Controversy over NFTs of state museum works explained well

Museums and NFTs: what is going on and why so much controversy these days over an episode that, moreover, dates back exactly one year, namely the NFT sale of Michelangelo’s Tondo Doni reproduced in digital format? To understand what is going on, one can start precisely from what happened in May 2021, when a digital reproduction of Michelangelo’s masterpiece was sold for the sum of 240,000 euros. It was a “digital silkscreen” (this is how it was presented), i.e., a unique copy of the work preserved in the Uffizi, which had both a “material” part, a screen with ultra-high-definition digital reproduction and a frame handcrafted also as a faithful physical reproduction, and its NFT certificate.In fact, the reproduction of the Tondo Doni was authenticated by NFT (Non-Fungible Token, a kind of property deed that certifies the uniqueness and authenticity of an asset: we speak of NFT works of art for digital works accompanied by this certificate, which shields them from reckless reproductions), and the operation had been handled by the company Cinello, founded by John Blem and Franco Losi, holder of the patent for DAWs - Digital Artworks, faithful, high-quality reproductions of ancient works of art.

The Uffizi had obtained half of the proceeds from the sale of the digital Tondo Doni net of expenses (the Florentine museum had received 70 thousand euros), and in addition the museum had made an agreement with Cinello to carry out similar operations (execution of the reproductions and sale in NFT format) for 40 other works of art. The example had then been followed by other Italian museums, which similarly reached partnership agreements with Cinello to achieve similar results. In short: to sell reproductions of the artworks, certified by NFT, to interested collectors in order to obtain easy revenues, since the technical part and the sale are up to the company, while the museum merely grants permission to reproduce the work.

The Uffizi-Iene-Republican controversy.

The controversy arose because of a report by Iene aired on Italia 1 on May 25 and anticipated by an article in Repubblica signed by Giuliano Foschini: the TV program and the newspaper in fact raised the problem of the dissemination of the reproductions. “If the buyer ever decides to exhibit it,” Repubblica asks, “can he do so without the permission of the Uffizi? In essence: aren’t we in danger of losing control of our heritage in a time when we are moving more and more toward the metaverse?” In addition, Le Iene and Repubblica challenge the fact that Cinello made deals without any public procedure (“Cinello pays no fee, he splits the revenue in half (a very high percentage for a brokerage). And that although there is no mention of exclusivity in the contract, in fact there is a clause that almost draws it”). In addition, Republic read the minutes of the commission appointed by the Ministry of Culture to examine the case of state museum works reproduced digitally and sold through NFT: in an excerpt of these minutes, we read that the director general of museums, Massimo Osanna, immediately blocked the contracts entered into by some museums (the article mentions the Uffizi, the Pilotta in Parma, the Galleria Nazionale delle Marche, the Museo Nazionale di Capodimonte, and the MANN in Naples) “because they provided for the alienation of the reproduction of the asset. The unavoidable necessity is to have the state retain ownership of the reproduction.”

The Uffizi’s retort was not long in coming: the museum explicitly spoke of “incorrect statements” in the Repubblica article. “The author of the article completely misrepresents the issue,” the museum let it know, “because he has not understood the basic technological and legal concepts that govern the production, dissemination and eventual commercialization of images of state cultural property, including those certified with Nft technology.”

The agreement, meanwhile, dates back to December 2016, expired in December 2021, and had been forwarded as per practice to the General Directorate of Museums: the Ministry, therefore, knew what was going on, and no concerns were raised at the time. “Foschini,” the Uffizi press office lets the Uffizi know, “completely misquotes a passage from a report of a commission of the Ministry of Culture (which he sloppily calls Mibac, by the name briefly in use during the Conte I government), in which the director general Massimo Osanna is attributed with the statement that this and other cases were ’extremely disadvantageous for the administration, because they provided for the alienation of the reproduction of the asset.’” In reality there was not, nor could there have been, any alienation, “because the law does not provide for it,” the Florence museum explains. “And an imaginary agreement that said otherwise would simply be null and void. But that has not been the case. Since the 1990s of the last century, the Permissions Service of the Uffizi Galleries has been authorizing dozens and dozens of uses of images of works on consignment to the museum every day, obviously according to the regulations in force and always in a non-exclusive manner: for many years even of digital images, which are subject to the same discipline as those on paper or other media.”

