How did you get the idea of creating a business closely connected to the world of art?

Almost a decade ago, as an experiment, we created the first ever mutual investment fund of art valuables in Russia. The possibility of creating such a fund was embedded in the legal framework, and yet in all the years of its existence it wasn’t done. The foundation of the fund was a small corporate collection of drawings from “The Italian album” by Karl Brullov. We had a theory that art objects don’t make it to the stock market because of their extremely high price. Usually we’re talking about millions of dollars. You can buy a share at the stock exchange for $100, but you can’t buy a painting with the same amount. So we decided to create shares of paintings. One share in our fund would have cost you half a million Roubles, and we sold nothing. But that was just the beginning. We had to understand how to turn art objects into an asset that can bring a constant flow of income. The art market is a sphere with massive inequality, a potential heaven for any investor. Our mutual investment fund cost only $4,5 million. And yet it was extensively covered in the media, including international publications.  So, a business with a relatively small price tag attracted quite a lot of public attention. That got me thinking – how could we use that?

And you found your answer in IT?

Yes, it turned out that the key was in the digital world, in the field of information management. Take any painting that hangs on a wall that costs $1000. After having it authenticated, we find out that it was painted in the middle ages. Its price is immediately increased sseveral-fold, at auctions you can buy works by unknows medieval artists for $5-10K. Then we find out that it was painted by someone in Rembrandt’s circle. The price spikes to hundreds of thousands of dollars. And then suddenly you find out that it was painted by Rembrandt himself. Now we’re talking about dozens of millions!

The painting itself hasn’t changed, nothing happened to it. So why did the price go through the roof? To answer that question, you can use a lot of descriptive words, from “narrative” to “provenance”. But all of it together, from financial and technical point of view, is simply information. The price of the art object lies not in the object itself but in the information surrounding it.

Let’s think of another story. Before the 20th century, the most famous painting in the world, the Mona Lisa, was hardly known to anyone. Now it’s one of the highest valued masterpieces. What made it so famous, apart from the obvious mastery of execution? In 1911 the painting was stolen and triumphantly returned to the museum, becoming an overnight newspaper sensation.

Stimulating public interest or as they now call it, “creating a hype”, is a mechanism that works like clockwork to this day. Multiple articles, mentions, memes, photographs create a stream of information that attract attention and turns art works into important masterpieces in the eyes of the consumer. Information such selfies, likes, hype also increase the price.

But the problem is that right now there is no mechanism that could convert this constant information stream, the steam constantly created around artworks, into a stable price builder. All of it does affect the art market pricing but doesn’t translate into serious money. So as an engineer I’m faced with the challenge of creating a machine that would convert all the steam into money.

Is .ART that machine?

I hope that it will become part of it. The ultimate priority is to bring trillions into the art market. Right here and now the instrument is .ART, so I’m using it. But if other instruments appear tomorrow I will consider them too. .ART gives me a way of bringing into life a very important idea that I have been thinking on for quite a while. We need to create a sort of a time capsule for information related to art objects, there has to be a safe container for it. In this day and age, the value of authentic information is obvious to everyone, hence its collection and preservation in one reliable, exclusive source that has certain authority would be a big step towards its price increase, as well as price growth for objects associated with it.

Domain industry is a great vehicle for such a project because there is no need to spend millions on marketing and advertising, on proving that this is the right solution. It has all been lode long before. If we talk about brands, then Google, for instance, is knows for a couple of decades, trillions of dollars have been invested into that name. Everyone knows what Google is. To count all the money, time and energy spent on the brand that “art” is… it’s simply impossible.

Somehow we got lucky and became the administrators of that brand in the digital world. But it’s not just my asset, it’s what humanity has been creating for centuries. My task is distribution – to provide an access to that umbrella brand to everyone.

How did you manage to get rights to the .ART domain?

I have to say that I very got lucky. Back when I came up with the idea of creating time capsules for information, a procedure for obtaining rights to a domain zone simply didn’t exist, although it would have been the perfect solution for my challenge. And then in 2011, out of the blue, ICANN made a historical (in their own words) announcement. They decided to reform the whole DNS system that existed at that point. For a long time, there were only .com, .net, .org and a few other domain extensions. At the same time there were national domain extensions, such as .co.uk, .cn and .ru. After years of discussions ICANN realised that such a limited amount of domain extensions is holding up the development of the Internet. People could not easily get good domain names, there was a lot of speculation. In January 2012 ICANN started accepting requests for new gTLDs.

 

And .ART was among these gTLDs?

Yes, .ART was actually quite a popular choice. After the submission period ended, we found that there were submissions for 1930 new gTLDs from over 1900 organisations. Most gTLD “strings” got just one or two submissions, but some were in greater demand. The .APP extension was at the top with 13 companies vying to get rights, including giants such as Google and Amazon. Eventually Google purchased .APP during an open auction for $25 million. .ART was third among the most sought after gTLDs; it had 8 business and 2 “community” submissions.

There are three types of submissions allowed by ICANN: “geo” TLDs such as .moscow and .london, those representing specific “community” TLDs (such as in case of the American Bankers Association, which got the right to operate .BANK); and “generic” applications from private companies or individuals seeking to build a business with the acquired top-level domain name. ICANN developed specific criteria to test whether an applicant met the definition of “community.” The benefit of being identified as a “community” TLD is that, if there is more than one applicant for one domain extension, the “community” applicant will prevail. Otherwise, the contending applications will be resolved via an auction process.

