The Back Room: Crypto’s Star Map

One of the central questions about NFTs has been whether their disruptive technology and ethos of democratization would lead to more equitable results than in the legacy art market. Well, a rigorous study of the major NFT platformFoundationmostly answers with a resounding, Nope, not really.

Published in the journalScientific Reports, the research was conducted byBarabsi Lab, a team of artists and data scientists studying complex networks. The co-authors used publicly accessible blockchain records to map every transaction that took place on Foundation during its first five months post-launch.

What emerged was an empirical recipe for market success as a crypto artist, which I parsed at length in this weeksGray Market. Below is a summary of its five key ingredients. Most will taste very familiar to art-market veterans…

 

1. It Pays to Be Firstand It Keeps Paying

Barabsi found a clear and lastingfirst-mover advantagefor crypto artists on Foundation. Artists who joined earlier sold more NFTs on average, and at a higher average price per NFT, compared to their counterparts who arrived laterno matter what earlier and later meant specifically.

The initial adoptersthe first2.5 percentof artists to join Foundation, between January 21 and February 22out-earned the early majority artiststhe13.5 percentwho joined between February 23 and March 10. But the early majority, in turn, also out-earned the later majority, who in turn out-earned the laggards, the final16 percentof artists to join during the sample period.

Sell-through rate and median selling price followed the same step-by-step descent. The former gradually dropped from74 percentin the initial-adopter phase, all the way to13 percentin the laggard phase. The latter declined from$1,046per initial-adopter NFT, all the way to$688per laggard NFT.

 

2. Its Better to Be Foundation Famous Than Twitter Famous

LikeTwitterorInstagram, Foundation allows users to follow artists on its platform to get notifications about their activity, including new NFT drops. Yet Foundation is only a niche within a niche of the crypto space compared to Twitter itself, which has become the headquarters of crypto enthusiasts in general and crypto artists in particular.

But the data reinforces the adage that niches get riches. An artists online presence elsewhere is nice. But unless they can port it over to Foundation, their success on the platform will be limited.

Artistswho increased from 100 Foundation followers to 1,000 Foundation followers were likely to experience a 10X increase in earningsa windfall only achievable if they increased from 100 Twitter followers to 10,000 Twitter followers (i.e. an order of magnitude more.)

 

3. ItsStillAbout Who You Know

As an open platform, Foundation allows artists who have already joined to invite new artists on board. But while this democratization of opportunity gels with the crypto discourse, sales results indicate that success is largely predetermined by artists relationships.

Since every Foundation artists profile page includes an invited by tag, Barabsi and his team were able to map each of the 640 artist clusters that sprouted on the platform in its first five months.

Data showed that some artist clusters dramatically outperformed othersand that new artists fared about as well (or as poorly) as whoever invited them.The richest and poorest clusters consistently did much better (or worse) than a randomized reference cluster in terms of sales value, sales volume, average selling price, and follower counts on Foundation and Twitter.

 

4. Its Very Hard to Shake Your Initial Reputation

Artists are responsible for setting their own prices on Foundation. Even if a new work fails to attract bids at its initial asking price, the artist can re-list it at a lower price. (Foundation allows works to be offered for private sale or public auction; in the latter case, a 24-hour countdown clock begins when a bidder agrees to meet the listed reserve price.)

Data shows that this system hybridizes a truly free market and the price-controlled gallery sector:artists selling prices often varied significantly from NFT to NFTbut also tended to stay within a stable range defined by their starting reputation level.

The study found that reputation has a similar impact on work-to-work selling price, mean selling price, sales volume, maximum earnings, and moreall of which mutually reinforce.Call it crypto predestination, with artists odds of success mostly locked in before they mint their first NFT.

 

5. Even as NFTs Drew in the Masses, the Rich Still Ruled

Although data showed high-reputation artists attracting new bidders at twice the rate of medium- and low-reputation artists, the three groups attracted newbuyersat an indistinguishable rate.

This means NFTs by high-reputation artists tend to be acquired over and over again by a few passionate collectors, often at outsize prices driven up by broader bidding. In other words

The minority of works acquired by top collectors sold for vastly more than the majority of works acquired by everyone elseboth market-wide, and among individual star artists.

Of 2,743 NFTs sold by the 180 highest-earning artists, about one-third were purchased by collectors who had previously bought work by the same artist. The roughly$4.5 millionspent by these repeat investors made up more than76 percentof the cohorts total sales value ($5.9 million).