As for the question of who holds the rights attached to the works, the relevant legislation consists of the 1994 Ronchey Law and the 2004 Urbani Code. “The rights,” the Uffizi explain, “are not in any way alienated, the contractor has no authority to employ the images granted for exhibitions or other unauthorized uses, and the patrimony remains firmly in the hands of the Italian Republic.” As for the alleged exclusivity, the Uffizi notes that “the contract explicitly mentions the non-exclusivity of the concession, in absolute compliance with the applicable regulations. The statement that the Cinello company ’pays no fee’ but ’splits the revenue in half (a very high percentage for an intermediary)’ is completely misleading. In fact, the private contractor does not practice any ’intermediation’ on behalf of the state, but acts in its own name and on its own behalf, without any interest or investment from the museum. The percentage in favor of the museum is by no means low, but on the contrary, at 50 percent of net revenues it is congruently high, given that quotas for the use of images usually range between 10 percent and 25 percent, depending on the specific product and market for which use is authorized.”

Finally, on the fact that the collaboration did not go through a tender, Eike Schmidt responded directly in the Hyenas report: there was no tender because there is no exclusivity, Cinello asked to use the Uffizi’s works to make digital reproductions, just as hundreds of other individuals do every year, and they pay what is due to the museum to get the authorizations. In short, the Uffizi has not given Cinello exclusive rights to reproduce their works.

But how do NFTs of artworks in our state museums work?

Meanwhile, it is necessary to understand what NFTs are. The acronym, as anticipated at the outset, stands for “Non-Fungible Tokens”: it is a unique, transferable cryptographic file that contains information about the artwork, its owners, as well as possibly also about changes of ownership. NFTs are recorded in a blockchain, a platform that can be considered a kind of “registry” of NFTs. In short, “whoever buys an Nft,” lawyer Dario Deotto explained in Sole 24 Ore, “actually buys a sort of digital certificate of authenticity of that good or work.” So, do the rights to the Tondo Doni pass to whoever buys the NFT? Absolutely not: the holder of the NFT owns the rights to a reproduction of Michelangelo’s work. “The fact,” Deotto points out, “is that the commitment on the part of the transferor to transfer the good or work relates to that copy of the good or work, but nothing, for example, prevents another copy of the good or work from being transferred, complete with an autograph signature, by the author.”

Therefore, it is also improper to speak of “NFTs of museum works”: if anything, NFTs are certificates of ownership and ownership of rights to the digital work derived from the original held at the Uffizi. This is therefore why the Uffizi-Cinello operation also saw the production of a “physical” work, a digital Tondo Doni embedded in the faithful reproduction of the frame: because the NFT is not itself a work of art, it is a file that does not contain the work. And the Tondo Doni produced by Cinello is therefore a unique work of art, quite distinct from the one everyone admires at the Uffizi.

Of course, this is a new world for public museums, and one that also needs to be explored in terms of the legal implications of transactions like the one involving the Uffizi and Cinello. For this, the Ministry of Culture is beginning to study what to do. “The transposition of a work of art to NFT and blockchain,” Undersecretary Lucia Borgonzoni explained last April 30 (so before the controversy) in an interview with Il Sole 24 Ore, “implies less freedom of action, since the transfer of rights concerns the NFT and not the reproduced work. If you sell the Tondo Doni digitally I assign the right on the NFT that reproduces the work and not the copyright on the physical work. The difference is both subtle and substantial. NFT works can be an additional income and heritage enhancement tool.” Despite the April 30 openings, Borgonzoni, in another interview with La Nazione on May 19, later backtracked, stressing that the Ministry has asked all museums in Italy to “stop, because the sale of these rights opens up scenarios that cannot be controlled at the moment. It doesn’t matter if the NFTs are a source of revenue. What matters is to protect from all points of view our art.” But what is the risk in concrete terms? The undersecretary remains vague: the fact that reproductions will end up on the “metaverse” and the fact that anyone anywhere can go and “recreate his own museum with our artworks.” In fact, there is no danger of museums losing ownership of the rights to the works. If anything, the more realistic risks concern the loss of control over reproductions, and always assuming that NFTs will open up scenarios different from the current ones: even now we see the great masterpieces of Italian art, from Michelangelo’s David to Leonardo da Vinci’s Last Supper , reproduced everywhere, often without permissions as also attested by recent court cases pitting Italian museums against those who made use of reproductions without asking permission from the rights holders, namely the museums themselves.

