THE IMPACT OF NFTS ON THE ROLE OF TRADITIONAL ART MARKET PROFESSIONALS IN LONDON

A dissertation submitted in conformity with the requirements for the Master’s Degree in Art Business Sotheby’s Institute of Art/University of Manchester

 

ABSTRACT

The art industry is rapidly changing, and so are its professionals. The changes that have taken place in recent years have been driven by several factors, including demographic shifts, economic challenges and technological advancements. As a result of these shifts, there has been an increase in new technologies being adopted across all areas of the traditional art world, from auction houses to galleries to museums, as well as an increase in new ways for collectors to interact with these institutions. The current trend is NFTs (Non-Fungible Tokens), a new form of digital assets used in the art market. Given its growing popularity and its potential to dramatically change the art market, the study seeks to examine how NFTs are impacting the role that traditional art market professionals in London play within their organisations. To realise this research aim, interviews were conducted with ten key individuals involved in the art market. The interviews were analysed using content analysis techniques to identify recurring themes throughout each interview. In addition to analysing the data gathered through interviews, secondary research was conducted by reviewing relevant literature and websites related to blockchain technology. Finally, triangulation was performed between all data sources to ensure the findings’ validity and reliability. This research concludes that while NFTs will not replace physical works of art or auction houses, NFTs will nevertheless significantly impact the roles currently being played by traditional art market professionals in London. Specifically, NFTs will change who plays what role in what transactions, who plays what role when interacting with clients, and how information is shared between parties.

ACKNOWLEDGEMENTS

I would like to take this opportunity to extend my deepest gratitude to every single individual who was involved in the entire duration of this research process. I would like to first thank my Supervisor who gave me helpful guidance in terms of how to approach my research and writing process. I would also like to recognize the role that my classmates played in terms of the encouragement they gave me and the overall motivation to continue with my project that they provided me with, even when I was discouraged or felt overwhelmed. Lastly, I would like to appreciate my family members for the moral and material they extended me, not just during this dissertation process, but throughout my academic life ever since I was a child. Everyone was helpful in one way or another and I will be entirely grateful for the support I have received.

AUTHENTICITY STATEMENT

The following text must be included:

DECLARATION

I hereby declare and confirm that the work in this dissertation is completely my own and I guarantee its authenticity. I fully understand what constitutes plagiarism. No portion of the work referred to in the dissertation has been previously published, in any format, or submitted in relation to another degree or qualification of any other institute of learning. I further confirm that this statement refers to all dissertation copies that are submitted, in all formats.

COPYRIGHT DECLARATION

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DECLARATION

I hereby declare that no portion of the work referred to in this dissertation has been submitted in support of an application for another degree or qualification of this or any other university or institute of learning.

NOTES

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The ownership of any intellectual property rights which may be described in this dissertation is vested in Sotheby’s Institute, subject to prior agreement to the contrary, and may not be available for use by third parties without the written permission of the institute, which will prescribe the terms and conditions of any such agreement.

List of Figures

Figure 1: Conceptual Framework 19

Figure 2: General satisfaction towards the NFTs trend 42

Figure 3: Effect of NFTs on careers 42

Figure 4: Effect of NFTs on Income 43

Figure 5: Long term effects of NFTs on careers 43

 

 

 

CHAPTER 1: INTRODUCTION

1.1 Introduction

In the last few years, non-fungible tokens (NFTs) have gained significant traction and publicity, with major blockchain art projects raising millions of dollars from investors through token sales and works of art being sold at hundreds of millions in value during auctions at major auction houses such as Sotheby’s and Christie’s.^[1] Non-fungible tokens (NFTs) refer to unique digital assets that can be sold as a token but cannot be broken down into smaller pieces. They can represent ownership or digital representation of an asset. Examples include ERC721, a protocol for tracking ownership and managing digital assets on the Ethereum blockchain.^[2] Transferring an NFT takes 15 seconds to over 30 minutes. The Average option can take 30 seconds to one minute, and the Slow option may take over 30 minutes. The main purpose of a transfer is to move ownership of an NFT from one address to another. There are two types of transfers: on-chain and off-chain. On-chain transfers are sent directly on Ethereum’s blockchain network.

In contrast, off-chain transfers use a relay method that sends transactions through a third party, such as a centralised exchange or another service provider, before being processed by Ethereum’s blockchain network. Most NFTs are purchased with ether (ETH), the native currency of the Ethereum network. In art, NFTs have been used as limited edition certificates representing ownership of the artwork. This makes NFTs one of the fastest growing and most promising new technologies in the art industry, potentially disrupting this traditional industry or changing it significantly. Traditional art infrastructure includes galleries, auction houses, and dealerships of galleries. NFTs infrastructure includes platforms such as Ethereum, EOS, and NEM. These platforms enable artists to create their digital art. As such, the current dissertation aims to delve into the impact of non-fungible tokens on the traditional role of market professionals in London’s art market.

 

1.2 Background Information

Globally, the art market is estimated to be worth $65.1 billion annually. The United States, Europe, China, Japan, and South Korea make up the majority of buyers in the global art market, with 47% of purchases happening in the U.S., followed by China at 27%.^[3] The art Basel fair is considered the world’s most prestigious contemporary art fair and attracts more than 70,000 visitors each year who come to see over 900 exhibitors.^[4] Regionally, the art market in Europe continues to grow rapidly; it is estimated to be worth €22.6 billion annually and accounts for almost 30% of global trade in art objects and collectibles, according to Art Basel’s 2019 report.^[5]

Moreover, UK traditional art market professionals such as gallerists, dealers, appraisers, and curators play an important role in shaping and determining what artists gain prominence within the UK market. In London, there is a strong presence of high-end and emerging galleries across the city, including institutions such as Tate Modern, Whitechapel Gallery, National Gallery, Royal Academy, and Saatchi Gallery.^[6] In addition, legal acts in art include copyright, moral rights, and trademarks. The copyright for a work of visual art is generally held by its creator. Hence, London is best suited for studying how non-fungible tokens will affect the traditional role of these types of art market professionals in the future.

 

 

1.3 Problem Statement

The art market can be defined as a specific subset of markets where individuals buy and sell works of art. Notably, the traditional art market can be defined as the formalised system of buying and selling works of art or through physical means such as galleries, auction houses, and dealerships of galleries.^[7] However, recent technological developments have created opportunities for artists to share their work via different platforms digitally. Nonetheless, NFTs have disrupted the way traditional art markets operate and, more so, affected the role of professionals involved in the traditional art market.^[8] The blockchain revolution is a major driving force in the shift of power and control to the hands of the creators, as it enables the creators to take on ownership of digital art.^[9]

While this may be advantageous to the creative community, it also means that traditional stakeholders such as galleries and auction houses may need to re-evaluate how they operate to remain competitive. NFTs are digital, and while innovative, they still rely on the traditional art market to thrive. As such, this technology is a double-edged sword: it may provide solutions to some of the major pain points in the art market, but it may also lead to unwarranted disruptions. In addition, any possible changes, negative or positive, may have a significant impact on the future of the traditional art market. For example, if NFTs are adopted and mainstream, then the art-making process will be expected to change. This, in turn, will affect how art is priced and where it is sold. Thus, there is a need to study how NFTs affect and will continue to affect the roles of traditional art market professionals who are based in London.

 

 

1.4 Objectives

1.4.1 General Objective

The overall objective of the study is to establish what changes have taken place with respect to the role that traditional art market professionals in London currently play in light of the growing influence of NFTs.

 

 

1.4.2 Specific Objectives

1. To find out the changes that NFTs have currently made to the art market in general.
2. To discover what benefits and challenges traditional art market professionals have experienced in their career so far as a result of the growing influence of NFTs.
3. To investigate the potential long-term effects of NFTs, and how this could change the future careers of traditional art market professionals in London.

 

 

1.5 Research Questions

1. What changes have NFTs currently made to the art market in general?
2. What benefits and challenges have traditional art market professionals experienced so far in their career as a result of the growing influence of NFTs?
3. What are the long-term effects of NFTs, and how could this change the future careers of traditional art market professionals in London?

 

 

 

1.6 Research Scope

The research will be limited to the geographical boundaries of London. In addition, only traditional art market professionals and NFTs experts will be included in the research such as: auctioneers, dealers, artist managers, traditional artists, NFTs art dealers, NFT creators, traditional art investors, and gallerists.

 

 

 

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CHAPTER 2: LITERATURE REVIEW

2.1 Empirical Study

2.1.1 Growing influence of NFTs

Horky and co-partners illustrated that NFTs have various and very important implications for the traditional art market. Firstly, it can be seen that there is a potential for new artists to create their unique style, which in turn creates higher quality art. Secondly, this influence has the potential to make art more accessible to those who are not near it. This is because their geography no longer limits people, and they can now easily purchase NFTs anywhere in the world. Thirdly, NFTs have the potential to redefine how artists are compensated for their work, and finally, there is a possibility that art will not be as valuable anymore. ^[10]

On the other hand, Noh and colleagues asserted that there are certain benefits and challenges that NFTs pose to the traditional art market. One benefit is that there is a possibility for the digitalization of original paintings, sculptures, and other pieces of art, which may help them stay in better condition for years to come.^[11] Another possible benefit is that there is a chance for new artists to gain more recognition and have their work shown to a wider audience. Scholars identify that the possibilities of future benefits are likely endless, as this technology is still evolving.^[12]

However, Rehnam and colleagues assert that NFTs are associated with a number of challenges. The challenges of NFTs in the traditional art market are just as diverse as the benefits. One potential challenge is that some buyers may find it difficult to appraise the value of digital art.^[13] Another potential challenge is that there is a possibility for theft or fraud to occur. Additionally, if art becomes less valuable in the future, it may negatively affect artists.^[14] Furthermore, blockchain technology is still new, and many developments will be expected in the future.