The same relationship was visible at the single-artist level. Nearly62 percentof the artistPaulSnijders earnings came from just six NFTs acquired by just three repeat collectors. Another 21 works, each purchased by a different buyer, made up the other38.5 percentof their earnings.

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The Bottom Line

Although the studys findings about the first-mover advantage and the power of follower count provide some hope for crypto artists hoping to bootstrap their way to success, most of its takeaways suggest that a high-quality social network is still the chief mechanism for advancement in crypto art.

By eliminating gatekeepers such as galleries, auction houses, and artist agents, then, NFT platforms shift the responsibility for constructing such a network wholly onto artists themselves. If self-promotion isnt foremost in their skill set, Barabsis research indicates, reputation might be even more confining in the crypto space than outside it.

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Paint Drippings

Sotheby's Oliver Barker with Shara Hughes, Naked Lady (2019). Courtesy Sotheby's

Sotheby’s Oliver Barker with Shara Hughes, Naked Lady (2019). Courtesy Sotheby’s

In the latestWet Paint, we learned thatSotheby’spaidTikTokinfluencerGstaad Guyto build hype around itsThe Nowsale inLondonlast week. How? By crafting content faking that he wonGeorge CondosGreen Head Composition(2013) for a cool2.3 million ($3 million). Sothebys, however, confirmed that the painting went to a buyer in Southeast Asia.

Also, an apparent mass exodus of artists from the roster ofJack Hanleyturns outnotto have been a direct response to his newBeepleshow after all. While emerging talentEmily Mullindid leave in protest, per Hanley, five other artists names disappeared from the gallery’s website for unrelated reasons, including compliance with theAmericans With Disabilities Act(whose vagaries are being weaponized against dealers in aspree of lawsuitsyes,again).

Heres what else made a mark around the industry since last Friday morning…

 

Art Fairs

  • Sales atArt Genvewere brisk despiteSwitzerlands decision to impose sanctions onRussia, but the fair said it has indefinitely paused its plan to expand toMoscow. (Artnet News)
  • The artistic director of theCosmoscowfair,Simon Rees, resigned in protest ofthe invasion ofUkraine. He is now working forLithuaniasContemporary Art Center Vilniuswhile relocating and housing Ukrainian refugees inVienna. (Artnet News)

 

Auction Houses

  • The latestHot Lotshighlighted six works that upended expectations during last weeksLondonday sales, including an explosive auction debut byAntonia Showeringthat fetched226,800 ($300,100)more than15Xits upper estimate atPhillips. (Artnet News)
  • Mega-collectorKen Griffinpulled out of a$100 milliondeal to buyRen MagrittesLempire des lumireslast year after an in-person viewing, per three sources with knowledge of the deal. The work sold atSothebysLondonlast week for a less spectacular (but still record-busting)$79.8 million. (The Canvas)
  • Phillips‘sNew Nowsale inNew Yorkbrought in$8.4 millionacross 195 lots on Wednesday, setting new records forSarah Slappey,Sanford Biggers, andJordy Kerwick, whoseUntitled 7shot to$201,600, more than10Xits high estimate. (Press release)

 

Galleries

  • Gagosianis showingFrancis Bacon‘s earliest “Pope” work at itsLondongallery onDavies Streetfrom March 15 through April 23. The 1946 painting, which resurfaced in 2016 during the compilation of Bacons catalogue raisonn, has never been exhibited publicly. (Press release)
  • Jonathas de Andrade, who will representBrazilin theVenice Biennale, has leftVermelhogallery forGaleria Nara Roesler. De Andrade will still work withAlexander and BonininNew YorkandGalleria Continuaacross its various locations. (Press release)
  • TheRobert Rauschenberg Foundationis partnering with three galleriesThaddaeus RopacinSalzburg, andMnuchinandGladstonegalleries inNew Yorkto stage a set of exhibitions focused on his less-known post-1970 works. (Artnet News)

 

