Some Frequently Asked Questions
ProPhoto quizzed Sharon about what photographers need to know about NFTs, should they get involved and what might be the potential benefits should they want to jump in.
What advice would you give photographers who want to get involved with NFTs?
“Even though there are legal implications, there are also financial considerations that lawyers cannot advise on. After all, cryptocurrency is a financial instrument and just like any investment, selling an NFT can incur Capital Gains Tax.”
In your opinion, has the pandemic impacted on – or even fuelled – this new NFT craze?
“The impact of the pandemic has meant a lot of us have turned to the internet for entertainment and comfort. E-commerce, gambling apps and cryptocurrency have assumed a new importance.
“So yes, I would say tokenising art is part of the pandemic-fuelled crypto investor revolution. Covid19 has triggered the e-commerce turning point and the tentacles have reached far to tokenised photography and digital art, and have enabled a new market for digital photographers.
“Where some photographers would not have found a brick-and-mortar gallery willing to exhibit their photograph or buyers, NFTs mean that you can showcase their photographs on an online gallery and sell them that way.”
So how do NFTs work?
“NFTs refer to blockchain-based digital tokens that are designed to function as representations of realworld or digital assets. An NFT cannot be duplicated since each token has identifying information that is completely unique. This is what makes it so attractive. Once you own it, it’s yours. There are several NFT exchanges in the art and photography space. In my view, the benefits are that a blockchain network can track orders, payments, accounts, production and much more. This means that for the artist, intellectual property is guaranteed. Furthermore, artists can now get full visibility because it records sales between parties in a transparent, verifiable and permanent manner.”
If you don’t own copyright when you purchase an NFT, what do you get?
“Effectively, NFT owners get a digital certificate stating that the owner owns that image or photo or artwork. However, even after the NFT is sold to someone else, the artist will usually retain copyright.
“The artist benefits as they usually get to keep their work, and the purchaser or investor also benefits because the ownership of the tokens is fixed and secured without any risk of them ever being destroyed, replicated or stolen.
“Another way to think of an NFT is having a receipt to verify that you have the piece of art, but not having the art itself. Analogies have been made along the lines of having a Certificate Of
Title, rather than the house itself. It’s the receipt you have to prove ownership. It is not all that surprising therefore that some people have cynically described it as a ‘bragging right’. They have certainly landed into the luxury market with people paying hundreds of thousands of dollars for one work.
“I always make a distinction between tangible and intangible. Because NFTs are digital in nature, they are always intangible. For instance, a common example I give my clients is that of a painting. The painting itself is a physical object and is therefore tangible. Meanwhile, the exclusive rights provided by copyright laws are intangible.
“The irony is that even though one is seen and touched, the other isn’t; in this current pandemic bubble, the intangible can sometimes be even more valuable than something you can hang up on the wall!”
What are resale royalty rights, and do NFTs operate in the same way?
“After the copyright amendments, Resale Royalty Rights are made pursuant to the Copyright Act. Under these Resale Royalty Rights – which became active in 2010 – artists have been able to collect royalties on certain resales of their work through the Copyright Agency. The scheme requires the seller – or the seller’s agent – to report all commercial resales for $1,000 or more, whether or not a royalty is payable. The Agency has managed royalties for thousands of Australian artists.
What is an NFT exchange platform, and can you give us some examples?
“An NFT exchange is a platform through which people can create, buy and sell NFTs, similar to share trading platforms. They include Open Sea (one of the largest), Binance, NFT Marketplace, ZORA, Nifty Gateway and Rarible, to name a few.”
Who are some of the most famous NFT artists in Australia?
“The name Lushsux immediately comes to mind. He basically paints memes through street art and is known for his humorous and provocative subject matters. A bit like Banksy, he prefers to be anonymous, and it is rumoured he has made the equivalent of over three million dollars of NFT sales.”
Given you work a lot in this area, have you noticed any trends?
“While this is a great generalisation, a lot of NFTs I’ve seen are very unique, innovative and original – particularly the digital art. I have seen a lot of memes, surrealist dreamscapes and fantastical scenes. There seems to be no rules, coupled with a high trendturnover.”
