Sales of digital art have increased every month since July of 2020. The most a piece has sold for is $777,777.77. The sales I saw were anywhere from $50 to $10,000. After reading about the sales and seeing all the cool art getting made, I went down a rabbit hole.
What are Non-Fungible Tokens? A digital representation of ownership. The token is proof that the owner of the art or media has the only copy. Artists need to put their digital files on the blockchain. The art needs to be limited edition, one of one.
The art on the ethereum blockchain gets tracked. This means someone can track every owner of a piece of art. Some people might want to buy a piece of art if they know a previous owner. The art cannot get altered by anyone. Sometimes a buyer might cut or retouch a painting then sell it. Cutting or changing the painting reduces the painting’s value. The next buyer might not notice the changes until after the transaction. If someone notices the changes, they will not be able to profit from the sale. The items on the Ethereum blockchain are immutable. There is no chance of losing value because of a previous owner.
Before the internet, an artist only sold their art once. If the buyer sold the art they then the artist did not get any money.
As the artist’s following grows, the resale of their pieces will increase. Helping artists make money from previous work.
Another method to generate revenue is to create an e-commerce store. An artist displays any art for customers to buy. They can sell digital downloads and physical art. They will have to deliver the art themselves.
The amount of potential revenue is dependent on the medium of the art. A framed canvas painting will sell for more than a photograph.
A commission is selling custom art to a customer or business. A company might want an artist to create a logo. Since the art is custom, an artist might charge more money.
An artist can teach others to generate revenue. There are many people interested in learning to create digital artwork. They can create a course about their medium for people.
Some people might want to see an artist create their art. To show their process, an artist can stream while they work. Streaming is similar to the SaaS pricing model. People will give an artist money every month. In exchange, they get entertainment.
Some platforms allow artists to collect small payments from their audience. In return, they might get a small reward, such as digital products.
When an artist runs an e-commerce store, they have to handle every element. Which includes shipping. They must pay for the shipping materials for physical items.
Digital artists need to use software. They need to pay for subscriptions. Software companies charge per year or monthly. Considering that the software gets used to create art and make money, it is a small price to pay.
There are many costs to start selling art. When starting an e-commerce store, an artist needs to pay platform fees.
For NFTs, an artist needs to buy Ethereum to get started. Once they buy Ethereum, they need to use it to add their art to the platform.
If it is a transaction on the internet, there is no avoiding the 3% credit card fees. An artist will have to pay the fees for the art that gets purchased.
Billion-dollar idea: an online credit card that charges 1% for fees.
Galleries are an opportunity for many people to see an artist’s work in one place. Virtual art galleries expand the number of eyeballs for an artist. In a virtual art gallery, people from all over the world can see an artists’ work.
An artist must split the revenue of a sale with the gallery. If artists host the virtual gallery themselves, they get to take home more revenue.
In any industry, collaborations help both parties grow their audience. Artists would benefit from a platform that allowed them to connect and collaborate. A dating app but for artists. They can leverage their audiences to help each other grow.
As an artist grows an audience, they may have people willing to buy any piece. Their audience might want to pre-fund the artist. If an artist had a platform to auction off concept art, they would make a sale before creating the piece.
People have been buying art since the beginning of time. The internet adds a layer of complexity that some buyers might find discouraging. Which would prevent them from buying digital art.
An artist might have many followers and people buying new pieces right away. For an artist to get passive income from resales, the art needs to get sold. A buyer could resell in a week or in a year. An artist has no method for knowing when the art will sell again. Which makes resale income unstable.
Buyers will need to buy Ethereum and transfer it to buy art. Some people have an interest in buying digital art. But buying Ethereum gets too complex for them.
The price of Ethereum fluctuates. At what price will people buy the art? For example, an artist sells a piece for 1 Ethereum. At this time, the price of Ethereum is $2,000. Then, the price drops to $1,700. Will the next buyer pay 1.1 Ethereum? Which is less than the original value. Or will they pay $2,100 in Ethereum?
Streaming has a reputation as a medium for gaming. An artist trying to stream and grow a streaming audience might have trouble. The existing audience will help an artist grow on a streaming platform by watching them.
The value of digital art is the opportunity to use technology to create unique pieces. Before digital art, an artist could not create dynamic pieces. They had to create sculptures or paintings. Using software, an artist can create GIFs, edit normal images, and create reality-altering images.
In the traditional art world, an artist only made money on the first sale. NFTs will help artists to make money on the secondary market. Creating a new income stream for artists.
The concept of buying digital art is new. It might take a while for digital art to go mainstream. But I will update everyone when random people in my life start texting me asking about NFTs. As the number of buyers goes up, the prices will too.
The internet provides the art community with opportunities it did not have before.