The Promise of NFTs for Artists and the Art Market

Steve and Katie speak with Amy Whitaker about her new book with Nora Burnett Abrams The Story of NFTs: Artists, Technology and Democracy. Amy describes her vision for the promise of NFTs for artists and a more equitable art market and discusses the democratic incentives NFTs create in this world. They discuss NFTs in the context of the current moment of uncertainty around the future of cryptocurrency, the blockchain, and the value of NFTs in general and the potential problems and limitations of NFTs within the fine art ecosystem.

Resources (The Artist’s Reserved Rights Transfer and Sale Agreement)

Episode Transcription

Steve Schindler:  Hi, I’m Steve Schindler.

Katie Wilson-Milne:  I’m Katie Wilson-Milne.

Steve Schindler:  Welcome to the Art Law Podcast, a monthly podcast exploring the places where art intersects with and interferes with the law.

Katie Wilson-Milne:  The Art Law Podcast is sponsored by the law firm of Schindler Cohen & Hochman LLP, a premier litigation and art law boutique in New York City.

Steve Schindler:  Hi, Katie.

Katie Wilson-Milne:  Hi, Steve. How are you?

Steve Schindler:  I’m okay. How are you? How is your new year?

Katie Wilson-Milne:  It’s going well so far. 

Steve Schindler:  Yeah.

Katie Wilson-Milne:  It’s flying by. And we are back to talk about NFTs and the blockchain and whether it makes any sense at all. 

Steve Schindler:  Our favorite topic. 

Katie Wilson-Milne:  Yes. 

Steve Schindler:  And we’re here to be educated by our guest Amy Whitaker. Amy is an associate professor of Visual Arts Administration at NYU’s Steinhardt School. She’s a beloved teacher there and a prolific writer and thinker who has focused on the relationship between art and markets and on the impact that emerging technologies are having on the art market. She is particularly qualified to do that, because she not only holds a BA from Williams College with honors in political science and art, but she also has received an MFA in painting, an MBA, and a PhD in political economy. Amy has authored numerous articles, and her bio can be found in the notes to this episode, and is about to publish her fourth book, The Story of NFTs: Art, Technology, and Democracy, with her co-author Nora Burnett Abrams, will be coming out in March by Rizzoli. And so we’re pleased to have Amy with us today to discuss her new book and the impact that NFTs in blockchain are having on the art market and its various participants. Welcome to the podcast, Amy.

Amy Whitaker:  Thanks so much for having me. I’m a big fan of the podcast.

Steve Schindler:  Well, we love that.

Katie Wilson-Milne:  Starting out on a good note.

Steve Schindler:  Alright. So Amy, why don’t we start by just having you tell us how you got interested in the topic and what made you write a book?

Amy Whitaker:  Definitely. The short version of the long story is that in 2012 a social practice artist I know, Caroline Woolard, convened a group of artists to talk about what property meant for artists. I ended up writing about resale royalties as property rights. We always joked that we wrote a book so that we could stop meeting two years later. And then around that time in 2014, I was introduced to someone who had just started a blockchain company. So I became interested in blockchain as a way of registering property rights— ownership, not just licensing. And then fast forward to the recent post-Beeple-sale NFT phenomenon, Nora Burnett Abrams, a wonderful colleague who’s a curator by background and the director of the Museum of Contemporary Art in Denver, asked me to do a public program, NFTs — WTF?, the usual meaning plus— what’s the frame art historically. We did that in April of 2021, and then we got the band back together for a four-part series, NFTs: Putting the FUN in non-fungible tokens. And that really, even at the time when we were working on the whiteboard in Nora’s office in Denver, it started to seem like a book. And so we were really lucky to partner with Razzoli, which co-published the book with MCA Denver, to create what’s meant to be a foundational text for people who are curious about NFTs, who might find the current conversation about them either insufferable or impenetrable, or both. Really not to say you should think these are interesting, but hey, there’s a lot that’s possible here and we should talk about it. And it’s really an invitation for the smartest people, you know, in any part of the arts or anyone in any part of the arts to join the conversation.

Katie Wilson-Milne:  Right. And you said you sort of got interested in this in 2014. That seems like the dawn of blockchain. I mean, like, tell me when these issues started cropping up both in the art world and for you academically.

Amy Whitaker:  Yeah, absolutely. So more recently a few friends have kind of admitted in passing that they thought I sounded absolutely crazy talking about blockchain for several years, or my brother said, hey, thanks so much for telling me what an NFT was three weeks before it was on the cover of the Wall Street Journal. For me, this is a really long-standing interest in the intersection of art and economics or business and what it is for artists to have a sustainable livelihood. And I think that the intersection of art and business is always political in the small “p” sense of one’s personal politics and the large “p” sense of public funding for the arts and the role of art in society. So for me, I’ve thought about this for a long time. I used to teach business to fellow classmates when I was doing an MFA in painting at the Slade, and I’ve always felt that we could talk more structurally about economics as a design medium in the arts. Not “artists are motivated by profit, what’s the marginal product of a work of art?” But it’s very difficult to be an artist. It’s economically precarious. There’s great dignity in the generosity position of art of trying things out, of putting them into the world before you get something back. And so I just became very interested in whether it was possible to think economically in a creative and structural way, almost in an ethical way. And that’s where I thought blockchain was so interesting. Not the cryptocurrency story and the money story and the ascendant prices necessarily, but just structurally blockchain is a registry of information.

Katie Wilson-Milne:  And for our listeners, could you just define blockchain and NFTs before we go on any further so we’re sort of all on the same page about what we’re talking about?

Amy Whitaker:  Definitely. So sit, get comfortable, this will just take 55 minutes.

