The rise of NFTs has incited conversations around ownership structures of the artwork, but what about ownership of the other power players such as galleries and platforms? Ultimately these conversations are driving at the same perennial question, how is art financially enabled and supported?
The problem of how art is funded and what impact that has is not new. Early patrons of art were institutional religions and the resulting artwork reflected both the values of the church and the values artists willing to please the purse strings. Nationally funded artwork is no different.
Leo Tolstoy saw the professionalisation of art as hampering the creation of good works. He essentially argues in his 1897 What is Art? that artists should not be funded or encouraged to do their work full-time.
In this column’s December 2020 article on Microsoft’s funding of a Sol LeWitt app we spoke about how the relatively limited engagement of the tech world with the art world tends to manifest itself with support for artwork and artists that comfortably reflect the tech industry’s values back to itself.
Venture capital: darling of Silicon Valley
Acknowledging that every funding structure has its conscious and unconscious strings we turn to venture capital (VC), the form of funding popularised by Silicon Valley start-ups, where companies receive funding in exchange for an equity ownership stake in the company.
In one such example, fxhash, the generative art platform that toured with the Tezos Foundation at Art Basel events throughout 2022, has just announced it has raised $5 million in seed funding from a mixture of venture capital, DAOs, and the Tezos Foundation. The funding was led by 1kx, an early-stage investment firm that specialises in ecosystem growth and is based in Berlin. Along with betting on the economic potential of generative art by funding fxhash, 1kx has also invested in a decentralised cloud storage company and Pudgy Penguins, which produces content, merchandise, toys, and digital collectables.
Referencing fxhash’s tools for creating, collecting, and sharing generative art along with its impressive 2 million unique transactions, Valérie Whitacre, Head of Art at Trilitech, the London hub of the Tezos ecosystem, sees the platform’s potential growth both inside and outside the traditional art world.
More than about the money
As with any tech start-up, venture backing in the art world should be understood to be more than about the money. Start-ups often take on venture funding from those they hope can help them get connected to the right communities and leaders. For example, the generative artist Casey Reas also invested in fxhash as an angel investor, a term applied to wealthy private investors focused on financing small business ventures in exchange for equity.
Reas and venture capital funding have also been foundational in another important art/tech platform, Feral File. Reas and the tech entrepreneur Sean Moss-Pultz first met at the MIT Media Lab in 2005. By this time Reas was famous in the Net Art world, which is a way of saying deeply under-appreciated. Net Art, with luminaries like Olia Lialina, had experienced incredible creativity and community but virtually no market.
At the time, Moss-Pultz was in the process of starting a company called Openmoko, a now discontinued project to create a family of open-source mobile phones whose production was crowd-funded. By 2014 Moss-Pultz had started a company called bitmark which had originally looked to serve the traditionally unbanked population through validation of digital ownership of non-financial assets, or what we now have come to think of as crypto currency.
Moss-Pultz took on Reas as an adviser and raised a "friends and family" seed round in 2016. Moss-Pultz had identified decentralised validation and digital ownership as the technology of his generation and his search for the killer app, the right application of this technology, would eventually bring his company through health data (2018), the music industry (KKBOX, 2019) and personal data, all with Reas as an active adviser.
They were also working on Spring, described by Moss-Pultz as an “escape hatch” for Facebook users who are frustrated by Facebook’s abuse of their personal data and want to reclaim control. Throughout these other explorations, the bitmark team constantly experimented with applications of blockchain technology for art. In 2017 bitmark funded A to P, a now famous exhibition and experiment that allowed artists to trade digital art with each other in a system of verified ownership.
The emergence of Feral File
Reas had stumbled upon an obscure 1971 legal contract known as the “Siegelaub-Projansky Agreement” which both Reas and Moss-Pultz felt was the missing piece for selling digital art. The artist Seth Siegelaub worked with the lawyer Robert Projansky to specify rights, royalties and responsibilities. Their goal was to address the unequal power dynamics between artists, collectors, and galleries. They wanted to “decentralise the art market and the institution.” This was so aligned with the bitmark company values and so the company continued to support the development financially. The resulting platform and smart contract became known as Feral File, a name that still adorns the monthly exhibitions curated by Reas.
Feral File is not directly funded by venture capital. It is a product or experiment funded by a start-up that is funded by venture capital
Feral File has grown out of the core of that a2p exhibition. It is still a place artists collaborate and collect with each other, only now open to the public. By 2019 bitmark had applied the smart contract functionality learned via their experimentation in the music industry to royalty splits and also bridged the bitmark blockchain onto the more popular Ethereum and Tezos blockchains.
Feral File is now known as one of the premier platforms for the exhibition of digital artwork. It has a reputation for discovering and supporting artists early in their emergence into public awareness and the market. Unlike fxhash, Feral File is not directly funded by venture capital. It is a product or experiment funded by a start-up that is funded by venture capital.
While VC funding in art is becoming increasingly common, other investment structures exist:
- Arcual—a platform that uses blockchain to host a digitised version of the established interaction between artists, dealers and collectors, in buying and selling new physical works of art—has as shareholders MCH Group, the LUMA Foundation and BCG X. A publicly listed company, MCH is the majority shareholder, owning a 67.5 % share.
- LACMA’s Art and Tech Lab applies grant funding from Silicon Valley companies to artists experimenting with new technologies.
- The art marketplace and VR platform Artland was recently acquired by the Copenhagen-based investment firm Velocity Capital ApS.
Each model results in different pressures and advantages but one thing is clear, there is more variety than ever in how and why art is funded and the tech industry models have arrived.