In the simplest terms, pricing artwork follows the laws of supply and demand, and that holds true for an NFT as much as it does a 200-year-old oil painting.
What’s more complex about pricing artwork is parsing through the terms “supply” and “demand” vis-a-vis a work of art.
The value of an art piece isn’t in its utility, like a car or house, though in the world of NFTs, utility certainly affects pricing. The value of art isn’t in its materials or the artist’s time — though that comes into play for both physical and digital art. The value isn’t even necessarily based on limited supply — as anyone who’s been to the Picasso Museum can attest.
Today, we’re going to investigate the major variables that go into the pricing artwork. These variables are:
- Career history
- Cultural significance
- Production cost
- Utility
Career History
The career of the artist is a huge — oftentimes dominant — factor in assessing a piece. Traditional art world factors include:
- Exhibition history: Where have they shown their work and alongside whom? Who do others consider to be this artist’s peer?
- Sales history: At what prices have they sold work on both primary and secondary markets?
- Career level: How long has this artist been a career artist? What caliber of gallery, collector, and clients have they had over that time?
- Collectors: Mentioned above, but worth reiterating. In web3, it’s easy to find the other collectors of a given artist and to see what other artists — of what caliber and general pricing — are represented alongside your artist-of-interest.
- Rarity: How rare of a piece is this within the artist’s oeuvre? Is this artist highly prolific? Does prolificness devalue the body of work or enhance it? (e.g., Bob Dylan vs. a jingle writer)
- Creation date: At what point does this piece occur in an artist’s career? Certain periods may value higher than others.
In this new web3 paradigm, a few new — but unsurprising — factors come into play, namely social media following (Twitter, Instagram, Twitch, YouTube) and private network activity (Discord, Telegram, etc.). The way an artist represents themselves online can also clue a collector in to how savvy and promising the artist is.
Cultural Significance
Cultural significance as a factor in pricing artwork is more subjective and subject to volatility.
Beeple isn’t the first digital artist, but he has inspired an entire generation of 3D digital artists to approach the form with rigor and seriousness.
Tyler Hobbs isn’t the first generative artist, but his aesthetic and approach struck a chord at the right place and right time, making him the generative artist to know.
CryptoPunks was no one’s idea of fine art, but the novel underlying technology and historical significance are so great, that they have been deemed the bluest of blue chips.
Bored Ape Yacht Club was far from the first pfp, but they were the first pfp to captivate its audience with its unique approach to intellectual property.
As British pop artist Allen Jones said in an interview with Artnet:
“Every period in art history, you’ve got the people who write the vocabulary, and then you have lots of people who learn the vocabulary and use it quite intelligently. There are lots of Fauvists apart from Matisse and Derain, but you remember the people who actually establish the rules.”
Another factor of pricing artwork to consider alongside the cultural significance of the artist is whether the piece is representative of the style that the artist is most known for. In other words, will people automatically recognize the artist in the artwork?
Production Cost
In the world of digital art, it’s understandable that some people might sneer at the idea of “production cost.” After all, the materials used in the making of an artwork are not then passed on in any tangible way — paint, canvas, marble, and stone can be touched, but pixels cannot. But that’s a misguided way to think about digital art.
Digital art often requires a different mindset around what constitutes “the art of a project.”
For instance, generative artists are absolutely justified in asserting that the real art they produce is the code that produces the generative pieces. The fact that computer programming languages might be opaque to the art-buying public doesn’t diminish its artfulness.
Also, consider the artistic advantages that digital art might have over physical art. Visual artist Musketon makes good use of their “extreme eye for details,” leveraging the digital capacity for bottomless intricacy and encouraging collectors to “zoom in up to 64000% on my work to still discover new details.”
And while it can be easy for a creator to churn out work, the artists that are worth investing in are the artists that truly invest in their work.
The technique used can heavily affect the pricing of a painting — which is to say that level of difficulty or other obstacles to mastery make proficiency incredibly valuable. This striving for mastery is why so many 3D artists — such as Xeus or Fvckrender — have followed Beeple’s example in creating and publishing daily work.
Utility
NFTs have introduced a new variable for understanding pricing decisions: utility (i.e., What can you do with it?). Utility has been a big buzzword in the NFT world, which — having been nurtured from the cradle on social media — is inherently more participatory and community-oriented than the traditional art market. The value of these utilities can often be subjective but not always.
It should be noted that not all NFTs carry utility. In fact, utility often takes center stage when the art is second fiddle (but not always). That said, if you are in the market for high-utility NFTs, here is a non-comprehensive selection of popular utilities.
- In-game assets
- Metaverse fashion
- Intellectual property rights
- Access to a group, event, or venue
- Access to an influencer or public figure
- Real-world redeemables (e.g., clothing, physical art)
- Fundraising for a worthy cause
Outroduction
The art world and the practice of pricing artwork are complex and can be scary if you’re interested in a high-ticket piece. The buzz of overnight millionaires minted by minting the right thing at the right time can be enticing, but that’s not the spirit of art. It might be exciting, but it’s not art.
Price can be a major constraint for collectors, so let’s simplify it:
- Do you like the artwork?
- Do you like the artist?
- Do people you like also like the artist?
- Or, do the artist’s fans raise red flags for you?
- Considering the above, does owning this piece align with your values?
- Can you afford it?
- How would answer the above differently if the piece were displayed beautifully and prominently in your home but its value had declined significantly after its purchase?
Price doesn’t have to be complicated, but it certainly doesn’t hurt to know what went into arriving at a figure.