Katie Wilson-Milne:  And the podcast will be over

Amy Whitaker:  So blockchain you can think of as a database structure. David Yermack, the chair of the finance department at Stern, who’s taught a class for a long time, tells his students it’s the most radical new structure since double entry accounting. I think that a basic working definition is that blockchain is a public append-only bulletin board. It’s a ledger where you can record information in timestamped sequence in ways that are cryptographically secure, belt and suspenders secure, so that you can trust information without trusting a central authority to keep the files. So it’s like a bank record with no bank, a transcript with no registrar at the university. It’s this fundamental inversion of a society that’s based on centralized authority. Now, I happen to like centralized authority. I believe in democracy and the rule of law and many places where I trust experts, but blockchain itself is a knowledge management system.So in the late 1980s, there were two researchers at Bellcore, the equivalent of Bell Labs for the Baby Bells in Morristown, New Jersey, Stuart Haber and Scott Stornetta. And they started working on this question: in the age of home computing and digital files, how will we know what was true about the past? It’s so easy to change a file. How will we know what was true about the past, and how can we do that without trusting a central administrator to keep the files? Turns out this is really, really hard to do, and they could not do it mathematically. And one day Stornetta was with his family at the local Friendly’s, and he had this a-ha moment that if you add one person to the registry, they can always cheat, but if you add everyone then you have witnesses. So what would it mean to have this distributed ledger of many interconnected copies? Haber and Stornetta actually built a company called Surety, and they started running a proto-blockchain around 1990, ‘91. And they have published this blockchain in the lost and found section of the Sunday New York Times. It turned 30 last fall, so I guess 1992. 

Steve Schindler:  Right. And it’s still being published, right? 

Amy Whitaker:  It’s still being published. And to me that’s the knowledge story of blockchain, that they were really concerned with knowledge and, in this poetic way, how we’d know it was true about the past. They published a paper called How to timestamp a digital document in 1991. That paper and some of their other work constitutes three out of eight of the total footnotes Satoshi Nakamoto’s Bitcoin Whitepaper.

Katie Wilson-Milne:  A really foundational— 

Steve Schindler:  Can I just ask you one question? You described it— blockchain as, part of your description was that it was an append-only registry. And maybe just explain a little bit what that means, because in my mind it sort of means that you can add things but you can’t take things away and you can’t edit them, which has some sort of negative sort of connotations. But maybe just elaborate a little bit on this idea of append-only.

Amy Whitaker:  Yeah, definitely. So I got that phrase from my colleague Joseph Bono, who’s a computer scientist who co-taught the Coursera course at Princeton. That’s really foundational, if anyone is interested in the technological way of looking at this. That’s exactly as you say, Steve, append-only. So you can add things, but you can’t take them away. Now, I personally never make mistakes, especially in writing, but I know people and I’m very sympathetic, so—no, I’m obviously kidding. 

Steve Schindler:  Right. 

Amy Whitaker:  We could do another podcast on errors you spot in your own books before they go to press.

Katie Wilson-Milne:  Exactly the point, right? Human beings are making mistakes all the time.

Amy Whitaker:  Yeah. Exactky.

Katie Wilson-Milne:  So how does this work? 

Amy Whitaker:  There’s a photo that Nora and I put in the book that’s Haber and Stornetta the first time they got news coverage for this. They are mislabeled in the photo and then in an early draft of the book, I mislabeled them again. Nora’s like, Amy, am I losing my mind or what’s going on here? And there’s a really famous example of a man called Terrence Eden who listed himself on the Verisart blockchain as the creator of the Mona Lisa in 1506. Obviously he didn’t do that for a number of reasons. But that will always be there. So blockchain is an immutable record, but that doesn’t divorce it from a sense of human trust and revision and repair. It just doesn’t forget things the way a human being does. But you can go back and make notes and correct things, but it’s really just a structure of managing knowledge. And then all of the cryptocurrencies were added by Satoshi Nakamoto and later developers of blockchain protocols in order to incentivize people to keep these many distributed copies of the ledger.

Katie Wilson-Milne:  And so what are NFTs and how do they fit into the blockchain?

Amy Whitaker:  So an NFT in its most narrow definition is a non-fungible token. So blockchain we think of as starting in 2009 when Satoshi Nakamoto launched the Bitcoin blockchain. Vitalik Buterin and his collaborators launched the Ethereum blockchain several years later. And Ethereum is a much more modular programming standard. So it’s programmed in tokens, and the tokens are named for the way that people agreed to have them become a programming standard. So ERC, Ethereum Request for Comment 20, is the first token, which is, or the first main one, which is a fungible token. And there’s some NFTs in the arts that are based on that. And then when we talk about NFTs, we’re usually talking about an ERC 721. That is a non-fungible token. So non-interchangeable. The way I think about this in the arts is that an NFT is a lot like a certificate of authenticity for a Sol LeWitt wall drawing. Where I can have the wall drawing on my wall but if I sell it to Katie and transfer the certificate, my drawing is no longer a LeWitt and she owns the LeWitt whether she has it put on the wall or not. Similarly, I own a high res JPEG of the Beeple Everydays that’s sold for $69 million. I don’t own the work. MetaKovan who bought it and owns the NFT effectively owns the certificate for the work.

Katie Wilson-Milne:  And an NFT is just a string of digits, right? I mean, it’s a programming code or it itself is not an artwork. It usually doesn’t contain a file to an artwork or any form of an artwork. It might point to a website that has an image of the artwork, but it itself is not a piece of art. Correct?

Amy Whitaker:  Right. I’m nodding robustly. That’s exactly right. Yeah. So an NFT, you can think of it as being kind of a unique digital identifier that’s registered on a blockchain. So the token combined with a smart contract, so it can do these very simple things, like transfer ownership or pay resale royalty. But yes, it is a digital identifier on a blockchain and that’s really it. There are very few artworks where the entire artwork is on chain. The one that comes to mind is a very cool project called Autoglyphs that was made by Larva Labs, the same people who made the CyptoPunks. And they were inspired by a LeWitt work in a show at the Whitney a few years ago. And LeWitt famously said, “the idea becomes the machine that makes the art.) And they created a piece of code that was small enough to fit on the blockchain that would generate an image every time. And so that would be an example of a work that’s on chain. But absolutely most of the time you have this problem of who maintains the file? How is it connected? What if it’s a dead URL link? So it’s very messy and that causes me pause. I can only imagine as attorneys how much more pause it probably causes you.

Katie Wilson-Milne:  Yeah. But I think also as a consumer it is confusing, right? Because why is this valuable? It’s not the thing we’ve already decided is valuable. It’s a new thing and people have just decided that it has value and so they’re going to spend money on this, but you could see it as worthless, right? Because it contains nothing and there’s no there there.

Steve Schindler:  Right. 

