The development of the online digital art economy has the potential to be a paradigmatic shift the likes of which the art market hasnt experienced since the mid-19 th century, when the first commercial galleries were pioneered in Paris. The online digital art economy is likely to parallel the traditional one, if not completely upend the way art is bought, sold and experienced in the future. However, despite this economys potential, very little is understood about selling practices, legal safeguards, artist protections, consumer rights, and consumer behavior and preferences in the digital art realm. This is largely due to the fact that the market was completely nonexistent until a couple of years ago, and even today only a handful of players are present in the market. The purpose of this paper is to address several of these questions using a multi-pronged approach. Our research can be broken down into the following sections: Market Research: We identified key players in this market and interviewed CEOs, CTOs and CMOs of these organizations as well as artists and curators in order to understand their motivations and concerns and explore both the business and technical realities of running these ventures. From our interviews and research we were able to come up with a good idea of how the market functions. This was crucial as these are the individuals who have thought most deeply about the digital art economy and are going to be shaping it going forward as first-movers. Each of these players offer a different approach to how digital art should be bought and sold and at the moment there is plenty of room for competing ideas. However, it is likely that as the market matures, there would be a greater tendency to standardize a single approach. Gauging Consumer Attitude and Awareness: We created a survey to conduct primary research into how people interact with different types of digital works of art. The survey, which included both multiple choice and short responses, was designed to test propensity to purchase and valuation of a work in response to subject matter, medium, and type of display. The survey further explored viewer responses to digital art as form and emerging field and their perceptions of the value of digital artworks. Legal safeguards of Artist and Consumer Rights: As it stands today, the digital art economy is built upon artificial scarcity created by sellers to mimic the traditional art realm. We wanted to understand whether artists and consumers are adequately protected under existing laws from potential exploitation. We also tried to understand what mechanisms needed to be developed within the market in order to strengthen protection for both buyers and sellers. Quantitative Analysis of Sales Data: Primary and secondary research into the above areas allowed us to develop intuitions about how the market worked, but we wanted to test these intuitions though quantitative analysis. To do so we compiled a robust database of several hundred digital artworks and developed 26 different intrinsic and extrinsic variables to understand how different traits of artworks contributed to both sales volume and price. While we were able to confirm several of our intuitions, many of our findings were quite surprising.
2 Background Information
What is Digital Art?
The Austin Museum of Digital Art defines digital art as art that uses digital technology in any of three ways: as the product, as the process, or as the subject (About | Austin Museum of Digital Art). Perhaps the broadest of these categories is digital technology as process. Computer generated visual media can be broken down into categories of 2D computer graphics or raster graphics, like digital collage, 2D digital painting or Natural Media, and pixel art, 3D computer graphics or vector graphics like virtual spaces, and works that incorporate technology as process and subject including fractal art, glitch art, and generative art. Works that incorporate technology as process also include images transferred onto computers via scanning, so photography taken with digital cameras or viewed on a computer is considered digital art. With only this small snapshot of the different types of digital art, one can see how complex the field is and how nebulous the concept of digital art is. One of the traps of trying to research something as vague as art is trying to define it. We found it impossible to define it and not leave out something. To borrow from from Justice Potter Stewart, we know it when we see it. For our purposes, we accepted anything that is claimed by its creator or its seller to be digital art as digital art. The only restriction we placed on ourselves was to focus on works sold and experienced entirely on digital device via the Internet.
History
While digital art is often considered a relatively new genre of art, its humble origins began decades ago with small increments of technological innovation that slowly blended together with creative endeavors to form not only a practice of digital art, but also a market for it. The foundation of digital art was laid in the 1960s. In 1968, Douglas Engelbart, a scientist from the Stanford Research Institute, refined the idea of bitmapping, creating individual pixels on a screen that could be controlled by a mouse. Each pixel on the screen would either be set to on or off with only the on pixels lighting up. In essence, this transformed a screen into a digital canvas, paving the way for further innovation (Paul). This technological evolution eventually led to the graphic user interface, a computer program that enables a person to communicate with a computer through the use of symbols, visual metaphors, and pointing devices, (Graphics User Interface). Still, for the most part, art and technology were two very distinct spheres. There were a handful of programmers that crossed boundaries, incorporating technology into their artistic pursuits. For instance, John Whitney, often known as the father of computer graphics created a short film using old analogue military equipment in 1960. In addition, Charles Csuri began creating images on an IBM 7094 computer. His 1967 film, Hummingbird, was considered a landmark in computer animation (Paul). As the 1970s and 80s rolled in, the element of human interaction began to play a key role in creating technological art. Artists began using computers as a way to increase accessibility and metaphorically collapse geographical boundaries and connect cultures from around the world. In 1982 Canadian artist Robert Adrian demonstrated this blend of cultures in creating a piece of performance art entitled, The World in 24 Hours, where he used slow scan television and radio to 3 broadcast 24 straight hours of programming filmed in 16 cities and three countries. Adrian was one of the first digital artists to specialize in a particular form of digital art (Stokes-Casey). Throughout the 90s, digital artist began to further specialize into various categories of digital art, such as object-oriented, interactive based, and critique centered art. It wasnt until the 1990s and 2000s when digital art truly took off. However, even with technological innovation and artistic interests, it has still been much of a battle for traditional art institutions to accept this radical new form of art.
