Intellectual Property in the Art Market II

A few months ago I wrote about Richard Prince, who sold lightly edited screenshots of other people’s Instagram posts for upwards of $90,000 (this after decades of rephotographing and editing other people’s works).  In another bizarre copyright and fair use saga from a few years ago, British photographer David Slater found himself in dispute with Wikimedia over the granting of a copyright to a picture taken on Slater’s camera—but by a macaque.

While traveling in Indonesia, Slater set up his tripod and, by good fortune, a couple of macaques clicked the camera’s button to take “selfies.” These pictures made their way around the world as viral sensations, but were however not treated as copyrightable. Slater claimed that his pictures did not belong in Wikimedia Commons—a repository for media in the public domain—as he should hold the copyright for them. However, copyright law specified that non-human animals were not eligible to hold copyright, and that Slater did not partake in the creation of the photograph (he had stepped away from the camera when the macaques snapped their own pictures) and could thus not himself hold copyright either. In short, the law and the media determined that—because Slater did not himself click the camera’s button—copyright could be held neither by the macaques nor the photographer.

In order for Slater to have a legitimate claim to the work’s copyright, he would have had to make significant alterations to the image that would substantially change the composition of the work, and allow him to hold copyright over that edited product.

This, in comparison with Richard Prince’s screenshots, brings up interesting questions of intellectual property, once again in the context of art. Firstly, why are Prince’s incredibly light alterations of Instagram posts (at most, he added comments) allowed, while Slater must see his work fall immediately into the public domain? Why must Slater “substantially” alter the work’s composition in order to own copyright over the edited work, but Prince can get away simply adding comments to the bottom? In short, what is enough of an “alteration” to make a work new, valuable, and an “original” contribution that deems copyright protection?

Moreover, the law is not on Slater’s side presumably because—even though he set up the tripod and the equipment was entirely his—Slater did not himself press the camera’s button. Which then begs the question: for a medium such as photography, or film, who is the author of a particular work? After all then, while it is clear that a production studio owns the rights to a feature film, why doesn’t our treatment of Slater’s predicament imply that the person physically behind the camera owns the rights? Or the director who envisioned each shot? Or the screenwriters who created the plot and the dialogue (if any)?

To what extent does “originator of the idea” count when it comes to authorship? Is the owner of a copyright the hand that laid down the paint, or clicked the button, or moved the camera? Or is it the person whose idea it was to lay down that paint in such a fashion, or click the button at the particular scene? Should intent to create ever play a role? After all, the macaque was likely fooling around with a strange object that belonged to Slater—who clearly desired to capture a good shot.

The boundaries of art and concepts keep getting pushed further and further with time. Sadly, however, the boundaries of copyright protection and our definitions of authorship and originality do not extend as quickly. Why could Marcel Duchamp take a porcelain urinal, call it a fountain, and make an innovative and avant-garde piece of art? Does the act itself of naming constitute a valid reinterpretation of an object and—as such—an original work of art? If so, Slater’s take on a macaque’s snapshot of herself—after the photographer setting up the requisite equipment to do so—as a “selfie” might then be considered an original work of art in itself.

Life in Economic Consulting

About two months ago, I began my first full-time job as an analyst at an economic consulting firm. As a member of the team, I conduct economic analysis on a wide range of issues across the lifespan of commercial litigation and regulatory proceedings. Located at the unique intersection of the law, business, finance, and economics, economic consulting firms aid experts in their analysis of the case in question. Under the experts’ direction, we apply both quantitative and qualitative methods to uncover the economic phenomena at play in a given case. As such, these firms are a great primer for a career in research in any of the fields covered by practice areas of the firm.

So far, a job in economic consulting has allowed me to think much more deeply about applied issues in finance and economics. In particular, I’ve expanded my repertoire of research skills and approaches that should be useful for any field of study. For my preferred areas of Industrial Organization and Arts Economics, the kinds of cases economic consulting firms are retained on have already inspired me to think about the role of information in financial decision-making, and of the limits and boundaries of intellectual property rights.

For example, what do investors consider to be material information? When and how do they use information about a financial instrument? When are expectations about an instrument absorbed into its price, if at all? When an expectation becomes a confirmed (or a disconfirmed) fact, should we expect a movement in the price of that instrument? And of course, the classic question: are investors entirely rational?

