How (Not?) to Crowdfund?

If you are interested in the nuts & bolts of the art market, I recommend Tim Schneider’s blog and newsletter The Gray Market, which offers remarkably astute insights on “the economics, technology, and business practices of the fine art market” on a weekly basis.

But while I admire Schneider’s work, I don’t necessarily agree with all of his observations. For example, his August 19, 2015 post titled “The Wisdom(?) of the Crowdfund” suggests that crowdfunding may be incompatibly with the art market because “fine art is largely, if not entirely, a niche medium rather than a mass one.” Now, Schneider is absolutely correct to observe a tension between the traditional art market model of selling unique or “semi-unique” objects at high prices and the typical crowdfunding model of pre-selling an indefinite number of reproductions at relatively low prices. And yet, as Schneider himself concedes, many fine artists, especially those selling digital works, effectively engage in a form of “crowdfunding” by pre-selling their works to a small number of collectors, and selling associated works at lower price points.

I would observe that Schneider assumes a market based on scarcity. And that’s understandable, considering that the art market has always depended on scarcity! Hence, its peculiar relationship to intellectual property, especially copyright. Unlike other works of authorship, the market value of an artwork typically inheres in the tangible (unique or “semi-unique”) “copies,” rather than in the intangible underlying work of authorship. As a result, artists and owners of artworks typically welcome the reproduction of their artworks without compensation, because publicity increases the value of the unique object.

But why assume that has to rely on scarcity, just because it did in the past? Especially when new forms of artwork, especially digital works, are not intrinsically scarce, and the artificial scarcity imposed by “editioning” and similar practices is of dubious credibility or effect? In other words, Schneider is correct that crowdfunding is a poor fit for the traditional art market, which relied on scarcity. And he is correct to observe that artists will have to rethink their business model in order to use crowdfunding effectively. But I don’t see why artists ought to depend on scarcity, if it isn’t credible or enforceable. There’s a reason the market for digital editions is … anemic.

Sure, artists are notoriously (and rather ironically) “small-c” conservative when it comes to business, and expect to do things the way they’ve always been done. But maybe crowdfunding could help encourage some artists to see new ways of framing their work and reaching audiences. In many ways, I think it already has. Art used to be about scarcity, but any economist will tell you that scarcity is the problem, not the solution. Or to put it another way, Walter Benjamin famously argued that the “aura” or social value of art depended on its scarcity, or “uniqueness.” And it turned out he was dead wrong! Too bad for him (although no one seems to have noticed…), and bully for us.

Brian L. Frye