A great link from istar:

The stores failed, ultimately, not because Kinkade treated them badly, and not because other stores were undercutting them. The stores failed because Kinkades are a commodity, and anybody wanting to buy one could get a second-hand Kinkade online at a much lower price than that charged at retail. Buyers no longer believed that their paintings would increase in value, so they bought fewer than they used to. And when they did buy, they were likely to buy already-existing Kinkades rather than new ones.

As a general rule, no retailer has ever consistently been able to make money by selling the proposition that his goods are going to increase in value after they’re bought. Kinkade managed it for a few years, but then, inevitably, the bubble burst. And when bubbles burst, people get hurt. It’s not the fault of Thomas Kinkade, it’s simple market dynamics.

This is the sort of thing I was worried about from artists after visiting Wyland's gallery in Laguna Beach, and reading about Kinkade being in 5% of homes. That they limit the supply of their artwork enough to keep prices high and make the art seem exclusive...but then keep pumping them out as fast as they can without driving the price down.

It's optimal for the artist - high volume and high price - but you get a lot of people buying something expensive because they expect it will hold its value because it is limited in quantity...but over the course of years, finding that the market is actually flooded with these "limited" works. When I saw all those "198 of 350" works, I just thought "That is an awful lot of $3,000 signed posters to be trying to sell...is there really that much of a market?"

Anyway, dunno if it is true for other artists, but fascinating that it turns out to be true for Kinkade. And awesome that the internet provided an accurate estimate of resale value via a secondary market, to correct buyers' expectations.

It would be so wicked cool to have a moving sculpture made from ferrofluid (and a few electromagnets driven at randomly varying levels).

choiceful & I are in Laguna Beach for our anniversary. It's an artsy California beach town, so being here involves a lot of strolling, shopping for cute unique clothes (which rarely fit us, but at least there is a lot of stuff we like), and art galleries.

First, it is impossible not to notice the commercialization of art here. As a fan of commercialization, I generally approve. Seeing people like Wyland and Thomas Kinkade who make art I like, and have managed to sell massive amounts of it, is pretty cool. Good for them.

But...then my inner anti-IP / economic efficiency gremlin pops up. The idea of people paying huge amounts of money for original paintings makes sense. Limited supply, so if there is demand, hey, the sky is the limit. No problem. But these bigtime artists (incl. my new favorite, V. Kush) sell very few originals - what they sell are huge numbers of "limited, authorized reproductions".

So what you are getting is a painting which:

1) Is a reproduction
2) Is made using a special process, like giclee (the modern alternative to lithography), which offers high-resolution, accurate color reproduction and long lifetimes.
3) Has an artificially restricted supply (usually in the hundreds), which guarantees to you, the buyer, that your art will maintain its value.
4) Is signed and certified by the artist.

It is the artist's right (from my point of view) to limit the number of signed reproductions to increase their profit. But it bothers me to see such high prices ($1,000 and up) charged for reproductions, whose supply is artificially limited specifically in order to drive up their price. (Priced at monopoly levels, rather than where MR = MC) Like any monopoly, there is a deadweight loss. And it seems likely that the deadweight loss for art is very high, because there are a few people willing to spend a lot of money, and marginal costs are very low. So the monopoly quantity provided is way less than the quantity would be in a competitive market.

There's something else weird which is going on here, which is that the art is being priced based on scarcity value instead of consumption value. Let's contrast art pricing with the pricing of another artist creation mainly sold as reproduction - the book. The author of a book has a monopoly, but books get sold with high volume and low prices. Why? Well, one reason is probably substitutability - books sub for each other much more than art, so if one author raises their prices, people will just buy other books. But I suspect another reason is that authors want their books to be read by as many people as possible, while artists want their works to be in a few exclusive places. And readers want to enjoy a book, while art collectors want to feel they own a special, limited thing. Actually, I bet it is the latter which dominates.

Since I seem to be judging other people's utility functions a lot lately, I will say that this art collector mentality is (IMHO) a bad thing. Creating artificially high prices through artificial scarcity is taking value away from the world. If you only like something when no one else has it, your utility function makes other people's utility functions harder to satisfy. In that way, this quality (miserliness?) is much like jealousy/envy (you are unhappy when someone else has something that you don't).

Maybe this seems wLimiting the scope of miserliness in society seems like an important way to maximize common good. Suppose the users of antibiotics had gotten special, unique value from curing their own diseases - but only if others kept on dying of those diseases. Imagine the Captains of Industry viewing antibiotics, not primarily for their ability to cure disease, but for knowing that they had the godlike and unique power to save lives - and paying huge amounts per pill for that feeling. And so the drug makers only did "limited, authorized runs" and produced small numbers of antibiotics, which the wealthy feverishly (ha!) bid for.

It would be a worse world. Obviously the case is more severe for life & death than for having more prettiness in our lives, but I don't see how that difference translates to a difference in kind. A world where art reproductions were viewed as goods to be enjoyed (displayed in your home or office), rather than to be collected and hoarded, would be a much prettier world. Deadweight loss is bad. Miserliness costs us all.

I dunno, this is kinda rambly and not fully logical, and maybe I'm just annoyed that the art I want is expensive even when it's just a reproduction and I'm just rationalizing it, but I think there is something to this. (Hey, I'm a smart guy, my rationalizations are sometimes wrong but they're usually interesting!)

I'm very picky about art, so there are not many artists I like. But today, I discovered one - Vladimir Kush. He reminds me a lot of Magritte, and most of his paintings are based on a Magritte concept: a surreal blending of two thematically related things. The difference is that his focus is narrower (only some of Magritte's work fits into this category), but with many more examples within that category, and I think his paintings are prettier. (I was tempted to say "aesthetically appealing", but why snobbify a simple concept like "pretty").

Here are some of my favorites:



He even has a "dynamic geography" piece, of a house/handbag:



There is a larger painting with an entire landscape of these.

I bought a book, and will (at leisure) ponder whether to buy posters (cheap!), signed limited edition prints ($1500 - $13000) or originals ($40K, $69K, and up...um...I think not!).

Which reminds me, time to rant about artificial limitation of supply and copyright., but I'll do that in a separate post...

The whole "Seastead resort" concept has been simmering in the back of my mind for awhile now. In some ways it can be imagined as a weird twist on Burning Man, with a lot of commonalities (crazy / weird / cool stuff, art everywhere, rave-culture inspired, drugs) and a lot of differences (commercialized, luxurious, comfortable, smaller, year-round, legally safer (no narcs)). It is definitely meant to appeal to a similar audience (or at least, the part of that audience that can afford it).

Anyway, the thoughts are starting to boil over into the foreground and I'm writing down some ideas which will eventually become a business plan. One of the aspects of BM I want to replicate is "art EVERYWHERE", particularly interactive art. I want some good examples, so: what are your favorite interactive art installations? Some of mine (from BM), are:

Dance Dance Immolation
Laser Harp
Telestereoscope
Firefall

Places like Discovery/Tech Museums are also good sources for this sort of thing.

I feel like I'm just putting every fun thing I've done in my life into this business plan. Hopefully "fun things that Patri has done" makes for a good vacation destination. *I* think it does, but obviously I'm very biased!

Oh, also, if you are in touch with this culture and comfortable with commercializing fun experiences (nasu_dengaku being a perfect example: a Burner who founded a company that makes interactive art displays), and would be interested in providing feedback on the bplan when it has taken better shape, comment here.