In this month’s installment of the Let’s Talk podcast series, staff members Natalie Larsen and Maraika Lumholdt discuss some of the biggest and most influential tech scandals we saw occur in 2022, and how they affect the ongoing of arts organizations. They also discuss where we might see policy headed in 2023.
Listed in order, the articles referenced include:
People Are Not Happy That the SF Ballet Used AI-Generated Art To Promote ‘The Nutcracker’
What to expect from AI in 2023
Outsourcing Art and Literature to Machines Isn’t Wise
Sam Bankman-Fried Released on $250 Million Bond With Restrictions
Even After FTX, S.E.C. Chair Sees No Need for New Crypto Laws
Elon Musk Says He Will Resign as Twitter C.E.O. When He Finds Successor
Maraika Lumhodlt
I mean, it really seems like societally, as technology evolves and these tools are becoming more accessible. We're really just asking what we can do, and trying things out and pushing them forward for the sake of technology rather than asking ourselves what the actual consequences will be for these people and how go impact us. Welcome to another let's talk episode of Tech in the arts, the podcast series on the arts management and technology laboratory. The goal of our Let's Talk series is to exchange ideas, bring awareness and stay on top of the trends. My name is Maraika Lumholdt, host of Tech in the Arts, and today I'm joined by our staff writer and lead researcher Natalie Larsen to talk about current news that has been happening in the month of December 2022. We will cover some of the most notable topics of 2022, such as AI, big tech and crypto companies, controversies as well as NFTs.
Natalie Larsen
So the first topic that I wanted to discuss today is AI, it's been all over the news. In last month's episode, we discussed generative AI, and its use in marketing, software development, design, and many more industries. AI has been, needless to say a topic of sometimes heated and passionate debates in the arts especially. And I think this is because it's about more than just a machine taking the job of a human. There's, there's the question about whether something that is AI generated or AI assisted can even be considered arts, I found an article by Craig Axford, he says I find the act of creating art to be at least as important as the final product and later says that art is a process. And I just thought that was really interesting. In thinking about kind of all the training and the practice that leads up to a human artist creating a work of art, there is something kind of magical about the process itself. And when you take that, and you just enter a prompt into a machine. That's a sentiment that's been shared by several other artists, specifically, portrait artists. So I'm going to talk now about this app that Marika I'm sure you've heard of-- Lensa AI?
Maraika Lumhodlt
Oh, yes, I've seen a few 100 creations from Lensa recently.
Natalie Larsen
Yeah, I saw so many. I believe it was in the beginning of December, sometime around, there are so many people, including celebrities on Instagram, just sharing these avatars and self portraits that they created on the app. So this became a commodity for a lot of people's obviously, who could make themselves look like wizards or elves or other magical creatures, genuinely, to me sounds really, really cool. But we have to remember that it does come at a cost. Many of the artists who make their living from portrait commissions accused the company that created Lensa Prism Labs, of using their art without permission, which unfortunately, is not an uncommon accusation of many of the software programs that create AI generated works. Secondly, it's an incredibly affordable way to get multiple unique portraits of yourself, which kind of undermines the work that human artists do. The way that Lensa works for those who are unfamiliar, is users first have to upload a minimum of 10 photos of themselves. And then for $7.99, they get 50 portraits or avatars, whatever you want to call them. That's obviously a much cheaper price than a human artists would, charge for.
Natalie Larsen
So you're getting a lot more or a lot less. And to address these concerns, prisoner labs put out a statement saying that they don't believe AI will replace artists, but instead will be used as additional tool. And this is a common rebuttal for supporters of AI and the companies that create this kind of software, but I do think it's kind of a cop out argument. Because it's not really addressing, like, their concerns, and I feel like they're not actually listening to these artists. While Marika, neither of us is a visual artist. And this technology obviously, I think impacts the visual arts much more than other art forms. But in, in theater and in music, there is a lot of work Like goes into a production or a concert. Of course, visual artists trained for years to perfect their talents. And then to have a software program just use your art as a form of data to then spit out an image in seconds. Must feel kind of insulting. I mean, I can't imagine having spent hours upon hours practicing for a concert to then I don't know how that would work
Maraika Lumhodlt
for a machine to seen create the same thing.
Natalie Larsen
Yeah. Yeah, but it's similar output, and then to not be given any sort of record recognition or compensation.
Maraika Lumhodlt
Yup. And for it to be viewed as a, you know, an alternative to that hard human created art.
Natalie Larsen
Yeah, so I feel for these artists, and I'm hoping that in 2023, we'll see some of these concerns more adequately addressed. But I think that's that's asking for a little bit too much to be done in just one year. I think that's going to, unfortunately takes time.
