a16z Conversation with Crypto Artists Pak and Signe Pierce: Where is the Path for Crypto Art?

Original Title: "Crypto for Creators: From Art Galleries to 'Tokenized' Collectibles"

Original Authors: Pak, Signe Pierce, Zoran Basich

Original Source: a16z

Compiled by: 0x13, Rhythm BlockBeats

This episode features interviews with two artists exploring auction sites and markets supported by cryptocurrency, as part of our ongoing series on the maker economy. Broadly speaking, the emerging model of "tokenizing" physical assets, including NFTs, is creating new ways for collectors and investors to buy, sell, and trade digital art. More generally, these innovations open the door to the tokenization of any physical asset or collectible that can be captured and held digitally, paving the way for many new business models for creators.

NFT trading platforms are opening new revenue streams for creators, as they automatically receive a share of secondary sales whenever their digital works are resold on these platforms. This is all transparent and recorded on the blockchain, marking a significant shift in the creator economy.

Our first guest is a major figure in the crypto art space and one of its most mysterious personalities. Pak is an artist and designer who created the AI image-sharing site archilect. Pak separates their personal identity from their online persona, hoping to conceal their true identity, so we conducted this interview via email and used text-to-speech software to convert Pak's responses into audio. Pak prefers that people focus on their work rather than their identity.

We know quite a bit about Pak's work; this year, Pak sold over 60 digital artworks on the crypto art platform SuperRare for more than $350,000. And this is just one of the platforms where Pak's work is sold.

In this interview, Pak discusses NFTs with Zoran Basich from a16z. These "non-fungible tokens" are unique assets that cannot be exchanged for one another. Paper dollar bills are fungible; each dollar bill has the same value as any other dollar bill of the same denomination. However, artworks or any collectibles can be non-fungible, with their value varying based on the market for that specific asset. With cryptocurrency, these assets come with digital ownership, making them easy to trade.

Let's first discuss the overall concept of digital art.

Why would someone spend a lot of money on something that seems easily replicable?

Pak: You see, this is a tricky question. Newcomers often assume it can be copied, but in reality, NFT collectors do not receive the data file; they receive a unique, signed token that cannot be copied or owned by others. So, thinking that NFTs can be "right-click-saved" is very similar to taking a photo of the Mona Lisa at the Louvre and claiming to own the Mona Lisa, or taking a photo of a plane ticket and generating something that allows you to board a plane. NFTs are not about the visible object; they are about the rights and permissions associated with that object.

It is just a matter of time before it is more widely accepted. Every emerging art medium goes through this struggle before being accepted. This struggle is not a bad thing; it is a good thing. Once the debate is over, the resolution of this conflict will make crypto art more valuable. From my personal perspective, this is not a conflict and questioning of "Is this really art?" but more about questioning "Is this unique enough?" And this will eventually be understood.

What was the mainstream business model for artists in the past, and how will cryptocurrency change that?

Pak: I have never categorized myself as an artist, even though part of my work, design, certainly touches on art. Therefore, I think it might be better to refer to the term "crypto artist" as "crypto creator."

From a design perspective, practitioners can choose to work full-time for a studio, freelance, or have their own studio.

For crypto art, the current model is closer to the second one, the freelance model; however, the details cannot be overlooked. A designer's clients "need" your work, but an art collector "wants" your work. Sometimes, being "wanted" feels better than being "needed."

When did you first encounter cryptocurrency, and how did your interest develop?

Pak: I was aware of Bitcoin before it became popular. Since I can remember, I have been interested in the concept of value, and I was immediately attracted to the idea of how value could be transformed into this new exchangeable form.

NFTs were unfamiliar to me. I first encountered NFTs when CryptoKitties was just starting, and they contacted me to create an Archillect kitty.

Today, NFTs are not just some fun little trinkets. I believe in the technology they advocate, so I am eager to stir things up in this technological revolution and evolutionary branch.

How do NFTs attract creators to become crypto creators?

Pak: It's similar to how cars became electric vehicles. "Crypto creator" is not a term that defines a special group of creators in my view. It is simply the term for this new, soon-to-be-standard digital commodity. In other words, when any creator can easily become a crypto creator, why not?

Most activities surrounding cryptocurrency are financial activities, trading, lending, and investing in cryptocurrencies. What characteristics of cryptocurrency might be attractive to artists, designers, and other creators?

Pak: For any creator, the creation and destruction of value is always captivating.

Do you have any advice for creators interested in exploring cryptocurrency as a new sales model?

Pak: Go for it!

You have been working at the intersection of technology and art for some time. Beyond their potential economic advantages for artists, do you think the ideas of cryptocurrency and blockchain, or decentralized technology in general, have deeper cultural or symbolic significance?

