Tuesday, January 25, 2022

What is art? (legally speaking)

I needed to find a definition for the question "What is art" recently while developing a new page about Money Laundering & the Art Market: Law, Regulations and Practice.

[Note: If you are selling art - but are not an individual artist who is selling their own art - and don't know about the new money laundering regulations, there is a very serious gap in your "need to know" art business knowledge. I'm hoping to publish soon.....]

So what is art?

Purists might suggest that if the artist says it's art then it's art. 

That might be fine in isolation - but it doesn't cut it as a definition in the "Art as a Merchantable Commodity Market" where there are very many relevant laws and regulations - and taxes and penalties and fines. ( for anybody in any doubt I suggest you read my Art Business Info for Artists page about "Legal Matters for Artists - How to stay on the right side of the law ​and understand all relevant legal liabilities" )

The legal definition of works of art in the UK

It's really quite simple. 

Art (in the UK) is defined for art business, tax, finance and money laundering purposes as stated below. 
Works of Art" has the same meaning as in section 21 of the Value Added Tax Act 1994 and includes:
  • Painting, drawings, collages and decorative plaques executed by hand; 
  • Limited edition prints; 
  • Original sculpture or statuary and limited edition sculpture casts; 
  • Handmade limited edition tapestries and hangings; 
  • Signed ceramics executed by an individual; 
  • Signed limited edition enamels on copper (not comprised in an article of jewellery); and 
  • Signed limited edition photographs. 

By way of contrast in the USA the courts have been used to dispute and contest constraints (i.e. "the obscenity pledge" and "the decency clause") which related to censorship of what is deemed inappropriate for public funding. In doing so they referenced the First and Fifth Amendments.

NFTs are NOT Art

Interestingly, I've only just realised that last week there was a bit of a furore online because Wikipedia has decided that NFTs are NOT ART! 

As in 

  • Sales of 'art' as NFTs are NOT art sales.
  • the most expensive NFTs which purport to be art are not being included in the list of the most expensive artworks ever sold
You can read the debate on the discussion page here - under 'Separation of NFT sales and artwork sales' which cites
NFTs are not a new artistic medium in the way that oil paint, printmaking, photography or video art were. Even digital art (which is just art made on a computer) preexisted NFTs by decades. NFTs are financial instruments. They make it easier to sell digital files by creating scarcity. Washington Post
Beeple’s work has been compared to that of KAWS or Banksy, two other artists who have bypassed art-world gatekeepers to establish huge sale prices. But ultimately, NFTs are a technology used to authenticate an artwork; determining whether a work is art or not is up to the viewer. The technology can be used to authenticate other kinds of objects, too. New York Times
So we now have
An NFT is a Non-fungible token 
A non-fungible token (NFT) is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger.[1] Types of NFT data units may be associated with digital files such as photos, videos, and audio. Because each token is uniquely identifiable, NFTs differ from blockchain cryptocurrencies, such as Bitcoin. (Wikipedia)
This in turn could affect their value - and hence there's a lot of "investment" in how they should be defined!

Personally, for me, an NFT is a digital token not art - and won't ever be art until it enjoys copyright protection - which NFTs do not.

Here are some of the articles discussing Wikipedia's decision to define NFTs - as NFTs!

I suspect some of the rationale might also relate to law and how art is defined.
An NFT (and, if applicable, the associated license to use, copy or display the underlying asset) can be traded and sold on digital markets. The extralegal nature of NFT trading usually results in an informal exchange of ownership over the asset that has no legal basis for enforcement, often conferring little more than use as a status symbol.
There needs to be parity in terms of the marketplace in terms of what is being bought and sold before you can start making comparisons about "what is the most expensive?"

There again it's entirely possible that there are also some considerable suspicions about:
  • inflation of NFT sales/receipts due to "wash trading"
  • use of NFTs for money laundering
BECAUSE at the moment there is no regulation of NFTs in terms of robust and regulated financial systems - which will very definitely NOT last forever.

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