Institutions
While existing art institutions have been slow to adapt to the increasing amount of digital art in the market, a few have made an effort to adapt to new technologies. For example, the first museum dedicated exclusively to the display of digital art, the Austin Museum of Digital Art, was founded in 1997. This space, much like many forums for the discussion of digital art, was created through a collaboration between the arts and sciences. In this case, the founders were doctoral students in computer science and art history. The founders emphasized a goal of attracting a younger, tech-savvy audience, an ideal audience which can be seen repeatedly in our study of digital art platforms. Famous art institutions such as the Victoria and Albert Museum and the Whitney Museum have also made a conscious effort to include digital art in their collections. The Victoria and Albert Museum in London, due to its emphasis on design, has made extensive efforts to explore the intersection between technology, design, and fine arts by creating an extensive collection of computer art, holding events in which visitors can meet digital artists, and co-hosting panels on the intersection of art and technology with science museums at the London Design Festival. The Whitney Museum in New York city has also made great strides towards digital art acceptance through its development of Artport. The portal to internet art and online gallery space for commissions of new media and net art was launched in 2002 in order to allow the Whitney to commission original works intended to be viewed online and to document the museums physical and digital art collections. Other important museums, including the Museum of Modern Art in New York and the Smithsonian Museum have also held exhibitions about the art of video games, further blurring the lines between art and technology. Other significant strides towards the acceptance of digital works into the artistic canon have occurred throughout Europe in universities and festivals. The University of Salerno has had a program since 1985 that supported projects concerning the relationship between art, technology, philosophy, and aesthetics. Art festivals focusing on digital arts have formed in the past 30 years, although the largest development was from the mid 1990s to the present. The Ars Electronica Museum and Festival in Linz, Transmediale Festival in Berlin, ArtFutura festival in Barcelona, and Onedotzero festival in London focus on media art, technology, and digital culture, although some, like Onedotzero, began as experimental film festivals that expanded to include art.
4 Technological Factors Influencing the Digital Art Market
Fall in prices of High-definition screens: Even as high-definition screens have improved their image quality, their manufacturing costs and prices have consistently fallen. Prices of LCD panels fell by 80% between 2004 and 2008, while the manufacturing costs declined by 50% (see chart) (The Economist, 2012). This has allowed for high-definition displays to become the norm. Rise of the Smart TV: In addition, the steeper decline in prices compared to manufacturing costs led to a net loss of $13 Billion to the screen manufacturing industry in 2012 alone. This has led them to seek lessons from the innovations made in other personal electronic devices, which use screens such as smartphones and tablets. The result is the Smart TV, which integrates the Internet into the television experience, through interactive displays and third party applications sold through iTunes-like app-stores. According to the latest research from Strategy Analytics (2014), global Smart TV shipments grew 55 percent year-over-year to reach 76 million units in 2013, accounting for 33 percent of total Flat Panel TV (FPTV) during the year. If the trend continues it is likely that Smart TVs would account for 73% of all TV sales by 2017. Reach of Streaming Services: With 30 million Apple TV users, million of units in sales of Googles Chromecast and the arrival of Amazons Fire TV, companies selling digital art now have the ability to stream digital artworks to high-definition screens for a large and growing consumer base. They can do this for the cost of building their application, without having to worry about the backend technology. This is done through their third-party applications, which are in an area of growing import for streaming devices, that arguably began life as a way to get users to invest more heavily in a specific ecosystem, but which have shifted into a way to get people access to their content wherever it is. Along with the growing ubiquity of high-speed Internet, all of these factors have made it possible for the digital art economy to grow.
Hurdles to Market Development
Despite the technological development and slowly increasing institutional approval of digital art, the market for such works is growing slowly. Digital art is often difficult to install in gallery spaces, and some works, such as online art, are not intended to be viewed in such spaces. Thus, digital art does not necessarily fit the white cube model employed by most contemporary museums and gallery. Galleries and auction houses are hesitant to sell digital art because of the untested market, and platforms for sales are still young. Furthermore, public perceptions of digital art vary, as we will later explore in our qualitative study, because the average consumer views new media and online works as less valuable. Digital arts legitimacy is consistently questioned when it is sold in the same way as physical works. Galleries and auction houses are also less inclined to enter the digital art market because highly reproducible online works require artificially imposed scarcity in order to fit typical patterns of supply and demand. These works are easy to forge or copy, making copyright protection difficult to enforce.
