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    How Virtual Currencies Are Helping Starving Artists Get Paid

    Written by

    Meghan Neal

    contributing editor

    Image via Flickr

    More often than not, being in a professional artist and making good money are like oil and water in America—as creative types' parents are wont to remind us. Artists, actors, and musicians are caught in the perfect storm of a struggling economy, a society that doesn't put a lot of monetary value on the arts, and changing technology that's challenging traditional forms of revenue.

    It's a digital problem that begs for a digital solution. Some savvy entrepreneurs think virtual currency could be the answer.

    For one, there’s Bitcoin, which artists and musicians are increasingly adopting as a payment method. One startup, Art4bit, believes creating “synergies” between art and cryptocurrencies could be the key to unlocking a fair payment model for artists. Bitcoin can benefit artists because there are minimal transaction fees and taxes, and the transaction is irreversible, unlike credit card companies or PayPal. It also opens up the marketplace internationally, since there's no need to worry about currency conversion.

    "Art markets and global economy are in crisis, but Internet and alternative currencies can make flourish new markets, linking people all over the globe, the company writes on its website. "Imagine art pieces sold around the world, without paying banking fees and with no borders. Today Bitcoins make it possible."

    AudioPlace, a platform to reward your favorite new musicians with a few Bitcoins, believes the decentralized currency is ideal for supporting new music because there's no advertising or industry influence—it's a transparent system for launching new artists.

    These benefits are nice, but they're not about to make aspiring painters and garage bands flush with cash. For that, we’ll need a more core-shaking change to the system. Enter Culture Coin, an alternative virtual currency that would create a new micro-economy for artists. The idea is currently is a finalist for the Business Unusual Challenge, organized by EmcArts. The winner will get $35,000 and will be announced in October.

    Culture Coin's goal is to be not just another alternative revenue stream, but an independent, sustainable economic model. Here’s the idea. By creating a brand new monetary system, you can decide what things are worth. The folks behind the Culture Coin concept, a group called Howlround, want to assign value to "sweat equity"—the labor, resources, physical goods, time and energy that artists put into projects.

    So, you give these latent resources Culture Coin value, and an artist “deposits” them back into the "bank" for someone to purchase with Culture Coins. Person B then use that payment for the next creative project, while person B can take the “real” cash they saved on resources and get paid. Meanwhile, the money stays in the ecosystem and circulates through the community.

    Exactly how to pull this off still needs some working out, and will probably be the make or break for the concept. But the principle behind the idea—taking the financial power away from organizations and industries, and putting it the hands of artists themselves—has been picking up steam for a while.

    "In the age of the Internet, all you need to "print" a currency is a number of computers tied to the same network and a group of people who want to buy and sell goods and services using an agreed-upon means of exchange,” the Atlantic wrote in a feature on “the new money.”

    The internet is making collaborative consumption much easier to pull off, which in turn is changing the way we think of “value.” Case in point, when Airbnb connected people that had extra space to people who needed a place to stay, the empty couch in your living room suddenly had a dollar sign on it.  

    The change in mindset also shows in the rise of micro-economies with their own virtual currencies. Nowadays, several towns in the US and overseas have adopted local currencies to encourage people to buy local. Businesses are launching virtual currencies to keep customers in their marketplace—think: credit card rewards, frequent flier miles, Amazon Coins, Facebook Credits, or Apple's iMoney.

    The citizens of Greece, crippled by the unemployment and austerity measures, have even taken to bartering, meeting in the local square to swap goods and services directly.

    Now we can add it the pile of attempts to leverage the internet to compensation artists—things like crowdfunding, digital tip jars, and other forms of fan funding. These microtransactions are notoriously tricky to pull off, because the fees are high but the cash amounts so small. And with a fragmented market—a slew of startups in the space but no one prevailing system—there’s no telling how much money is actually making it into artists' pockets.

    As for Art4bit and Culture Currency, they’re both in the very early stages of an audacious tas: challenging the one-size-fits-all traditional currency and wiping the slate clean for what’s considered valuable in today’s society.