The World’s Leading Auction House Dives into NFTs
In April 2021, renowned auction house Sotheby’s launched its first NFT collection in collaboration with Nifty Gateway and digital artist Pak, titled “The Fungible.” In total, The Fungible Sale by Pak brought in $17 million and marked the beginning of Sotheby’s industry-leading NFT approach among traditional institutions.
In the year since The Fungible, Sotheby’s has completed 11 total NFT sales:
Sotheby’s inaugural NFT sale of digital artist Pak, in collaboration with Nifty Gateway.
Natively Digital: A Curated NFT Sale
28 NFTs, new and old, curated from across the ecosystem, co-curated with Robert Alice.
Heir to the Throne
25th anniversary of JAY-Z’s 1996 “Reasonable Doubt” album cover, re-imagined by artist Derrick Adams.
This Changed Everything: Source Code for WWW
A collection of NFTs and time-stamped documents from creator of the WWW, Sir Tim Berners-Lee.
Sealed CryptoPunks: Five Punks on Paper
5 of the 24 iconic CryptoPunk lithographs, signed by Larva Labs co-founder John Watkinson.
Natively Digital 1.2: The Collectors
53 NFT lots from renowned NFT collectors. The first of Sotheby’s NFT sales on Sotheby’s Metaverse.
1 lot of 101 Bored Ape Yacht Club NFTs and 1 lot of 101 Bored Ape Kennel Club NFTs.
Chromie Squiggle: MINT IT!
1 lot of 10 unminted chromie squiggle NFTs from artist Snowfro. Sold on Sotheby’s Metaverse.
Kings + Queens
300 unique avatar NFTs, created by Italian NFT artist duo Hackatao. Sold on Sotheby’s Metaverse.
Gérald Genta: Icon of Time
100 designs selected from Genta’s 3,000+ collection. Each design is accompanied by an NFT.
By the beginning of 2022, Sotheby’s had sold over $100M USD worth of NFTs and landed on the Time100 Most Influential Companies of 2022 and Forbes Blockchain 50 of 2022. Sotheby’s is nearly 300 years old, and has a long history of artistic innovation that has kept it at the forefront of global auction houses. Among fine art institutions, Sotheby’s has remained the most visible and vocal establishment to adopt NFTs as an evolution not only of its brand and customer base, but also as a legitimized artistic medium. Sotheby’s has found particular success in the blockchain ecosystem by adopting models of web2.5 that have allowed for industry leadership, brand growth, and technical innovation.
web2.5 trends in fine art
The art world’s embrace of NFTs was one of the biggest catalysts in the explosion of the NFT ecosystem throughout 2021. According to Artprice's end of year report, “digital NFT works already represent a third of the value of online sales, or 2% of the global Art Market [sic] in 2021.” This is encapsulated perhaps most clearly with the $250M USD in combined NFT sales by Sotheby’s and Christie’s in 2021, 27% of which can be attributed to Christies’ March 2021 landmark sale of Beeple’s Everydays: The First 5000 Days for $69.3M.
The adoption of NFTs by the fine art industry can be divided into two major artist groups: natively digital artists and traditional artists. Natively digital artists — those whose artistic medium began online — can be split into those who have been working digitally with success for long before NFTs became mainstream (eg: Pak, Beeple, Kevin McCoy, Sarah Zucker, Rhea Myers) and those who, though likely already creating digital art, found their true renown and monetization by creating NFTs.
Fine art institutions are also curating works from traditional artists who are newly stepping into the digital realm. Artists such as Alexa Meade, Damien Hirst, and Jeff Koons all have notable careers in non-digital mediums prior to their forays into NFTs.
By curating both the natively digital and traditional artist communities, fine art institutions like Sotheby’s have rapidly grown their consumer base. Natively digital artists have brought their web3 collectors to fine art brands, bestowing their trust on these establishments in the process. Traditional artists who have expanded their mediums into NFTs do the same, but in the opposite direction. They guide their audience of traditional collectors, who may look on decentralized technology with confusion or skepticism, towards web3, helping them build trust and understanding.
If web2.5 is a waypoint along a progression of technology and culture, Sotheby's has proven emblematic of its opportunities. The institution's finely-tuned approach has brought together natively-digital artists and collectors with traditional artists and collectors under one roof and one artistic movement. The result has been financial and reputational upside at the forefront of technical innovation.
Led by Sotheby’s, two other web2.5 models have proven critical to the ability for fine art institutions to successfully adopt distributed tech.
Sotheby’s has facilitated every NFT sale after The Fungible on its own online auction house, and in the process enabled payments in crypto. Sotheby’s accepts BTC and ETH from KYC’d wallets maintained by Coinbase, Gemini, Fidelity, or Paxos. All prices are denominated in USD or British Pounds, and the cryptocurrency equivalent is determined at the moment of payment, not the moment of bidding or invoicing.
The way Sotheby’s accepts cryptocurrency is emblematic of web2.5. Receiving payments in crypto is necessary for any brand to attract and retain crypto-native crowds. However, compliance ambiguity also requires brands to find a compromise to completely permissionless payments through custody services like Coinbase and web2 financial norms like KYC.
Compared to other auction houses and major art institutions Sotheby’s has taken a notable monetary and infrastructure stake in web3. In October 2021, NFT commerce platform Mojito announced a $20M seed round with participation from Sotheby’s. The announcement coincided with the launch of Sotheby’s Metaverse, a dedicated marketplace for the company to conduct its future NFT sales. Since the announcement, Sotheby’s Metaverse has powered four sales and over $21M from Natively Digital 1.2: The Collectors, Chromie Squiggle: MINT IT!, Kings + Queens, and Liverpool Football Club Heroes Club.