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On December 17th 2021, The 2021 KAMA(KAMS Art Market & Appraisal) Conference was held online under the title “Art Market Going Online : Changes, Chances, and Challenges.” The conference identified the market’s shifting trends and new consumers, and examined the trends in NFTs and the metaverse, two concepts that emerged as keywords last year. Furthermore, it discussed the sustainability of the online art market through a discourse on security and data loss in a digitized art market, the environmental crisis triggered by the digital industry, and the legal policies and economic prospects of the cryptographic art market. This article is from Session 1, Transition to Online : The Art Market and Collectors, in KAMA Conference.

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Collector Trends 2.0

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To begin with, it is helpful to look at the wider context of how the art market has fared these past couple of years. COVID, as everyone says, has accelerated everything. This is also true in the art market. It's been very, very sharp, as if 10 years or possibly more of progress was squeezed into one. It was a huge shock in many ways, but the art market seems to have come through.

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Why? Well, mostly, because the rich have gotten richer. Globally, this is true, but notably, millennials (people aged between 23 and 38), and women have done pretty well. There is also a fast-growing wealth through much of Asia. This wealth has met a market that had to adapt to the way that younger and faster people. It went online and went higher tech after much resistance through the years. Luckily people wanted to buy art but this was not a given. In the times of crisis, it is likely that art is the last thing people have in their minds. However, it seems to have been very popular and the only way to buy it was virtually. With this younger and faster audience, other trends accelerated.

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There's much more transparency now. For example, if I went to an art fair in real life two years ago, and wanted to get the price of something, I'd have to ask very nicely. Some people might give it to me, some people wouldn't. I certainly spend a lot of the years of my life as a journalist, trying to get prices out of people. Now, on the online viewing rooms, the websites that replaced art fairs, prices were there. Well, at least a price range and of course, there's greater accessibility in other ways. Suddenly, everyone could go to an art fair without an entrance fee. Visitors didn't have to fly in from anywhere, or stay in an expensive hotel, or pay quite high entrance fee to a fair.

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The art world has been gradually getting more accessible over the past decades, particularly through art fairs since the turn of the century. But suddenly, the whole world was a potential art buyer. The important thing about this accessibility as well, is that it meant we could be anonymous. We’re behind a computer screen. This has been incredibly important in a world that can seem very elite and judgmental. At the same time, cryptocurrencies and, blockchain platforms found their moment. Art backed by non-fungible tokens and, NFTs, really began to take off. What was happening in this code-based techie world seemed much more exciting and dynamic than looking at lots of pieces of flat, still art on a computer screen. This is why we can find more about NFT-based art than other digital-based art. Because of such excitement, and accessibility, new buyers entered the art market.

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What are these buyers like? Well, they're younger, but remember that millennials go up to age of 38. So they're not way younger. These are people with real moneys, real jobs, real tastes, and real opinions. According to the latest Art Basel and UBS report, they are the biggest spenders on art. This report found that in 2020, 30% of millennials spent more than a million dollars on art during the year that their median spend was $228,000, much higher than any other age group. A lot of millennial money in sales is self-made, rather than inherited as it had been in the past, by people who are used to making a choice when they're ordering food or buying clothes. Thus, they want choice when it comes to looking at, and purchasing art. They're not going to go to galleries necessarily or to art fairs. Dealers have to come to them. We've seen that physically in the past couple of years. There are a lot more pop-up spaces in cities such as Aspen and Monaco. Also, galleries, dealers, auction houses, everyone who is trying to sell art has had to be a lot more creative on social media, and so on. The new buyers are still from some of the more traditional financial world, but they are crypto-savvy. They move very fast. As it has always been true of new money, they are creating something new they want to break with the past.

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My colleague Tim Schneider, who writes for Artnet, recently went to the NFT.NYC conference. He quotes someone there describing the crowd as a parallel universe to the state-of-the-art world. I'm not sure if they are completely parallel universe. However, certainly one major difference is how public buyers now are, especially on Twitter and Discord, a gaming platform, which seemed to be the platforms of choice. Again, a little bit like prices. The identity of a seller and a buyer have always been huge secrets in the art world which loves its privacy. But look here. There is Christie's, an 18th century French owned Goldstar Auction House, twitting the usually very secret identity of the buyer of the famous Beeple that sold for $69.3 million online on March the 11th. I doubt it was Christie's idea. MetaKovan, the buyer, would have wanted it. And in fact, he retweeted it and it got 1,500 likes. This is the new market.

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MetaKovan is a good case study in the motivations of buyers of NFT art in particular. His real name, as became apparent after the Beeple purchase, is Vignesh Sundaresan. He is a Chennai born tech consultant. He got into cryptocurrencies early and founded the Fund Metapurse. His avatar, in this picture, a work by Silvio Vieira, called Contemplation of Creation, that MetaKovan or Vignesh owns, and we can see on SupeRare that he bought it for 0.45 ETH two years ago, which at that time was worth about $100 and now is worth about $1,800, simply because of the currency gains. His name, MetaKovan means king of the metaverse. And, in a very revealing interview with the Financial Times by Stefania Palma, Singapore correspondent, which I highly recommend people to read, he was, I thought, incredibly interested about the conflict between smashing the traditional barriers of the art world and wanting to belong to the traditional art world. This might underpin the role of NFT in the art market just now. In the interview, he says of his anonymity that “the avatar removed all the judgments and put my work first before people could meet or judge me.” What was possible with his online buying and with the NFT market was to bypass the judgment he has obviously felt existed. We have seen it exist with galleries picking and choosing the people who are allowed to buy from them. But also, he says, “Now everyone wants me in the cap table.” The cap table is a group of people who sit around a table, and they look at a spreadsheet, and they're allowed access early on to some of these high-tech startup funds. He wanted to belong. The final quote is fascinating, too. “It's the NFT that changed the world of the Beeple’s 5000 days, you cannot put a number to it.” He wants to make history. He absolutely did make history. But that has been the motivation for art buyers for centuries. To want to belong, to make a change, to use art to get to the top of the tree.