Katie Wilson-Milne:  So I mean, is this sort of a market fiction? Like every new product we decide is desirable and there’s the appropriate scarcity put on it and people just come to some conclusion based on Instagram or whatever taste makers they’re following that something should be expensive.

Amy Whitaker:  Right. The sort of pet rock phenomenon with many zeroes added onto the price. Absolutely. And I think if you start in the traditional art market with something like a Monet painting, we all agree that there’s some sort of aura of the original object and we don’t know how much it’s worth if we have to make it commensurate with dollars, but we know that it’s worth something. And then the supply is so constrained. We understand that the auction mechanism drives the price up to whatever the top person in the room will pay. But I think in this case there’s so much range in production of NFTs and some of them I think are intentionally tacky and in poor taste. Some are unintentionally tacky and in poor taste. We might be aesthetically libertarian and agree to disagree. People like what they like. I think there also is some artistic production within NFTs that’s really, really fascinating and kind of beautiful and conceptually grounded. That could be Dmitri Cherniak’s work, Transparent Grit, which was in the first Feral File show, which is this really beautiful, almost orphist painting, but in movement. It could be Refik Anadol’s project that is up at the Museum of Modern Art. It’s on a 24 foot square screen in the atrium right now, but it’s an animation based on the metadata and image files from the entire MoMA collection. It could be something that’s a form of institutional critique. Nora and I write about this how Addie Wagenknecht has done work that’s an institutional critique of technology. And she’s an artist who works for some of the blockchain protocol companies like Algorand in addition to having an artistic practice. And she makes, just as one example of many, she’s on the cover of our book too but she makes fake face mask beauty tutorial videos that are really about password security.And she’s able to change the metadata so they’re searchable for people looking for face masks and she’s wearing a face masks and she’s like, we need to talk about pass phrases. Because she feels that people who are an audience for those videos among her friends are people who most need that protection. That’s a little similar to some of Andrea Frazier’s early work, like her gallery highlights tours where she shows the staircase and the fire extinguisher. So I think there’s a lot of really conceptually engaged work and some work that echoes these anti-market themes of early LeWitt projects.

Katie Wilson-Milne:  But Amy, are you just describing like digital or video art? I don’t hear you describing an NFT. I hear you describing interesting digital or electronic projects that artists are engaging in, but why is the NFT relevant at all to that value?

Amy Whitaker:  The core thing that the NFT does, and I’m glad you asked me that, is that it creates digital scarcity. It creates the possibility of having one copy or a controlled number of addition to copies of a digital work that would otherwise exist in infinitely replicable form.

Katie Wilson-Milne:  Right. They do exist in infinitely replicable form, but there are only some that are attached to an NFT. 

Steve Schindler:  Right. I think the Sol LeWitt analogy is a good one. I think of Dan Flavin as well. His estate, well, they never issue a second certificate of authenticity. There’s only one. So with the certificate you have a work of art that’s worth hundreds of thousands of dollars perhaps, and without it you have five light bulbs and a fixture that’s worth 30 bucks. And so anyone can make the light bulb and the fixture, but only one person can own the certificate and the original work. And I guess that’s very similar in the digital realm.

Katie Wilson-Milne:  Except that the Sol LeWitt can be like—the digital artwork can be made over and over and over again, whereas like the certificate presumably is worth less if the light bulbs disappear?

Steve Schindler:  No. Actually not, because actually the Flavin estate will replace the light bulbs. They have—

Amy Whitaker:  Will replace the art.

Steve Schindler:  —a stock of them. They will replace the physical objects. They will never replace a certificate. 

Katie Wilson-Milne:  Yeah. Interesting. 

Steve Schindler:  So it’s really very important to keep the certificate in a safe place. And I imagine that’s probably true with an NFT as well, which makes me nervous because my brief experience with trying to maintain a wallet for Ethereum is, oh my gosh, how am I ever going to make sure that I don’t lose the very long password connected with this?

Katie Wilson-Milne:  I mean, I lose my password—I forget my passwords all the time to everything. So it does seem like if you had millions of dollars stored in a wallet it could be risky. Well, Amy, before we get too far down the rabbit hole, tell us a little bit more about the book, the structure of the book, sort of the thesis of the book, and then we’ll dive deeper into these topics.

Amy Whitaker:  I would love to do that. I would also love to underscore exactly what you both just said. People who bought Bitcoin early when it was “nerd money” and have substantial holdings have to write their pass phrases on like fire-resistant metal or something in four different places.

Katie Wilson-Milne:  I always wondered how they kept track.

Amy Whitaker:  And I think some people are working on how to make that relational, where it’s not that I have it written down, it’s that I register ahead of time that I trust Steve. So you can go to Steve to verify me. But it’s really fascinating, and I think the Dan Flavin case is such an interesting comparison. So the book that Nora and I wrote, it has four core sections: artists and making, collectors and buying, and future states, and then an introductory section that is really the framing of the book, which is the intersecting stories of blockchain. And this kind of surfaced organically for both of us at the same time. We were figuring out what to call the book and we were like, this book is really about a set of stories. So you can think of a Venn diagram that’s all these different kinds of stories or lenses onto blockchain. There’s a cryptocurrency or money lens where we think about news stories about the price of Bitcoin, and there’s an artwork lens where we think about how something made an auction record or why is this worth any money at all. The lenses that are emphasized in the book as more unexpected are the artist lens, how artists are using this to have a livelihood, whether through direct sales or through having resale royalties that then support them in the secondary market. And then the democracy lens, which is how blockchain has at least the potential to radically reshape power dynamics in the arts through resale royalties or fractional equity, through people creating organizational structures around that to pool resources to redistribute them, what are called decentralized autonomous organizations or DAOs. So this real question of how blockchain might be an economic architecture that reorients power to artists or reorients our sense of common shared public good. 

Steve Schindler:  Maybe if we stick with that for a minute. I mean, this whole idea of democratization kind of flows through your book. Maybe we should just take our listeners through it a little bit. I mean, one is the so-called resale royalty rights that are embedded in these so-called smart contracts and that’s now become a sort of feature of NFTs. And maybe just explain that a little bit from the beginning.

Amy Whitaker:  Definitely. And please jump in. I’m mindful of being in the room with attorneys. 

Katie Wilson-Milne:  Well, we want to be convinced. We’re not, so we want to be convinced. So yeah, take us through your democratization sort of thesis, because I think that’s interesting. 

