Prepared by Dr. Clare McAndrew and presented by Art Basel and UBS, the highly anticipated annual art market report is finally here for the 2021 round-up! In this special edition of the Art Market Recap, we’re sinking our teeth into this report and highlighting some of the key findings in the world of digital art and NFT’s.
Perhaps not an altogether shocking revelation is the growth in millennial and Gen Z buyers collecting digital art. 56% of the High Net Worth collectors (HNW) surveyed for the report were planning on buying digital art in 2022 and this was the highest for millennial collectors (61%) and in Taiwan (71%), Singapore (62%) and the UK (61%). With the rise of crypto, meta, AI and AR initiatives and investments most popular with millennial and Gen Z demographics, the collecting opportunities in the realm of digital art have increased and dovetail seamlessly with the taste of these demographics. Raised in the Internet and post-digital ages, this quantifiable data supports the long assumed notion of younger collectors having a robust stake in the digital art collector market.
With the COVID-19 global pandemic, the global art market came back strong in 2021 from this initial ebb. For digital art, it was its time to shine. Although traditional mediums still made up the majority of market sales, digital works made of 11% of HNW collectors spending with 5% of Gen Z and 4% of millennials having spent over $1 million. Moreover, 2021 saw further development in fractional ownership including NFT technology. Not only were collectors interested in acquiring digital works, but online sales also saw healthy development. Online sales accounted for 20% of total sale, down 5% from 2020, but more than double the share in 2019.
Although transactions via NFT platforms were not included in the report as they occur outside of galleries, dealers and auction houses, what we can see from analysis of some of these sales is the trend of rapid increased activity on these platforms. More information can be sources at NonFungible.com which tracks qualified NFT sales on a variety of blockchains. The report outlines that the value of sales for art-related NFTs expanded to $2.6 billion (collectibles extending to $8.6 billion). Not only is the value of sales increasing rapidly, but the volume of transactions has also increased from just over 775,760 in 2019 to 5.5 million in 2021. Interestingly, this exceptional growth is also in light of OpenSea’s recent move to limit the number of NFTs minter per day to quell misuse. This limit was quickly removed after negative feedback, but the OpenSea’s statement explaining their reasoning (with over 80% of items created having been plagiarized works, fake collections and old fashioned spam) highlights collector confidence in light of some of the grey zone issues in the digital marketplaces that still require solutions.
NFTs did have earlier interest in the art market from around 2018, however, it was not until the March 2021 sale of Beeple’s “Everydays: The First 5000 Days” (2021) (selling for $69.3 million at Christies in June 2021) that the market turned that spark into a bush fire. Many of the NFT sales, however, tend to be low value, being traded and resold by a limited number of people. Interestingly for art NFTs, only 1% of them sold for more than $1,594 and the top 10% of traders accounted for 85% of transactions. So seemingly, as much as things change, much remains the same; the top percentile appears to monopolize the majority of transactions. Nonetheless, we can see the exponential growth in the value and transaction volume for NFTs, solidifying their developing place in the market.
Furthermore, increased presence on the secondary market at larger auction houses with top collectives such as Larva Labs’ CryptoPunks and Yuga Labs’ Bored Apes Yacht Club confirms the increase demand for NFTs. This has also intensified the debate as to how artworks are defined and which artworks the secondary market handles. In addition to the groundbreaking Beeple sale at Christies, Sotheby’s launched Metaverse, a Web3 enables NFT marketplace along with the virtual gallery in Decentraland to exhibit NFTs. In collaboration with digital artist, PAK (owner of BURN.ART domain), the inaugural sale in April 2021 achieved $16.8 million. The successful sale attracted a host of young new bidders with 78% of NFT bidders new to Sotheby’s and more than half under 40 years of age.
The qualitative and quantitative data outlining the rise of buying online, in many cases sight unseen, is expertly fleshed out in the report and we encourage a thorough read of the report to find out more! The consensus among dealers was that the shift to digital is here to stay with 77% observing greater communication with clients and 68% concurring with positive growth regarding increased online sales. Although traditional in person viewing and buying is still favoured in many cases, collector confidence in buying online aligns neatly with dealer and auction house agile initiatives to service clients remotely.
So what are our key takeaways? The growing interest in digital art is very evident with younger collectors outpacing older generations of collectors in this realm. Notably, Millennial and Gen Z collectors on average spent more than Boomers across all categories of fine art showing that a small number of young collectors have been spending significant amounts on digital art.
Looking to the future, there seems to be no signs of slowing down in the hunger for NFTs. 88% of HNW collectors confirmed their interest in purchasing NFT-based artworks in the future with only a 4% minority having no interest in partaking. Digital artworks, AR, and NFTs are increasingly diversifying the art market with hungry collectors searching out opportunities in this budding field.
Love it, hate it, hate to love it or love to hate it, digital art and NFTs are forecasted to keep making more waves and we’ll be here covering it all!
If you want to read the report – click here to access it.