5 Comparison with 19th Century Parisian gallery Goupil et Cie
Professor Hans Van Miegroet pointed out a very interesting similarity in the activities of Goupil et Cie the French art print publisher, which created prints from preexisting paintings and sculptures for the mass market. Below we have created a comparison between the activities of Goupil and those of current Digital Art Companies.
Goupil et Cie Online Digital Art Sellers Licensing works from artists to make multiples Licensing works from artists to make multiples Printmakers and etchers replicated the work into multiples Programmers help artists or original work that is replicable is made available for purchase People purchase prints that are theirs Collectors who purchase the work are actually just buying a license to view Once out, no change in artist terms can influence the owners of the prints Licenses may be revoked if license terms changes between artist and vendor
Companies active in the digital art market:
The following table creates a comparison between the three players in the digital art space at the moment. Sedition is the oldest, having been founded in 2011 by two individuals experienced in the online as well as traditional art market and with connections to the most prominent contemporary artists. Art Kick was founded last year by a seasoned serial entrepreneur, who collects art personally and launched their first product earlier this year. The youngest company on the list is Depict, founded by two MIT Sloan School of Business graduates. After series of alpha and beta tests, they launched their first public beta in March 2014.
Table 1: Digital Art Platforms Sedition ArtKick Depict In a nutshell High-end Digital Art in White-Cube-like setting art with a small a
I dont know much about art, but I know what I like and I know how to use the internet. Founders Robert Norton, former CEO of Saatchi Online Harry Blain, gallerist who founded Haunch of Venison Sheldon Laube, Founder/CEO: Serial tech entrepreneur with long successful track record. Formerly CTO of Novell and Chief Kim Gordon, CEO: Chinese Lit at Columbia Shambhavi, Product Chief: MIT Engineer, Digital Artist. Helped bring Wifi to International Space Station while engineer at Boeing 6 and worked with the YBA Information Officer at PwC Most executives have been part of Laubes other ventures
Timeline Founded in 2011 by Harry Blain and Robert Norton In June 2013, Sedition opened up its platform to allow submissions from other artists who can benefit from promoting and selling their works in digital limited editions. Idea formulated in March 2013, when Laube saw the success of services like Spotify in the music industry Got a team together and started building product and launched within 10 months Officially launched in February 2014
Shambhavi Kadam and Kimberly Gordon met at MITs Sloan School of Business, where they developed the idea Won 100K business plan competition Alpha testing at MIT incubator before founding Spoke with stakeholders while developing product Market research before plunging in Moved to SF in August 2013 to found Depict Started hiring team and off-site curatorial team Launched public beta in March 2014 Supply Chain They have engineers work with well-known non-digital artists to create the digital work Trading platform will give them control over exchange of the art They procure work from digital artists directly The open platform also gives them access and control over new talent Freely available work sourced through image banks Plan to tie up with repositories of images to add large amount of content and to maintain steady supply of fresh stuff In future will accept work directly from artists looking for exposure Curatorial team dispersed all over the US source and curate art work The curators and artists work create context with text Technical team builds website and secure the art Artists keep copyright and license Depict to license it to collectors
Customer Interface Work can be purchased on the Sedition website Call themselves the Spotify for art One can select collections of images Can browse through themes such as landscape, urban and abstract 7 When the edition sells out, collectors are allowed to trade work Work can be streamed onto personal devices as well as on SmartTVs Works can be sorted in a number of different ways but not by theme that can be rotated via streaming on your screens using Chromecast, Airplay for free
You see the work before the artists name Streaming via Apple TV and Google Chromecast Display controlled using smartphone and tablet apps. Content Curated artworks by specific artists that is put up by Sedition Open Platform allows artists to put up to 5 works of art at a time Currently work that is freely available for reasons including expired copyright Includes works of art, photography, sports and other popular non-aesthetic themes Each curator curates a collection of artwork of artists they brought on board They also write artist bios etc./ to build context Pricing Model Price range: $8 - $1600 Edition Size range: 30 - 50,000 Currently a freemium model to gain customers Plan to introduce a premium service with special interest high quality art and images that need to be licensed. Pricing Method: Emerging artists: $10-$30 Mid-career artists: $50-$100 Established artists: artists discretion Revenue Split: 60% goes to the artist 10% goes to curators 30% goes to Depict as a service fee Edition Size: 250 Target Market Targeting those familiar with the work of major artists but cannot afford original works and are open to owning digital editions instead Currently targeting people not serious about art but to use it like a pure consumption good Biggest expense is the PR team Currently have 10,000 users Digital natives Tech community in Silicon Valley and beyond Decorators and interior designers Those looking to turn TV into conversation piece Future Plan Premium service with artwork that requires licensing Develop digital displays meant specifically for viewing art 8 They plan on introducing a platform to let artists share their work on it to gain publicity
Integration of Auction Houses and Web-Based Platforms
Paddles On! was a collaborative project between the Phillips auction house, Tumblr.com, and Paddle8 online auction platform. The multi-platform event, which occurred in October 2013, consisted of a livestream gallery tour, open call on Tumblr, exhibition and live auction at Phillips New York space, and online auction through Paddle8. The project, collaborated by Lindsay Howard, focused on works produced with technology, such as video art and digitally-printed images and sculptures. (Paddles On!) Ultimately, the initiative sold 16 of the 20 pieces put on the auction block, for a total of $90,600 (PHILLIPS: Paddles On!). While the works, varying between $16,000 and $800, generally sold for less than Phillips typical fare, the auction was such a success that Phillips has expressed an interest in performing another similar event in the future (Cleary).