Amy Whitaker:  And please tell me exactly how you’re not convinced. 

Katie Wilson-Milne:  Well, maybe we will be by the end.

Amy Whitaker:  So I think many of your readers will know what a resale royalty is, which is an amount of money paid back to an artist when their work is resold in a secondary market. This is very connected to legislation in the European Union and the United Kingdom, places where this is done by law, but also a conversation in the United States. After Robert Rauschenberg’s late 1950s work Thaw was sold by the Sculls at auction in 1973. 

Steve Schindler:  He was upset.

Amy Whitaker:  He was upset. He pushed Mr. Scull, allegedly. The work sold for $900 originally and then resold for 85,000 and Rauschenberg didn’t receive any of the increase there. I actually was thinking of Mr. Scull earlier, Steve, when you mentioned Dan Flavin, because Mr. Scull sounds like a villain in this story, but he actually is the person who bailed out Flavin’s light bulb bill early on before Flavin was well known.

Steve Schindler:  Oh, interesting.

Amy Whitaker:  So I think this is a little more complicated. But I think we can agree that in Rauschenberg’s case, just structurally not Rauschenberg being motivated to make money, but just price and value being aligned in our logic of living in a market economy, that the work he did between 1958 and 1973 substantively contributed to the increase in price of that work. For example, he represented the United States at the Venice Beinnale in 1964 and won the top prize. Those things would have an impact on the value of his work. The Sculls are also early risk takers and deserve some share of that increase as well. But there had already been this conversation happening that started in 1969 when the artist Takis went to the Museum of Modern Art and took his work telesculpture out of a show and stood in the garden with it, because he didn’t like how it was exhibited and waited for the director of MoMA to come tell him it was okay to take it out of a show. This led in part to the formation of the Art Worker’s Coalition and one of the main outputs of that activist group was the artist contract, the Siegelaub-Projansky agreement, which gives 15% of the increase in value when a work is resold back to the artist. That contract was really more successful conceptually than financially, to put it politely. It’s just onerous to use. 

Katie Wilson-Milne:  It was aspirational. 

Amy Whitaker:  It was aspirational. You had to spend a lot of time. There are a lot of transaction costs, a lot of monitoring costs, a lot of requirement that you reveal information about yourself as a collector. That what’s happened is that with the advent of these blockchain based sales platforms, like SuperRare, there’s a creator share that goes back to the artist and it happens automatically by smart contracts. So the share tends to be 10% in the secondary market and it tends to be based on the gross resale price, not on the increase above a cost basis. I personally find that less elegant. But the idea is that part of the proceeds are going back to the artist and these sums can be really meaningful. In the case of the Refik Anadol project at MoMA, the artist and the museum collaborated with Feral File. So I’m an advisor to bit mark the company under Feral File, but I was not involved in this project’s formation at all. MoMA feral file and the artist studio collaborated to sell NFTs on Feral File, and that project supported MoMA to endow a Web3 associate position. It supported Feral File and it supported the artist. And I would say estimating from the Feral File website so far, they made about $1.6 million for the artist and about half a million dollars for the museum, two thirds of which came from the primary market, and a third of which came from the resale royalty. 

Steve Schindler:  Wow. 

Amy Whitaker:  So I think this is meaningful in terms of how people are funded.

Steve Schindler:  So that seems like a lot of money for a work and how—

Katie Wilson-Milne:  And it’s one example of a well-known artist that has a relationship with MoMA, too.

Steve Schindler:  Yeah. Can you tell from your research how many times this work sold, or if you’re looking at say 10% average of a resale royalty, that just seems like a lot of revenue that was generated somehow.

Amy Whitaker:  Right. So in that particular case, some of the works are editioned and one of them is editioned, I think, in a copy of 5,000. And a very small percentage of the works have resold, maybe 3%. It just has added up, because the works have traded up in the marketplace. Maybe a better example, and this is a little bit dated, but as of a couple of years ago the organization in the UK that collects the resale royalty, the artist resale rate DACS— 

Steve Schindler:  Where it is not voluntary, where it is a legal framework in the UK as it is in the EU that artists get this. 

Amy Whitaker:  Exactly. And I don’t think the exact amounts is like 4% sliding scale up to around 12,000 euro capped. 

Steve Schindler:  Yeah. There are different threshold points. Yeah.

Amy Whitaker:  So I believe that the amount of money that was collected on an annual basis is around 18 million pounds distributed across artists in the UK. At the same time, the arts council’s funding of individual artists a lot more would flow through organizations is around 12 million pounds. So these are meaningful sums of money. I am skeptical of legislative resale royalties, because of how expensive it is to collect them.

Katie Wilson-Milne:  And just I wonder too, expensive and like how realistic is it that in the non-auction world that—

Amy Whitaker:  Yeah.

Steve Schindler:  Right. And I think also one of the arguments that was often made, I mean this was something that was in conversation for so long and now it’s kind of sort of faded from possibility, certainly in this Congress. There are studies that show that the artists who benefit most greatly from resale royalties are the ones at the very top of the food chain who sell at works at the very highest prices that auction houses who probably are less in need of these additional sums than the many, many, many artists who are creating at the lower end—

Katie Wilson-Milne:  Not selling works at the big auction houses.

Steve Schindler:  Correct. And that may be that’s something that smart contracts kind of deal with more efficiently, because there isn’t just the mechanism to collect very small amounts from private sales mostly.

Amy Whitaker:  Definitely.

Katie Wilson-Milne:  I think the most convincing part of your book, and in general for me these conversations about the possibilities of NFTs and the blockchain is with respect to artist rights and the expansion of the economic world that artists can operate in. But I struggle still with the basic pre-blockchain reality that consumers, museums, taste makers are going to be interested in a certain high level of artists and they may benefit if MoMA does a big project with them and gets involved in their sale and enough people in the art world think that’s cool or know that artist and are willing to engage in this NFT economy. What I guess I don’t know is how applicable is that, as Steve was saying, to most artists working who create the ecosystem in which the art world really exists and struggles. And we already see this dynamic has long been at play in the art market, which is that the art market is 100% focused and driven by the very top artists. And by top artists, I mean top grossing artists on the primary and secondary market. And we all cater to that. Steve and I cater to that, curators even cater to that, and certainly dealers cater to that. So how exactly are NFTs creating a different environment if they themselves of course are going to be purchased by the same kinds of people of the same incentives?

