How a New, ‘Deliberately Unsexy’ Blockchain Company Wants to Help Artists Take Advantage of Collectors Turning Their Work

Max Kendrick’s moment of clarity about the inequalities of the art market came during his studies, when a friend of his did an internship at an international bank and became a member of the ‘lobby beautification committee’.

“He said, ‘Hey, look, we’re bidding on one of your father’s pieces in an auction!'” Kendrick passed this on to his father, the sculptor Mel Kendrick. “Isn’t that cool!”

His father’s reaction? “There are so many reasons it’s not cool,” the older Kendrick replied. “But above all, it literally doesn’t benefit me. And by the way, that piece could sell for less than it cost me to make. It is literally lose-lose.”

That moment stayed with Max for eight years as a diplomat in the foreign service before landing in a business program at Stanford University in 2019. There he met Charlie Jarvis, who was working on a bachelor’s degree in computer science and studio art. The two bonded over a shared interest in how technology could disrupt some of the art market’s archaic models. in 2021, Fairchain was born.

Once upon a time, flipping a work of art—that is, buying low and selling high—was considered a sin in the art world. Artist Robert Rauschenberg famously confronted collector Robert Scull after the 1973 record auction of the taxi magnate’s pop art holdings at Sotheby Parke Bernet. The source of Rauschenberg’s outrage? Which Thawthe one he sold to Scull for $900 had just changed hands for a whopping 94 times that amount—and the artist wouldn’t see a dime.

Today, while still frowned upon, flipping is so common that the art world has become almost desensitized to it. But unlike many European countries, the US has no federal laws mandating artist resale rights, and this problem is felt as acutely by emerging talents as it is by greats like Kerry James Marshall† But the advent of the blockchain era the calculus changes, and the Fairchain founders try to shift power back to artists.

Artist Robert Rauschenberg, who fought for artist resale royalties, photographed at the Museum of Modern Art in March 1977. Photo by Jack Mitchell/Getty Images.

“The bland, technical description is that it’s a visual arts title authentication and transaction tool that supports artists throughout their lives,” Kendrick recently explained over a cup of coffee near the company’s offices on the northern outskirts of New York. gramercy.

“While also protecting galleries and collectors from space fraud,” Jarvis added.

Like predecessors, including Verisart, Fairchain uses blockchain technology to record the sale of a work of art with a digital contract that serves as a certificate of authenticity and tracks the work forever. The contract guarantees a royalty percentage of up to 10 percent to the artist — sometimes split with the original gallery owner — to be paid each time the work changes hands. For every piece of art sold through Fairchain, the company will receive $10, which will be charged to the seller.

The duo describes the concept as “deliberately unsexy”. In recent months, however, Fairchain has taken on a lot of cachet: The company hosted star-studded dinners in Miami and Los Angeles, and their branding — by the respected design firm Pentagram — has been ubiquitous (a poster featuring Rauschenberg’s indelible quote, “For God’s sake, you’ve didn’t even send me flowers,” which he spat at Scull after the pivotal auction hangs in my apartment as I write this). Fairchain’s advisors include big names in the arts such as Hank Willis Thomas and Laurie Simmons, while investors include Carroll Dunham, Ludovic Nkoth and Alteronce Gumby.

“People have spent years trying to make something like this happen,” explains Simmons, who has known Max (through his father) since childhood. “It didn’t feel like a completely new idea. It feels like something is being reborn as a result of all this great new technology. I was excited out the gate.”

Attempts have been made before to solve this problem. Rauschenberg and others successfully lobbied to pass the California Resale Royalty Act in 1977, which mandated that artists get a royalty payment on resale if the transaction takes place in California or if the seller is located in the state. However, it was knocked down by a federal appeals court in 2018. There are also stories of artists including an ad hoc clause in their sales contracts that would entitle them to royalties, although there is no infrastructure to enforce it.

Kerry James Marshall, Knowledge and Wonder (1995).  Photo courtesy of Christie's.

Kerry James Marshall, Knowledge and wonder (1995). The artist pushed back the Chicago Public Library, which planned to auction his mural at Christie’s in 2018, saying the library “exploited the work of artists in the city for short-term profit.” Photo courtesy of Christie’s.

Fairchain had its soft launch at Art Basel Miami Beach last year, allowing dealers to choose to use the platform to close a sale. It has also been used in several charity auctions, including those of the Leslie-Lohman Museum of Art, Art For Black Lives and Church, Eric Fischl, and the April Gornik Art Center in Sag Harbor.

Fairchain’s technology could also discourage profit making in the charitable arena. “Artists donate their works to these auctions,” Jarvis noted. “Now they are basically able to protect themselves when their act of goodwill is abused.”

“There’s a freedom of movement in the art world that I’ve always appreciated, that you can [make a deal] a handshake,” Simmons told me. “But as more and more money comes into the art world — more and more international money, and I’ll throw in the word oligarchic money, why not — a lot of people don’t know if their artworks are real.” (The week I interviewed her, Simmons saw a counterfeit piece allegedly made by her husband, Carroll Dunham, up for auction in Florida.)

As is often the case in the art world, a big selling point comes down to privacy. According to Kendrick, when the duo first met galleries to discuss the concept of Fairchain, one dealer insisted, “No matter what you design, there’s always a collector here who wants to pay me in a briefcase full of money. before that can happen.’”

Fairchain’s use of blockchain differs from that of NFTs. While NFT wallets allow for complete transparency, when Fairchain records a transaction publicly, collectors can keep completely private what is in their collection – the collector is the only person who can determine whether their collection is visible and which pieces are visible on the blockchain . “We take away frustration, but no mystery,” explains Kendrick.

The Fairchain team.  Thanks to Fairchain.

The Fairchain team. Thanks to Fairchain.

For artists, the benefits seem obvious. However, getting buy-in from the other parties requires some incentive. One incentive, especially for collectors, is efficiency and reliability: a Fairchain contract can be drawn up and sent to a collector in minutes, while the current standard procedure is to wait to see if an invoice appears in your email to find out whether you have secured a work or not.

“It kind of feels like when my parents want to go to the airport and order a taxi for the next morning,” Jarvis explains. ‘And you never know for sure if it will show up. You wake up in the morning and wait for the taxi.” The benefit of Fairchain, Jarvis says, is more akin to a ride-hailing app: “When I want to go to the airport, I wake up, I call an Uber. I know exactly how much Uber will cost. I know exactly when it will arrive and when I will be there.”

Since its launch, several hundred works of art have been sold through Fairchain. New York dealers Charles Moffett and Hannah Traore (who is also an investor in the company) both have upcoming shows that will sell all works through the service.

“For an artist, it’s much more feasible to build a career when there’s more economic security,” says Jarvis, who grew up watching her own father make art from a wood shop in their home, but without the idea. to have that he could sustain himself as a working artist. “The idea that you could have a career in art isn’t what anyone in my community even had as a concept… What we’ve built is this really cool thing that actually extends access.”

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