Predictions for the Art NFT Market

Nearly one million NFTs were sold in May 2022, totaling $1 billion — those numbers are particularly astounding given that NFTs didn’t even enter the general lexicon until a year or two ago.

For centuries the art world existed in physical spaces that showcased physical works. However, new technologies and innovations are changing not only the way artists create art but the way collectors purchase it. Is the pendulum swinging away from the physical art world to one that exists in digital spaces, where artists mint NFTs and where collectors display them in a virtual gallery? The answer is yes.

Whether the art landscape becomes mostly virtual or, more likely, a hybrid, digital art, and NFTs are a valuable addition to traditional mediums and means of creating art. Here are some of the ways art collectors are embracing the new technology and the benefits art NFTs can offer to artists and collectors that haven't been possible before.

What Art Collectors Are Saying

Where do collectors believe the art world is going? Our recent report on the "State of Art Collecting 2022" found an unmistakable throughline: The art world is going digital, not only when it comes to art creation but collecting as well.

With the advent of online galleries and marketplaces, collectors are finding artists and their works via new channels. According to collectors surveyed for the report, many are using both online and offline sources to discover new artists and new art. 61% say they are comfortable with buying art online.

More collectors also view digital art as being just as worthy of collecting as traditional works. A little over half of the collectors surveyed believe digital art should hold as much monetary value as physical art, signifying a growing market for digital art. The majority also believe that in five years, digital art will overshadow more traditional mediums.

There's also majority adoption when it comes to purchasing NFTs, as 63% of collectors surveyed purchased an art NFT in the past year. 22% plan to spend more than $5,000 on NFTs in the next year — and it could be even higher, as the median purchase price for NFTs preceding recent fluctuations in the market was $24,000.

All of these insights point to one thing: The world of art creation and collecting is shifting online, and today, art collectors have hands in both the digital and physical art worlds.

But will these numbers and this growth be undercut by the recent crypto market downturn? It’s easy to be bullish about NFTs and digital art when the market is bullish. While there are some collectors looking to make a profit from their purchase, there are many other collectors who are not daunted by the changing market and want to continue to build the future of digital art.

How NFTs Will Change the Art World

Digital art, and especially NFTs, bring a number of benefits to both artists and collectors. For one, a more digitally-focused art world means fewer barriers to entry for collectors, since accessing art will no longer be limited to accessing physical spaces. Art lovers can virtually tour a private collection, visit a museum in the metaverse, or even use a smartphone to experience AR installations right where they live. More access means that more collectors will be able to find artists that really resonate with them — they're not limited to only who's on view in a local gallery.

Of course, a digital art world also lowers barriers to entry for artists, as anyone who wants to create art can upload their work to an online gallery, showcase it on their social media, or feature it on a website. With access no longer funneling through traditional gatekeepers, we’ll see an art world that’s more representative of our actual world, with more diverse representation among artists and artwork alike.

NFTs also enable collectors to directly transact with creators. This functionality can lead to a shift in how artists are supported and could evolve into a neo-patronage model where many individuals fund their favorite artists. NFTs allow fans to become partial owners of work and share in the future earnings of the artist as well.

Blockchain technology also offers features and benefits that artists haven't had access to in the past, like being able to gain future royalties on secondary market sales.

These benefits in an ever-evolving digital landscape will result in art no longer just being confined to a canvas on a wall, passively viewed. Instead, collectors and fans will participate in the art and interact with it as a game or a wearable, either in physical or digital spaces. One of the positives of the market downturn is that it may shake out get-rich-quick projects for more interesting and creative work that can really expand what Web3 technology can offer.

All of this points to more independence for artists going forward. New patronage models will give artists the freedom to create the art they want, in new mediums that allow for innovative experimentation. With NFTs, artists can gain more control over how they want to manage and build their careers and set their own artistic vision and direction.

The Art World’s Future

Considering that the art world has stayed relatively the same for centuries, it’s hard to imagine how the seismic technological change and innovation ushered in by NFTs and Web3 more broadly is reshaping the landscape so quickly. While both artists and collectors will need time to fully understand the potential of the Blockchain in the realm of art, it’s certain that this new technology is creating a future characterized by more artistic freedom, greater accessibility, and new forms of patronage.

Also published here.