From Traditional to Digital: The Evolution of Art Collecting in the NFT Era
The First Art Newspaper on the Net    Established in 1996 Saturday, July 20, 2024


From Traditional to Digital: The Evolution of Art Collecting in the NFT Era



In the digital age, art collecting has undergone a transformative shift. While the traditional approach has remained largely unchanged e since the Renaissance, the emergence of new technologies, such as Non-Fungible Tokens (NFTs), has marked the foundation of a new perspective on art collecting.

NFTs are digital assets that use blockchain technology to represent ownership and authenticate unique pieces of content, such as paintings or statues. Unlike fiat money, which can be exchanged on a one-to-one basis, each NFT is a unique asset that can’t be replicated or replaced. Issuers can sell NFTs on digital marketplaces to generate new revenue streams through democratized bidding or fixed sales. Simultaneously, collectors can reach galleries without limitations and diversify their portfolios with previously inaccessible artworks. NFTs have emerged as a disruptive force in the art world, offering numerous opportunities for art institutions and individuals to monetize masterpieces, improve the security of transactions, and discover hidden potential. While some art institutions seek guidance from specialized companies like Digital Basel, others remain uncertain about how NFTs may change the familiar status quo.

In this article, the Digital Basel team will explore the evolution of art collecting from traditional to digital mediums and the implications for artists, collectors, and the art market. Thus, the team behind your gallery will be able to prepare for future changes and fully leverage the power of emerging technology

The Landscape of Traditional Art Collecting

Today, the traditional approach remains one of the dominant forms of art collecting. Despite the emergence of new technologies and the overall democratization of art, traditional art collecting is often characterized by limitations, exclusive deals, higher, higher financial thresholds, and, primarily, a lack of digitalization. As the traditional model still prevails in the art community, it is important to be familiar with its characteristics, roles, and challenges to better understand how art institutions can benefit from the changes brought by the new modern model.



Salons are one of the traditional art collecting forms still present today. Jean-André Rixens (1846-1925) – Albert Wolff, Figaro-Salon 1890

Characteristics

Physicality — owning tangible objects is at the core of traditional collecting. Although it may be more valuable to buy real objects, owners have to consider that they are susceptible to physical damage and decay. In addition, they have to bear the expenses and responsibilities associated with transportation and security.

Private collections — even though private collections exist regardless of the approach, in the traditional model, that type of ownership can sometimes be detrimental to the public and galleries. For example, during the COVID-18 pandemic, many galleries and museums faced financial challenges, forcing them to sell some of their exhibits. As a result, famous artworks became inaccessible to the public, remaining undisclosed in the possession of private collectors.

Long-term ownership — in the traditional approach, collectors typically view art as a long-term investment and tend to hold artworks for extended periods. Thus, galleries can gain income primarily through one-time deals rather than acquiring long-term revenue streams.

Exclusive networks & market access — the traditional art collecting model often entails limited access to artworks and art events. To even have an opportunity to bid on masterpieces, collectors have to attend various industry-related social gatherings and connect with artists and representatives of art institutions.

Traditional roles

Galleries serve as intermediaries for artists by providing a platform to gain exposure, build their reputation, and engage collectors. They play a crucial role in discovering and promoting artists' work, as well as selecting artworks that align with their aesthetic and market preferences. Through their curation, galleries influence which artists and artworks gain visibility and recognition in the art market.

Private collectors are individuals who play a critical role in shaping the art market by providing demand and driving prices. Their preferences directly influence which artists and artworks become famous and valuable. While some collectors may lend or donate artworks to museums, others may keep valuable masterpieces hidden from the public in their private collections. In addition to their primary goal of owning art, private collectors also serve as patrons, supporting artists in their growth and allowing them to focus on the craft.

Auction houses provide a transparent and competitive platform for public sales events, where artworks are presented to potential buyers. They also play a role in the art collecting process by assessing the value and marketability of artworks, setting minimum prices, and facilitating bidding processes. Their decisions have a significant impact on the value and demand for artists, galleries, and their artworks.