Relevant laws regulate reproduction rights. The main one is the Cultural Heritage Code, which regulates reproductions of works of art in Articles 107 and 108, and then the Decree of the Ministry of Economy and Finance of 25/11/2021, with a section on digital reproductions. And again, there are two European directives, No. 1024 of 2019, which regulates data reuse in public administration, and No. 708 of 2019, on copyright and digital finance. Just to better assess the situation, the MiC in December set up a “Commission of experts that,” Borgonzoni concludes, “has the task of studying NFTs and drafting the rules that will regulate the sector.”

What the experts think

“I have been following with great interest the emergence of this new form of expression and also the collecting that accompanies it,” says art historian Cristina Acidini, president of the Academy of the Arts of Drawing and former superintendent of the Polo Museale Fiorentino, “and I am very relieved that the Ministry of Culture has decided to take stock of the situation and possibly give guidelines because it is a subject that cannot be left to individual interpretation. It is a big responsibility to spread through these very sophisticated means images of planetary value that actually can also transit in a way that is controlled with great difficulty. So without blocking something that is very promising and also very fascinating I think it’s really time to regulate this activity.”

Lawyer Gloria Gatti, in the pages of Il Giornale dell’Arte, downplays, “The NFTs (Non-Fungible Tokens) that contain the high-resolution digitized images of 17 works in the Uffizi Galleries (made with so much frame by the company Cinello, which calls them DAWs) are nothing more than deluxe trinkets, like the postcards, magnets, notebooks and pencils that visitors take home as souvenirs. Just as no one posed the problem of the vulgarization of culture [...] for the image of the Mona Lisa placed by Jeff Koons and Louis Vuitton on a handbag, likewise, Le Iene should not have posed the problem of a rich gentleman who hung a round frame with a television screen inside in which the image of Michelangelo’s Tondo Doni is reproduced. In fact, the Cultural Heritage and Landscape Code makes the reproduction of cultural property in the care of the Ministry, regions and other public entities subject to a concessionary measure, which is discretionary in nature, by the entity that has the property in its care (Articles 107-109 Cultural Heritage Code). In particular, the granting of the faculty of reproduction (and the determination of any fee or consideration) is subject to the evaluation of the intended uses, which must be the subject of a declaration and commitment by the applicant to the Administration. As a rule, the granting measure limits the further usability of the images. The granting of exclusivity is incompatible with the provisions of public law and would, moreover, be null and void. Since it is a mere digital copy of a cultural asset, without any creative contribution, it cannot be considered a work protected by copyright or even enjoy an autonomous and new right of reproduction, so much so that Cinello has registered a patent.” On the same line as Gatti is Massimiliano Zane, an expert on the economics of culture: “Ultimately, speaking from the Uffizi Galleries and NFT affair, we are talking about neither more nor less than beautiful postcards: digital postcards, in 8k, very very expensive, but postcards nonetheless.”

Two state museum directors also spoke on the case, espousing the line of caution. Cecilie Hollberg, director of the Galleria dell’Accademia in Florence, fears the risk of a black market in digital reproductions: “At the basis of Nfts there is always a digitization of the works, which I don’t do, an outsider does it, and who guarantees me that of these digitized works I don’t then misuse them? There will be contracts, but after a while, or even right away, there could be a black market. I have absolutely no guarantee. I find it a risky solution for cultural heritage because if a third party digitizes it means that I absolutely no longer have control over these works because they could do whatever they want.” Thus, on the other hand, Luigi Gallo, director of the Galleria Nazionale delle Marche: “Welcome guidelines from the Ministry of Culture and refresher courses for museums on the issue of art Nfts, the ’not fungible tokens,’ digital reproductions of works of art registered in the blockchain and numbered.” MiC’s Directorate General of Museums “did well, indeed very well, to put the brakes on this front and take time for reflection. When I arrived in Urbino, contacts had been initiated in the fall of 2020, which were not followed up: so no reproductions of works from the gallery’s collections were made.” In short: the issue is new and there is much to study.

Controversy over NFTs of state museum works explained well

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