How Tokenization Is Turning Art Into A Commodity And Changing Monetization
I had a conversation with someone recently who said, “I still don’t get how I can monetize my physical art using blockchain technology.”
To help them understand, I equated the idea with an investment in Tesla. There are already Tesla cars on the road, but the company wants to make new cars and new models. So, on a high level, the investor gives money to make Teslas in the future, hoping those developments will increase the value of their investment.
That concept doesn’t just work for companies — it can be applied to artists, too.
Just as you would bet on the development of a new Tesla model, tokenization allows you to bet on the development of new art. By purchasing fractional ownership of an existing piece, investors are doing two things:
- Betting the value of the piece will rise over time.
- Providing the artist with funds to create new artwork.
The artist is able to liquidate finished pieces in order to make new art, grow their reputation, and potentially increase the value of their work. As the value increases, so does the share of the investor’s fractional ownership of that artwork.
Ultimately, the goal of tokenization is to help artists create viable businesses from their work by commoditizing and monetizing it in both the physical and digital realms.
Digital art is already being commoditized.
The reality is, tokenization can allow people to make a business out of nearly any type of digital art.
People “own” and trade CryptoKitties, CryptoPunks, and all sorts of other digital art and designs. And the digital art community is growing quickly. The barriers to creating, publishing, and promoting work are much lower online than they are in the physical world.
That means it’s easier to monetize digital art, which creates incentives for people to produce it. At the Blockchain Art Collective, one of our goals is to use tokenization to create those incentives for physical art as well.
Physical work can also be turned into a commodity.
After years of perseverance, some artists get to experience the thrill of showing their artwork in a gallery. Seeing a room full of people admiring your work on opening night is a great feeling.
But at the end of the night, how many red dots are on the walls? In other words, how many pieces actually sold?
Many people who enjoy viewing art don’t actually buy it. Either because it’s out of their price range, or they just aren’t willing to pay the full price at that moment. Maybe their living room walls are full.
Tokenization provides a solution to this problem, allowing interested parties to purchase a fraction of the work.
As guests walk around the gallery on opening night, they could purchase 10% of an artwork they enjoy, perhaps with just a tap of their phone. It gets rid of the binary, “to buy or not to buy” decision and expands attendees options for supporting the artist.
Even if none of the artwork is bought outright, the artist can still make money through the purchase of shares in their work. This allows them to buy more supplies for future works. Or just pay next month’s rent.
Tokenization will change art monetization and its community.
There will be people out there who are more interested in art for its investment potential than its aesthetic value.
But that will also mean a rise in the number of people who are willing to spend money on art in different ways.
Tokenization opens up the art world to people who don’t have the resources to commit hundreds of millions — or even thousands — of dollars to buy a single painting. Rather, they can build a portfolio of paintings, drawings, prints, sculptures, photographs, or any other commoditized art in which they’ve purchased shares.
In a way, this will also change the notion of buying an entire piece of physical art. It may become more of a grand gesture that signifies a real connection with the piece and a desire to own it.
Digital and physical art will continue to converge, much like the rest of our physical lives are becoming enmeshed with the digital. Allowing people to buy a fractional stake in art benefits those who want to invest in art without taking on massive risk. But it also benefits the artists who can monetize their work with less effort.
It opens up a new stream of revenue for them to work, build their reputation, and hopefully make a real living off their artwork.