Amy Whitaker:  No, those are all great questions. And again, yeah, I’ll limit my comments to 55 minutes. The statistic that always stands out for me is that 1% of the auction market by volume accounts for 40% by money, right? So absolutely there’s a massive concentration at the top of the art market. And anecdotally, I think people at auction houses used to really hate resale royalties. They felt singled out by them. They were onerous, they felt like it interfered with transactions. And also I think, anecdotally, people are starting to really like them and support them because it’s more automated, it happens across a lot of different institutions. For me there are two things that really come together in my opinion about this. One is that I don’t have a belief that it’s bad for artists who are rich to get rich. I think we don’t police richness in other fields the same way that we police it among artists. I also think some of the artists who are making a lot of money at the top of the market have foundations that then support a lot of other areas. And Warhol is often trotted out—

Katie Wilson-Milne:  Absolutely. It just isn’t democratization if the NFT promise isn’t spread more evenly. 

Amy Whitaker:  Yeah. Well, so the two things I would say in response to that, and I’m so glad you asked that, because I think that’s such an important question. One, and I really cite the work of Lauren van Haaften-Schick here. She’s the expert in the Siegelaub-Projansky agreement. When those conversations were originally happening after Takis took his work into the MoMA garden, there were a lot of more radical proposals than actually made it into the artist contract, and some of these were limited by the technology at the time. For example, generationally sharing proceeds from successful artists to emerging artists, or I think using principles of finance, you can imagine creating a portfolio where if all of us are artists we pool our resale royalties, and if I sell a work I get 70% of the proceeds and 30% is shared across all of us. People do this in professional gambling. You can imagine a lot of—

Katie Wilson-Milne:  Didn’t Mutual Art try to do something like that?

Amy Whitaker:  I think so.

Katie Wilson-Milne:  There have been efforts and actually they fell apart, because they asked artists to contribute to the upkeep and storage of the work or the maintenance of these projects. 

Amy Whitaker:  But see, this is what I find so interesting, is if you take something like Artist Pension Trust that fell apart, because of storage fees, you can use resale royalties to mimic that structure without storage. So the research I do is on fractional equity and art as an alternative to resale royalties. So instead of the government saying, Steve, you get 10% when your work resells, when Steve is first selling work in the primary market, he sells it for 10% less and buys the equity in his work. And I model it this way because I don’t like listening to some of the critiques about artists getting “special welfare,” or being a special class of creative workers. I see this as the resolution of a structural problem where artists are excluded from something like book royalties or entrepreneurial equity. So that retained equity in your work is a property right. And it’s a property right under the Coase Theorem in economics. It has value and can be traded any time. So you don’t have to wait 20 years theoretically for your work to sell at auction. You can pool those shares with other people to create a retirement fund for everyone the exact same way Artist Pension Trust did, but without the physical objects. There are a lot of details obviously.

Steve Schindler:  Yeah. But actually that seems like a great idea.

Amy Whitaker:  Yeah.

Katie Wilson-Milne:  But these are all contract ideas, right?

Amy Whitaker:  Mm-hmm. 

Katie Wilson-Milne:  They’re just creative contracting that would change market custom in an industry. Is it that the blockchain facilitates doing that in an easier way? It’s not that blockchain makes it possible, because we’re talking about very traditional contracting principles here—

Amy Whitaker:  Right.

Katie Wilson-Milne:  —and property right principles as you said. But it’s that there’s like a new mechanism to make old law easier to implement.

Amy Whitaker:  So the Coase Theorem, this 1960 paper by Ronald Coase that won the Nobel Prize in economics, the idea of that is that let’s take something like pollution where you say this is the total amount of pollution we can have, we don’t know how to price it, but we know that there are 10 shares of pollution. The theory is that if you distribute those shares to all the companies, they will trade amongst themselves, and the market will set the price so that the company that finds it most valuable to pollute will buy up rights from other companies. But the key is provided that the transaction costs are not too high. So it’s really just a very simple observation that their transaction costs have been onerously high to do anything like this, to monitor the relationship between a physical work of art and a registration of it in an investment trust owned by a bunch of artists, the distribution of it. So the technology of blockchain, the transparency of the ledger and the automation of smart contracts, I’m not saying it’s a panacea at all. It still requires a lot of care, organic care and maintenance and trust, but it does create these really interesting new avenues. And to your point about only helping artists when they’re famous, I mentioned Dmitri Cherniak, and not to single him out, but his work was on the cover of the very first Feral File exhibition. Those works were priced at $75 and sold in an addition of 75. Parenthetically, all of the artists in the show and the curator got a copy of everyone else’s work. So that’s already a pooling or a portfolio mechanism, and there’s a resell royalty. I saw that work when it was $400 and I was like, you know, I could buy that. I really love that work, but I’m not going to, and I know I’m cognizant in this moment that it might go up a lot more in value and I feel completely okay with that. That work now trades for $100,000 to $200,000. So there are many cases of works that sell for $75 in the primary market and then go up astronomically. I’m not saying that there’s no speculation in that, there’s nothing messy, but I do think that there’s really interesting structural work happening underneath it. So I always use the analogy of a forest fire, right? It’s not a crypto winter, it’s a crypto forest fire. That some of the speculation’s burning off but the structural regrowth is verdant and really interesting. And I would absolutely not defend it and say, this is perfect. I would say more, we’re in the art studio, these things are happening, they’re getting made, how can we apply discernment to shaping them in the best possible way? Including the work that you do as attorneys to kind of steward artistic practice and the— 

Steve Schindler:  Well, and also, and this just brings me to the sort of the next thing I wanted to ask you about is the role of galleries and dealers, right? Because it does seem to me that, using the Rauschenberg example, that work that he did over many years probably did contribute to the increase in price for his works. But also art dealers and galleries play an enormous role in stewarding the works of artists and making sure that they’re not overexposed and being—

Katie Wilson-Milne:  But also creating their value.

Steve Schindler:  And creating value. And obviously to some extent the democratization project that you’ve been talking about can exist apart from dealers. But is there a place for dealers and galleries in the sort of NFT world that you are talking about?