Qualitative Research
Introduction
Upon beginning our study of digital art, our group realized that there was a lack of available research on the way potential consumers interact with it. Due to the emerging nature of the market there has been insufficient scholarship on the valuation, both aesthetically and fiscally, of digital art, especially when viewed on an online platform. Thus, we saw fit to perform a study of college students, seen by some of the online art platform developers as the ideal customer (young, hip, tech-savvy, etc.), in order to gage their reactions to digital artworks and their willingness to purchase such works.
Methods
Participants were 36 college students, primarily from Duke University, between the ages of 18 and 22. They were asked to view four different works of digital art: 1. Elmgreen and Dragsets Powerless Structures, Fig. 101, 2. Matt Collishaws Butterflies and Flowers, 3. Universal Everythings Transfiguration, and 4. Weavesilk.com, all of which are being sold online in some capacity. Powerless Structures, Fig. 101 and Transfiguration are on sale at Seditionart.com for $56 and $74, respectively, Butterflies and Flowers is sold on at Artsy.net, and Weavesilk is available for $2.99 from the iTunes App Store. The participants then answer questions in a survey presented via Google Form. 9
Figure 1: Screenshots of works 1, 2, 3, and 4 clockwise from top left
The survey is available here: https://docs.google.com/forms/d/1mohW8f2ME-n3c3NgsAzrhaGYOzZRMdF7kV2gS8-Mwag/ viewform?usp=send_form
The survey consisted of the following sections: - A few demographic questions about age, hometown, major, and family background in order to ensure a diverse assortment of respondents that still fell within the intended population to be studied. - A set of questions applied to each work in order to gage how much the viewer values each work and how he/she envisions the installation of digital art. - A set of reflection questions about the viewers conception of digital art, response to seeing the work on different platforms, and interest in purchasing digital art.
10 Results and Discussion
The first question we will discuss is Is it Art? Viewer responses varied greatly among pieces, although all had a majority of Yes responses. 67%, 89%, 78%, and 53% of viewers responded that the pieces were art, respectively. In open answer responses, viewers emphasized the importance of pieces being meaningful, difficult to create, creative, and beautiful, in order to be considered art. Work 2, as a photograph, was considered by many to be art simply based on its medium. One may speculate that works 2 and 3 received the most yes responses due to viewer familiarity with photographs and videos in museum and gallery settings. Viewer responses to work 4, the one that was the most controversially art, showed a trend that continued throughout the study. Many viewers approached the piece as an app, and explained their hesitance to call it art by referring to it as a computer program, code, or platform for making art and questioning whether the platform, user-generated product, or both were considered art.
Figure 2: Is it Art? Response Charts
11 The next question with notable responses, Would you buy it? demonstrated that our audience was distinct from that of Sedition Art and that viewing a work as art was not requisite for purchase. Powerless Structures, Fig. 101, despite being one of the most popular works on Sedition, would not have been bought by any participants in the study. The stated reasoning behind not purchasing the piece stemmed from the idea that a three dimensional sculpture could be reproduced physically and thus was not unique to the digital medium the way pieces 3 and 4 were. The contrast between our participants and the consumers on Sedition could be due to a lack of available information about the piece and its artists during the study, like its serving as a model of a sculpture in Trafalgar Square, but it could also be due to study participants not actually being representative of the type of person who uses online auction platforms. The pieces viewers would most want to purchase, work 2 with 39% yes and work 4 with 37% yes, were popular for different reasons. Work 2 was popular because participants felt that the photograph was beautiful and easy to display. Participants viewed work 4, on the other hand, as an app rather than an art piece, and expressed interest in buying the work at a low price. Thus, 10 out of the 13 participants who responded that they would purchase work 4 said that they would pay $5 or less for it. We can see that participants were willing to purchase the work even if they did not see it as art, but would do so in a different context. This question again brought up questions of how participants perceived work 4 differently from the others due to its interactive nature and close relation to contemporary technologies. Viewer comments on the piece used verbiage such as - Interactive - App - Open Source - Program - Code - Screensaver - Online - Screenshot demonstrating that they were interacting with it as a program, not as a work of art, and used language that reflected its technological nature rather than its artistic one. Perhaps as digital art becomes more mainstream, viewers will address it with terminology that incorporates technological and artistic dialogue, but contemporary viewers seem to respond to such works with the more familiar, technological language used outside the art world. 12
Figure 3: Would you buy it? Response Charts Our exploration of the linguistic cues used by participants extended to the question How would you define Digital Art? The most common responses described it as art created on a computer or on a screen, both of which reflect some types of digital art but do not reflect the diversity and breadth of the field of digital art. Other participants confused online art and digital art, again demonstrating that participants have not necessarily interacted with many kinds of digital art or did not view them as such. Some definitions, on the other hand, were broader and described digital art as a visual work of art that you cannot touch, art made and displayed in a digital medium, an art form that incorporates current technology. These results demonstrate the complexity of digital art as a category, which may serve to hinder market development for such works.
