afford costs of production. In this case, he may tokenise his future copyright over the film. Investors buy these copyright tokens by signing a smart contract. Investors’ money is used to fund the film and if the film is financially successful, investors get an amount of profit depending on their share in the film. Even though this seems an easy funding opportunity rather than applying for a bank loan, it brings some legal issues. For instance, can a person assign his future copyright? Assigning copyright of future works is not allowed in many countries such as France, Hungary or Polland. However Australian copyright law allows assigning future copyrights as long as the contract is in writing and signed. So, if smart contracts fulfil this requirement, then cryptography may be a brand new application in copyright law. Overall, copyright tokenisation may not be illegal depending on the legislation but it is still a complicated and uncertain process.

Resources:

DADA.art, ‘The Invisible Economy: Art As Currency’, Medium Blog, 2020

Jason Bailey, ‘The blockhain Art Market is Here’, Artnome, 2017

Jason Bailey, ‘What is CryptoArt?’, Artnome, 2018

Karen Frances Eng, ‘What the Heck is CryptoArt?’, Medium Blog, 2020

Martin Zeilinger,‘Digital Art as ‘Monetised Graphics’: Enforcing Intellectual Property on the Blockchain’, Springer Link, 2018

Maximilian Kiemle, ‘Blockchain and Copyright Issues’, 4IPcouncil, 2019

Rita Matulionyte, ‘Can Copyright be Tokenized’, European Intellectual Property Review, 2019

Rita Matulionyte, ‘Tokenizig Copyright: Can Blockhain help with Arts Funding?’, Copyright Blog Kluwer IP Law, 2019