Institutions

  • Late collectorsNorahandNorman StonegiftedSFMOMA350 contemporary works (including pieces byDiane Arbus,Francis Picabia, andCarrie Mae Weems)and$10 millionin unrestricted funds, which the museum will put towards future exhibitions. (Artnet News)
  • MoreEuropeaninstitutions distanced themselves fromRussia.AmsterdamsHermitage Museumand theHermitage Foundation U.K.cut ties with their parent museum inSaint Petersburg(from which they regularly borrowed works);Belgium‘sAfricaMuseumsuspended all contracts with Russian organizations, institutions, and researchers per Belgian federal policy. (Monopol/ Press release)
  • TheSacklerfamily agreed to allow museums to remove its name from buildings and programs without penalty, as part of a new settlement that resolves multiple civil lawsuits filed in response to the opioid epidemic. (Artnet News)
  • Budi Tekdonated seven works from hisYuz FoundationtoLACMA, led byAi Weiweis oft-photographed Zodiac heads. (TAN)

 

NFTs and More

  • NFT marketplaceOpenSeahas been deleting the accounts ofIranianusers and collectors due to ongoing sanctions from the U.S. (ARTnews)
  • Collector andGarage MuseumcofounderRoman Abramovichis the latest UHNWI Russian national to be tagged with sanctions by the U.K., including a complete asset freeze that blocks his efforts to sell Premier League powerhouse Chelsea F.C. (Financial Times)
  • TheGetty TrustinLos Angelesis suing the financial-services firmAllianzover alleged mismanagement of its investment fund. The complaint accuses Allianz of losing some$60 millionby abandoning its promised strategy to protect against a market crash. (Artnet News)

 

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Data Dip

Warhol’s Wild Auction Ride

 2022 Artnet Worldwide Corporation.

2022 Artnet Worldwide Corporation.

Andy Warhols auction profile has taken some hits since the early 2010s. But while some insiders insist this perception is warped by his markets yearslong shift toward private transactions, the fright-wigged ones works may be regaining momentum under the gavel, too.

 

  • Warhols total sales by value peaked in 2014, at$653.7 millionworldwide, then promptly entered a multi-year decline.
  • His auction market hit rock bottom during the pandemic in 2020, notching sales of just$116.5 milliona mere18 percentof its apex value six years earlier.
  • But bidders spent$347.6 millionon Warhol lots last year, more than doubling his YOY sales, and making him 2021’s third-highest selling artist at auction (behind onlyBasquiatandPicasso).

 

For a more nuanced analysis of these twists and turns, click through below for the latest Artnet News Pro Appraisal.

 

[Read More]

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His mother asked me to.

 

Thomas Krenson why he hired a 21-year-oldMax Holleinas an intern while serving as director of theGuggenheim, sparking a decades-long mentorship that proved instrumental in Holleins eventual ascension to the directors chair at theMet. (WSJ Magazine)

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Artwork of the Week

Pablo Picasso’sTte de femme (Fernande)

Pablo Picasso, Tte de femme (Fernande) (1909). Courtesy of Christie's Images, Ltd.

Pablo Picasso, Tte de femme (Fernande) (1909). Courtesy of Christie’s Images, Ltd.

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Date: 1909

Seller: The Met

Estimate: $30 million
Selling at: Christie’s New York
Sale Date: May (date TBD)

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The latest trophy announced for Mays spring auction cycle is also one of the pricier works to be deaccessioned by a museum of late.The Methas officially consigned a bronze cast ofPicassos 1909Head of a Woman (Fernande),widely considered the artists first Cubist sculpture, to Christies. The work carries a$30 millionestimate and a house guarantee.

It is also the definition of expendable for the Met, since the museum owns not one buttwoof the works roughly 20 known casts. The sculpture earmarked for Christies was donated more than 35 years ago byFlorene M. Schoenborn(who died only a few years later); its soon-to-be replacement is part of a Cubist trove promised to the Met by the still-kicking ber-patronLeonard Lauderlast year.

(The redundancy was a big part of the reasonKatya reported six months agothat the Met was mulling a sale of the work, which the museum declined to confirm at the time.)

In a statement, the Met pledged that all sales proceeds will go toward new acquisitions. This seems kinda obvious, since the sale will take place a month after the closure of theADAAs pandemic-responsive window allowing member institutions to deaccession for the sake of collection care. But given how controversial deaccessioning can be, it probably doesnt hurt to be clear!

The Met raises around$15 millionfrom art sales in a typical year. If all goes as planned, its acquisition coffers will soon be about twice as full as usual. I guess flesh-and-blood plutocrats wont be the only ones to come out of the pandemic richer and readier to spend.

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With contributions by Naomi Rea.

 

Thanks for joining us in theBack Room. See you next Friday.