Welcome my friends to the third edition of Nonfungible Alpha.
Each week, I drop bite-size, actionable insights for both collectors and artists. The focus is the 1/1 market, up-and-coming artists, and the art of collecting.
I’m trying out a new format today, featuring a real-life story or “case study” from the NFT market. We look at an unlikely collector opportunity and how an artist recently went from having ten unsold works to being sold out with new ATHs in a matter of days.
Alright, LFG
Weekly Quote
If it's not a hell yes, then it's a no.
-Derek Sivers
📈 Market Pulse
This week saw a continued uptrend in baseline SuperRare volume but with fewer fireworks like last week’s mega sales from XCOPY and Grant Yun.
We’re only a few days into August, but so far SuperRare and Foundation are on pace for around the same volume as July. If the new baseline sticks, however, I would expect a few outlier days to the upside to drive August above July.
🔥 Weekly Featured Art
The Fine Art Of Falling Apart, by Eric Pause
Available on SuperRare
Case Study: An Unlikely Collector Opportunity and How an Artist’s Market Transformed Overnight…
Over the past few months I’d see Schauermann’s art pop up from time to time on SuperRare. I was drawn to his work but decided against collecting it for one simple reason: overminting.
He had 10 unsold works, some of which had been laying dormant for months.
I’ve seen overminting kill promising artists. Flooding the market with a bunch of unsold works can convey a lack of scarcity and value in the eyes of collectors. It can also signal a lack of “market savvy.”
This game is in part a Keynesian Beauty Contest in which collectors attempt to buy things that not just they perceive as beautiful and valuable but that they think other collectors will perceive as beautiful and valuable.
Should it be this way? I don’t know, but it is.
In the past, I would have written off an overminter like Schauermann, but I learned the hard way not to do this.
This time last summer, a low-profile artist by the name of Grant Yun had four unsold pieces on SuperRare. Most had been sitting there for over two months, untouched.
A weeks later, all four of these works were bought for between 1 and 1.5 ETH each.
The rest is history, with Grant’s work now selling as high as 136 ETH. And I think he’s just getting started.
To be clear, I think overminting is a risk and Grant took off despite this, due to his remarkable talent, energy, and grit. (Luckily, I still got a hold of a couple of Grant’s 1/1s, but I missed on buying more when I had the chance and on buying his most iconic works).
The point is that while overminting is a red flag, writing off an artist because of it can be a costly error.
But I’d take this a step further: overminting can be an opportunity for the enterprising collector.
If the main reason an artist hasn’t taken off is because they minted too much, too fast, then what if this issue is fixed?
In Schauermann, I saw many of the traits I look for in up-and-coming artists. They were just overshadowed by runaway minting and a scattered pricing strategy.
I felt that he had great potential if these aspects were fixed.
This is when an idea popped into my head.
I couldn’t buy all of Schauermann’s ten unsold pieces, but what if I could find a couple other collectors to go in together?
Maybe each of us would buy 2-3 of his works, collectively sweeping up his listings. I figured each collector would be comfortable going in if they knew there were other keen collectors and that all his work would be bought.
First though, I’d need to see if Schauermann was receptive to input and changing his minting strategy. Otherwise, we could buy all his unsold works, but continued overminting would turn away future collectors.
Some artists love to think about the market side of things and are savvy with it. Others aren’t. That’s okay with me, as long as they’re open to input and willing to learn. If an artist is neither adept with the market side of things *nor* open to feedback and change, then it won’t work for us.
So the first step was to strike up a conversation with Schauermann and gauge his receptiveness.
I told him that I loved his work and that he should feel free to run anything by on the market side of things to get a collector’s perspective. This was a way to gauge if he saw that what he was doing on the market side wasn’t working and was open to input on how to fix it.
He got back right away, and I found out two things:
1) He was open-minded. Even if he didn’t have all the answers, he was asking the right questions.
2) Another collector was also talking with him and interested in buying multiple of his works.
1) convinced me to move on it and 2) meant that I’d have to move fast.
In the next 24 hours, that other collector P. Azuro and myself scooped up six of his works combined (I later bought two more on the secondary).
A wave of other collectors followed, and within a week all of his works were sold out. Since then, he has sold four new 1/1s, some entering bid wars and hitting new all-time highs for him.
In the span of 10 days, the market for Schauermann’s work flipped from the restaurant that nobody wants to dine at cause all the tables are empty to the restaurant that everyone wants to check out cause there’s a long line out front.
To be clear, a lot of collectors already loved Schauermann’s work (shout out all the collectors like that discovered his work long before me), but many were hesitant to collect due to overminting.
With this issue fixed, the sky is now the limit for this artist.
I think the takeaway of this story is that while overminting is a liability, it can also be an opportunity in select circumstances.
If an artist:
is open to feedback and change
has a number of unsold works
the main reason nobody wants to buy them is because nobody else is buying them
Then one or more collectors can coordinate together to buy the artist’s unsold supply and essentially flip the market script. This process, however, requires communication and coordination to ensure that everyone is aligned.
This story makes me wonder how many other artists like Schauermann are out there that have incredible potential but have been overlooked for similar reasons.
I suspect a lot…
Interesting analogy…giving me something to think about…I’ve always chased the curve
- Vintagemozart
Great insight into your approach/view on artists. Schauermann also is a unique artist and worth collecting indeed.
Question: I produce a lot of art, not because of a simple style, but I'm a fast and steady worker. I sell almost everything, but can't seem to reach higher sales price levels (above 1-2 ETH for a 1/1). Do you think reducing the mints/curating my art more sharply would increase prices on the long run? Tried it a while, but nothing changed, so I went back to minting more because, well, keeping the income flow going.
Would love your opinion on that if you got a minute! Cheers!