13
The next question we would like to address is Would you pay more if it were a [physical sculpture or] painting or print? To our surprise, only one piece had a majority response of yes (work #1). Participants expressed that they felt the sculpture would be worth more due to the inherent value of a physical work, the practical aspects of producing and transporting a physical work, and the sensory benefits of tactility. On the other hand, the majority of participants felt that works 3 and 4 would lose value without motion and sound for the former and interactivity for the latter, demonstrating an awareness of the elements that make a digital piece distinct from a physical one and the placing of value on those unique aspects of digital art.
Figure 3: Physical Price Response Charts
14
Remembering that many viewers were unsure of whether work 4 could be categorized as art, it is notable that participants answered 4 most for the question Which work do you find most appealing? Again, we can see that participants appreciated work 4 as an interactive platform for creativity despite not necessarily viewing it as art. Work 3 was also popular, despite viewers not necessarily buying it. Thus, we can see that participants value interactivity and other online-specific aspects of digital art, even if this does not lead them to purchasing such works.
Figure 4: Favorite Work Response Chart
Further meditating on how viewers define value, we asked Do you think digital art is valuable? which received an overwhelming response of yes. Despite personal proclivities to buy or not to buy digital artwork, our participants valued the emerging field. However, responses to Do you think digital art is as valuable as physical art? were much more mixed, as many responders felt that digital art needed to gain more popularity and awareness in order to be considered of equal value to non-digital works. Participants were especially adamant that museums should incorporate digital art into their collections. 88% responded yes to Do you think digital art should be displayed in museums? Even participants who were not sure whether digital art was valuable felt that museums had an obligation to display viable new forms of art and would be doing a disservice to a number of artists by only showing physical art. This perception of the cutting edge art museum is relatively recent and rooted in the growth of contemporary and modern art museums, as not long ago museums served as the old guard of the art world, maintaining history and displaying classical art styles. Perhaps the youthful perspective of college students affects their perspectives on digital art and its methods of display.
15
Figure 5: Digital Art Value Response Charts
16 We also asked participants, Do You Think You Would Experience the Works Differently If You Viewed Them on a Different Platform? The response was overwhelmingly yes, as viewers felt that different devices would create different viewing environments and would allow for the works to be viewed with more detail. As previously mentioned, Sedition, ArtKick, and Depict have different policies on what platforms art may be viewed. While Seditions option of viewing works on smartphones, computers, televisions, etc., may allow for more accessibility to the work, we can see that only streaming to televisions would have a tangible positive impact on the way viewers perceive the artworks.
Figure 6: Platform Impact Response Chart
Finally, we wish to address platforms for purchasing art. Despite being mostly unfamiliar with purchasing platforms for online art, viewers were somewhat receptive to the idea. Many worried about copyright issues and maintaining value with unlimited supply, the former of which we will address in our next section. Based on the responses to this question, we believe that if sufficiently educated about the digital art market and the way different platforms function, a substantial number of viewers could be convinced to purchase digital art.
Figure 7: Digital Art Purchase Response Charts 17 Further research is required to corroborate our results on a larger scale. While this study produced insufficient data and our results are susceptible to sampling and volunteer biases, it was beneficial in its function as an exploratory tool to allow us to better understand the participants in the digital art market and to understand what the next generation of art consumers values in artworks, both aesthetically and economically.