 

 

2.1.2 Potential changes to the traditional art market

Change in the traditional art market can be expected in several aspects. These include changes in what is considered valuable, how it is valued, and the nature of transactions. ^[15] Traditional art was previously valued on the artist’s reputation, creative output, and uniqueness. It has never been valued for its utility or monetary value.^[16] The level of sophistication in NFTs may impact the changes to the traditional art market. As the level of sophistication in NFTs increases, the changes to the traditional art market will be more profound. ^[17] There are several possibilities. First, it is possible that NFTs could eventually replace physical artworks with digital versions of them on a decentralised database.

This would change what is considered valuable and how it is valued. If digital artwork is more convenient and cheaper to own than the physical one, traditional art may be less valuable. On the other hand, if people would rather have the tangible version of an artwork, it could make it more valuable, what is considered valuable and how it is valued.^[18] Second, as the level of sophistication in NFTs increases, the ownership of art could be extended to a larger number of people.^[19] Digital art is more accessible and affordable for many and can be bought with a tap on a smartphone. The accessibility may allow digital art to provide an alternate form of income generation for traditional artists.^[20] This would make it possible for more people to own artwork and share in the benefits that its artwork

In addition, Valeonti and colleagues found that the need to store and maintain art physically would be eliminated. When to store and maintain art, a physically centralised database and smart contracts will be enacted; hence, there is no need to store the original artwork in museums.^[21] Without the need to maintain art, the demand for museum curators may decrease, leading to a change in employment opportunities. Fourth is the issue of copyright violations. Copyright infringement violates intellectual property rights, where someone makes and sells products without the creator’s permission. Suppose a digital copy of the artwork is stored on a decentralised database.^[22] In that case, decentralisation may make it more difficult to track down the identity of the person committing the copyright violation. It is also possible that a decentralised database may make it easier for an owner of digital artwork to commit a copyright violation.

In addition, socioeconomic factors, including economic downturns, alter traditional art market values. Socioeconomic factors can create financial instability and cause art prices to drop.^[23] Whereas NFTs transactions are immutable and thus cannot be tampered with or deleted. Notably, the cultural contexts in the traditional art market illustrate the importance of culture-specific social norms and attitudes towards issues related to artistic production, authenticity, authorship, creativity, ownership, and value.^[24] However, with NFTs, the cultural context becomes more important because creative individuals may no longer pursue careers in the traditional art market due to its strict requirements for anonymity. Creative individuals typically do not want their private data shared, but if they do decide to enter the market, they will need to reveal certain personal information.^[25]

 

2.1.3 Potential impact on the role of traditional art market professionals

2.1.3.1 Positive impact

Gurieva found that with NFTs in place, auctioneers would gain a new tool to conduct auctions. Valuers will be able to appraise and verify the authenticity of artworks digitally. This is especially true regarding resale royalty collections (RRC). Art collectors will have greater access to a global market, which might lead to an increase in art collectors. Curators may experience a decrease in their jobs as the traditional art market relies heavily on acquiring and maintaining physical work. The potential for copyright infringements also increases. Finally, as blockchain technology advances, the role of cultural context changes because it no longer matters who created the work or owns it.^[26]

Nonetheless, Malik and team study asserts that traditional art market professionals will have to contend with multiple challenges presented by NFTs. For example, auctioneers still need to be certified and knowledgeable about what constitutes valuable art pieces. Valuers will also face challenges such as digitally assessing the authenticity of pieces while preserving security measures. If they cannot identify fraudulent activity, counterfeit goods could go unnoticed, devaluing authentic pieces and even resulting in lawsuits against reputable auction houses that sold them knowingly. Auctions will also need to be updated with the capability to upload artwork and update bids in real-time. Artists will face a changing art market and copyright laws, resulting in decreased artwork sales.^[27]

Furthermore, NFTs may allow art collectors to purchase art from around the world with lower transaction fees and faster transaction times. However, with this newfound convenience, art collectors will be less likely to interact with traditional art market professionals.^[28] In turn, traditional art market professionals may need to adjust their methods of engaging in the market and develop alternative skills. This results from NFTs eliminating the need for live interactions and interpersonal relationships that are integral to the traditional art market.^[29] Moreover, eliminating the need to display original art in museums and galleries will likely result in fewer positions. However, this may be offset by the ability to sell art to a global market.

 

 

2.1.3.2 Negative impact

Auctioneers cannot profit from buying and selling art due to cut fees. Art collectors may avoid buying art from auction houses altogether, reducing sales by upwards of 15 per cent. Valuers may see reduced opportunities, as they have to deal with appraising less valuable pieces of art. They may also face an increase in fraud as digital reproductions become more widely available and easy to produce. Curators will have fewer job opportunities since museums will likely downsize their display spaces or eliminate them.^[30] Despite these drawbacks, some experts believe there is hope for these professions.^[31] This is because by working traditional art market professionals working together, they can leverage the strengths of each profession to combat these negative impacts. This means valuers must find ways to validate artworks’ authenticity without relying solely on an auctioneer’s opinion.

Cultural institutions should focus on educating visitors about the value of non-physical art, while curators should research how to integrate old and new art forms into museum displays. Thus, if embraced, NFTs may provide a way for the traditional art market to evolve rather than shrink. There is a need for the traditional art market to adapt and embrace the change brought by NFTs.^[32]Without doing so, it may lose its grip on the art market and be replaced by NFTs. Moreover, traditional art professionals may lose their jobs due to NFTs. Auctioneers will be impacted the most, seeing their profits decline as they are now required to compete with much cheaper rates from other auction houses. Valuers will also suffer from an increased risk of fraud and counterfeiting.^[33]

 

 

2.2 Synthesis of literature

Based on the literature review it is clear that researchers argue that while NFTs will bring many benefits to the art market, such as lower transaction costs and shorter transfer times, they could also negatively affect employment prospects for those in the traditional art industry. For example, auctioneers will not be able to reap any profits from buying and selling items at auctions because of the inexpensive rates offered by other companies. Valuers will similarly be at greater risk of fraud because it has become easier to create counterfeit copies.

 

 

2.3 Conceptual Framework

The independent variable is the growing influence of NFTs. The dependent variable is the potential changes to the role of traditional art market professionals. The moderating variable is the level of sophistication in understanding NFTs and how this influences decision-making. The context variable is the impact of socioeconomic, and cultural contexts on the traditional art market professionals.

Figure 1: Conceptual Framework

Level of sophistication in NFTs

Impact of, socioeconomic, and cultural contexts on the traditional art market professionals

Potential changes to the role of traditional art market professionals

Growing influence of NFTs

 

 

 

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Research Design

The research design will be qualitative, with in-depth interviews with participants directly involved in art investment and sale on both traditional and new transaction forms. Qualitative data analysis includes open coding of interview transcripts, and themes identified through this process will be explored further using thematic analysis. The qualitative research design refers to studies where researchers gather information about the social world by observing and participating in it without imposing pre-conceived categories on the material being studied. In contrast to quantitative methods, qualitative studies use non-numerical data gathered from naturalistic observations or direct participation in social events.^[34] Although qualitatively rich data does not lend itself easily to statistical manipulation (coding), its value lies in providing insight into how things happen and why they happen this way.

Using grounded theory as the guiding methodology, the hope is to identify potential changes that may occur due to the growth in popularity of NFTs by interviewing people working at different levels in the market. Grounded theory is a qualitative approach based on positivist epistemology and aims to develop theories grounded in data. Grounded theory is designed to produce verifiable knowledge and create scientific generalisations by relying solely on facts collected by observing the behaviour under study.^[35] The aim is to investigate whether there has been any increase in competition or change in the relationships between buyers and sellers. As well as to explore what the effects have been for artists and their work, and those responsible for managing artwork collections.

 

 

3.2 Study Population and Sample Size

The study population will consist of any professional currently working in the art market (including artists, sellers, managers, art gallery owners/curators, investors) that live or work in London and fit the criteria for participation outlined below. It is essential that the participants represent a range of experience and backgrounds to allow the study to gain insight into a diverse range of perspectives on NFTs and the impact they had on the traditional art market based on their own personal experiences. The sample size for this study will be 10 individuals. Participants will be chosen for this study based on relevant experience and knowledge to the research topic and availability for an interview. They will be contacted initially through email or telephone conversations before setting up a time for an in-person meeting.