In case of .ART I approached major art institutions and museums to collect support for a community application, but realised that, under the ICANN rules, the “art community” was too broad to qualify for this distinction. In the end we submitted a generic business application.

Of the other nine applications, there were two for .ART that were submitted as community applications, which led to certain confusion. It was unclear which, if any, organisation should be designated to represent the entire, not-well-defined art community.

To clarify the situation the two applicants, both prominent online art news portals, realised that they were essentially in the way of each other and made an attempt at uniting, signing a joint memorandum. ICANN rejected the proposition, and followed its rules – conducting separate evaluations to determine if either of the two applications met the community criteria.

The experts that staffed the ICANN Community Evaluation came to the unsurprising conclusion that neither of the applicants qualified to represent the art community.

So, three years after these ten applicants presented their submissions, ICANN finally was able to consider all the applications and deal with the contention for the .ART TLD name..

In cases of contention, all participants had to either agree to some sort of settlement or agree to  an auction. The parties in this case, agreed to a “private” auction where the amount paid by the “winner” was distributed among the “losers.”

The auction was conducted on July 15th, 2015; I won against 9 other applicants. At the end of March 2016, .ART signed the agreement with ICANN.

What happened after you signed the agreement with ICANN?

That was a whole other story. In a very short period of time we had to get a team together, come up with a strategy, and do it all in the conditions of an economic crisis.

In December 2016 we launched. Companies like Rolls-Royce, Apple and Google claimed their domains straight away. According to the rules they had 60 days to do that. After that you can technically sell any trademark to anyone who claims it, but we try to avoid that on the principle “right name to the right hands”. People build businesses around their names, but we don’t want to make a business around the names that don’t belong to us. So when Amazon approached us to buy amazon.art, we sold it to them for the offered price. “Right name to the right hands” is our core principle.

Now we are fully operational. January 2019 was the first month we broke even. And in March we started online registration of art objects – a new big development stage for .ART.

This stage is all about our pioneering approach to what we do. .ART became the first domain zone in the history of the Internet, which ICANN granted the permission to expand the WHOIS service, which is the main source of data for domain registrations. We added new fields, which can now include unique information about the art objects (artist’s name, caption, owner etc). This kind of data digitisation holds a great potential and is of interest for any organisation that preserves or sells art objects. This solution also allows for the inclusion of any tech innovation, including blockchain.

Why do people and businesses related to the art world should have a .ART domain and not, for instance, .com? 

.com is a very old and widespread TLD, it used to be almost universal for a very long time. But now there is a way to digitally self-identify in a more precise way. It was time for it to happen, as ICANN itself admitted, and now there are numerous options for those who want their own website. Clearly a more fitting domain extension is the one related to the sphere the owner works in.

.ART is a sort of a digital dress-code. .com means commercial. If that’s what you do – it’s for you. If you’re an NGO, then get a .org, if you’re a ministry – get .gov. But if you want to identify with the art community, then .ART is the only way.

I’ll give you an example. TATE Modern is situated on the bank of the river Thames. The combination of its physical address and its content makes it highly successful in terms of visitor numbers. If TATE Modern was completely empty or had a flea market inside (inadequate content), no one would go there. On the other hand, a gallery which exhibits Dali, Warhol and Picasso, situated in the East Midlands waste disposal areas, would not get much traffic either. Address does matter. Your address in the art world is your status, just like in the brick and mortar world. The simple formula is “relevant content plus relevant address” will give you the best results.
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.ART launched over two years ago. Are there things you are proud of?

Definitely. In comparison to other domain zones, we have a very high percentage of users who stay. About 90% of the people who got themselves .ART websites are continuing to use them. About the same percentage get annual renewals of their domain names. We are quite high up in the domain zone rankings. The drop-out rate from other domain zones after a year’s registration is around 50%.

Most of our registrations are name+surname+.ART combinations. That means people want to associate their identity with the .ART extension, which is nice to see. Anyone who strives to show a connection to art in their positioning comes to us – it’s very prestigious to be associated with the art world.

We also have quite an impressive number of prominent registrants, including the National Museum of Modern Art (MAXXI) in Rome, the Multimedia Art Museum of Moscow, a crowdfunding platform very popular among artists Kickstarter, and many more. In total we’ve hit 50K registrations already.

How would you explain the mission of what you do?

If you really look at the bigger picture, the main product of human activity is culture. We know about the life of past generations from cultural artefact’s – music, sculpture, architecture, paintings. That’s where the knowledge is. And there is a practical aspect to it. Romans used to copy Greek sculptures en masse. If it wasn’t for them, we would have never seen these objects. Copying and replication is a good thing for culture. An attempt to yet again immortalise a cultural phenomenon is a blessing. And that’s exactly what we are doing.

Then again, every activity, even a charitable one, comes down to economics. The task is to create a cultural complex (similar to a military-industrial or energy complex), which would be able to attract trillions of dollars as well.

Because on the one hand it’s obvious that culture and art is the main product of our human activity, but on the other hand – its volume is ridiculously small in comparison to other industries. According to the TEFAF report, the volume of the world art market in 2017 was close to $64bln. If you add the black art marker it would go up to $100bln. Which is about the same volume the property marker trading achieves in just a week. The capitalisation of the world stock market is measured at $80-90 trillions. The size of the art market is mere crumbs in comparison to that. So what, we value petroleum more than culture?

In a way I see my mission as establishing fair treatment for the arts. I’d like to attract trillions to the sphere which encompasses things far more valuable for humanity than petroleum.

Also published on Medium.