Opinion / Beeple’s US$69 million NFT art sale: what brands can learn about pricing luxury goods beyond all expectations from this once-in-a-lifetime Christie’s auction

Mar 25 , 2021

Beeple’s NFT artwork Everydays: The First 5000 Days recently sold for an incredible US$69 million in an online Christie’s auction after an initial listing of US$1,000 – what can we learn from this unprecedented art sale? Photo: Reuters

Digital artwork Everydays: The First 5000 Days sold for an incredible US$69 million, but was only listed by Christie’s for US$1,000 – was it all a stunt?

Jeff Koons and David Hockney are the only living artists to command higher sums, while Bugatti and Hermès have created similarly exclusive stories

This article is part of Style’s Luxury Column.

When Christie’s sold one of the most expensive artworks of all time by a living artist for US$69.3 million, many could not believe the outcome – including, apparently, the artist who created it and the auction house that sold it.

Beeple’s Everydays: The First 5000 Days, a virtual collection of 5,000 images, was listed at just US$1,000 for the initial bid. Never before has a piece of art exploded in value by nearly 7,000 times in a matter of minutes – a sure sign that no one reckoned with the value of the lot going under the hammer.

Beeple’s Everydays: The First 5,000 Days sold for US$69.4 million in an online auction on March 11, positioning the artist among the top three most valuable living artists, Christie’s said via Twitter. Photo: Christies via AP

Parking accusations that the whole thing was a publicity stunt riding off the sudden explosion of interest in the billion-dollar NFT art craze, many observers of the traditional art world are still puzzled over why someone would pay so much money for a digital piece of art.

Typically, we might assume that producing expensive art is a process of sacrifice by the artist, who slaves in a dark studio over many weeks or months to gift the world a unique expression of their individual genius on canvas. In many cases, it is. But there are also thousands of artists all over the world that are (more?) talented and, at best, their art sells for a three-figure sum. Most never become famous or sought after. Hence, effort and talent – manifested in the “product” – are not the main drivers of value here.

So how can we explain the price point that one Indian blockchain entrepreneur was prepared to pay for Beeple’s work? A closer look reveals that this art sale has all the ingredients employed to market (and justify the prices of) the most desired luxury products.

What if everyone else in the category is wrong in terms of their pricing? You then benchmark yourself against brands that may be undervaluing their value creation. As a result, you are wrong, too

A detail shot from Beeple’s Everydays: the First 5000 Days digital collage. Photo: Reuters

To fully grasp correct luxury pricing, we need to understand how it is done typically versus how it should be done. The approach many brands apply is to simply benchmark with competitors and category conventions, while making the desired margin on cost the key decisive factor. In other words, if you are in the business of selling a luxury car, you probably start with your production cost, then add your desired margin and see if you are above or below your closest competitors.

This approach is practically always wrong when it comes to luxury. The strategy only works for mass market brands where the reference price theory gives us indications on the willingness to pay. Luxury has completely different, counterintuitive rules. Hence, intuition with regard to luxury pricing will almost always misguide you. The US$1,000 starting price for Beeple’s artwork is a great example. Even an experienced auction house like Christie’s was seemingly completely off.

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Daniel Langer

Daniel Langer is the CEO of the leading luxury, lifestyle and consumer brand strategy firm Équité (equitebrands.com), and the professor of luxury strategy and extreme value creation at Pepperdine University in Malibu, California. He consults some of the most iconic luxury brands in the world, is the author of several luxury management books, a frequent media commentator, a global keynote speaker, and holds luxury masterclasses in Europe, the USA, and Asia. Follow @drlanger on Twitter

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