Pak: Anything can carry symbolic meaning; it depends on the receiver rather than the creator. I value innovation, I value creating value, and I have always worked to break people's preconceived notions. Of course, the decentralization of things implies a new technological culture for the future, many new norms and standards, and many branches of unknown directions, which is the reason for existence. It's almost like just before the internet became mainstream.

Let's talk about the income issue for artists. Will NFTs, like traditional art business models, make it difficult for creators to earn money, or do you think wealth distribution might become fairer with cryptocurrency?

Pak: Art auctions are a completely different realm, and it is inappropriate to value NFTs based on that. Of course, art supported by NFTs will have its own audience, and I expect to see dynamics similar to the traditional art world in how things are valued.

On the other hand, NFTs can be used for many other things, which is their strength. Anything that can be owned digitally can be supported by NFTs. They have many applications in media, entertainment, real estate, gaming, or any type of asset or collectible. This is a technology that will slowly become mainstream in art, but it is not limited to that. Therefore, I believe that not just a few creators will make money. It will be the foundation for many new business models in the future.

Our next guest is Signe Pierce, a visual, digital, and performance artist whose work has been exhibited in prominent galleries in Paris, Los Angeles, and New York. She is currently showcasing her art on the creator market Foundation. On that site, the prices of tokens associated with limited edition artworks are real-time and dynamic, fluctuating based on buyer demand, who may be investors, collectors, or fans. (Signe has also recently launched auctions for one-of-a-kind works based on NFTs.) Signe discusses why she transitioned from only working with galleries to trying the crypto market, how this move has affected her work and business, and how cryptocurrency has changed the way she engages with her fans. She also offers advice for creators interested in entering the crypto world.

She first mentions how the popularity of social media a few years ago made her think about new monetization models for creators.

Signe Pierce: Between 2014 and 2017, Tumblr became popular. And my photos received hundreds of thousands of shares.

I kept thinking about this question: why is there no valuation around this kind of love? How could this be possible? How can we turn likes into money? How can I transform the attention economy into a tangible form of monetization?

This was the big question that really made me think. Yes, I can truly understand why this blockchain technology and tokenized artworks could potentially disrupt the art world, while also aligning with my vision of a more prosperous world for artists and people enjoying art.

So how did you start collaborating with curators?

Signe Pierce: I got in touch with curator Lindsay Howard. We discussed our vision in detail, hoping to find new ways to allow artists to have more stake in their work. I think part of the reason was having a curator I truly trust inviting me, and I could feel their grasp of the pulse of the times, all of which influenced my desire to collaborate with them.

What artworks do you currently have? Can you introduce what they are like and what pieces are presented there now?

Signe Pierce: I created three specific running pieces from what I call the "Longhorn Lily" series. I offered two prints of 100 editions each and a video of 10 editions. I wanted to create a running piece to provide a cool crypto training wheel for those who might be interested but are too nervous to try.

Let's see what happens, you know? At the end of the day, you can experiment with cryptocurrency. It has always been very exciting to watch its trading aspects, as they get exchanges when they trade their tokens. For me personally, this is just a new realm.

Interestingly, fans and collectors can purchase your artworks at a marked price. When you are ready to create these artworks, they will receive a physical copy, right?

Signe Pierce: That's right.

And while they wait for you to complete the artwork and fulfill the order, they can also trade the tokens associated with that artwork. So, the price of that artwork fluctuates in value, or it is dynamic, right? It can go up or down.

Signe Pierce: Exactly.

So this brings us to the question of trading that you mentioned. And this is where it gets really interesting because now you are not talking about a static price, but a dynamic price that allows more people to participate in the collection from a purely trading or investment perspective.

Signe Pierce: I know not all artists will like this, and not all artists will feel this is how their work should be. But I think it's an interesting way to think about our work, somewhat like stocks. I am very interested to observe how this approach develops in this field because it is fresh, it needs to be explored to make it mainstream.

So from the buyer's or collector's perspective, they can wait for the price to rise and then trade for profit, rather than ultimately owning your physical artwork, right?

Signe Pierce: Yes, that's right. I think this is also a cool way for people to support artists. If you don't decide to redeem the token, you might not necessarily get a physical version. But you are still supporting me, supporting the artist by participating in the trading. I think this is a cool way to let people enter the crypto world and support the development of art.

One thing we should mention, as you just pointed out, is that every time someone trades these NFTs, the artist receives a portion of the proceeds.

Signe Pierce: That's right. Plus, as the editions decrease, the more editions sold, the higher the price will rise. This is also very exciting.

How do you think about pricing? How do you decide what the initial price is and how many editions there will be?

Signe Pierce: I spent a lot of time thinking about this. I intended for my work to be traded through the gallery system and art market, and I wanted to purposefully keep them low-key, you know, to maintain rarity. They come with a full set of framing and serious production. These pieces are high-quality digital C prints. They just have a larger edition, so the price matches, without so much scarcity attached to them.