Maraika Lumhodlt
Yeah, as we've seen with many of the technologies we've discussed, it is a snail's pace towards any kind of regulation or improvement in response to complaints or critique, justifiably from artists. I mean, it really seems like societally, as technology evolves, and these tools are becoming more accessible are really just asking what we can do, and trying things out and pushing them forward for the sake of technology, rather than asking ourselves what the actual consequences will be for these people, and how they'll impact us. Absolutely. And I think as more artists kind of speak out as they advocate for recognition and fair compensation and regulation of these types of technologies. Hopefully, with time, we'll see more of these concerns addressed.
Natalie Larsen
For example, San Francisco Ballet, just last month, he used an AI generated image of a nutcracker. Oh, yes, obviously promote their their production of The Nutcracker. And people, both artists and their audiences were not happy about it. It was pretty creepy. There was it was not even that great of image, I'm sorry to say San Francisco, but that just the kinds of stories that keep coming up will serve as as kind of lessons for arts organizations as well. We can't just rule out ethics when we're doing these kinds of things. And when we're working with AI, we have to kind of consider the consequences and consider as a result of our actions.
Maraika Lumhodlt
Yeah, I definitely agree. And, and it is an interesting, double edged sword, I think, too, because a lot of what AI can do, maybe not in these more artistic formats, like we've discussed, but in other applications can save a lot of time and replace work that a human would be doing otherwise, right, whether it's art, or I think another example that I've seen recently is Apple using AI to narrate books for audiobooks. So things like that whole entire processes that can be replaced by AI save money, they have time, I think we've talked for eons, what it feels like about how automation can replace humans jobs, whether that's like in a factory or as a rider, whatever it is. So on one hand, I do see how that can benefit organizations, save time and money, but they have to be thinking through those ethical concerns that you just mentioned. And maybe that's contributing to our overall narrative seems to be more and more prevalent of jobs that exist today are not going to exist in the future. So we need to train people now for those future jobs. It's not that we're cutting out job opportunities, it's just different jobs that we'll be having to train ourselves. So I do I do see how accelerates that discourse as well.
Natalie Larsen
Absolutely. And we'll try to stay on top of the, seems like hundreds of stories about this/
Maraika Lumhodlt
In terms of big tech and how big tech is being used. I want to talk about FTX which is a topic we talked about last month revisiting because a lot has happened since then.
Natalie Larsen
Yes, very spicy.
Maraika Lumhodlt
Very spicy. One of the biggest tech scandals from 2022 I would say and still very much going on. So for anyone that listened last month you would have heard us report on the arrest of Sam Bankman-Fried and the subsequent investigation of his practices in what he was doing with his company FTX so little recap of what happened in December, Sam Bankman-Fried was arrested and accused of defrauding customers and investors in his company FTX cryptocurrency company. So since that initial arrest he it's been reported by the New York Times that he's facing eight count indictment for this defrauding in addition to misappropriating billions of dollars for his personal use and violating federal campaign finance laws. So a lot of accusations stacked up against him. And he's also been accused of manipulating the market for two cryptocurrencies specifically called TerraUSD and Luna to try and benefit FTX. So that's a pretty major one, obviously, market manipulation is, is a large crime to be committed of. And it's interesting because cryptocurrency I don't think, is necessarily thought of as a parallel to traditional markets all the time, right? It's kind of like to go against a lot of traditional market dynamics. But it has been said that this is just as significant as the Bernie Madoff scheme from years ago, so Bernie Madoff 2.0 cryptocurrency edition.
Natalie Larsen
Yeah, millenial Benie Madoff.
Maraika Lumhodlt
Millennial Bernie Madoff, exactly. The new generation of fraud. So again, a lot more details have emerged in terms of the specifics around what FTX was doing. So now that it's been alleged that FTX was funneling customer deposits into Alameda Research, a trading firm that Sam Bankman-Fried was a co founder of interesting coincidence, probably not. And, as of now, two of the former FTX executives, Gary Wang, who was a co founder, and Caroline Ellison, who was the chief executive of Alameda Research, have already pleaded guilty to fraud charges that they were accused of, and are now cooperating with the authorities. So probably on their part, trying to get a lesser sentence by cooperation. I think last month, we also talked about how Fried was very openly talking about things and admitting that his lawyers told him not to talk, but he was talking. Now a very different story. I think his lawyers convinced him or he realized how serious the charges were. Because now it's been very quiet, minimal public appearances, minimal social media posts, all that.