Even after two centuries, art auctions have undergone little to no changes. Christie's Auction Rooms (1808).

Challenges

Cost and Affordability — although traditional art collecting has become more affordable compared to previous centuries, it can still be prohibitively expensive. Not only works by old masters but also pieces by new talents may cost hundreds of thousands or even millions of dollars, which significantly limits opportunities for average bidders to acquire high-quality artworks by renowned artists. Moreover, the expenses associated with maintaining, insuring, and storing artworks can further add to the overall cost. Thus, the traditional model restricts access to the market for collectors with limited budgets.

Authentication & Provenance — establishing the authenticity of artworks and tracing their ownership history can be a complex and time-consuming but crucial aspect of the traditional model. Art collectors, galleries, and artists face the daily risk of encountering counterfeits.

Preservation & Conservation — in the traditional model, collectors are responsible for preserving and conserving their artworks. They need storage facilities with proper handling and temperature control to protect artworks from deterioration and maintain their value and longevity. This process demands specialized knowledge, as well as time and resources, which further contribute to the overall price of each artwork.

Art Collecting in the NFT Era

Meanwhile, as many art galleries and individuals continue to engage in the outdated form of art collecting, NFTs provide new opportunities to challenge the status quo in the art world. Instead of pushing art owners to sell off their originals, NFTs allow them to generate income from digital copies of their artworks.

Furthermore, unlike self-interested auction houses, intermediaries are 24/7 publicly accessible and completely transparent marketplaces or facilitating platforms like Digital Basel. Through these platforms, galleries can directly trade with potential collectors from anywhere in the world. Additionally, galleries can receive assistance to streamline the process of transforming their artworks into NFTs.

Thus, galleries and collectors can not only reap the benefits of art collecting but also avoid the disadvantages of the traditional approach.



OpenSea is one of the popular marketplaces where art NFTs can be monitored and traded 24/7 from anywhere in the world.

Advantages of Art NFT Collecting Over the Traditional Model

Enhanced security — blockchain technology, widely used in NFTs, is a type of distributed database. It provides buyers and issuers with a transparent, decentralized, and accessible 24/7 record of ownership. Regardless of the platform and blockchain system where they are minted and sold, your art NFTs will be completely secured from fraudulent activity.

Prospective revenue stream — as previously mentioned, selling artworks at traditional actions often leads to a one-time profit. Afterward, receiving benefits from the already executed deal is almost impossible, even if the cost of sold artworks spikes. In contrast, selling artworks in the form of digital assets like NFTs allows galleries to generate income not only from initial sales but also from secondary purchases in the form of royalties. Thus, there is no need to be concerned about missing out on more beneficial opportunities, as artworks can continue to generate revenue in future deals.

Diverse collectors’ engagement — although art has immeasurable value on its own, NFTs can offer collectors new ways to interact with art. Using them as IDs to access exclusive services & content or as a tool for community building, art galleries or museums can drive awareness, boost demand, and even promote both their offline spaces and the NFTs.

Lowered financial threshold — traditional art collecting is often unreachable for a general audience. Instead of democratizing art, it perpetuates exclusivity, reminiscent of the Middle Ages, where valuable masterpieces are accessible only to a few. In contrast, art collecting with NFTs reduces the threshold and allows more collectors to participate in the bidding, leading to more deals.

Increased liquidity — compared to physical artworks, NFTs are more liquid. Many art pieces hold significant cultural value and are subject to governmental regulations. However, as digital assets, NFTs eliminate the need for complex procedures during deal execution. They can be quickly bought or sold on marketplaces from anywhere in the world, making it easier for art institutions to trade their artworks as digital assets.

As evident, converting artworks into NFTs may be a challenging but quite beneficial way to monetize art in the modern era. However, we highly encourage you to learn more about the emerging art-collecting landscape.

It’s time to unlock and embrace new opportunities presented by the digital realm and global community of art connoisseurs.










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