As for intellectual property rights—and this relates to my previous post on this blog—what are the boundaries between creator and contributor to a given work? Particularly when it comes to the issue of copyrights for creative works—how small of a change in somebody else’s work is enough to grant the editor a claim over the transformed work? Can “concepts” ever be fully claimed by an “owner”? And how long should copyrights even last?

All in all, I’ve thoroughly enjoyed the work, the people, and the culture of the last two months in economic consulting. I’m eager to learn many more skills and gain an even better understanding of the quantitative and qualitative methods involved in researching topics in the law, finance, and economics. Economic consulting is highly recommended to those with some interest in any of these fields.

Any views expressed in this post regarding the work involved in economic consulting are mine only and do not necessarily reflect those of my peers or the firm I work for.

Intellectual Property in the Art Market

At this year’s Frieze Art Fair in May, Richard Prince sold unaltered screenshots of others’ Instagram pictures (without permission) for upwards of $90,000 each. His contribution?: some obscure, Instagram comments on the bottom of each screenshot from what appears to be an account he owns: richardprince1234. After a private exhibition at Gagosian earlier in September of 2014 that gave way to much criticism, Prince had the art market once again debating issues of authorship, authenticity, and originality.

This occasion joins many other instances where the line between artist and seller is incredibly blurred and contested. After all, whom does art belong to? Who transforms an ordinary object—such as Warhol’s soup cans, or Duchamp’s “Fountain”—into a piece of art? And then, who can lay claim to the authorship of that work and, even further, sell that piece of art to others (let alone at exorbitant prices)?

Like many other, more “traditional” products, art can be studied from the perspective of value added. After all, no one protests that the final products we purchase on retail go through what is usually a long, complex supply chain where subsequent producers, dealers, wholesalers, etc. add a feature, a service or a physical transformation to the intermediate good they acquired, to then sell on to the next producer in the chain and, eventually, the end-consumer. Yet, nobody protests because this is both established practice and, most importantly, an arguably fair practice. The intermediate producer gets paid by the supplier further downstream for the service he performed on the product. Leaving aside those strategies frequently studied in the vertical relationships section of an Industrial Organization course, we could argue that all producers who had a role to play in the production of a product get fairly compensated for their value added.

The question in this case—that of the art market—is how much value is enough to transform someone else’s work into one’s own? And how little value added (in this case, some comments) is needed to transform an Instagram picture into a $90,000 work? How should the $90,000 price of that artwork be broken down between Richard Prince, the end-supplier, and those Instagram users who added their value in creating and uploading their image to the website? Didn’t they, after all, add much more value than Prince himself did? Or are Richard Prince’s contacts with the art market—his ability to be exhibited at Gagosian and at the Frieze, to print those snapshots and have them set up, worth incredibly large amounts of money? Is his name, the service he’s adding in getting these snapshots a fine art exposure, worth thousands upon thousands of dollars (these same questions could perhaps be asked, interestingly enough, of luxury fashion retailers: does the brand add that much value)?

And ultimately, this can lead us to ask: if Richard Prince’s service and value added are really worth that much, why is art fetching such high valuations? I’m certainly not the first to question art prices—Qatar is reported to have purchased Cézanne’s The Card Players for upwards of $250 million in a private transaction. The literature is extensive and often, understandably, must rely on the philosophical: art, after all, appeals to a part of us as humans that is perhaps “irrational”, that is “priceless” and invaluable.”

Yet, if that is true, and if simply adding several comments is enough value added to fetch thousands of dollars based on other people’s works, maybe it’s time we start copyrighting and trademarking every single thing we do.

Location Models in the Art Market

Last week, I was very pleasantly surprised to be awarded one of the two David Estabrook Romine Prizes awarded each year by Columbia’s Department of Economics. I was lucky to receive this Prize for writing the best paper in an undergraduate Senior Seminar for the academic year 2014-2015. It thus seemed fitting that I take this week to write about my paper and how it relates to my future research and academic goals.