Amy Whitaker:  I think definitely. I think dealers are very important early risk takers. I think the NFT market has huge potential to crater the traditional taste making apparatus of the arts. 91% of people who bid on the Beeple were new to the auction house. And I think we rely on dealers more than we may even realize, to help us make sense. Dealers and curators and these sort of messy overlaps of institutional and commercial practice. So I think absolutely dealers could theoretically retain fractional equity and art. And one place that that is very interesting to me is when you have a dealer who really develops the career of an emerging artist and then they are “poached” by a mega gallery. 

Steve Schindler:  Yes. We see that all the time. 

Katie Wilson-Milne:  We see that all the time.

Amy Whitaker:  Yes. So what do you think about that, if the first dealer owns residual shares in the works that have sold before as opposed to in the artist’s career as an entity?

Katie Wilson-Milne:  Well, I think they often think they do, but they don’t actually. The law as you know, Amy, in New York is very protective of artists. Somewhat ironically, because we think, we think correctly, that galleries and dealers have the power in these relationships at least early on. Actually in the absence of contracts at the end of the day it is often more our typical client— a gallery or a dealer— that is left without what they think they’re owed. Because there’s not a custom of putting the stuff in writing, which drives us crazy. That’s still the case even at very successful galleries. And so it’s a mess. It’s continued to be a mess. It’s an old fashioned problem that has not found a solution. We think contracts solved that problem. Clear representation agreements from the very beginning that lay out what happens at the end. Those, for whatever reason, although not expensive to do, not hard to do, feel awkward for people in the market still. Even again, at the very high level. I don’t know how bringing, and of course we’re not really talking about NFTs, we’re just talking about some kind of smart contracting blockchain way that these market participants deal with each other. A) good lawyers need to be involved in the drafting those smart contracts. I’ve never worked on a representation agreement that wasn’t negotiated. So the idea that everything could be automated without any specificity to the artist or relationship or how much money is being brought in then or the specifics of a deal seems hard to imagine. But I can see that the market might welcome that in a way, a contract negotiation back and forth on paper and paying a lawyer every time clearly isn’t catching on.

Steve Schindler:  Right. But also I think it creates a little bit of friction with the fiduciary duties that galleries owe to artists. And I think you’d have to think through a little bit what it would mean to carve out this kind of perpetual ownership or a kind of resale royalty for the gallery that increases in value over time and how that just relates to the obligation that the gallery has at all times to the artists. But it’s an interesting thing to think about. 

Katie Wilson-Milne:  It might actually be a more aligned form of commission. 

Steve Schindler:  Yeah. No, it could be.

Amy Whitaker:  Yeah.

Katie Wilson-Milne:  I think it would actually facilitate fiduciary obligations in a way that now it’s hard.

Steve Schindler:  Well, certainly it would align their interests in a way, their future interests. Yeah.

Amy Whitaker:  Yeah. Exactly. No, I mean, it’s analogous to board members of a corporation owning shares. It solves that corporate governance fiduciary duty problem. But to me what’s so interesting about it, and I couldn’t agree more even though you have front row seats, that people think contracts are gauche in the arts. I think that what’s really fascinating about this more holistically is that it shifts contracting from zero sum thinking to collaborative thinking. Saying this is a form of value we are creating together, we don’t know what it’s worth yet, we’re not talking in dollars, we’re talking in fractions. You know, what would make sense here? And then it might be worth a lot later, but the idea is that you’re making a commitment to create upside together and then that upside can be shared and it can be shared between the dealer and the artist. It can also be designated to charity or to other artists in the gallery. To me it’s a very interesting creative form of structural thinking. Not I’m profit motivated, what’s the maximum? This is mine, that’s yours. But what are we building together and how can we share in that?

Katie Wilson-Milne:  This seems like a culture shift though, rather than something that’s inherent in the blockchain or in NFTs. This is what we hope will just be a natural evolution of an industry that’s grown up long ago and needs to catch up with some of its practices. And also think about things in a bigger ethical way, which could be really interesting. And Steve and I are very interested in this topic. I just don’t know how the blockchain or NFTs factor into this particularly.

Amy Whitaker:  So let’s say that you wanted to take this as a contracting problem apart from NFTs or blockchain, it seems really exhausting to record to say, okay, that’s your 5%, this is my 5%. You have this registrarial problem of knowing where the works are. And to be able to do that on blockchain without introducing blockchain as this shiny object that is overtaking the world, I just think it might be helpful as a technology and as an incentive toward that cultural shift, right? And that absolutely, you might see changes that happen because of it that can be managed off chain in contracts. There’s no reason to use the blockchain unless you need it. It’s a technology, the way a pencil is a technology or a computer is a technology. It’s just there if it can be helpful. But I do think it can be, especially with the combination of public registry. I mean, you can have private blockchains, but public registry or transparency and anonymity, being able to use an alphanumeric code and not your name, that there’s something really powerful there for incentivizing these cultural shifts.

Steve Schindler:  Well, it’s interesting that you say that because there’s so much of a move in the art market toward transparency, or at least that’s what people have talked about.

Katie Wilson-Milne:  It’s the main critique.

Steve Schindler:  The main critique of the art market is that it is so opaque and there’s so many secrets, and obviously that has run into new requirements for anti-money laundering diligence, particularly in Europe. And so now I’m sort of wondering whether the anonymity of the blockchain here sort of helps to further that opacity, or is it—I’m sure a lot of people would love not to have their names associated necessarily with ownership.

Amy Whitaker:  Right. It’s such an interesting question. And the chapter of the book on collectors and buying gets at this, because they’re these weird overlaps of GDPR requirements, know your customer, anti-money laundering requirements where there’s a pull toward privacy and a pull toward disclosure. Some of the cases that I find most interesting and not yet resolved are the ones where the technology of blockchain is a little ahead of the regulation. For example, I mentioned DAOs or decentralized autonomous organizations. Just think of it as a group of people who want to buy an artwork together, and they want that to be the legal entity that buys it. It’s difficult to do that with an auction house, because the auction house wants a single person to be the buyer so that there’s a beneficial owner and then the beneficial owner would have to secondarily transfer the work to the DAO, to the group. So these things I think are very interesting. They’re interesting from a contracting standpoint, regulation standpoint. I mean, I’d be genuinely curious what you both think of that kind of line of problem.