Legal
There are various legal aspects that come into play when not only classifying digital art, but also maintaining protection over this form of intellectual property. Much like traditional art, once a work of digital art is created, there is automatic copyright protection for this work under U.S. Copyright, Title 17, which states Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device, (Copyright Law). There are still various issues that apply to digital art that arent as prevalent to their traditional counterparts. One of the most common problems is the increased likelihood of joint ownership. To start off, there is sometimes a disagreement between parties if a work even warrants a join ownership. In digital art, this often occurs between the coder and graphic designer. Since each coauthor is entitled to license, copy, distribute, or do anything else permitted under the guidelines of copyright ownership, without the permission of any other co-owner, further problems are likely to occur if only one party wants to distribute a joint work. Regardless, each co-owner is responsible to the other co-owners for any royalties or other payments received for the co-owned work. The best way to avoid these potentially expensive disagreements is to have the contracts in place that all parties can agree on prior to the production of a digital art piece (Hollaar). Furthermore, another common issue with digital art copyrights occurs in works-for-hire. In a work-for-hire, the artist relinquishes all rights from his or her work to the client. For this to take place, the terms of the contract have to be very clear to specify that the job is a work-for-hire, and the artist must understand what they are signing into. In most cases where the artist is an employee of the company, such as a Disney Pixar Artist, there is little dispute over Pixars ownership of the work. However, issues can occur if the proper contracts are not in place, especially when an artist is not employed by the company or being hired on a one-project type basis (Fullks). In most cases though, the issue with digital art isnt about securing the proper copyrights, but rather protecting those copyrights against unauthorized reproductions and infringements. Breaking a copyright is as simple as saving a digital art piece from an artists website then uploading it to ones social media account or printing copies of a piece without the appropriate permission. Lawyers often disagree over whether artist should register their works with the US Copyright Office, often arguing over whether its worth paying the fee prior to an infringement (ODesky). A copyright is automatically granted when the work is created and displayed. However, copyright registration establishes a public record and adds proof of copyright ownership to aid in fighting copyright infringement. It is also required when trying to sue another party for unauthorized use (de Vos Devine). Much of these early issues faced by digital art seem to parallel those that occurred with the emergence of a digital music industry. Digital art, like digital music, represents the stark contrast 18 between intellectual property and real property. Both goods are non-rival and non-exclusive. A non-rival good is a good in which one person's use of it doesn't diminish the ability of other people to use it. Moreover, a non-exclusive good is one in which it is very difficult to exclude people from using the good, thereby making it difficult to restrict access to the good based on price (Karim, Dunnagan, and Rouse). This combination disturbs the typical supply-demand model that most commodities rely on. Thus digital art markets are forced to find artificial ways create scarcity while protecting their unauthorized distribution. Buying a digital song or digital artwork is very different than purchasing their physical counterpart. When one purchases a digital artwork, ownership is simply a license to access and display the particular digital work, rather than ownership of the work itself. Since the digital art business model is often based upon selling the right to access a digital work, restricting access to those that did not purchase the work is pertinent, as is, preventing unauthorized reproductions. One of the most prevalent technologies is the digital restrictions management, also known as DRM. DRMis the practice of imposing technological restrictions that control what users can do with digital media (What is DRM?). In the digital art sphere, these are normally done in the form of watermarks and lower quality images when users browse art, as well as streamed services, such as Seditions app-based medium to view purchased works to prevent reproductions (McNee). iTunes, one of the worlds largest digital music distributors, echoes these practices through only allowing shortened samples of songs prior to purchase and only allowing the use of songs on 5 authorized computers after purchase. The Digital Millennium Copyright Act, known as DMCA, criminalizes production and dissemination of technology, devices, or services, such as DRM, intended to circumvent measures that control access to copyrighted works. DMCA is used to protect intermediate companies as well as creators. Intermediate companies need to control access and act when prompted that access has been breached, but if they do so, are protected from being complacent in the copyright violation. It also gives artists a method to ensure their copyright protections are being upheld (Oyama). These protections are pertinent to not only the creator and intermediates, but often the consumer as well, especially in sites like Sedition, where there is a secondary market between consumers. A buyers rights in Sedition contain two main points, a use right and a resale right. The use right allows a buyer to use and display their purchased piece of work while the resale right allows a user to sell their edition of that artwork to other collectors through a secondary market within Sedition (Olsen). This resale right is very much an attempt by the digital art market to mimic the traditional art market, however, the issue of maintaining artificial scarcity is pertinent. A consumer needs to know that a site like Sedition isnt going to suddenly increase edition sizes, thus jeopardizing the resale value of their work. Its very unlikely that an online digital art market would ever increase edition sizes after customers have already purchased a work, as there are various legal implications, as well as the fact that this would often go against their business plan. From a legal standpoint, increasing edition sizes could be argued as Unfair Competition Practice and a form of Misrepresentation. Furthermore, by broadening the edition size, customers would no longer consider the resale value in the price of a piece when deciding to purchase a piece, thus, disrupting the entire supply-demand model that digital art markets work so hard to artificially create. While copyright protections are generally extended to digital artworks, their unique technological platform, much like digital music, demands considerations to ensure proper protection against unauthorized uses and reproductions. The digital art market is still relatively 19 new. It will take some time to see how courts will handle future cases, and how these decisions can affect the future development of a digital art market.
Quantitative research
Introduction
The art market has yet to successfully adapt digital advances into their business model, when compared to other mediums such as film, music, television, and literature, which have already transformed their business models to progress with changing technological discoveries. Websites such as Sedition are attempting to be the first movers to successfully adapt new technology into their business model to make art affordable and accessible for the masses. Their method of integrating technology into the art market is through the median of digital art. Digital art is not a new form of art in fact it had been popular since the 1970s, but technology has yet to drastically change the sales of art. If the art industry plans to follow in the footsteps of other mediums such as film, music, and literature, then a company who is capable of capturing a market share early may have a great advantage in this market. Online companies, artists, and collectors alike can prosper from recognizing trends and popular features of digital art sales. We hypothesize that digital art sales can be strongly predicted based on a list of extrinsic and intrinsic variables.