But again, I found that I could still work in the art market while also making my work accessible to more people. I believe my work is valuable. I take it very seriously, and I hope it gets the proper attention. I hope it appreciates over time. I think the art market has seized this opportunity.

But I don't want it to be completely prohibitive to others in the world, as that goes against my general spirit of art serving the people. So for me, this is my personal approach. Similarly, not everyone will agree, but this is my way, allowing us to cater to both realms. I won’t abandon the art market or the art world, but I am genuinely interested in trying new things and inviting more people to participate and become collectors.

So, the website where you sell your work is like a stock market, right? It shows the price rising or falling. I checked this morning, and your works have gone up over 100%. Congratulations!

Signe Pierce: Yes, we are doing well.

How often do you check the prices? What does that feel like? This allows you to see real-time feedback from people on your work, right?

Signe Pierce: Of course, it's very exciting. It feels modern. I will be very honest; I am not a financier, you know? I am an artist. But I am a modern artist, and I am genuinely interested in modernity and the future, while also paying attention to how it works and understanding it to think better. So when I see the value of these works in real-time, it is exciting. I have gotten used to the culture of Tumblr, where you can see your numbers rising, which is exhilarating. You directly see people liking or sharing. But for me, aside from a few dopamine bursts, nothing is attached to it. So this actually creates a little capital for it, making it more interesting and valuable.

Is this an experiment where you might earn a little money? Is it a significant source of income for you? How much does it represent in terms of your income sources?

Signe Pierce: At the end of the day, I earn money through my work, which is exciting, and I also gain additional profits. I profit from it, which is another avenue for my income, allowing me to create my art and spread it to people. For me, these are all victories. Although the profits are not as high as in the art market, that is just one piece, you know? And I have many pieces that bring in income and profits, significantly increasing my earnings.

So, hanging a piece at a very high price for a while and then waiting for its appreciation and valuation doesn’t mean much to me. And if it doubles in price on the secondary market, I won’t see it unless I write it into the contract.

How do you view digital art versus physical art? Because I think in this case, you now have to create physical pieces and send them to people. There are replication costs involved, which might cut into your profits, while digital works are easier to replicate.

Signe Pierce: Absolutely correct.

But at the same time, the development of digital art is challenging because, for example, how do you prevent it from being copied? But with cryptocurrency, there is this additional thing of tokens; you know its provenance, you know it is a unique artwork that cannot be truly owned in the same way. So as part of the business model, how do you consider these things?

Signe Pierce: This is a very important question. I think people now and in the past have struggled to understand why they should pay for a video or a GIF. If it is not a tangible artwork, how can it have value? This requires a lot of thought and exploration from artists and tech experts. For me, as you mentioned, the origin of blockchain technology ensures the authenticity of the work, which is key to making all of this possible.

Once we have a collective consciousness, I believe this will be revolutionary for how art continues to be created, traded, and collected.

I also want to talk about fan engagement because this is very interesting. Now your artworks are undergoing a transformation where people can participate economically, but tokens also have the potential to enable other types of engagement. People can become "super fans" or access certain aspects of your life or work that non-token holders might not be able to access. So, have you considered the evolution of fan engagement as it relates to cryptocurrency?

Signe Pierce: I think there is tremendous potential here. Accessibility and access points will be important components of fan engagement. There are various ways to address this.

I just want to do it in a way that I think is cool. To be honest, one of the most important points I want to design is that I want it to operate in the way I truly want. I am very curious about how we can engage fans, and when I put myself in their shoes, I think about what interests me in paying for the work of artists I like. This is essentially the artist's decision to configure different layers of value.

So I am very interested in your perspective. What should artists who are interested in exploring cryptocurrency know? How much do they need to know about crypto before they start?

Signe Pierce: I think it is always helpful to have someone hold your hand through it. If no one can teach you directly, then you can try to self-learn. I mean, I really had to do that for myself. I only superficially understood how all of this worked because I am just an artist. Therefore, learning advanced blockchain technology is not necessarily something to do every day. But because I am an artist interested in models and methods for the future, it is important for me to sit down and focus on these ideas so I can keep them in mind. That is part of it.

But on the other hand, I think it is this fearless entrepreneurial spirit; what do I have to lose? If you are not currently making a lot of money and have no money to operate your artwork, what do you have to lose except diving into something new and seeing if it can sustain itself? I think for people, this is a very important energy, generally speaking, it is like, "Let's go." "Let's try something new." If enough people have this innovative spirit, that is when things start to ignite and change.

Awesome, Signe. Thank you so much for coming. It was great to chat with you.

Signe Pierce: Thank you, I had a lot of fun. Thank you for giving me this opportunity.