NFTs are booming, and leading auction houses are following the trails.
September 27, 2023
Why Leading Auction Houses Are Entering the NFT Space
Ah! Hear that? That's the sound of transformation! The transformation of an industry.
Did you notice leading auction houses have made the headlines lately? For example, when Sotheby's announced its marketplace for curated NFTs collections or when Christie's sold a single NFT for 69 million!
It seems that auction houses are now starting to accept that blockchain technology is indeed marking a new path for their industry. NFTs are moving from the fringes and becoming an increasingly viable avenue for auction houses to generate revenue.
The benefits of NFTs for auction houses
First, let's remember that non-fungible tokens are not the art itself. An NFT provides ownership rights for an asset, typically a digital one, stored on the blockchain. However, an NFT can be a piece of art or about music, photography, film, sports, and more.
Second, back to the main topic here, why are auction houses entering the space? Because NFTs are the beeeeeest! —Yes, sometimes we get too excited about this, but there are more reasons for it. Let's see how auction houses have experienced the benefits that NFTs bring to the table for the first time.
Christie's reaches new highs
In 2021, the 255-year-old auction house Christie's got lots of press for its first NFT sale. "Everydays: The First 5000 Days," by Beeple, sold for 69.3 million. It was the first NFT sold by a major auction house. *historic moment happening*
It set at least three world records as the highest price for any digital artwork, the highest price for any lot in an online-only auction, and the highest overall total for an online-only auction to date. The auction positioned Beeple among the top three most valuable living artists, according to Christie's.
Christie's took the first step into the NFT space, but what about the other major auction houses? Like Sotheby's, did they see the same potential in crypto art? The answer: Yes, they did.
Sotheby's has extraordinary results
Thanks to their NFT auctions, Sotheby's reported a 46% jump from 2020 and the highest sales figure ever in its nearly 300 years of history! Read that again: in its nearly 300 years of history. Yep.
They even launched their own marketplace, a permanent crypto art salesroom called "Sotheby's Metaverse."
Sotheby's looked at NFTs as an opportunity to bridge between two worlds: the contemporary art market and the physical collectibles world. In 2021, approximately 44% of all Sotheby's bidders were first-timers, while 80% of all NFT bidders were newcomers.
Although Sotheby's is not pivoting 180 degrees into digital art, they are already integrating NFTs as part of their curated collections. And one thing is clear, more people, creators, companies, and brands are interested in the value and benefits of the NFT industry.
Interesting fact: Sotheby's already accepts cryptocurrency as another payment option for physical artwork.
Caption: Natively Digital 1.2: The Collectors
Philips enters the scene
Philips had an almost 60% increase in global sales in 2021 compared to the previous year. It is essential to mention that these earnings were not solely on NFT-related auctions. However, the auction house did feel the magnetism of NFTs.
Philips followed Christie's and Sotheby's steps, and as a result, their first auctioned NFT was "Replicator." A piece by the top-selling digital artist Mad Dog Jones (Michah Dowbak) for 4.1 million.
When the online bid started, it reached 2 million in the first 24 hours and peaked at 4 million in the last five minutes!
Last year, Philips wanted more, after their first success with NFTs. So they had another online-only auction of "Bitchcoin" by the crypto pioneer Sarah Meyohas. Each of her NFTs sold from $50,000 to more than $113,000.
More is yet to come
Every opportunity has a challenge next to it. By joining the NFT market, auction houses are still scratching the surface. It’s like they're becoming galleries now, instead of working mainly in the secondary market. As well, NFT artists and creators want to auction their artwork directly with them.
Another example of how web3 transformation occurs is how contract details or bid registrations happen without the usual strict formalities. During an interview, Noah Davis, head of digital art sales at Christie's, said some processes took place on platforms like Twitter and Discord. That's where a different segment of art collectors and potential buyers are.
The NFT industry is very challenging in many ways. Especially regarding legal matters, like restrictions, regulations, and anti-money-laundering (AML) requirements. The anonymity in the space can also be a gray area that auction houses are exploring.
Read more on our latest post about hiding your identity in the NFT space and how security and inclusiveness can come from it.
The 69 million dollar question
Who's next? What creator will be making history, and which auction house will be on the headlines? What type of NFT will set higher expectations?
The fact that leading auction houses entered the NFT space should tell us something. They are becoming more and more involved in digital art as the world moves online and into the blockchain. Like auction houses, more industries will start to see more extensive opportunities in NFTs. But the winner won't be the one with the most extended years of history, but the one that moves faster, better, wiser.
What does the future look like for these auction houses? Drop us a line @buenonft; we'd love to know what you think!
