Sie sind auf Seite 1von 30

1

Dillon Patel, Shannon Sims


Ariel Shpigel, Keshav Mahendru

DIGITAL ART MARKETS

Introduction

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.








28
Works Cited

"2013 Smart TV Shipments Grew 55 Percent." 2013 Smart TV Shipments Grew 55 Percent. N.p., n.d.
Web. 01 May 2014.

About | Austin Museum of Digital Art. Austin Museum of Digital Art, n.d. Web. 2 May 2014.
<www.amoda.org/about>.

Cleary, Sean. Personal Interview. 5 January, 2014.

Copyright Law. Title 17 U.S. Code, Sec 102. 1990 ed.

"Cracking up." The Economist. The Economist Newspaper, 21 Jan. 2012. Web. 01 May 2014.

De Vos Devine, Katerine. "Intellectual Property Copyright." Telephone interview. 15 Apr. 2014.

Fulks, Michael. "Copyright Law in the Digital Age." Apogee Photo Magazine, 2013. Web. 18 Apr.
2014. <http://www.apogeephoto.com/mag1-6/mag1-6mf.shtml>

"Google Exec: We've Sold Millions of Chromecast Adapters." Gigaom. N.p., n.d. Web. 01 May
2014.

Gordon, Kimberley. Personal interview. 15 March. 2014.

"Graphical User Interface." Britannica.com. Encyclopaedia Britannica Inc., 21 Apr. 2014. Web.

Hollaar, Lee A. "Digital Law Online: Ownership." Legal Protection of Digital Information. BNA
Books, 2002. Web. 14 Apr. 2014.
<http://digital-law-online.info/lpdi1.0/treatise10.html>

"How Amazon Fire TV Stacks Up To Apple TV, Chromecast And Roku | TechCrunch."
TechCrunch. N.p., n.d. Web. 01 May 2014.

Karim, Ilias, Wesley Dunnagan, and Angela Rouse. "Music Copyright in the Digital Age." Music
Copyright in the Digital Age. Stanford OSPBER, 2010. Web. 21 Apr. 2014.
<http://cs.stanford.edu/people/eroberts/cs201/projects/2009-10/music-and-copyright>

Laube, Sheldon. Personal interview. 23 March. 2014.

McNee, Lori. "Marketing Your Digital Art: To Watermark or Not?" Web log post. Fine Art Tips.
N.p., 30 Sept. 2011. Web.
<http://www.finearttips.com/2011/09/marketing-your-digital-art-to-watermark-of-not/>

O'Desky, Aly. "Digital Art Copyrights." Personal interview. 14 Apr. 2014.

29
Olsen, Katie. "S[edition] And The Art Of Digital." SVBScription, 28 Jan. 2014. Web. 21 Apr.
2014. <https://svbscription.com/blog/collectors-edition/sedition-and-the-art-of-digital>.

Oyama, Katherine. "Why the Digital Millennium Copyright Act Is Working Just Fine..." Digital
Music News, 10 Apr. 2014. Web. 14 Apr. 2014.
<http://www.digitalmusicnews.com/permalink/2014/04/10/dmcaworkingjustfine>.

Paul, Christiane. Digital Art. New York: Thames & Hudson, 2003. Print.

Paddles On!. Paddles On!. Phillips Auction House, 3 Feb. 2014. Web. 2 May 2014.
<http://paddleson.tumblr.com>.

PHILLIPS: Paddles On!, Auction & Exhibition New York 5-12 October 2013. Phillips Auction
House, 10 Oct. 2013. Web. 2 May 2014.
<www.phillips.com/auction/auction/PD010213>.

Stokes-Casey, J. "The World in 24 Hours." Art and Electronic Media. N.p., 25 Mar. 2013. Web. 21
Apr. 2014. <http://www.artelectronicmedia.com/artwork/the-world-in-24-hours>.

"What Is DRM?" What Is DRM? | Defective by Design. Free Software Foundation, n.d. Web. 20 Apr.
2014.
<http://www.defectivebydesign.org/what_is_drm_digital_restrictions_management>.

Woolery, Andre. Personal interview. 12 April. 2014.




















30
Appendix

Data spreads and density:

Final Model Regression Diagnostics: