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Photo: Sotheby's
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Last year, sales of art-related NFTs dropped 49% from $2.9 billion to $1.5 billion, per The Art Market 2023. Art's share of NFT sales dropped from 14% to 8%, as collectible share expanded. The average price of art NFTs fell from a peak of $5,519 in the summer of 2021 to $1,179 by 2022's end.
Falling volumes, shrinking share, and declining prices.
No matter, Sotheby's remains bullish on the market for NFT-based art.
While both Sotheby's and Christie's have square-peg, round-holed their auction infrastructure into Web3 commerce via traditional auction events for NFTs of repute, Sotheby's took the next step this week, launching its own curated marketplace for digital works.
This effort is more Web3 native in nature, with peer-to-peer transactions taking place fully on-chain (whether Ethereum or Polygon) and artist resale royalties honored through smart contracts. In a sign of adaptation to newer technologies (rather than the reverse), the marketplace is powered by Mojito, a Web3 brand platform for enterprise customers.
You don't have to be a Web3 or NFT fanboy to acknowledge that there will likely be a strong future appetite for collecting works of talented artists who choose to operate via digital mediums rather than traditional vehicles. Besides, most of those fanboys have rebranded as ChatGPT/AI experts anyways, so perhaps the digital collecting stigma will fade as WAGMIs and Diamond Hands give way to tweet threads on all the ways you're falling short in your GPT prompts.
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The challenges in collecting digital art in many ways mirror those of the traditional art world. The volume and variety of works is so incredibly expansive that identifying the right works is near impossible without some form of guidance. In an endless OpenSea of listings, how can newcomers be expected to find their Nemo? The learning curve is too steep, and the barriers to entry are too high, even if much of the merit of blockchain-based creation revolves around the lowering of other art world barriers.
In many ways, storytelling and editorial context have been sorely missing from the blockchain-based art ecosystem. This market shortcoming has slowly and incrementally found alleviation in recent months via museum curation, exhibition, and technological advancement. The Sotheby's marketplace promises to be another such step, with specific artist pages exploring the artist's story, as well as the themes and techniques that drive their work forward.
As you might have gathered, the marketplace won't be open to any and all artists and collections; scammers, copycats, and phallic projects need not apply. Instead, it will be carefully curated by Sotheby's specialists.
Of course, just as in traditional art, curation often means the already recognized and esteemed artists will grow more recognized and more esteemed, while the undiscovered toil away in hopes of their moment in the Sotheby's sun. Perhaps, though, it's that recognizability and repetitious exposure that can inspire traditional art collectors to dip a toe in friendlier waters than OpenSea.
Still, the intended decentralization of the art market - away from dealers, galleries, and auction houses - has faltered fairly quickly as market constituents long for the centralized taste-making those parties provide. Though their margins may be robust, and many begrudge the inability of artists to benefit to an equitable level, these third parties do provide valuable votes of confidence to the markets they serve.
Fortunately, there is evolution on behalf of the creator. The smart contracts enabling and honoring resale royalties (a hot button issue on other NFT marketplaces) ensures artists will continue to benefit as their secondary markets thrive. Furthermore, approved artists could list directly with Sotheby's at the uniform cost of a 2.5% selling fee.
Fear not: the marketplace efforts will undoubtedly feed the auction beast, where 26% buyers premiums for the most renowned pieces will handsomely reward continued metaverse investment.
You can decentralize art, but in a culture where collectors hunger for peer approval and institutional validation, you can't decentralize taste.
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