This is actually quite smart on the owners part as he controls the art work and making sure they paint over at some point. He knows this will happen without his permission, but giving them permission gives him control.
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Yeah, there is plenty of unauthorized graffiti that happens all over the place but by allowing it I think that the street art world kind of controls who is going to paint there. That underground network of artists probably know who the other people are even though they try to stay anonymous and would go and reprimand anyone who puts some unauthorized crap up there.