Can Blockchain assist with Resale Royalty?
Blockchain is once again hitting headlines, with Bitcoin more than doubling in value since December 2020, plus the recent high-value sale of an NFT (non-fungible token): Digital artist Beeple’s work Everydays: The First 5000 Days, sold for $69 million USD. So we thought it useful to revisit our review of blockchain and how it might assist in the management of the Resale Royalty Right.
Blockchain is a growing list of records which are linked and secured using cryptography. It records transactions (or sales) between parties in a transparent, verifiable and permanent way. Blockchains are generally managed by a network of parties that adhere to agreed protocols. The transaction or provenance information contained in a blockchain can be accessed by consumers or others via a digital portal, such as a QR code. Crypto coins or cryptocurrency are the most widely known type of blockchain technology and, of the numerous currencies created, Bitcoin is the most well-known.
Copyright Agency is committed to efficiently and effectively managing the Resale Royalty Scheme (by Government appointment). That means providing accurate identification of eligible resales, efficient processing of the resale reports and quick payment of royalties to the visual artist.
As blockchain provides unique identification which is timestamped and confirmed on the blockchain, this technology is also likely to provide additional assurance to the art market of the provenance of the work, plus streamline the reporting of resales. As blockchain technology evolves, we want to ensure we are ready to take advantage of the benefits and pass those onto the artist and art market.
In conjunction with Desart and their Digital Labelling Project, we worked with select art centres and art market professionals involved in primary and secondary sales. We considered the operating environment and needs of all parties from the creation of the work through to the sales process. With an eye on what worked well and what could be improved, we reviewed blockchain and a variety of technologies that track supply chains. To test and build our understanding of blockchain, we developed an application on the Ethereum blockchain.
Having completed our research and built a test visual arts blockchain, we found that blockchain technology is well developed and functioning effectively for digital uses like Bitcoin. In visual arts rights management, it can offer automation and efficiency; however, this needs more development in ensuring data integrity for physical works onto the blockchain. There are some very effective methods for uniquely tagging physical works, but more needs to be done on the associated business practices to ensure accuracy.
We met with many interested local and international parties who were working on, or looking for, blockchain use cases in the visual arts. As the managers of the Resale Royalty Right, in the same way that we engage with all artists and art market professionals, we will engage with all visual arts blockchain organisations and feel ready to do so.