Methods
To build a statistically strong model of sales of digital art we had to accrue a large and specialized data set. This proved to be only accomplishable thought raw data collection, which allowed us to include all the variables we thought might be necessary, and excluded any that would not be useful for our research. We chose Seditionart.com because it is one of the largest digital art companies and had the most information readily available. Sedition has a unique format that shows great economic and financial planning, but unfortunately this progressive business plan made it difficult to compare to other digital art sites, which limited external validity. Additionally, since Sedition works with a dynamic price model, that increases the price as more people buy a work, so we only knew the current price of the work and not its starting price. Additionally, the variable we use for sales only includes the variable public sales, so it may not be a complete representation of the number of works sold. These problems limit the amount of analyses we can do since it hinders our ability to calculate profit, which is acknowledged as the fairest and most commonly used comparison when dealing with goods and companies. The multiplication of these sales and price to get profit would result in an over representation of the variable price, amount A, and an underrepresentation of variable sales, amount B. Since we do not know if A is greater or less than B and by how much, we would not know if our model is over representing or under representing the success of digital art. To work around this problematic situation we chose to use sales of each work as our dependent variable, while accounting for price. This allows us to examine the sales of a work, know how much the price effects the sales, and know how each variable affects the sales given the price is the constant across all works. After finding a way for our model to predict successful digital art sales, the next task was to choose variables that may affect sales or help strengthen our model. Extrinsic variables were included and were easy to identify, for instance: whether the work was curated, the number of 20 words in the description, the number of artworks the author has on Sedition, the number of edition of a works being sold on Sedition, and if the description says the work is part of a series. The intrinsic variables that were added include whether the work was a landscape or an urban landscape, has depictions of nature or plant life in the work, had written words that were legible, or whether the description said the piece was a photograph or a sculpture. After collecting a large sample size, 396 works, with all the variables we then started analyzing the data for any trends, noticeable reactions, correlations, and possible missing variables. During this step it was noticeable that there were three recurring outliers: Elmgreen & Dragsets Prada Marfa, Powerless Structures, and Damien Hirsts Xylosidase. These three works that were constantly outperforming their competition and since these works were not incorrectly inputted, nor did they appear to create unfair advantages, we preceded by finding variables that could normalize these works. The variables we chose to include were variables intended to account for artist popularity, namely the number of Google hits the artists names with the word art produced, unless the artists name was vague then we did not include this variable to their works, whether the artist has a Wikipedia page, and a dummy variable for the artists primarily recognized as digital artists. Comparing all the variables Cooks distance plots with and without artists popularity variables showed a great improvement in the models fit when popularity variables are included. After collecting all the variables we started eliminating and transforming the model to have the strongest fit. This process included transforming variables such as sales, price, and edition size. Finding what variables when pared with others in the model created the strongest fitting model. We also included a variable that slightly reduced the strength of the model, but allowed us to better interpret the results. An such variable was word count of the description. Since many of the variables were taken from words or phrases from the description we need to be able to account for the fact that a longer description may result in more of these words or phrases.
Results
The spreads of price and sales appear to be typical to a small sample size of normal goods. The number of works sold (n=396) averages 36.28 (s=84.6) and the median is 8 in April 2014. The price of these works averages 32 (s=93.7) and the median is 14.
Figure 8: Density of Sale and Price Plots 21 The number of works sold that were curated (n=185) averaged 73.5 (s=84.6) with a median of 42 (s=112) while the mean sales of works on the open platform (n=210) was 3.5 with a median of 1 (s=7). Figure 9 shows curated works in purple and grey for open platform works. It is not surprising that curated works well substantially more than open platform work, but with the large variation in sales of curated works there must be more going on than simple this distinction.