 

 

3.3 Sampling Techniques

Sampling techniques refer to the methods used to generate a sample. There are two main types of sampling techniques: probability and non-probability. Probability sampling is used when the researcher wants to make inferences about a larger population by studying a smaller, representative subgroup of that population. Non-probability sampling does not require a sampling frame or prior knowledge of the study population, as all population members are equally likely to be included in the sample. Non-probability sampling techniques include snowballing, quota sampling, convenience sampling and judgmental sampling.^[36]

Participants for this study will be selected through judgmental sampling. Judgemental sampling is deemed appropriate for this study because it targets specific sample subsets based on the expert knowledge of the researcher, such as those with particular experiences and backgrounds, which should help provide diversity in perspective. Based on the research they shall undertake, the researcher shall select 10 respected art experts who work within art galleries or the art industry in general located in the study location (London) as these art experts will be best placed to provide pertinent information that will be relevant to the study as relates to NFTs and their impact on the traditional art market in London.

 

3.4 Data Collection

Data collection methods involve a mixed methodology of both primary and secondary data collection. Primary data will be gathered first-hand by the researcher.^[37] In this study, data will be collected primarily through in-depth semi-structured interviews. These interviews will be recorded, and notes will be taken to ensure accuracy and consistency. Primary data is beneficial for the study because it allows researchers to clarify, probe and develop ideas more thoroughly.

Secondary data will include data from published reports, journal articles, newspapers, archival sources such as libraries or government agencies and online sources of information.^[38] Secondary data will be used to corroborate findings, analyse patterns and provide background on the field under investigation. Research can be cross-referenced to find out what similar studies have found, while publications and academic papers can also inform the research design. Reports and papers can also point out areas that may need to be explored further or where there may have been gaps in earlier research.

 

 

3.5 Sampling Procedures

A sampling procedure ensures that every type of participant group is represented and interviewed.^[39] All interviews will last approximately one to two hours. To maximise the data quality, audio recordings of the interview and notes taken will be made. These recordings and notes will then be transcribed verbatim. Transcripts, recordings and notes will subsequently be anonymised to protect participant confidentiality. Only information about gender, age, sector and position in the art market will remain identifiable. The coding process to analyse the data has yet to take place, but it is anticipated that it will involve applying qualitative thematic analysis using NVivo software. The final product will be a report that explores the impact of the changing art market in London, considering various viewpoints.

The findings will be analysed against secondary sources such as published literature on art markets, business models for operating an auction house or gallery, and current research into globalisation and how it affects creativity industries. Furthermore, from these sources, other possible factors that might impact the art market will be researched, including potential changes in regulation and taxation. Finally, the results will be discussed concerning other cultural sectors, which operate within the same sphere as arts but operate differently, such as books or film production. Secondary data sources will be utilised to provide evidence that backs up the interpretations made during the research.

 

 

3.6 Instrumentation

Instrument tools in this study include NVivo, a qualitative data analysis program that will be used to explore and code large amounts of text-based data. Qualitative thematic analysis will identify trends and patterns in the responses. Thematic analysis is a systematic way of identifying patterns in the reactions and categorising them into themes. It is considered a form of content analysis that offers insight into how the participants view the topic of discussion. This method can be used to answer open-ended and closed-ended questions. Thematic analysis can provide answers to specific questions related to data collected during interviews, create new questions, generate hypotheses about relationships between variables, summarise broad issues addressed during interviews and facilitate understanding among individuals conducting multiple interviews on related topics.^[40]

 

 

3.7 Data Analysis

Data analysis looks at the participants’ qualitative responses and will be applied using NVivo software. This will allow for a comprehensive exploration of the issues and perspectives concerning the potential changes to the traditional art market due to the increasing presence of NFTs in London. Data analysis will be conducted using qualitative approaches, focusing on interpretation and meaning making through content analysis, interviews and observations. The analysis will be conducted in two phases: the first phase, the primary data collection and processing stage, will use qualitative data analysis. Data collected in questionnaires will be processed through content analysis and open coding methods. This means that the interviews will be analysed using a qualitative approach focusing on interpretation and meaning-making through content analysis, questionnaires and observations. The second phase of data analysis is to interpret results for publication. The interpretations of these results for publication are expected to involve qualitative data analysis.

Qualitative data analysis will include extracting common themes from transcripts, looking at specific examples discussed during interviews, exploring visual representations created during the interviews and identifying recurring words, images and concepts.^[41] Data analysis will be done by looking at specific cases mentioned during interviews, exploring visual representations made during the interview, identifying recurring words and images and discussing general issues raised in response to interviewees’ comments. Results will have a high correlation with other research papers analysing similar subjects. The analysis of the findings should lead to recommendations that could impact the direction of policy and strategies for museums, galleries and dealers to best compete against NFTs.

 

 

CHAPTER 4: ANALYSIS

4.1 Analysis Chapter 1: Historical, social, and cultural context

4.1.1 Introduction

Context is a collection of conditions or circumstances that form a particular setting in which something exists, happens, or develops, especially those peculiar to an individual (Oxford dictionary).^[42] This chapter focuses on how these contexts have shaped our perception of art and its worth. The historical context focuses on The Renaissance, The Dutch Golden Age, The Industrial Revolution, and Postmodernism. Social context considers changes in class structure from feudalism to capitalism and, through postmodernism, has placed more emphasis on money, credit, and success instead of the position within society with the higher social status (Dictionary).

At the same time, the cultural context concentrates on beliefs, values, attitudes, and behaviour patterns that most people in society typically accept. In London, the role of traditional art market professionals such as gallerists and auctioneers has been under attack for some years. ^[43]It could be argued that their roles have been impacted by developments such as new technologies, rising levels of inequality, and increased globalisation, amongst others. However, the study suggests that despite all these contextual changes, historical, social and cultural contexts determine the changes in the way traditional art market professionals operate.

 

 

4.1.2 Discussion

4.1.2.1 Historical context

Historical context refers to the transformation of the economy during different periods in history. For example, in The Renaissance (a period spanning roughly the fourteenth through sixteenth centuries), the role of professionals tended to be less critical than patrons and other high-ranking individuals.^[44] Thus, the art market profession largely depended on who they were connected to – nobility, clergy and members of the merchant class who played significant roles in commissioning works of art. Artists had relatively little control over what kind of work they created or where they sold it. During The Dutch Golden Age, the Netherlands became one of Europe’s wealthiest countries because trade flourished. Amsterdam became an international centre for commerce, attracting skilled artisans and artists from across Europe.^[45]

They saw themselves as independent artists without the need for patronage, consequently becoming professional entrepreneurs. Therefore, if we compare this situation to today, we can see a shift in power where the gallery owner/dealer holds much more power than before. The artist still controls what kind of work they produce, but once it leaves the studio, he becomes dependent on galleries to sell their pieces and make a living. This seems to be a system in flux as the powers of the gallery owners seem to be on the decline, whereas new ways of engaging art buyers are taking their place. One of these new ways is social media, which replaces the middleman and allows buyers and sellers to connect directly.

The use of social media platforms such as Instagram, Facebook, and Snapchat has revolutionised the industry. Galleries use these channels to promote their exhibitions and market their artists’ artworks. The price for artwork is also set concerning the number of followers or views it has received on these platforms. This means that a lower-value piece may be displayed alongside a piece that costs thousands of pounds without any context or explanation given to the viewer.

Besides, the Industrial Revolution impacted art markets because it created the economic condition of widespread demand for mass production, making specialised skills less valuable. After all, they were easily replicated while labour costs decreased over time.^[46] Therefore, many artists lost out because they did not fit into this new system. However, the role of professionals like gallerists, curators and dealers increased significantly because they were responsible for organising events and displaying artworks to the public. Many galleries have grown clientele by providing a space where clients can come and experience art rather than purchasing it outright.

Furthermore, there has recently been a clear resurgence of interest in the arts, so collectors do not always want ownership. Instead, they want to support artists by buying paintings or prints on credit and displaying them at home. In comparison to the current situation of NFTs and their impacts on the art market in London, it is easy to say that the role of traditional art market professionals has changed. While these traditional art market professionals are still necessary for the development and promotion of artists, they are no longer solely responsible for selling the art. The new ways of engagement, especially NFTs, allow buyers and sellers to connect directly.

Nowadays, various factors determine how much an artwork is worth, and it is often left to chance whether it sells. Another factor that determines the value of a painting is the prestige of its creator. An unknown and untrained artist will usually fetch a lower price than a well-known, internationally recognized artist because their art is expected to improve. Other elements that influence pricing are the dimensions of the work and whether it is for sale in editions or limited editions.^[47] Besides, in NFTs, the audience is given more power because they can make requests and bid. But despite this newfound power, people can feel intimidated and reluctant to participate in auctions, as it is all too easy to lose one’s sense of perspective when bidding against people who know what they are doing.