The paper I wrote was titled “Location Models in the Art Market—Artists as Firms Visualized on a Product Space”. The primary motivating question was: How do artists choose their “product”—be that any number of characteristics that define the artist as a firm and that define her work? In my paper, I developed a framework to visualize an artist's set of works on a product space, defined and constructed by measuring the degree of stylistic similarity of each artist with every other artist on the space.

My interest in this topic arose from a desire to apply an Industrial Organization lens to the art market. Inspired by discussions in Prof. Prajit Dutta’s Economics of the Arts seminar about the nature of creative work and how we can use Economics to study art, I wanted to explore the deeper question of how artists choose what to make of their artistic product: in short, how to position themselves in the product space of artists.

Most work in Economic literature however focused on more traditional ideas of labor supply, and at most, focused on the optimization decision behind how much “creative effort” an artist decides to allocate to the production of one particular piece of art (to summarize the literature, understanding that artists are motivated both by their artistic pursuits and by their need for survival, economists had been looking at how an artist balanced two competing tensions: the commercial and the artistic value of her work).

I wondered, however, how artists decided to create their product when locating themselves in a much larger universe of past and present artists. How do artists essentially differentiate their product (if at all) by observing both the set of artists that are in the art market at the same time as them, and the ones that have been in it and shaped it in the past? I thus had the idea of extending a location model to the world of art.

Location models (the most famous of which is perhaps Hotelling’s Linear City) study horizontally differentiated products and how each product’s “location” on a product space (which can be one, two, three, or even higher-dimensional) in relation to certain characteristics affects the profits each product’s corresponding firm makes. These models thus have wide implications for how firms design their products, based on consumer preferences for the characteristics and attributes that define the axes of the product space, “transport costs” (the costs consumers face from “moving” to another part of the product space because their “ideal” product (as represented by a point on the product space) is not being offered), etc.

My idea was then: how will an artist, viewed essentially as the primary “firm” of the art market (and viewing galleries, auction houses, etc. as “secondary” firms that rely on the work of the artist), choose her location on the product space? Moreover, in the world of art, would maximal or minimal product differentiation apply (meaning, would an artist earn higher profits by being as distant as possible from other artists in the product space (meaning she has a very unique body of work), or being as close as possible to other artists (her work is located on a “crowded” portion of the product space, which we could interpret as more “popular” forms of art))? What even defines profits in the art market (success and achieved eminence, actual monetary compensation)? In short, what motivates an artist’s body of work? What informs the way an art piece looks—the attributes (like color, medium, size, etc.) the creator chooses for it?

As it turns out, in trying to put the idea of an artistic product space in practice, I stumbled upon the perhaps not-so-surprising role of influence in art. Because categorizing an artist’s body of work based on characteristics can be rather difficult (let alone the issue of reducing an artist’s work into one single point on a product space, which brings us closer to philosophical questions on the transcendence of art), I opted to use a somewhat indirect methodology to construct my sample product space: I decided to calculate the degree of correlation between the mentions of artists’ names in books over the last 145 years, as measured by Google ngrams. Assuming that a higher degree of correlation implied stylistic similarity between two artists, I then plotted a product space by selecting artists to represent each axis. This is of course rather limiting, since the interpretation of this kind of product space is essentially—if Picasso is one of the axes—the degree of “Picasso-ness” of an artist’s work. In short, how much like Picasso is artist X?

A sample ngram, showing the mention in books of the names "Claude Monet", "Edouard Manet", and "Alfred Sisley", three noted Impressionists. Note the particularly high correlation between the mentions of Claude Monet and Edouard Manet.

A portion of the correlation matrix.

I then calculated several measures of the degree of influence of an artist on the product design of a present artist (measured by first calculating the average correlation of an artist with every other artist in the product space). This led to some rather intuitive empirical results: the greater the degree of “separation” between an artist and the artists of today (meaning, the more in the past an artist has died), the less of an influence she holds on the work of today. In short, 500 years from now, Picasso is likely not going to be seen as influential in the world of art as he is considered today or in the 20^th century. Another result was the effect of lifespan: it turns out that the number of years an artist lived (assuming it correlates with length of career) does not actually impact the degree of influence of her work. Thus, a 90-year-old Picasso can in theory have as much influence as a 28-year old Jean-Michel Basquiat.

