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.

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.