 

4.1.2.2 Social context

Social context refers to how societal changes affect the roles of various stakeholders. They include artists, buyers/collectors, gallerists/art dealers/curators, museum curators and board members of museums or galleries. During the feudalism era, the era of industrialization (A), the social class structure was organised into three estates: those who pray, those who fight and those who labour. From an economic point of view, there were mainly two classes: the upper class (nobles) and the lower class (peasants).^[48]

There was also a mercantile middle class between nobles and peasants, but this social position lost its importance as time progressed. As society developed and became more complex, the distinction between social classes became less clear-cut. Thus, in the art market, art was only owned by the nobles, while peasants could only produce art and sell it through specific channels controlled by the nobility. In recent years, the rise of young collectors from both ends of society – the aristocracy and the bourgeoisie – brought about changes in attitudes towards buying art. Today, there are many different buyers with each class being targeted differently depending on how wealthy they are.^[49]

For example, galleries target wealthy collectors, whereas auction houses target more affluent clients looking to buy expensive pieces from famous artists. However, this study found that NFTs have created a hybrid situation whereby non-traditional actors such as major retailers and small private investors are now key players. This is mainly due to disintermediation, whereby art transactions are done without the involvement of traditional intermediaries, dealers, and auctioneers.

With the rise of postmodernism, however, the previous notion of originality became irrelevant, and purchasers were encouraged to buy works that were reproductions rather than originals. Postmodernism emphasises money, credit, and success instead of one’s position within society, with higher social status, such as Duke and Duchesses being required to wear certain clothes and interact with certain people to maintain their place.^[50] In addition, the art market was more controlled by those with higher economic status than today.

This meant that only those who could afford to pay could purchase. In contrast, people today have greater freedom over their purchases because there are now alternatives like NFTs that give people without financial means access to experience the art world without having to purchase anything.^[51] Yet while these new alternative methods have brought about some benefits, they also have downsides; for example, many visitors might only be customers and never become involved in any other aspect of the industry again. This does not necessarily mean that the art market is suffering because even if the collectors do not become active participants, they help drive up demand.

Moreover, the postmodernism approach to viewing artworks did not survive long enough to see the emergence of contemporary art. When the postmodern movement started dying out in the late 1980s, so did the idea that an artwork could be judged by its merit alone. This period gave way to the era of contemporary art.^[52] Besides, the role of traditional art market professionals during the postmodern era was booming because they were the ones driving the market. During this time, galleries played a big part in displaying and marketing art in a way that was appropriate to post-modernists. Galleries often produced catalogues containing essays, interviews, and reproductions of the artworks. This is very different from NFTs because they are online platforms where people can watch videos, read texts, look at images and gather information on exhibitions they may want to visit -all free of charge.

Moreover, the capitalist era led to increased competition for talented individuals who could be hired for their creativity. During capitalism, changes in traditional art market professionals’ roles included increased power for all agents within the industry because of increased competition among them. Also, increased demand among artists during this era led to inflation within the field. Meanwhile, increased supply among artists pushed prices down, causing a shift in power and control within the industry. Capitalism still plays a huge role today and has had significant impacts. An influx of contemporary art has shifted emphasis away from established art institutions and allowed newcomers to enter the fray.^[53] Nowadays, artists can choose what gallery or dealer they want to work with rather than feeling pressure from one exclusive dealer.

Furthermore, auctions are getting closer and closer to resembling a public sale so that bidding is open to anyone with money rather than just a select group of high-profile buyers. This is not necessarily a good thing for the art world. Firstly, buyers may be interested in artwork for personal gain and not from a genuine appreciation for the piece. Secondly, this may hurt the quality of artworks sold at these auctions. Thirdly, with an increasing number of buyers coming from outside the art sector, there will likely be an increase in fakes entering the market and people unaware of what they are buying.^[54] This means that capitalism brings the aspect of competition, creativity, and greed to the art market. When there is an increase in competition, the arts become a commodity for financial profit, and interest in art decreases. When people are greedy, they lose sight of the vital service or product and focus solely on profits and losses.

Moreover, with the capitalism concept, introducing copyright law has reinforced the notion that ideas belong to individuals rather than groups. The individualistic notion of human agency has shifted since then, with people believing they must compete fiercely against others to survive. Consequently, skills other than creativity like networking and presentation may be just as crucial for success today.^[55] Traditionally, the role of these professionals was to introduce artwork and help set prices based on demand. But today, newer art buyers tend not to rely on them, instead choosing to find information about artworks using social media sites like Instagram or Tumblr. However, capitalism also brings about mass production of NFTs, negatively affecting society and culture. First, it takes art out of the hands of craftsmen and turns it into something made by machines. Second, it decreases the value of original works of art while simultaneously creating an excess supply. Finally, NFTs mean more reproductions and copyrights, less respect for creators, less diversity, and more fake products.

Thus, with the advent of NFTs, society will have many detrimental effects. The first effect is that lower-end items would replace higher-end items- nothing would feel special anymore.^[56] This would affect artists’ livelihoods by devaluing their hard work. Another significant impact would be a decrease in uniqueness- everything seems generic when you see it everywhere. In addition, the introduction of postmodernism changed how people created artworks, which impacted how artists interacted with gallery owners or dealers who bought and sold their work. Collectors went from buying original paintings to buying cheaper and less risky prints.

It was less dangerous because the value of a painting depended on the perceived value of the artist, whereas with a print, the value depended on what a buyer thought of the actual quality. In postmodernism, originality and exclusivity were no longer critical considerations in purchasing art. The focus shifted to making successful deals that would result in profit. This is because postmodernism rejects the idea of originality. Instead, it emphasises money, credit, and success. This led to a market dominated by the elite, usual people with high education and income levels. For instance, a person might have to know someone in the royal family to get invited to their house. These art collectors would then purchase expensive and rare items to gain respect from their peers.

With the rise of postmodernism, however, the previous notion of originality became irrelevant, and purchasers were encouraged to buy works that were reproductions rather than originals. Postmodernism emphasises money, credit and success instead of one’s position within society, with higher social status such as the Duke and Duchesses being required to wear certain clothes and interact with certain people to maintain their place.^[57] In addition, the art market was more controlled by those with higher economic status than today. This meant that only those who could afford to pay could purchase.

In contrast, people today have greater freedom over their purchases because alternatives like NFTs give people without financial means access to experience the art world without having to purchase anything. Yet while these new alternative methods have brought about some benefits, they also have downsides; for example, many visitors might only be customers and never become involved in any other aspect of the industry again. This does not necessarily mean that the art market is suffering because even if the collectors do not become active participants, they help drive up demand. Moreover, the postmodernism approach to viewing artworks did not survive long enough to see the emergence of contemporary art.

When the postmodern movement started dying out in the late 1980s, so did the idea that an artwork could be judged by its merit alone. This period gave way to the era of contemporary art. Besides, the role of traditional art market professionals during the postmodern era was booming because they were the ones driving the market. During this time, galleries played a big part in displaying and marketing art in a way appropriate to post-modernists. Galleries often produced catalogues containing essays, interviews, and reproductions of the artworks. This is very different from NFTs because they are online platforms where people can watch videos, read texts, look at images and gather information on exhibitions they may want to visit -all free of charge.^[58]

 

 

4.1.2.3 Cultural context

Cultural context can be defined as a specific group’s way of life and traditions. In British culture, art has always been linked to societal importance. Art was used in the past to project power and status. This is because members of the upper class would use their wealth to purchase original pieces, which in turn would display their dominance and influence in society. Beliefs regarding art as luxury items carried into the post-war decades can still be seen in our community today. However, these beliefs are now being challenged through phenomena such as NFTs, which enable more people than ever before to experience the arts regardless of their economic background or social standing.^[59] With the significant presence of social media, it is easier to spread awareness and get conversations going about the topic under discussion. As a result, there has been a rise in various art-related activities, such as teaching courses on artists’ work, designing clothes with inspiration drawn from museums’ collections and curating events for children.

Moreover, values and attitudes towards art have also changed over the last few decades. For instance, there has been increased social awareness surrounding consumerism and ethics within the art industry.^[60] In particular, some buyers will no longer spend lots of money on luxury goods, like art. Instead, they focus on what makes them happy rather than what satisfies others. This means that the art market is not in dire straits, but the art world will never be the same. NFTs provide a new form of seeing the arts. The new generation of art lovers is interested in collecting less expensive, less elitist and more socially responsible works of art. It is believed that this can also be attributed to the on-going recession and fear of financial uncertainties. Thus, behavioural patterns have shifted so that purchasers focus on long-term investment value when purchasing art, not just the purchase price.

In the past, collectors were only wealthy aristocrats that had access to commissioned paintings, sculptures and other similar forms of artwork. These days, however, low-cost digital reproductions are available for anyone with Internet access to buy. The change in generation needs, such as during the baby boomer period, the role of traditional art market professionals was highly valued, and they played an integral part in the art world.^[61] This, coupled with the belief in art as luxurious objects, played a significant role in determining art prices. One example would be Sotheby’s and Christie’s, who made up the traditional auction houses at the time.

Their job was to sell high-end collectables, often valued in millions of dollars and sometimes sold for tens of millions. Nowadays, prices at auctions are much lower due to online platforms such as eBay and Amazon. Millennials and Generation Z are the most important demographic for art marketers and sellers.^[62] This is because they are more involved in the NFTs markets, where art can be easily viewed and purchased. Thus, the change in times has reduced the importance of the traditional art market professional and has changed their role. Whereas they once determined art prices, they are now reduced to acting as intermediaries who broker deals between NFTs and those who want to buy art. This is because their involvement is unnecessary for those looking for good quality prints, photographs, videos or computer programs that are easy to find on the web.