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So how different is our world now? Firstly, we have to remember that things are beginning to come back to real life and that the art market intermediaries, the auction houses, the galleries, the dealers, the art fairs – they need the world to come back. This is their business. But if they need NFTs, they certainly need the NFT buyers. Suddenly, digital art is a part of auction houses, gallery shows and art fairs, with a mutually beneficial relationship created. NFT market, which is still a little bit of a wild west, gets validation as art, and also through the legal checks and balances that a big auction business has to comply with before they sell anything. This is not necessarily in keeping with the more democratic ambitions in the open market, which creates some tension. However, the tension between keeping art elite and opening it up to the masses has long been there. NFT is definitely helping the traditional market, too, as buyers move from digital NFT art into heavyweight physical art.

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Based on the tweet by Justin Sun, the founder of the Tron cryptocurrency, who was born in China, it seems that he started his art buying with Murat Pak’s Cubes, which were offered at Sotheby's and priced up to $1,500 each in April. Then in June, he changes to an untraditional but physical work of art by KAWS, which he bought in Hong Kong, again at Sotheby's, for 2.5 million Hong Kong dollars, which is about $300,000. Then, in November, he bought one of the most expensive items in the mega auction of the Macklowe Collection at Sotherby’s. Giacometti's Le Nez, an incredible important work of art, for which he paid $78.4 million. The auction houses need him, too.

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A bit of a reality check is in order. We are learning to love seeing art in real life again. Online buying is just another way to buy. People can buy over the phone, over email, and also buy online. Seeing art, having an experience is still very different. NFT works are super exciting, but very hyped. And we are seeing prices go shoot up, shoot down and get to levels that really no one can explain or justify yet. The NFT world is also not just about art, it is arguably more about music, gaming, sports, finance, of course. Therefore, art is a very small part of what is going on in the wider NFT crypto world. It's also more correlated with traditional investments than some buyers would like.

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NFT art soars in value or in price. When Ether soars that makes Bitcoin, the original cryptocurrency soars. And when Bitcoin goes up in value, its owners who are also owners of equities, so traditional shares, also go up. It's not really a hedge against other investments in the same way as some of these physical artists. There's also the ongoing question of how much we need the gatekeepers, intermediaries, the dealers, the writers, everyone in but the curators. I would argue that with so much more out there, and also wild and different and changing so fast, we need some sort of validating systems. And artists as well might say they want to go straight to their buyers, but they need some protection.

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Another serious problem that I see is that while there should be plenty of opportunities for emerging younger, ethnically diverse artists, the available data so far shows that NFT sales are still dominated by the Western art market centers and the most successful artists are still white men. It is also, as I’ve said, a very, very volatile market. For now, the most sustainable beneficiaries seem to be physical art by rebellious artists, such as Basquiat and Banksy. Digital art, which has long been on the margins, is clearly also benefiting, which is great news. This is why I’ve called this article Collector Trends 2.0. We're not seeing a complete reinvention of collectors. We're seeing a shift into a new direction.

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It is important to remember that quite a lot of traditional collectors are enjoying dabbling in the digital and NFT world. It is an area that is moving very, very fast. This makes it very difficult to predict NFT trends, but here is my personal prediction. Firstly, some of the logistical hurdles to online buying in general are improving. There was a time when people were too frightened to buy food online or clothes. Then gradually, the price points are getting higher and higher. There are lots of lawyers working around the clock to establish global rules, while also respecting regional laws, national laws, and looking at the wider online sale structures. NFT is, in particular, not so easy to jump into. But there's plenty of work being done to make it easier for people to exchange between FIAT, traditional currencies, and cryptocurrencies. There are some responsible galleries and educational establishments aiming to demystify online, which helps us all.

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I would highly recommend Unit London, a gallery here in the UK. Their website whose name I've put there, they have everything on it from what is an NFT, how to buy an NFT, and of course, they have their own NFT platform. They're also well documented the problems with a carbon footprint involved in minting, making an NFT. But new platforms are being developed to overcome this. This will be extremely important in an increasingly environmentally aware world. The existing conflict between democracy and validation will result broadly into two markets. One of them can be the Wild West, and then we can have volatility and maybe a bit more fun. The other one will be more similar to ours; we will co-opt what we need and what we can take. I think it might account for about 10% of the global art market, though others disagree with me.

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I had one NFT artist tell me this week. He believes that in two years, the whole market will be NFT backed. It's up to us to decide. But what is certainly true is that whilst what was a very niche, elite, high barrier to entry market has widened out considerably because of the moves on mind during the pandemic. As David Zwirner, the mega gallerist, said to me, we all need to be much more open minded. There's a much bigger art world out there than we thought. This isn't going to go away.