When it comes to art the goal is to make the person experiencing the art feel something. Whether that be awe, happiness, sadness, anger, etc. The 1st place winner gave me (and apparently most people) a more intense emotional reaction so it's better art.
Now, as for the skill level on display, the 2nd one obviously takes more skill, but skill is only one component of art and depending on your end goal it can be completely unimportant to the piece.
So no, democracy didn't fail, it delivered exactly what it should have in this instance.