 

 

4.1.3 Conclusion

In conclusion, the art market’s historical, social and cultural contexts have directly impacted the role of traditional art market professionals. With the advent of technological innovation, there has been a shift away from traditional investments and towards acquiring digital assets.

4.2: Analysis Chapter 2: Introduction of the specific material

4.2.1 Introduction

This chapter will explore the effect that participation in new forms of art market structures has on traditional art market professionals and to what extent this can be seen as a positive or negative effect on their role within the industry. In addition, this chapter will also seek to address the often overlooked questions about whether these changes are sustainable for all parties involved and what implications they might have for future generations. Notably, the role of professionals in the traditional art market models includes the four business models of contemporary art that are business models centred on innovative art, traditional art, modern art, and the project.

Thus, exploring how professional roles change depending on which model they participate in is essential because it can help in understanding the consequences of changing environments. For example, artists who sell their work through galleries rely more heavily on commissions than on selling directly to consumers at an exhibition or via another sales outlet. The success of commission-based models depends on the venue’s ability to balance quality with profit margins. The same goes for agents who provide expertise and negotiate with collectors, buyers, and sellers on behalf of their artist clients; if they cannot keep up with the costs of opening a gallery space while still retaining enough capital to sustain themselves, then they may not be able to maintain an agency without significantly raising their commission rates.

4.2.2 Discussion

4.2.2.1 Business models centred on innovative art

Innovative art is the most advanced art form and typically attracts high-income earners. One such form is technology-driven works; in the art market is a new trend driving innovation in pricing strategy. Such as digital prints and sculptures created using 3D printing technologies, interactive media installations, or live performance pieces. These pieces are usually commissioned by museums and unique exhibition venues but attract private collectors. Moreover, NFTs are innovative art centres that operate differently from typical art centres in terms of architecture, displays, and modes of distribution. This is because NFTs are online platforms that allow people to view artworks before deciding whether to purchase them, whereas normal galleries require customers to come into the physical spaces.^[63]

Thus, traditional art market professionals fill different roles with the model centred on innovative art. For instance, to stand out against others in the field, they must possess a deep understanding of what defines art and how best to present it so as not only to make it attractive to audiences but also to conform to expectations. They need an understanding of technological advancements in production processes and methods used for installation to take advantage of new opportunities made available by emerging technologies such as virtual reality. The art dealers and curators in the traditional art market models play a role in presenting new developments to the public.^[64] Their awareness of current trends and artistic movements, and their knowledge of what is happening in the world, is crucial to introducing new and innovative art.

 

4.2.2.2 Business models centred on traditional art

One of these models is focused on traditional art such as fine art, painting, sculpture, and printmaking. These art forms are rare in NFTs because they are subject to copyright laws that prevent them from being duplicated or plagiarised in several ways. In addition, physical works may be sold for high prices for several reasons, including their rarity and popularity with audiences. On the other hand, there are drawbacks to this business model. For example, in this type of model, art dealers and curators may be responsible for displaying paintings or sculptures on a rotating basis. So even though they can help in the discovery process by bringing new talent to the attention of collectors, it is an expensive and labour-intensive undertaking that requires their constant supervision.^[65]

Furthermore, since many of these works are expensive and difficult to transport, they need reliable shipping companies, which adds more costs. Finally, due to the nature of the physical work they produce -there is no guarantee that buyers will like them when they see them in person- any dealer who participates in this model must have the financial means necessary for storage fees. Traditional art-related models relate to NFTs, providing opportunities for those seeking to buy art. But in this model, the customer can review the artwork and decide on their own if they want to buy it whereas in NFTs, they are asked to pay upfront without the chance of seeing the art first.

One similarity between the two models is that they depend on buyer and seller trust. In the traditional model, they are also responsible for certifying the authenticity of the art and vouching for its quality; in the NFTs model, reviewers do this. What makes the NFTs model different from the traditional one is that it operates as a direct-to-consumer platform in which sellers advertise their goods to a global audience with an emphasis on high volume sales rather than cultivating relationships with individual collectors.^[66] The lack of personal contact and the difficulties associated with reviewing physical works make it hard for artists to establish themselves in this market.

 

 

4.2.2.3 Business models centred on modern art

Digital media allow original artistic content to be disseminated without geographical limitations, so anyone can enjoy it anytime. Additionally, digital copies of original works cost very little to reproduce, making them affordable for people around the globe. In this case, the focus is on contemporary artworks (often called modern). The modern art-related model relates to NFTs providing opportunities for those seeking to buy art.^[67] The difference is in the display. Modern art displays often take place in galleries where visitors can leisurely explore the pieces.

In contrast, in NFTs, it is impossible to examine the item because you cannot physically touch it. This leads to the risk of impulse buying. Another disadvantage of this model is that the artist has to do all the selling independently since it does not rely on art dealers and curators. It can be a daunting task for a new artist with limited marketing skills to reach out to potential customers across the globe. However, NFTs offer a solution to this problem. Another advantage of NFTs is that it provides an easier way for potential buyers to learn about the art they might not know otherwise. This is because NFTs offer a virtual art tour, which is especially helpful for those unable to visit a gallery in person.

Besides, modern art affects traditional art market professionals in that auctioneers face competition from online platforms, while art dealers have seen a decline in revenues generated from trade commissions.^[68] One possible reason for this is that there has been increased competition among retailers due to the rise of eCommerce giants like Amazon and eBay, as well as Internet-based markets such as Etsy. A second factor may be attributed to the decrease in demand for physical objects when virtually unlimited reproductions are available on sites such as Google Art Project or YouTube.^[69]

 

 

4.2.2.4 Business models centred on project

Projects also constitute another type of financial agreement between artists and investors. Those investing money into a project usually expect some return, usually in financial profit. However, unlike other financing agreements, projects do not necessarily need to generate monetary gain to succeed financially; they need to create enough revenue so investors see a return on investment. There are many different ways that artists can make money through projects, such as sales and exhibition fees.

These sources of income vary depending on the type of art. For instance, visual art typically generates income by being exhibited in a public space for free but charging for the use of reproductions. On the other hand, traditional art market professionals such as art dealers and appraisers benefit from projects, as they often serve as experts in assessing the artwork’s authenticity.^[70] This is important as it gives art dealers and art appraisers an edge in the market.

 

 

 

4.2.3 Description

Notably, the specific materials of this research focus primarily on London, as it is arguably one of the most prestigious centres of the international contemporary art trade. Most of the sources used to build this research come from data retrieved through online research tools such as The Art Newspaper’s Art Market Annual Report and independent surveys conducted by third-party organizations such as Arts Professional Surveys Ltd. However, articles published in major newspapers such as The Financial Times and news stories sourced from BBC News Online were also consulted for information about current trends.

Moreover, the questionnaires aimed at exploring the impacts of NFTs on traditional art professionals found some ambivalence towards how these changes affected their roles. On the one hand, 41% claimed they enjoyed more significant levels of job satisfaction with the trend of NFTs and hoped the future would see more progressive change. On the other hand, 49% admitted that they struggled to remain relevant under the new system and would welcome increased diversity in opportunities whereas 10% were indifferent.

Figure 2: General satisfaction towards the NFTs trend

 

Source: Author

Furthermore, 58.6% felt like the impact of NFTs on their careers had been negative, with only 27.1% considering them to be positive, whereas 14.3% were indifferent.

Figure 3: Effect of NFTs on careers

 

Source: Author

Additionally, 61.8% revealed that their income had decreased since 2018 due to fewer private commissions coming through. Whereas 25% experienced an increase in income and 13.2% did not experience an increase or decrease income

Figure 4: Effect of NFTs on Income

 

Source: Author

It is unsurprising that when asked whether or not they believed NFTs helped their prospects for a long-term career, 45% responded that this was not the case; 61% stated that the shift in arts funding away from commissioning artists led to many galleries being forced to close down.

Figure 5: Long term effects of NFTs on careers

 

Source: Author

However, the survey responses were largely optimistic, with 43% claiming that access to a broader range of work enabled them to do their jobs better. Consequently, there are clear signs of discontentment with the changing economic landscape and their loss of power. As a result, new technologies also offer fresh opportunities for creativity. Several dealers and art advisors actively engage with social media, for example. If their physical premises are inaccessible to the public, they now have the option of taking their business online. This type of flexibility means that even those art professionals who fear that the growth of digital markets spells bad tidings for their livelihoods should still feel confident in embracing technological innovation as a tool for survival. The art market is constantly evolving, and as it continues to thrive in the 21st century, it will inevitably require new talents.

This type of flexibility means that even those art professionals who fear that the growth of digital markets spells bad tidings for their livelihoods should still feel confident in embracing technological innovation as a tool for survival. As art professionals progress with their skills, they will inevitably need to adapt and find new ways of engaging with the market. For this reason, it is essential that art education incorporates the use of new technologies and expands beyond what is traditionally taught in a classroom setting. Many colleges have broadened their curriculums to reflect these changes, while others are doing so. The Royal College of Art, for instance, offers a degree in Digital Innovation and Design, which integrates the latest technologies and encourages students to think critically about the potential of these new forms. This type of education will undoubtedly prove beneficial in years to come, as it will prepare them for the challenges ahead.