So when it comes to how this impacts arts organizations, we touched a little bit on this already, but cryptocurrency is something that impacts arts organizations, particularly tech savvy ones might be using crypto as a fundraising tool when it comes to crypto philanthropy, perhaps others are creating NFTs to use as an additional revenue source. And those are bought and sold using different cryptocurrencies. So there's a number of ways that this could be impacting arts organization. So whatever the result of this action against FTX is that may or may not prompt regulation in the crypto industry, whatever it comes to be, will likely impact those arts organizations that are using or being touched by cryptocurrency in some form. I think it's interesting that Gary Gensler, who is the chair of the SEC, or the Securities and Exchange Commission, has come out and said that the existing rules around trading cryptocurrencies are sufficient. And he's saying that it's actually up to the crypto companies to come into compliance with them. And it's not a burden on the SEC or other regulative bodies to add more regulations and rein in the industry. So based on that argument, doesn't sound like there may be more regulation coming down the pipeline. But of course, we will try and keep you all informed of what will come in as we keep saying it is a very slow process. So I'm not optimistic that anything will happen by the next time we talk. So be aware of your investments in crypto know that that is a possibility.
Natalie Larsen
Yes, I'm going to add on to kind of continue on the trend of big tech and policy and regulation. Twitter is another one of our favorite companies.
Maraika Lumhodlt
Favorite problem child.
Natalie Larsen
Favorite problem child! That's obviously been making headlines mostly in in late 2022. And it's continuing to do so probably, most recently with Elon Musk announcing his plan to resign from his position as CEO whenever the company find someone to take over for him, but he will still be the owner of the company.
Natalie Larsen
But just this past Friday, Wire reported a to 200 million user email leak at Twitter. Twitter has not commented on this matter just yet. But this is not the first major leak that Twitter has experienced. This is just kind of the most recent one. So I think these two companies serve as kind of warnings to consumers, that a lack of regulation in the crypto industry paved the way for, for FTX to happen and for Sam Bankman-Fried to happen. And I think as Dr. Crawford put in our last episode, it's a critical time in tech policy that artists and arts organizations need to be paying attention to. So they can be prepared to respond to it in a way that they feel is most appropriate, whether that's ensuring that they're compliant with consumer data privacy laws, or assessing whether or not it's best to leave a social media platform altogether, because it's no longer aligns with their values.
Maraika Lumhodlt
And I think a lot should and probably are thinking already about solidifying, you know, the code of ethics having guidelines to assess these kinds of decisions against because they'll just become more and more frequent. And based on all of what we're hearing.
Natalie Larsen
I've seen artists and arts organizations have taken that stance on that and have said we are leaving this platform. This is not what we stand for. It's also troubling to me that the SEC chair doesn't feel this sense of urgency, especially in the wake of this huge trial. That's moving pretty quickly with FTX. Because it's pretty clear to me that crypto currencies are being pressured enough to fall into compliance with existing regulations. It's great to see that several lawmakers aren't shying away from expressing their opinions on the issue. Like Minnesota Senator Amy Klobuchar, who is the chair of the subcommittee on competition policy, antitrust and consumer rights. She's been pushing for a bill that would require big tech companies to pay news outlets for the media content they distribute on their platforms. In the EU. It's a completely different story. Just last year, they released the Digital Market Act or the DMA and the Digital Services Act or the DSA. Both of these regulations stand to protect consumers from online harm and stimulate greater competition in the tech industry, basically attempting to prevent a monopolistic market. So in terms of what's to be on the lookout for 2023. One expert predicted that something called the Digital Operational Resilience Act or the DORA will be of major significance, because it aims to increase cybersecurity and so basically mean that organizations would need to comply with this regulation, which could potentially mean investing in new cybersecurity software. Another interesting piece of legislation currently in the works is the AI Act, which goes back to what we were saying previously about some sort of regulatory framework for artificial intelligence. So this act would apply to anyone wanting to use build or sell AI products and services by basically diminishing the harm that AI could potentially cause in the future as we as we said before.
Maraika Lumhodlt
Yeah, I'm sure it will be fair in the future. But when we think about how the US responded to other legislation coming out of Europe like their GDPR initiative in terms of privacy, we saw states take action like California- They put out their CCPA regulation and, and slowly, we're starting to see action on this side of the Atlantic. So perhaps this will be the same kind of pattern or follow that same pattern. A lot of what we talked about today about AI would directly be impacted if the US proposed something in response to the AI apps that you were just talking about. So that would be really interesting to see how that impacts what's being done here with AI and how it impacts the arts. And I will say, like, GDPR, even if this regulation stays just in the EU, and the US does not do anything to enact their own, so many companies are, and organizations are operating internationally. So it's likely that in some way, this EU regulation will impact us based organizations choose.