Figure 9: Curated vs. Open Platform Art Sales
22 Statistical Model Results
Figure 10: Variable independent reactions with log sales Figure 11 allows us to see the interactions and effects of the variables as a whole, when all of the variables effects are being taken into account. 23
Figure 11: Multivariable models for hypothesis The final multivariable model appears to be the strongest fit. This model allows us to see how each of these variables interacts with sales of digital art as well allows us to further investigate the nature of the digital arts market. The significant variables that result in a positive correlation with sales when holding all other variables in the model constant are edition, length, curated, sound, Wikipedia page, and series. The variables that are significantly associated with negative sales when holding all other variables constant are price, Google results, and the presence nature. Discussion When price is regressed by itself against log sales, there is an interesting reaction whereas the price increases by 1% the sales of the work increase by more than 1% (Figure 10). Given just this, it would appear that digital art is a giffen, or more likely a Veblen good, where an increase in a goods price encourages people to buy more of it because it signals that the good is in higher demand. When other variables are taken into account (Figure 11) we can see that many factors are needed to complete the multivariable model. An increase in the price of a work by 1% is shown to 24 be associated with a decrease in sales by 0.77%, when all else is held constant. The addition of other variables show that prices true influence on sales is in fact not positive (Figure 10), but rather price is associated with an almost equal decrease in percentage sales (Figure 11). The completed multi variable model shows that digital art is not in fact a Veblen good, but rather the other variables in the model are responsible for the change in sales. The variables in this model that have the most influence include: length, curated, sound, google and wiki, nature, and series. Length One of the unique benefits of digital art compared to traditional art is the ability to easily incorporate moving images, therefore it is a unique advantage of evaluating digital art to be able to test how length of a work affects sales. The multivariable model concludes that an increase in length of a work by 1% is associated with an increase in sales by 0.57% for a work, holding all other variables constant. There are two possible reasons for this positive correlation: these people bought the digital art over traditional art because of its incorporation with movement, or people buy digital art just simply because they prefer longer works compared to shorter ones. By observing length, as well as other variables included in digital art and not traditional art, we can argue that digital art is becoming its own market, a substitute for the traditional art market, or a complement to the traditional art market. Curated In the final multivariable model, a curated work is associated with a 305% increase in sales compared to non-curated work, holding all other variables constant. When only regressing curated on log sales we see curated works are 480% more likely to sell (Figure 10). It may not be surprising that putting more effort into selling a piece of artwork will increase sales by a statistically significant amount, but it is worth while to point this out. As we account for other variables in the model, curated has less of an impact on sales when it is regressed by itself, about 175% decrease. Even when accounting for other variables curated works still have 305% higher sales rates. Sound A work with sound is associated with a 112% increase in sales, holding all else constant. Interestingly though, digital art with sound that matches an action is 158% less likely to sell, even when holding all other variables constant (including price and length). The table below confirms that when only comparing sound matches, the association with sales is positive, but when sound, price, and length are regressed together we see that sound matching negatively impacts sales. Additionally, since sound matching is not significant in any other model except the final multi variable regression, sound matching is taking into account a negative association with sales that is not taken into account with any of the other variables. Also, soundmatch and sounds reaction with sales may indicate that another variable or further research is needed. 25
Artists Popularity While an artists Wikipedia page is associated with an increase in sales by 57%, one additional Google result when searching the artists names is associated with a decrease in sales by 0.4%. This is an interesting and seemingly misleading result, because the Wikipedia page and Google results of the artist seem to be measuring the same variable, the popularity of an artist. Even when comparing Google results between curated and open platforms, the result is still the same. Wikipedia pages are associated with higher sales, while Google results are associated with lower sales. One hypothesis for Googles correlation with sales is that people buying works want to invest in up and coming artists rather than investing in established artists. This hypothesis only works for artists that are successful enough to have a Wikipedia page, but do not have as many Google hits as their competitors. Analogous to the sound variable, the artist popularity variable needs further research.
26 Nature The presence of nature in a work is associated with a decrease of 79% sales, holding all else equal. This is consistent with contemporary art findings landscapes do not sell well. It is interesting that even after accounting for landscapes in this model, nature is still negatively correlated with sales. Meaning even if a work with depictions of nature is not a landscape sells it is less likely to sell than their counterparts without nature.
27 Series Lastly, the use of series in the Seditions description is associated with an increase of 44% sales, holding all of the other variables in the model constant. The hypothesis here is that people enjoy or find it financially beneficial to collect works that are part of a collection. Future Research Possibilities or Issues Future research is needed to confirm the hypothesis, enhance external validity, and to further the research of the digital art market. This study may benefit from the addition of other variables, like sex of artist, location of artist, age of the artist, date the art was published, and so on. Secondly this study would benefit from the comparison with other online digital art companies. Comparing companies would entail finding a new way to measure profit, as this is the only acceptable way to measure successful sales between two companies. Game theory may be the best way to calculate profit if it is possible to see the rules that drive sales and profit then it maybe possible to work backwards to find the starting price and the true profit. Lastly, additional research and game theory models are needed to find the best explanations for the results that are concluded in this study. Other possible research ideas could be to see if the developing digital art market is a submarket of the traditional art market or its own market. The research done in this study is not conclusive enough to tell if the digital art market is developing independent of the traditional art market or within the traditional art market. The best way to go about this is to see if there appears to be signs that the digital art market is a complement or substitute of the traditional art market. An example of how we would do this would be by viewing length, and other variables that are incorporated into digital art but not traditional art, we could create an argument for digital art becoming its own market that maybe a substitute to the traditional market or complements to the traditional market.
Conclusion
Digital art is part of a fascinating developing market that has received insufficient attention in art historical and economic study. While the field of digital art can only be loosely defined, it has great potential as a relatively untapped market. Due to the relative newness of the market, we decided to research the selling of digital art from many different perspectives as an exploratory study of the emerging market. In our gathering of data from creators of online art platforms, ideal new media consumers, copyright lawyers, and the art platforms themselves, we hoped to create an overview of the potential for growth in the market as well as the difficulties participants may face.
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