The study has found that traditional art market professionals find it challenging to remain relevant in the face of NFTs and would welcome a greater variety of opportunities. Other scholars have also found that the impact of NFTs on traditional art market professionals is mixed: some enjoy their new freedom from working with established collectors, while others struggle to keep up with demand. The study concludes that art education should incorporate new technologies and expand past a traditional classroom setting to prepare for changes in the art market in years to come. Besides, further research into the issue would be valuable to examine how other professions – such as art handlers or framing experts – might be affected by digitization. Some art handlers at Frieze commented that they felt they had become ‘second-class citizens’ in increasingly visual culture and expressed frustration at not receiving any commissions. Besides, Delaplaine’s study on virtual market evolution observed that the full extent of consequences for traditional art market professionals might not yet be realised because many people are reluctant to embrace NFTs.^[71]

Moreover, there is a lack of studies concerning specific cases of virtual galleries such as Warhol’s Museum Online or Lucienne Day Gallery’s online collection. Hence, NFTs offer benefits as well as difficulties for art professionals. Particularly since the digital world is constantly evolving. Similarly, Nadini and colleagues noted that mapping the NFT revolution reveals that the pace of change is increasing.^[72] This indicates that, regardless of whether one believes in the democratising effects of technology, more needs to be done to ensure that the costs of entering the art market do not place barriers in the way of young talent.

Moreover, the study has shown that despite concerns over the future viability of traditional art market professionals, it is essential that they continue to evolve with technological innovation. Consequently, Reshethikova and team found that during the COVID-19 pandemic, NFTs offered advantages to traditional art market professionals as they could communicate with their clients more efficiently and efficiently.^[73] This is because only contact information is required for digital transactions. In addition, NFTs provide a platform for art professionals to sell their work without relying on expensive gallery spaces and with less pressure for success. This can make it easier for artists not represented by a gallery to access new audiences. Thus, the pandemic also played a massive role in the change in the traditional art market.

Moreover, Mackenzie and Bērziņa’s study asserts that criminal activities are associated with NFTs. They argue that the anonymity of the Internet offers criminals a chance to carry out fraudulent activities.^[74] For example, this includes trading art for crypto currency in return for tangible goods. However, this does not mean that NFTs are responsible for these crimes, as the same authors point out. It simply means that increased trade in NFTs increases the chances of encountering fraudulent activity. Likewise, the study has found that NFTs displace traditional art market professionals as they struggle to compete in a marketplace where physicality and scarcity are no longer prerequisites for value. This has led to a call for more digital art auction houses like Paddle8, Artnet, and Artsy. These platforms allow contemporary and historical art to be available in virtual format.

Moreover, the study has found that traditional art market professionals find it challenging to maintain relevance in the digital age. Some, such as Christie’s and Sotheby’s, are trying to enter the NFTs market by offering virtual auctions.^[75] This provides a more accessible venue for sellers and buyers of art and enables art professionals to survive in the new digital economy. Finally, cybercriminals are infiltrating various aspects of the NFT market using tools like distributed denial-of-service attacks to inflate prices and siphon off funds from unsuspecting victims artificially. The conclusion from all this data is that cybercrime remains an important consideration when dealing with online technology. Notably, cybercrimes have infiltrated different areas of the NFT industry.^[76] Distributed denial-of-service attacks involve hackers flooding a website or network with traffic until it collapses, which are standard methods employed by fraudsters. What makes them especially problematic is that they enable cybercriminals to get their hands on victims’ crypto currency holdings without physically interacting with them.

 

 

4.2.4 Conclusion

It can be concluded that NFTs are emerging as a disruptive force to be reckoned with. In the art market models, traditional is often defined as high net worth individuals investing large sums of money into precious objects at high premiums. At the same time, newcomers are anyone who cannot afford the expensive investment model. Furthermore, there are many ways to trade tokens through exchange platforms like Coinbase. Another trend is the launch of blockchain start-ups that seek to replace intermediaries in transactions between buyers and sellers. As a result, traditional artists and market professionals must find ways to stay relevant within these changing ecosystems if they want to remain relevant today.

Overall, it is evident that more research in this area would be invaluable for understanding the implications of NFTs on traditional art market professionals. However, one thing is clear: the emergence of new technologies will have significant consequences for all parties involved in producing and consuming art. These changes will require increased attention to arts education and training programs in institutions and reconsidering regulations governing the use of intellectual property rights.

Furthermore, the study found that traditional art market professionals still figure out their roles in a rapidly changing art world. As with new technologies, the boundaries of what it means to be an artist and professional are blurred. For example, some auction houses have been experimenting with live auctions on the web, which allows them to reach a wider audience than they would generally be able to. Galleries like the Lucienne Day gallery have also begun selling digital artwork editions on their websites. This has enabled them to bypass the high commission fees charged by art fairs. Thus, the study found that art education should be updated and expanded to prepare for changes in the art market in years to come. NFTs are already affecting the status quo by providing a new means of distributing art outside established galleries. As a result, museums and galleries risk losing revenue streams that they traditionally relied on to sustain their business models.

 

4.3 Analysis Chapter 3: Research Themes

4.3.1 Introduction

Research themes refer to the overarching topics of the research project. For this study, the research themes look at the effects of NFTs on the art market and its professionals. The benefits and challenges that have been experienced by traditional art market professionals so far due to the growth of NFTs are also discussed, as well as the potential long-term effects and how this could change the future careers of traditional art market professionals in London.

 

 

4.3.2 Research theme 1: Effects of NFTs on the art market and its professionals

This study found that NFTs affect the art market and the art market professionals positively and negatively.

 

 

4.3.2.1 Positive effects

Based on the findings, it is evident that there are many benefits of NFTs, such as faster transaction speed, access to a wide range of galleries and artists’ work, lower costs for exhibitors/buyers. The auction houses’ professionals benefit by getting an additional income stream from selling digital editions of works. There are also cost savings because these works can be sent digitally instead of using the costly freight service for transporting physical copies. Galleries enjoy significant benefits from having their inventory available online, not just during opening hours or when they host an exhibition or fair. They no longer have to keep vast amounts of stock and pay high rents for showrooms if they do not need them, resulting in more exhibition space. NFTs allow them to sell non-traditional pieces too, which helps increase revenue.^[77] Artists benefit from increased publicity by sharing their work through social media platforms like Instagram and Facebook.

Benefits for collectors include getting instant feedback on whether or not what they are looking at interests them and being able to take closer looks without physically visiting a gallery. Discounts are given to collectors who buy multiple works by one artist. In addition, the art dealers who operate like middlemen between artists and buyers no longer have to store, transport, and insure their inventory before selling it.^[78] Instead, they sign up with the platform where they will list the artwork. They must provide details about each piece and add any necessary pricing information.

Moreover, the system generates invoices automatically. It may seem like the art dealer does not have much control over the process, but rather than wait for customers to come knocking on their doors, sellers can now use NFTs to reach out and draw people in. Artists also find positives in NFTs.^[79] Due to the fact that they can directly market themselves and share their artwork across different platforms; the number of art sales has increased.

 

 

4.3.2.2 Negative effects

The study found that despite the benefits, NFTs also have disadvantages. Questions are raised concerning copyright, art ownership, and the loss of opportunity for human interaction and contact. As the market becomes increasingly dominated by NFTs, the role of professional art market players will become less influential. The auction house professionals are likely to be replaced by NFTs that offer a more comprehensive range of services, as they no longer have the exclusivity of their goods. The art market is likely to shrink as the whole industry evolves from a traditional art market to a virtual one.^[80]

The traditional art market professionals in London will experience the changes that NFTs have brought to the art market. The auction house professionals are unlikely to be in demand anymore, as NFTs offer a more comprehensive range of services. For instance, an action house employee interviewed stated that “I believe auction houses are most impacted by this change because they are losing their prime spot in the art market. With these new types of trading platforms, it is easier for people to purchase artwork without having to rely on an auction house which could make them less
relevant in the future.” This means that traditional auctioneers might not be required for years to come. Although this is unlikely to affect them significantly at first, it will eventually lead to a decline in their incomes and status, as they can no longer rely on the auctioneer business model for sustainability.

The art market is also expected to diminish as the traditional art market transforms into a virtual one. This will have implications for the careers of traditional art market professionals in London, as they will have to adapt and learn how to work with NFTs. The auction house professionals are unlikely to be in demand anymore, as NFTs offer a more comprehensive range of services. This means that traditional auctioneers might not be required for years to come. However, it is unlikely they will be affected by this at first, eventually leading to a decline in their incomes and status as they can no longer rely on the auctioneer business model for sustainability. The traditional art market is also expected to diminish as the traditional art market transforms into a virtual one. The auction house professionals are unlikely to be in demand anymore, as NFTs offer a more comprehensive range of services.^[81]

This means that traditional auctioneers might not be required for years to come.