Why do you think some NFTs have attracted such a high price?
“Traditional works of art such as paintings are valuable precisely because they are one of a kind. In contrast, digital files can be easily and endlessly duplicated. However, NFTs introduce something new altogether: namely that artwork can be ‘tokenised’ to create a digital certificate of ownership that can be bought and sold.
“Certainly, the high prices of some NFTs have been a bit of a head-scratcher for some. I believe it is somewhat due to the pandemic-fuelled crypto investor revolution, and for now they’re just the ‘the thing’.”
So, are you saying NFTs are just ‘a thing’ that’s going to pass?
“At first, I thought it was just a fad, but now I realise the value of NFTs. The reality is, not anyone can just whip up an NFT and command a high price for it. The NFT art that holds high value will usually have a fan base of admirers. For example, Beeple’s Instagram was extremely popular before he made his US$69 million NFT sale. At this point, Beeple has 2.2 million followers on Instagram.
“Another perspective people don’t talk about enough is how NFTs have really benefited artists. People should always consider that when buying NFTs that they are supporting artists.”
Can you think of a specific example where NFTs have really helped a photographer?
“One that immediately comes to mind is the Canadian photographer Cath Simard. Initially, she shared a photo of a road on a Hawaiian island on her Instagram account. When it went viral, she tried to stop the widespread use of her photo all over the internet, none of which credited her as the owner.
“Ultimately, after tirelessly tracking down accounts and companies for appropriating her photograph, she minted an NFT of it for approximately US$300,000 (approximately A$415,400). Now it’s free for anyone to use. So, in a sense, NFTs are offering artists a means to claim back and derive profit from their work.”
Do you think this NFT trend is particularly relevant to photographers?
“Absolutely. Exclusive and limited-edition prints are valued assets in the photography market, and photographers already determine ahead of time what edition sizes will be. Prints with smaller edition sizes can be highly sought after, as some take it as an indicator of a unique piece or even high production value. In the same way, tokenisation of art as NFTs create a digitally rare asset – they likewise allow photographers to determine the edition size. As all details are recorded on the blockchain, NFTs allow even greater transparency for the buyer in terms of edition details since, traditionally, buyers may be unknowingly buying extended editions rather than a true first edition print.”
Do you have any other case studies relating to photographers?
”On Valentine’s Day in 2018, Irish conceptual artist and photographer Kevin Abosch sold an NFT featuring a single red rose called “The Forever Rose” to a collective of investors for an amount equal to US$1,000,000. The NFT was based on a photograph Abosch had taken, and was divided into 10 shares, with each person owning one-tenth of the rose token. The funds from the sale were donated to the CoderDojo Foundation, a global network promoting coding and programming skills for young people.
“Abosch has been vocal in his praise about cryptocurrency and how it empowers photographers and artists alike. In particular, Abosch believes that, while virtual art is a challenging idea, especially in terms of ownership, the blockchain operates as a public ledger that brings clarity and transparency to the industry.”
New Opportunities
Sharon concludes, “NFT art classifies digital artworks in a way that enables artists, graphic designers, photographers, animators and street artists (to name just a few) to monetise the fruits of their labour. For the purchaser/collector, they benefit in that they get clear proof of ownership and authorship by the artist.
“So, personally, I would encourage all Australian photographers to consider whether NFTs could be relevant to them. The NFT space is something artists should explore sooner rather than later, as no one knows when the bubble will burst given the unpredictable nature of new technology.
“Love it or hate it, there are no signs of it slowing down.”
This article is for general information only and must not be relied on as a substitute for legal advice. It was written on 20 February 2022 and is current to this date. Sharon Givoni has been working in the area of copyright law for 30 years and can assist with NFTs, copyright, contracts and other legal issues facing photographers. She often presents industry talks and seminars, and writes regularly for a number of publications on the intersection between the law and the art and creative industry.
Sharon is also currently updating her book Owning It: A Creative’s Guide To Copyright, Contracts And The Law. More information about the book is available at www. sharongivoni.com.au/owning-it. You can pre-order the new edition at info@iplegal.com.au.