Naughty or Nice.(The Talk of the Town)(chocolate figurines by Peter Paul Chocolates LLC)

"Business art is the step that comes after Art," saith Warhol the Prophet, and, thirty years later, we know whereof he spake. The mergers of art and commerce accumulate on every side, as brand-name artists such as Damien Hirst, Richard Prince, and Takashi Murakami endorse and/or provide luxury items for Louis Vuitton, Fendi, and other purveyors. One such venture kicked off last week in the West Village, where Paul McCarthy, a California-based artist known for his reliably disturbing installations, has converted the Maccarone gallery into a chocolate factory. Peter Paul Chocolates LLC, as he calls the enterprise, will operate through the end of 2007, turning out Santa Claus figurines for the Christmas trade.

Made of premium chocolate from the Guittard company, in California, the ten-inch-high figurines sell for a hundred dollars each, and McCarthy, a sixty-two-year-old man whose scraggly white mustache and beard might remind you of Santa unless you were familiar with his work, hasn't the slightest idea how many of them he will sell. "The price is a dilemma," he said a few days before the opening. "The people who don't know it's art ain't going to buy it, and the people who buy it as art will have the dilemma over whether to eat it or not. We make a thousand a day. If we actually sold a thousand a day, or eight hundred, that would be quite astounding. I'd probably have to rethink"--he laughed--"the world of marketing!"

The conversion from gallery to factory involved a complete renovation of the Maccarone's six-thousand-square-foot space on Greenwich Street. The manufacturing takes place in a large room to the right of the entrance, under the supervision of Peter P. Greweling, a master chocolatier with the Culinary Institute of America; visitors can watch through a glass wall as the raw chocolate is heated in a stainless-steel vat, cooled slightly, then warmed, poured into molds that are then attached to a spinning machine, cooled and taken out of the molds, and sent via conveyor belt to an area in back to be packaged and stored. "We built to code," Michele Maccarone, the gallery's owner, said. "The public can't be near the food preparation." The packaged figurines are sold ...