However, it is unlikely they will be affected by this at first, eventually leading to a decline in their incomes and status as they can no longer rely on the auctioneer business model for sustainability. The traditional art market is also expected to diminish as the traditional art market transforms into a virtual one. The impact on auctions due to new technologies such as streaming will reduce revenue and profits earned by auction houses such as Christie’s and Sotheby’s due to consumers choosing digital platforms over physical ones. Without the exclusivity of items, there would be increased competition among auctioneers and an increase in prices, making art inaccessible to many people. Furthermore, due to fewer human interactions between buyer and seller via e-commerce systems, there would also be an increase in fraudulence- buyers can hide behind their screens when buying online, which may mean that more risks will arise from these transactions.^[82] Online dealerships are less likely to provide quality customer service because their clients cannot see or touch the item they are purchasing.

 

 

4.3.3 Research theme 2: The benefits and challenges that traditional art market professionals have experienced

4.3.3.1 The benefits experienced by traditional art market professionals

As a result of NFTs, traditional art market professionals are now engaging with a broader network of people than ever before. This can be attributed to their ability to use online platforms to connect with potential patrons across geographical boundaries. Consequently, they can maintain a global reach while still operating locally. Another key benefit of the influence of NFTs is the reduction in the costs and time involved in organising art exhibitions. This makes it easier for traditional art market professionals to produce their exhibitions and shows, and get to know their audiences better. NFTs have also allowed for greater access to art for everyone, making it available to those who may never be able to purchase pieces from auctioneers.^[83] This ease has impacted the traditional art market in London and beyond, leading to an increasing interest in art.

The ability for art to be more easily accessible and shared is a double-edged sword, as it is both suitable for beginners in the industry and bad for professionals as they can lose their exclusive control over their works of art. For instance, a traditional artist interviewed stated that the growing market for NFTs can help promote other artists whose work may not traditionally sell well. Hence, with this increased accessibility, a lot of content is being produced, so there is less demand for original artwork. If this trend continues, it could make life hard for those working in the world of fine arts. With this increase in accessibility to art and content, demand has decreased, which makes life hard for those working in the world of fine arts. NFTs, however, offer different routes into the business, such as becoming an educator or collector. Both these options require less expertise and expense but still allow individuals to engage with artists and the art world. These different avenues into the industry provide something for everybody, allowing individuals to find their niche if they cannot work in other areas due to costs or family commitments.^[84]

With NFTs come new routes into the art industry, such as collecting and educating about art. Collecting offers another career avenue without requiring great skill or expensive equipment. Educating oneself about various aspects of the arts allows one to gain knowledge outside their field, which can then be utilised when necessary. As well as bringing in money from teaching, collectors are rewarded with the opportunity to purchase artwork at low prices when bought directly from artists. Finally, some traditional art market professionals can supplement their income by doing more affordable things like opening galleries or starting tours themselves.^[85] All these ways of earning extra money give people choices and flexibility in how they live out their careers. This ease has impacted the traditional art market in London and beyond, leading to an increasing interest in art. This availability of low-priced pieces has contributed to the success of newer generations within the trade.

 

 

4.3.3.2 The challenges experienced by traditional art market professionals

The impact of NFTs on the role of traditional art market professionals in London presents several challenges. There are two primary ones, both involving their economic viability. Firstly, the rise in the number of people producing and selling art has led to a decline in demand for original artworks. This creates problems for professional artists who used to depend heavily on selling their originals and royalties. Secondly, while many start-up entrepreneurs have found success after transitioning to digital media, others have not fared so well. In particular, high street stores that previously sold prints and reproductions have now been forced to close down. The most common reason for closure cited was competition from online retailers, which generated lower prices.^[86]

On the other hand, NFTs have opened up opportunities for artists to earn revenue through exhibition fees and commissions. Artists also benefit from increased exposure, sharing exhibitions on social media sites like Instagram. So far, there is no indication that this changing trend will slow down any time soon, as seen by companies like Artsy and Taobao getting involved in the market too. However, this does create more of the same problem for artists and art market professionals. They will still need to produce large amounts of work to make enough money, yet their ability to sell them may continue to decrease.^[87]

Traditional art market professionals in London must also contend with competing for attention and space. It will likely become increasingly difficult for traditional art market professionals to compete against NFTs as their novelty wears off and it becomes normalised to consumers.^[88] This power shift could significantly affect their careers, altering what it means to be a traditional art market professional in the future. At the moment, there seems to be an on-going debate about how these changes might affect what it means to call oneself an artist. Some feel that because these platforms enable anyone to share their work, they do not take care when choosing who enters into the art world, potentially making it difficult for true talent to flourish.

Others believe that because of this openness, they can discover new types of art they would never have come across before or get creative ideas from seeing other people’s work. For instance, a gallery art assistant manager interviewed stated that, “there is less interaction between artists and viewers when everything is digitally connected instead of through face-to-face meetings at the gallery which might lead to loss of revenue.” As such, some professional artists use the Internet to curate their collections, which poses a challenge mainly to the galleries and auction houses. This strategy is considered easier than finding collectors who might only want to buy a few pieces. Both perspectives highlight how NFTs have altered how people understand what it means to be an artist, suggesting that change is inevitable. If trends continue and potential long-term effects of NFTs appear, it may alter how we see traditional art market professionals in London.

 

 

4.3.4 Research theme 3: Potential long-term effects

4.3.4.1 Potential long-term effects

In the long term, this growing influence of NFTs on the art market will likely significantly affect traditional art market professionals. Due to the challenges that NFTs have created, it is not unlikely that traditional art market professionals will find themselves adapting to a different type of career. This implies that they will have to adjust their skillset to remain competitive in the contemporary art scene until NFTs inevitably grow stale. For example, traditional art market professionals might be asked to be less reliant on creating artworks and instead focus on production and management. Similarly, they may need to explore how best to manage their social media presence for publicity and networking purposes.

If NFTs continue to grow in popularity, it is also possible that people may not necessarily view the traditional art market professional as an artist in their own right. Instead, they may consider them someone who manages the logistics behind exhibitions rather than create them.^[89] It is hard to say whether this will positively or negatively impact their careers. However, an art curator interviewed stated that in 20 years NFTs will be able to be a long-term growth engine for the industry in addition to helping improve access and discovery of art and there will be a full shift from the traditional art market to NFTs.

On the one hand, having fewer responsibilities could make their job more manageable. Still, on the other hand, it reduces their importance in society as individual creative voices and visionaries. In addition, NFTs offer easy accessibility to any artwork imaginable, and the prices of both traditional and digital artwork may decrease. In doing so, the value placed on both paintings and drawings decreases, giving some traditionally wealthy buyers less incentive to invest in original artworks. These consequences will depend mainly on how long NFTs dominate the industry; with time, these aspects might be entirely changed. The likelihood of these changes occurring is still unclear and dependent on many factors, including the pace of technological innovation and whether government intervention has been implemented.

Furthermore, even if these shifts happen eventually, there is no way to determine when this might occur or its implications; nor can we speculate what the role of traditional art market professionals should be if they continue to survive through this period of change. The responsibility and status of these professionals remain uncertain and uncertain, especially given the rapid development of new technology. There are two opposing views: those favour regulating NFTs to allow them to thrive side-by-side with traditional art markets while preventing unfair competition against each other.

In contrast, those opposed believe regulation will only stifle the growth potential of innovative companies. Given this difference, the high commission fees charged by online auction websites such as eBay (in comparison to art galleries) make it difficult for smaller businesses to compete. As well as this, in the past, these auction websites have had issues of fraud and lack of transparency regarding their operating costs. While these practices have since improved, it is clear that there is still work to be done before they are regarded as trusted marketplaces on par with traditional art establishments. This uncertainty of where NFTs will be in the next decade makes it challenging for traditional art market professionals to predict their careers.^[90]

They may embrace these changes and re-orientate their business strategy, hoping to flourish under these changing circumstances. Alternatively, they may continue down a path of success, maintaining current clients and building upon their strong networks within the arts community. The traditional art market professionals may have to rethink their business model to maintain the level of success they are used to and will have to keep up with the rapidly evolving world of technology. The idea of these changes is a challenge and something that will require resilience and creativity to prosper.

These professionals must be aware of the future possibilities, as it would be naive for them to think that things will not change. These professionals need to understand what new skills they need to develop and how they might affect how they do business. The Internet can provide many opportunities and disadvantages; just like any industry, there are always pros and cons. The Internet is no different – some use it as an outlet or tool to express themselves, others find it liberating but not financially rewarding, while some consider its instability off-putting.^[91] Thus, potential long-term effects are both positive and negative for professionals who rely on more traditional methods of artwork distribution.

It is difficult to know whether NFTs will ultimately hinder the future career prospects of professional artists who have built up their reputation over decades through hard work and dedication or if they could open doors to new avenues and markets previously inaccessible. The role of traditional art market professionals in London may change entirely over time if specific strategies are adopted, whereas other strategies could lead to inevitable redundancy. Inevitably, however, we cannot foresee the full extent of future consequences because of our limited understanding of life five years from now.