Katie Wilson-Milne:  Yeah. I want to go back to something we were talking about before this, which is the idea that in the democratization context that somehow NFT blockchain is going to pull this wider net of artists into the art market and so make it more possible for them to participate and earn a livelihood. But NFT and the blockchain don’t make art more desirable. So anyone can go out on the street and sell their work, right? And the street is great. It’s like anyone can go out, there will be people walking by in New York, but they can’t guarantee that people are going to want that work or pay more for it next week than they did today. Or how even if 90% of artists have access to this technology and can afford to mint NFTs and associate them with works, why does anyone care? Who’s going to buy this, you know? How does that make them money?

Amy Whitaker:  Yeah. That’s a very fair question, and it’s slightly different from selling art on the street, right? That on the street you have a limitation to the number of passers by— 

Katie Wilson-Milne:  Of course. Of course.

Amy Whitaker:  —and in NFT world you have a limitation to search who can find you. Absolutely. There’s no reason anyone has to buy any of this. And NFT sales are not immune from questions of exclusion, differential pricing for men and women, kind of race ethnicity. For example, the artist Dread Scott created a work called White Male for Sale, which was an NFT conceptually about fungibility of black male bodies during the slave trade. Nora and I write about this Dread spoke in program. That work didn’t have an estimate when it sold at auction. Although the kind of working estimate from a panel that Dr. Cheryl Finley hosted was I think $2 million, which is the lifetime earnings of a man in the United States. That work sold for $32,500. Or there’s a black woman artist, Elise Swopes, who’s one of the first artists on Instagram. She sold an NFT around the same time as the Beeple sale but I think for—I can’t remember the exact figures, but like in the tens or hundreds of thousands of dollars, and not in the tens of millions of dollars. So that matter of degree is significant. And we still see massive participation issues just in the arts in general. 84% of art school graduates in the United States are white, non-Hispanic, and there are a lot of studies of salary inequity, the difficulty and precarity of being an artist. And some of that gets celebrated in economic papers like, look, they’re so entrepreneurial. But it is incredibly difficult and is a huge form of exclusion from artistic practice. And I’ve studied this in a paper with a statistician, Greg Wolniak where if you look at the individual earnings of artists versus their household earnings, they’re huge racial disparities in the safety net of having a larger percentage of household earnings relative to individual earnings.

So I think that NFTs, there are a lot of hurdles, right? You have to pay to mint things, you have to have digital access. But also I think the power shifts, even if they’re nascent, they’re quite interesting directionally. The boat has turned a few degrees and we haven’t seen where it’s going yet, but the sense of possibility is different from what it was. So I’d be the last person to say I have a crystal ball on what’s going to happen. I just think it’s interesting. It’s so easy to criticize. There’s so many worthy criticisms, and yet the paint isn’t dry and it’s moving. And so the thing I most want, and I think the project of the book is for people to feel invited to pull up a chair out of the conversation. I mean, I genuinely want to know what people think and these questions are really important. And I love that you’re telling me what you disagree with, because you might convince me too if the book is printed, but—

Katie Wilson-Milne:  I don’t think so.

Steve Schindler:  Yeah. 

Katie Wilson-Milne:  Well, let me ask— the technology that made blockchain and NFTs possible is so fast developing. It is so new, and it’s not that that’s stopping, right? The development of this technology in terms of how art can be displayed and traded and how money can move back and forth and how information can be ledgered presumably will continue to change. So how do we create a market that has longevity and value when the technology exists at a moment like frozen in time? And presumably the technology will change and the value of these NFTs presumably have some relationship to their ability to point to other links and works of art which they themselves are not, which might break or disassociate.

Amy Whitaker:  Yeah. So I think it’s a great reminder of the relationship between the market and the catalog raisonné registrarial side of artistic practice or art historical practice. There are technologies like IPFS, these ways of logging and NFT in perpetuity. And now that may be flawed, there may be something that comes up that I haven’t considered there, but norming culturally, making explicit in contracts, understanding the terms of service in different platforms of whose responsibility it is, is to steward that registration, that’s a really big change from how people take care of traditional works of art. So those things I think are incredibly important. And then watching the conversations toward interoperability of blockchain protocols and thinking constantly is what I’m looking at decentralized or recentralizing? Am I looking at something that’s trying to embody the potential of blockchain to be decentralized? Or am I looking at basically a centralized organization placed on top of a decentralized structure? There’s nothing inherently wrong with that. If you have a coin based wallet that’s recentralizing, but some of the platforms use common custodial wallets, you don’t have your own wallet. Some of the platforms have slightly different terms of service and terms of whether you even own the NFT. You might own a license to the NFT. So I think including for people like you who have such long-standing and vast expertise in this to help all of us make sense of what’s happening on different platforms or what the questions are and forming the best practice. And that comes partly from constantly trying to navigate this gulf of understanding the programming as a non programmer, which is something I’ve definitely been living for several years.

Steve Schindler:  I have a great deal of respect for you for that because—

Katie Wilson-Milne:  Yeah. It’s amazing. 

Steve Schindler:  —it’s really admirable, I have to say, in reading the book.

Amy Whitaker:  It’s a form of, I don’t mean this to sound so grand, but it’s like a form of intellectual integrity as a professor just to say, I don’t know anything about that. I have no idea what you’re talking about. I don’t understand that. Or to know your limitations. It’s like walking into a library and you’re like, “I’ll never read all these books in my lifetime.” And I wish I were a programmer, but also in my experience the people who are the very best programmers sound very gracious and curious and are patient when I have sounded like a third grader describing blockchain. And there’s a lot of sort of posturing and “I was there at the beginning” and the kind of messianic tech complex that I actually find a signal of kind of not active curiosity.

Katie Wilson-Milne:  On the tech, on that sort of side of things, are the smart contracts easy to keep track of and locate? Like let’s say you buy an NFT and it’s in your wallet and everything changes, and the technology of the wallets change and it disassociates and you’re like, oh, I don’t know what my rights are. I don’t know anything about what I just bought. How do you go find the smart contract if you look back?

