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No NFT, no comment - how digital art dominated 2021

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No NFT, no comment - how digital art dominated 2021

By: Melanie Gerlis - Financial Times

In a year of tech innovation, buyers and sellers have had to grapple with new systems of value and ownership — or lose out

Surplus wealth, in-person activity and the three letters N, F and T have motored the lively art market through the challenges of 2021.

That the rich have got richer through the Covid-19 pandemic and accompanying stock market gains has been well documented. Now, added to the existing billionaires and millionaires, are newcomers from booming economies in Asia, millennial entrepreneurs and a dominant breed of fintech-savvy crypto investors, happy to ride the highs and lows of this volatile arena.

The impact on the art market was immediate. While 2020 was all about moving physical activity online, 2021 proved that such efforts increased the appetite for art and produced buyers hungry to keep spending once some in-person activity returned. Come the hybrid, bellwether November auctions in New York, more than $2bn of transactions were made in just one week, dominated by the $676m from just 35 lots from the divorced couple, Linda and Harry Macklowe.

Like it or not, though, the art market story of 2021 was sealed in March when Christie’s offered a digital work by the previously little-known graphic designer Mike Winkelmann, who goes by the name of Beeple. The work was a compilation of 5,000 fantasy digital images that had been shared online, including on Instagram under @beeple_crap. “Everydays: The First 5000 Days” was backed by a blockchain-secured, non-fungible token to confer unique ownership and had no price estimate — in essence because no one had a clue about its worth. The staggering verdict was $69.3m, paid by the crypto investor Vignesh Sundaresan, known as Metakovan, and it put Beeple in the same price league as David Hockney and Jeff Koons.

Suddenly we all had to grapple with the new-tech language — minting, dropping, slashing — and, perhaps more challengingly, try to understand alternative systems of value and ownership. Important issues such as copyright, tax and regulation remain in catch-up mode come the end of the year but those of us who thought this was a fleeting, working-from-home phenomenon have been proved wrong.

The auction houses were quick to co-opt the NFT phenomenon into their sales, while galleries ranging from the megawatt Pace to Unit London have launched their own NFT platforms. By the end of this year, Sotheby’s had its own metaverse, with a digital gallery in the virtual Voltaire Art District of Decentraland.

It seems baffling, but such moves proved their worth come the November auction of the Macklowe collection of physical, mostly 20th-century art. Here, the Tron cryptocurrency platform-founder Justin Sun, who had first bought NFT work priced at $1,500 by the digital artist Pak at Sotheby’s in April, swiftly upped his game. He picked up Alberto Giacometti’s “Le Nez” (1965) for $78.4m, the fifth-highest price paid at auction this year.

Overall, public auction figures for the three main houses, Christie’s, Sotheby’s and Phillips, more than reversed their 2020 decline. Combined, they turned over $12bn in the year to December 8, up 76 per cent on 2020 and 20 per cent above the equivalent 2019 total, according to the analytics firm Pi-eX. While New York continued to take the bulk of the record-breaking sales, Hong Kong surged as a trading centre: Phillips says its sales here nearly doubled from 2020, having already gained 25 per cent during that year.

Elsewhere, art fairs began slowly to return, with restrained outings for events such as Art Basel in Hong Kong and Frieze in New York in the first half of the year. These were followed by an intense season of events from the postponed Art Basel in September to the same fair’s Miami outing in December. In London and Paris too, the in-person fairs buzzed with the renewed energy of professional networking and prompted sales across a range of channels, now better geared for remote access.

Frieze gave an injection of confidence when it announced the launch of a fair next year in Seoul, a city with an influx of galleries this year. But the spectre of the Covid-19 pandemic was never far away. For its Swiss fair, Art Basel set up a $1.6m relief fund for exhibitors; by the time of the Miami fair, the looming Omicron variant was a reminder of the fragility of these international events during the ongoing pandemic.

Gallery closures during the year indicate a strained industry. Stalwarts such as Gavin Brown and Metro Pictures in New York left the scene and, in Cologne, Delmes & Zander, a champion of under-represented artists, closed after more than 30 years. “Times have changed,” the gallery’s founders noted simply in their statement.

Artists began to take matters into their own hands, not only through social media and NFTs that can take them straight to buyers, but through alternative intermediaries, notably a growing art agency scene. At the same time, auction houses are encroaching on every area of the art business: galleries seem squeezed.

They have, however, benefited from the lower rents available as traditional retail moves more completely online. New gallery spaces ranging from short-term pop-ups to permanent fixtures have followed the money and galvanised trade in resorts such as the Hamptons, Palm Beach and Aspen. Events that focus on the gallery space, including this year’s inaugural London Gallery Weekend, are finding their footing in a more decentralised world.

What of the art?
The 20th century is still the biggest money-spinner and this year’s auction record came courtesy of the reliable Pablo Picasso, whose 1932 painting of his lover Marie-Thérèse Walter sold for $103.4m at Christie’s in May. Hot on his heels was Jean-Michel Basquiat, an artist whose spot in the pantheon of art history is now cemented and whose popularity worldwide gives weight to the wider re-evaluation of street culture and artists of colour. Despite the appearance of a more diverse display of art at exhibitions and fairs, there is still plenty of work to be done to redress the imbalances.

There was speculation in works by a handful of contemporary artists as the auction houses redirected their offerings towards the newest of new art. The generally beleaguered Old Masters market yet managed to produce the third-highest auction price of the year in January when a c1480 portrait by Sandro Botticelli sold at Sotheby’s for $92.2m. And, in December, the Dutch government confirmed it was ready to buy Rembrandt’s “The Standard Bearer” (1636) for the nation, for €165m.

Such enthusiasm for traditional paintings may not run deep through 2022 but made a refreshing old-guard contrast to the metaverse. If the NFT craze during December’s Miami fair is anything to go by, however, next year we may hear of little else.