Thus, potential long-term effects of NFTs will include reduced revenues and profit rates for auction houses, decreased accessibility to art, and a shift in the relationship between buyers and sellers. There are three possibilities for a career change for traditional art market professionals. They could compete with other auctioneers and charge higher rates, diversify and start providing different types of art market services or diversify their profession ultimately (such as an accountant could become a photographer). The rise of the popularity of some NFTs has led to galleries reducing opening hours and investing in fixed locations, so artists who live off sales from galleries may have difficulties selling their work.

The popularity of certain NFTs has led to galleries reducing opening hours and investing in fixed locations, so artists who live off sales from galleries may find it difficult to sell their artwork. Auctioneers who continue to operate under the old system will face challenges competing with technology giants such as Amazon and eBay. Still, those who adapt early enough could benefit from a fast-changing industry.^[92] It will not only change how businesses trade goods and services, but it will also alter how we experience art. Future generations may only ever buy paintings through a screen rather than see them up close.

 

4.3.5 Conclusion

Overall, the research revealed that although NFTs have impacted the art market, traditional art professionals have not felt much difference. Although NFTs are posing severe competition to traditional art systems and practices of how artwork is bought/sold as well as posing challenges for those already established in the industry, ultimately, there may be room for coexistence between both sectors. The positive impacts of NFTs on traditional art market professionals include the freedom to sell art outside of the commercial gallery system and the ability to connect more directly with buyers without going through a middleman such as galleries, dealers, and curators. Traditional art market professionals also benefit from making connections with other talented creatives around the globe, receiving feedback about their work, potentially finding collaborators, and gaining exposure for their practice. However, the negative impacts of the increased popularity of NFTs to traditional art market professionals are the lower prices of artworks and reduced levels of turnover because buyers can easily shop online.

Another problem traditional art market professionals face is difficulties getting loans and credit due to banks’ unwillingness to lend money for investment into physical goods. Most potential lenders are less willing to offer credit lines for physical goods than services, which poses problems when selling expensive artworks. Overall, the possible long-term effects of NFTs pose many opportunities and risks. For example, the availability of cheaper artworks leads to decreased demand for high-end pieces and thus reduces buyer interest in collecting expensive works. With collectors likely increasingly looking towards digital platforms where they can acquire good enough reproductions rather than invest in originals, it is clear that traditional art market professionals will need to reinvent themselves if they want to stay relevant in the contemporary digital world.

 

 

CHAPTER 5: CONCLUSION

5.1 Summary of findings

The study has shown that traditional art market professionals in London are not prepared to accept non-fungible tokens as a new form of payment for their services. This is due to several reasons, including a lack of understanding about blockchain technology and its potential benefits and concerns about possible risks in accepting crypto currency payments. However, there is a willingness among these professionals to learn more about crypto currencies and blockchain technology, which may eventually lead them to change their minds. In addition, NFTs are a threat to the role of auction houses because artists can use them to sell their work directly to buyers without going through an intermediary.

As such, auction houses will need to find ways to adapt or risk losing business from artists who wish to sell directly on an online platform. Besides, artists using NFTs could bypass galleries altogether and sell their works directly to collectors. The study also found that NFTs are advantageous in that they offer transparency, immutability, and lower transaction costs than fiat currency. These advantages mean that it is likely that NFTs will become increasingly popular with both investors and consumers over time. However, there is still uncertainty about how NFTs will develop and whether they will have long-term success.

On the other hand, NFTs have some disadvantages in the art market, such as security issues and regulatory uncertainty. Besides, fraudulent activities involving NFTs are a concern, particularly since many people do not understand blockchain technology. The use of NFTs affects traditional art market professionals both positively and negatively. For example, auction houses face competition from online platforms that are selling artwork that are using NFTs. On the positive side, however, auction houses can benefit from increased interest in artworks sold using NFTs. In addition, NFTs provide opportunities for new players to enter the art market.

At the same time, individuals working in art-related industries benefit from increased demand for expertise related to blockchain technology and cryptocurrencies. Despite these positive aspects, most participants were sceptical about NFTs and did not expect them to become widely accepted in the art industry anytime soon. Thus, although there are many challenges ahead, NFTs will play a significant role in shaping future developments in London and the global art industry. This is because the potential long-term effect of NFTs for traditional art market professionals is extraordinarily positive since they include greater trust, reduced fraud, lower transaction costs, higher liquidity, and greater access to capital.

Moreover, the study found that traditional art market professionals in London prefer the traditional way of doing things rather than adopting newer methods. This was reflected in their reluctance to accept NFTs, despite acknowledging their benefits. Nevertheless, if they can overcome their fears and reservations about adopting newer technologies such as blockchain, they will significantly benefit from embracing innovations like NFTs.

 

 

5.2 Recommendations

Based on the findings, it would be beneficial for traditional art market professionals to learn more about blockchain technology and cryptocurrencies to make informed decisions regarding the acceptance of NFTs for transactions involving artwork in London and globally. This will help them overcome their fears and reservations about adopting newer technologies such as blockchain. In addition, auction houses could provide consultancy services related to blockchain technology and cryptocurrency trading to increase revenue streams. Galleries should embrace innovations like NFTs to stay relevant and attract new customers. Besides, artists should also consider using NFTs to sell their works directly to buyers without going through an intermediary. They could also use platforms like OpenBazaar to conduct peer-to-peer transactions using cryptocurrencies.

Moreover, traditional art investors should consider investing in crypto assets instead of traditional investments because of their higher returns. Furthermore, art collectors could benefit from NFTs by paying fewer commission fees when purchasing a work of art. In addition, NFTs creators could develop new ways to add value to existing art pieces, thereby increasing interest in these pieces. Both buyers and sellers need to understand NFT’s function before buying or selling artwork using these digital tokens.

NFT art dealers should create awareness among potential clients. By doing so, they will be able to demonstrate their expertise in dealing with innovative technologies like blockchain and cryptocurrencies. Therefore, educating people about blockchain technology and cryptocurrencies would ensure the adoption of NFTs by traditional art market professionals. Finally, governments must create favourable policies toward crypto assets to encourage people to invest in them. The study recommends further research into NFTs and their impact on contemporary art practices. For instance, future studies could focus on creating educational content for users interested in learning about NFTs. Such content could include information about buying, selling, and storing different types of crypto assets.

 

 

5.3 Conclusion

In conclusion, the impact of NFTS on the role of traditional art market professionals in London is positive and negative. It is positive because it creates a more efficient platform for users to sell and buy art. However, its negative impact can alter how traditional art market professionals manage transactions between clients and buyers/sellers in London. In addition, a significant challenge faced by traditional art market professionals is their lack of knowledge regarding blockchain technology and cryptocurrencies.

This makes them apprehensive about adopting newer technologies like NFTs. To overcome these challenges, traditional art market professionals should learn more about blockchain technology and cryptocurrencies to make informed decisions regarding the acceptance of NFTs for transactions involving artwork in London and globally. Overall, NFTs are expected to play a significant role in shaping future developments in London and the global art industry due to increased demand for expertise related to blockchain technology and cryptocurrencies among individuals working in art-related industries.

 

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APPENDICES

Appendix 1: Interview Schedule

Opening remarks: Hello [Interviewee], thank you for agreeing to have this interview with me today. I appreciate your time.

My name is Muyi, an art student at Sotheby’s Institute and I am interested in finding out more about how NFTS have impacted the traditional art market, especially professionals like yourself who work in the art industry in London.

Let me start by asking you some background information.

1. What position do you hold or role do you play in the art industry?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

2. Where do you work?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

3. How long have you been in the art industry?

………………………………………………………………………………………………………………………………………………………………………………………………………………

4. Are you familiar with NFTS? How would you describe NFTs in your own words?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

5. Have you personally had experience with NFTs, such as trading it or collecting it? Have

any of your friends?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

6. Have you come across NFTs in your work? Are there people who are actively advertising

NFTs to art industry players?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

7. What have you heard from your colleagues in the art market? Are they in support of NFTs or against it, and why? In general, has there been resistance towards NFTs or is there widespread acceptance?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

8. How do you think the art industry has prepared for NFTs? What strategies can they capitalise on to benefit from it?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

9. Have NFTs significantly altered anything about the way players in the art industry manoeuvre and make decisions? If so, please elaborate.

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

10. What industry players have been affected the most and in what way? How do you think it impacts auction houses, artists, dealers, etc?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

11. Currently, do NFTs affect your operations in the art industry? If yes, how have they affected you (both positively and negatively?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

12. Do you think that traditional art professionals will be replaced by NFT specialists in the future as this new business model continues to grow?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

13. What changes or progress do you anticipate will take place in the next 1-5 years as relates to NFTs and the traditional art market?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

14. How about in the next 20 years? What long-term effects do you anticipate? Do you see NFTs as a long-term growth engine for the industry?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

15. What recommendations would you offer to players in the art industry about NFTs? Would you also want to give them any cautions?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

16. Do you think NFTs are just the beginning? Do you think technology is finally beginning to disrupt the art industry as a whole?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

17. Any other thoughts?

………………………………………………………………………………………………………………………………………………………………………………………………………………

Closing remarks: Once again, thank you so much for your time. Your insight has been very helpful and will benefit my research tremendously.

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