Amy Whitaker:  This is the thing, and I mean, it varies from situation to situation but I think it was a little over a year ago, Hic et Nunc, the sales platform that was for Tezos registered NFTs, just went offline. So it still existed, and I think if you had a degree of programming savvy or patients your stuff was still there. But yeah, it’s very weird. It’s like a storefront can disappear and then come back. So that’s why I think this conversation about standards and best practice and interoperability. So if something’s on a blockchain that then goes defunct, can it be ported over to another blockchain? And how we really understand that, I mean— so when I said an NFT is narrowly an ERC 721, the very first NFT that was ever made was made by my colleague Kevin McCoy in 2014, I think, and that predated Ethereum. And he made it on the name coin blockchain, which is an offshoot of Bitcoin. And he had to re-mint it for someone to be able to buy it. And he did all of that with a great deal of care and technological sophistication but he then has to explain to people how he did that. So there’s this sort of problem. It’s the same problem, I take Tylenol, I don’t understand how it works scientifically. I’m going to have work on blockchain, I can’t program it, but what does it mean to be a generalist in a world of so much siloed and complex knowledge? And what does it mean to figure out the relationship between the legal system and this new governance structure, especially to inform regulation that might be clunky and overarching in the wake of FTX and these other scandals. But that actually it could be pretty interesting and nimble and in everyone’s interest.

Steve Schindler:  Right. I mean, just going back to the Dan Flavin example of one of the ways I became acquainted with their practices is through a colleague who had lost a certificate, and there was a legal case about it, but you go back to there was a piece of paper, right? And while that technology isn’t changing, you have to put it in a file, you have to put it somewhere. And then over time maybe you misplace it. There’s no way 100% to safeguard the location of something of value like that. And it’s a similar problem it seems with wallets and NFTs. You can lose them. It’s possible. And there’s no way to completely eliminate that.

Amy Whitaker:  I think there are a number of people working on this, but I know this from Sean Moss-Pultz, the founder of Bitmark, the company under Feral File. And I’m an advisor, I’m not trying to do a sales thing. I genuinely respect Sean and his colleagues, but they’ve been developing a wallet called Autonomy, and MoMA partners with them, that you can download NFTs from a QR code on the wall of MoMA into an autonomy wallet. But I think that technologically what they’re looking at is relational verification. So I think there’s something poetic about this, that the end game for a technology that’s “replacing trust,” is actually not me as a person who has something written down on paper at home, me doing that, but also me being able to ask someone for help if I lose my keys and they can vouch for me. So being in community that’s technologically recorded, I think those things are very interesting answers. I also just want to say very sincerely that you’re both attorneys I have admired and respected and enjoyed listening to for so long. And Steve is a colleague of mine at NYU, and I once hosted a guest speaker when Steve had a prior commitment for class. And the guest speaker, who will remain nameless, said, “I will always do anything that Steve asked me to do, because he wrote the contract for me in the following way.” So I think when you raise these questions about NFTs and blockchain, I really hear them, because I can imagine how carefully you raise these questions for your clients. And I hope that there are ways that you see in your practice and that all of us kind of coming together conversationally can figure out how to develop a kind of sophisticated or agile best practice that marries what I think are genuinely structurally new avenues of organization with a healthy sense of is this really the most exciting new thing or what can we carry forward useful from existing expertise?

Katie Wilson-Milne:  Yeah. And I think the takeaway I have from this conversation is that the smart contract, rather than the NFT itself or the mechanism, the blockchain, is really the key piece here, I’m sure from our perspective at least. So how do we center the smart contract as an essential component among the players? When I think right now it’s the afterthought, it’s like a shrink wrap agreement. I don’t know if people keep track of them, they’re not negotiated, they’re probably not read. And of course paper contracts sometimes aren’t read either, but there’s something about putting something in front of someone they have to sign that’s an invitation to read in a way that clicking on something— 

Amy Whitaker:  Right.

Katie Wilson-Milne:  —on a website may not be. So thinking about the role of the smart contract and if it will take on a role that can facilitate these relationships in a new way I think is interesting.

Amy Whitaker:  Yeah. And I think the possibility that legal practice can summarize terms in contracts so that they’re readable without the summary replacing the contract, I think that that’s a general issue in terms of service. I think also the arts are in the broader world a legacy industry that no one expects to come up with these radical structures that could be helpful for everything. But I think the more that the arts plugs into larger conversations about contracting and smart contracts like the Lawrence Lessig Code Is Law conversations, the more we may realize that there are things that are developed in the arts that are actually helpful outside the arts. Because we have a long history of navigating things of value that are very hard to price, relationships that are very hard to contract, and that I genuinely think that there could be systems developed in the arts that are then useful beyond. And I think connecting this conversation to larger questions of contracting is very interesting.

Steve Schindler:  Thank you, Amy. This has been fascinating and I love the idea of, in a way that you described your new book about an invitation to pull up a seat at the table to have the discussion. So with that, just to remind our audience, the book is The Story of NFTs: Art, Technology and Democracy, published by Rizzoli and MCA Denver, and it’s coming out in March.

Katie Wilson-Milne:  And we’ll link to your other articles and work as well in our show notes so our readers can see some of the other topics you’ve talked about.

Amy Whitaker:  Thank you. 

Steve Schindler:  This was a lot of fun. Thank you, Amy. 

Amy Whitaker:  Oh, it’s such a pleasure. And Nora and I had a lot of fun writing that book. It’s got some warmth and Nora’s signature curatorial style. So please join us on the page, and thank you so much for having me. It’s really a pleasure.

Steve Schindler:  And that’s it for today’s podcast. Please subscribe to us wherever you get your podcasts, and send us feedback at, and if you like what you hear, give us a five star rating. We are also featuring the original music of Chris Thompson. And finally, we want to thank our fabulous producer Jackie Santos, for making us sound so good.

Katie Wilson-Milne:  Until next time, I’m Katie Wilson-Milne.

Steve Schindler:  And I’m Steve Schindler bringing you the Art Law Podcast, a podcast exploring the places where art intersects with and interferes with the law.

Katie Wilson-Milne:  The information provided in this podcast is not intended to be a source of legal advice. You should not consider the information provided to be an invitation for an attorney-client relationship, should not rely on the information as legal advice for any purpose, and should always seek the legal advice of competent counsel in the relevant jurisdiction.

Music by Chris Thompson. Produced by Jackie Santos.