Fast forward again to 2010, and this from Investopedia.com –
‘A 23-year old in London, Tom Saunders is offering an “emerging artist derivative contract”. The intention of the contract is to provide purchasers the option, but not the obligation (just like a normal options contract), to purchase one of Saunders’ works in the future – in 10 years to be precise. Investors will pay Saunders ￡2,000 now for the option to purchase a future work for ￡1 in 10 years time. The idea behind the contract is that many artists do not mature or gain notoriety for many years – time often spent as a starving artist, or time spent compromising artistry for a paycheck.’
So whats going on here…?
Well, the ‘EADC’ contract offers further confirmation that when it comes to Artworks, latent value emerges. But it would appear that one of the main aims of the contract is to circumvent the Latency Problem by asking buyers to trust that an emerging Artist will be successful in the future, before the process of latent value emergence is able to reveal whether they are or not – kind of like trying to put the chicken before the egg or the cart before the horse, so to speak.
So, as fantastic an idea as the EADC is, unfortunately as a workable solution to the Latency Problem it’s a non-starter; there can be no short cuts with the latent value emergence process.
What the EADC does do however, is to shift the focus away from ‘Resales’ as the only way to solve this problem… In fact, the EADC makes waiting for a Royalties payment look a bit like waiting for a Bonus Bond win.
In Part 5… Is the Latency Problem solvable?