Maraika Lumhodlt
I think that's a really great point, individual states taking on the initiative to and as for arts organizations, who may have customers abroad that are EU residents, they do need to fall into compliance, I believe, if their, if their customers are located in the EU, which especially for for larger organizations, that may very well be the case. So another reason why it's important to stay on top of that. Alright, so speaking of staying up to date on scandals and big tech and changes in big tech, another big change that we saw this year, this past year, 2022 really happened with NFTs. So we saw an NFT bubble burst, I would classify it as and after that there's a lot of speculation by experts and enthusiast alike, speculating in terms of what the NFT industry will look like going forward, or if it's a trend that now is dying off.
Maraika Lumhodlt
So pretty much throughout the entire year of 2022, we saw a ton of obstacles that NFTs were facing. In January, we were seeing $17 billion worth of NFTs being exchanged, but by September, so just eight months later, it had dropped all the way down to 400 million. To put that into percent perspective, that trading volume had decreased by 97%. So that's obviously very significant. There isn't one specific cause that we can pinpoint, for that crash in terms of the volume trading volume declining so rapidly. But in a Hyperallergic article, they stated that the FTX bankruptcy that we've been talking about was definitely impacting this decline. On top of that, there's been widespread criticism of the market, because of its inability to fairly compensate artists as well as its negative environmental impact. So those are two points that we discuss a lot. And it also, so Hyperallergic also theorizes that the traditional art market has gravitated towards NFTs. And because of that the success of NFT artists has become dependent on their connection to, quote "A gallery, institution or other organization", we're in a new year, there is still speculation of what that will mean in terms of how cities will continue to transform and adapt after this big downturn.
Maraika Lumhodlt
So the VP of Product at open sea has been quoted in a Wired article saying that he's confident that the utility of the product will reshape its value and ultimately, ultimately resuscitate it in the marketplace. He also said that there, quote, "a new breed of use cases surfacing that take advantage of the particular properties of NFTs." So clearly some optimism there. And some opinions that it's not just going to completely die off as an industry.
Maraika Lumhodlt
I think, specific use case that we continue to see as an opportunity for NFTs as in gaming, players can trade their assets in the game for cryptocurrency. Another is using NFTs for membership. So Starbucks, which has a pretty popular membership and rewards program has recently launched Starbucks Odyssey is a partnership with Polygon, which is ian Ethereum scaling platform. So this is new and there's not a ton here yet, but it will be an extension of Starbucks's loyalty program, where members of that program can earn NFTs. So there's another practical example of how it could still be used and potentially gained back. So those are just a few examples, but I think generally they're There are a lot of use cases to say NFTs can still persevere and be used in ways like this. We do also continue to see a push to make NFTs more accessible to the mass public and create community around the collection and trade of NFTs. I think these are points that early in NFTs' existence were big selling points right and, and showed the power and like the people orientation of NFTs and how it was so different than other traditional assets to be traded.
Maraika Lumhodlt
So companies are really trying to come up with incentives for consumers to collect these NFTs and really make it a desirable commodity again, but of course, I do think and I'm sure you share this opinion, Natalie, that the flaws that have been kind of revealed or critiqued do still need to be addressed. We can't just ignore them and try and make NFTs flashing again, Polygondecided or announced that they went carbon neutral in April 2022. And they've committed to becoming carbon negative in response to the growing criticism around the environmental impact of NFTs. So as long as companies like this, and at this scale are moving in this direction, and can improve the image of NFTs, there's definitely a chance that it can grow in 2023 and rebound and continue to grow bigger and bigger.
Maraika Lumhodlt
The group that was contributing primarily to the trading volume that we were seeing a year ago, it was just that group that was being appealed to with BoredApe and more traditional or previously done. Themes of NFTs I can absolutely see how diversifying in these ways and addressing flaws would attract those broader groups and bring back that volume very to more people.
Natalie Larsen
Thank you for listening to Tech in the Arts. Be on the lookout for new episodes coming to you very soon. If you found this episode, informative, educational or inspirational, be sure to send it to another arts or technology aficionado in your light. You can let us know what you think of this podcast by visiting our website amt-lab.org that's amt-lab.org or you can email us at amtlabcmu@gmail.com. You can follow us on Instagram at Tech in the Arts, or Facebook or LinkedIn at Arts Management and Technology Lab. We'll see you for the next episode.