  

There were of course many potential limitations and critiques of this framework (including its reliance on the Google ngram search engine, the assumption that correlation implies stylistic similarity, and a simplification of the factors that would make an artist (and those related to her in style) more or less mentioned in books in a given year). Like many new ideas, there are many potential improvements. Most importantly, however, there are also many further questions that the idea provokes. In particular, I closed by considering the implications and potential uses of this kind of framework:

• By visualizing the product space in different time periods, we can visualize and study the historical development of art movements and artists’ careers over time (how, where, and why do artists enter or move around the product space?)
• We can consider the question of innovation in the art market: do new, great ideas arise by a bold, new artist locating himself on an empty portion of the product space and being successful, or does it happen when an artist enters a crowded location but, through her skill and vision, manages to shift the location of other artists to new, unexplored and exciting locations? Does innovation, then, always have to be pure originality, or can it be slow and steady deviations away from the established Zeitgeist?
• We can empirically study maximal vs. minimal product differentiation in the art market: are artists more successful (be that in measures of achieved eminence or actual earnings) when entering a crowded location (which we can assume is clearly more popular forms of art, but also then much more competitive), or when they are bold, new and original, entering their own niche locations?

I really enjoyed writing this paper. It was exciting to conduct my own research, develop my own methodology, confirm intuitive results on the role of influence in the art market (a reassuring sign that my framework perhaps actually works), and most importantly, create a departure point for one of my main future interests: applying concepts of Industrial Organization to less traditional markets and industries. In particular, how can we think about artistic product design and differentiation more deeply? How can we think about an artist’s reasons for entry and exit in the market, etc.?

I hope, in the future, to consider some and many more of these questions, understanding that there’s definitely a place for the fields of Art History, Sociology, Psychology, and Economics, among many others, to learn from each other and apply each field’s techniques and body of knowledge to at least begin grasping at some of life’s deeper questions.

An Introduction

Hello! My name is Ricardo R. Rodriguez-Padilla. At the present moment, I’m a Senior at Columbia University just a month away from graduating with a Bachelor of Arts in Financial Economics and Business Management. After graduation, I’m lucky to be staying in New York City to work as an Analyst at the economic and financial consulting firm, Cornerstone Research. I hope to use my experience there as an exploration of many of the topics that I’m most passionate about in Economics. In particular, I hope to gain some further insight into topics in Industrial Organization, and use my time there as research experience I can put to use for a PhD in Economics a couple of years down the line.

Like many other people, I view Economics as a tool and a framework with which to think about and address many of the issues of our day. While many of these may be more “traditionally” in the realm of what people think about when they hear “Economics” (i.e. finance, money, growth, etc.), I’m particularly passionate about applying economic models to explore and consider less “traditional” questions, specially on the individual-scale of Microeconomics and in Cultural Economics.

I’m sure many would agree that Economics does not have all the answers; it often relies on simplifying assumptions, and the validity of those assumptions is often questionable in many scenarios. But economic models help provide a framework with which to begin exploring and identifying both the big-picture and microscopic-level questions we must ask when thinking about a problem or a phenomenon. To that extent, Economics can certainly inform and enlighten our analysis of policies and of organizational, individual, and macro-level decisions. Economic thinking can aid us in formulating and testing hypotheses, discovering factors we hadn’t considered before in a problem, guide our understanding, and ultimately provide preliminary (and sometimes, final) answers to the questions we’re trying to answer.

While I have many questions I’d like to answer, perhaps my most motivating questions are the ones that guide both those who are passionate about Economics and actual Economists (a rank I’d like to join myself soon). The questions that guide most of what I (and many others) think about are: What can I do to contribute to our understanding of behavior and decision-making (and the incentives and factors that play into those decisions)? More generally, how can I help understand and draw connections between the causes and the effects of the phenomena and the decisions by individuals, organizations, and nations-at-large that we see in our world and society today? And most importantly, how can I use that knowledge to create new, optimal effects through better, more informed decision-making, and ultimately (as cliché as it may sound) make our world a better place?

I hope this blog will serve as a place where I can explore some of the economic questions I’m concerned with as I hopefully move closer to a PhD in Economics.