Problems of the art industry

Problem definition

The idea of a digital art store comes from several problems within the art industry, which are discovered through research and interviews and consequently explained in more detail. ArtMinded from Wädenswil wants to eliminate the problems of the art industry and aims to support artists and provide the technical infrastructure to accompany artists.

High margins of physical galleries in art industry

Traditional galleries have a gallery contract with their exhibiting artists, which regulates the rights and obligations of the gallery and the artist to exhibit the works and to market them. In Switzerland, most galleries require a share of the revenue of 30 to 50 percent. According to our own survey of ten artists in Switzerland as well as in France, the margin is usually set at 50 percent and only a few and small galleries demand the minimum rate of 30 percent. This is because small galleries often do not have much potential to market the works to the general public and to bring the artist many customers. The margin of 50 percent of the sales revenue makes many artists question their own exhibition in galleries; after all, they have invested a lot of time in their artwork and would therefore like a higher share of the proceeds. Although their own fixed costs for the platforms are low and physical as well as digital galleries generate further revenues through additional sales, artists are often obliged to work with a partner in order to become successful.

Problem of contract binding

Artists are often characterized by spontaneity and creativity. Since galleries usually promote the exhibiting artists and thus drive up the prices of the artworks, they usually bind the artists to themselves through an exclusive contract. Artists often have no possibility to sell the artworks in other galleries or to offer them in parallel on their own platform, because they are bound by contract. Furthermore, galleries often want to sign the artist exclusively for future works. If the author ─ thus the artist ─ undertakes to entrust future works to a specific gallery, this contract must be in written form. Joining a gallery, while beneficial, restricts the creator of the artwork. It is therefore not advisable to conclude gallery contracts informally, orally and on a handshake, as this may lead to difficulties of proof. In the case of long-term or open-ended contracts, care should also be taken to avoid unethical slave contracts. It is best for artists to add an expert when negotiating contracts, which adds cost and is not acceptable by some. Through a survey of ten artists in Switzerland and France, it became clear that they want to decide for themselves where to sell their artwork. Eight of the ten artists interviewed agreed with this statement.

Failure of small, talented artists

Since many smaller artists do not have the means to set up their own webshop or take care of marketing their own products, they have to sell their artworks on art platforms for high margins. Apart from their own efforts on social networks, art platforms are the only option for smaller artists to sell their works. As the effort for marketing and promotion is very high, this describes the only way to become successful. Physical galleries rarely accept small artists because they do not bring an audience to the company. Therefore, art dealers have to filter out those with the best future prospects from the large supply. Thus, to make the selection successful, galleries need very strong knowledge of the market and are limited by the limited physical space to supply and demand. ArtMinded helps small talented artists with marketing, technical preparation and the sales process.

Certification/proof of art

The interest in non-fungible tokens comes due to the lack of transparency within the art industry and its certifications. Today, physical artworks can only be reproduced through complex, manual labor and protected from a loss of value through a variety of protective mechanisms. Digital artworks, on the other hand, are easily reproducible due to the advanced technical possibilities and can be multiplied simply by saving the file and duplicating it. The resulting copies are also almost identical to the original and unlimited. For digital artists or physical artists who want to profit from digital resale, the exclusivity and security without NFTs is therefore not given and difficult to prevent.

Problem of the lack of digital platforms - art industry

In Switzerland, blockchain technology is a trend that has reached a large number of residents between the ages of 18 and 64. However, it is still rare in the Swiss art industry. Many companies do offer digital artworks on third-party platforms such as OpenSea, but do not enable the actual minting on the platform or certification with so-called NFTs. In addition, many platforms have fixed cooperation partners in the art industry and only selectively advertise for larger artists and present them well on the platform. No digital art platform promotes regionality and shows the audience which artists are active in the immediate vicinity of the potential buyer. In general, it can be stated that there are only a few digital galleries for artists that support the artist in challenging activities besides the actual creation of art, such as logistics, certification or sales with suitable payment options. Few digital art galleries are registered in Switzerland, although demand exists according to Hiscox’s own survey. Platforms rarely address current trends such as live events and do not offer artists a digital solution for new needs.

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