This is the second-- and I promise, the last-- excerpt from my recent talk at the Norman Rockwell Museum.  I submit the following thesis for dispute and contradiction.  Next week I will go back to showing really cool pictures. 
Over the years, many people have wrestled-- pointlessly I think-- with the difference between art and illustration.  The internet is riddled with silly theories on the subject:
The distinction lies in the fact that art is the idea (brought to life) while an illustration is a depiction (or explanation) of an idea.

Fine Art is simply art for art's sake. Even if you are doing a commission for a client, it would still be fine art.  But illustration is illustrating a story or idea.

In modern illustration the intent is most often the selling of a product.  When something noble is put to ignoble ends, there is a deterioration of value.
Even talented artists and illustrators have been tormented by the distinction. Illustrator Robert Weaver noisily agonized about the boundary line:
Until the illustrator enjoys complete independence from outside pressure and direction, complete responsibility for his own work, and complete freedom to to do whatever he deems fit-- all necessaries in the making of art-- then illustration cannot be art but only a branch of advertising.
With all due respect to Weaver's romantic illusion, it's difficult to think of a fine artist with "complete independence from outside pressure and direction" whose work was not worse off for it.  

Despite all this hand wringing about the difference between art and illustration, I think the question is a fake one, concerned more about social status than about the nature of art.

The real difference, it seems to me, has nothing to do with the talent of the artist, or the quality of the work, or its morality, or its intelligence.  It is far too easy to identify examples of illustration that are superior to "fine" art in each of these categories, just as it is easy to identify examples of fine art that are superior to illustration.  It hardly takes any effort to puncture categorical distinctions between the two types of work.

In my view, there is no inherent difference between art and illustration except the way in which  payment to the artist is processed.

Here's what I mean:  For the first 30,000 years of art, artists were able to earn a decent living working for kings, priests, pharaohs and popes.  Art was commissioned for temple walls and public spaces.  It adorned palaces and royal tombs and the homes of aristocrats.  Then kings began to disappear from the earth.  Popes stopped commissioning new art.  They were replaced by a new commercial class, fueled by the birth of capitalism and the invention of the corporation.  This class became the new patrons of arts.

It's important to emphasize that although art's sponsors and subject matter changed, the quality of the work did not. The same talented artists who once painted the ceiling of the Sistine Chapel or the walls of the Great Temple at Karnak simply migrated to the new bosses in order to feed their families.

Artists adapting to the new business realities found two paths.  The first was to produce what we now call "fine" or "gallery" art for the private moneyed class and corporate art collections.  The second path opened as a result of the newly invented printing press: rather than selling a picture to a wealthy patron,  artists could now make multiple copies of a picture and sell them for smaller amounts to larger numbers of (less-wealthy) purchasers.  If this option had existed during the golden age of Greece or the early Italian Renaissance, you can bet some of the greatest artists would have taken full advantage of it.  In fact, when this business model first began to emerge with the invention of etching, some of the greatest artists, such as Durer and Rembrandt, quickly embraced it:

Rembrandt turned to etchings as a way of selling multiple copies of a single image to Dutch merchants.

The story of that technology is the history of illustration. There would be no modern illustration without two key developments:
  1.  The ability to create and distribute quality copies to large audiences; and
  2.  The ability to collect small, proportional payments for that art from large audiences.
Because of these developments, the most talented artists (who we could never afford to hire individually under the old business model for art) could now create beautiful pictures to entertain and delight the public.  They are paid with a tiny fraction of the price we pay for a magazine or book or video game or movie ticket.  By aggregating tiny payments from vast audiences, we paid handsome sums to great magazine illustrators such as Norman Rockwell, Maxfield Parrish and J.C. Leyendecker, just as we pay handsome sums to the talented creators at Pixar today.   Similarly, commercial artists who design products for mass consumer markets get paid very well when a penny or two from each sale goes into the manufacturer's design or marketing budget. Michelangelo never had the option of getting paid that way.

For a snapshot of how this new opportunity opened up for artists, look at the pirate illustrations of Howard Pyle, the father of modern illustration.  As the technology for reproducing his pictures gradually improved over his career, the public became more enthusiastic and the demand increased dramatically:

The earliest Pyle pictures were printed in magazines after talented wood engravers carved Pyle's images into wooden printing blocks. The engraver even signed the recreated image (see highlighted portion). 

Crude color was added to enhance the early images.

Later, audiences grew as the invention of photo engraving captured the subtler and more sensitive aspects of Pyle's originals .

Improved printing technology finally reproduced the full colors and technique of the original, leading to the golden age of illustration and a proliferation of illustrated books and magazines.

As we scan Pyle's pictures, we see how the quality of reproductions, and the newly sophisticated vehicles for delivering them to the public,  transformed the economics of art and inspired new bursts of creativity.  A handful of black and white journals, such as Scribners and Century, evolved into dozens of splashy, well designed, full color magazines.  It was the Cambrian explosion of modern illustration.

In short, the twin pillars of modern illustration are 1.) quality reproduction, and 2.) the ability to collect marginal payments from large numbers of viewers.  These two developments created a robust opportunity for talented artists.  They are the core of the economic model for illustration, and the only categorical difference between modern illustration and fine art.  

Does the method of payment affect the character of the art?  Yes, but perhaps the better question is: does it affect art for the better or worse?  It is undeniable that because of its wider audience, illustration is often broader than fine art.  But as Shakespeare proved definitively, broad appeal to a popular audience is not incompatible with greatness.  Even more importantly, the broadness of the illustration audience combined with the relentless scrubbing of the commercial marketplace seems to have inoculated illustration from the narcissism, decadence and irrelevance which has now infected the "fine" art model.

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