Demand is Fleeting; but Supply is a Spectrum

"How much should I charge for my art?" is probably the question artists - both experienced and new - ask the most frequently when they first enter into the NFT space. They've heard stories of a few people who "made it big" in Web3, and they want to get in on it, too. The answer? It depends.

If your works are in high demand, you can charge more. If not, you have to charge less. The laws of supply and demand apply to artworks too, assuming that making money from it is part of the goal. (Sometimes it is, sometimes it's not.)

Figuring out "what people want" is a notoriously difficult task - if demand generation could be reduced down to a predictable formula, we'd probably all be rich by now. But the supply structures of NFT projects in its current form are actually pretty straightforward, so we'll be covering those parts, here. The other frequently asked question by artists in the NFT space is "how many editions should I mint?", after all. A better understanding of how this stuff works in relation to market forces may help to alleviate some of the uncertainty around it, at least.

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From top to bottom (from the smallest supply to the most):

1. "1-of-1s" are closest to traditional artworks in that there is only one copy per artwork. The entire monetary value of the project lies in that one copy. Some artists in the NFT space have pushed this upward boundary even further by including physical artworks to accompany its digital versions as well. (A pseudo-certificate of authenticity, in a way.)

2. Generative NFTs: This site (fx(hash)) has been a pioneer in this style for a few years now, and is the logical/evolutionary bridge between PFP (profile picture) NFTs and 1-of-1s. While the generative artwork can produce many different results every time it's run, the owner technically "owns" the process itself and all possible outcomes as well. The generative NFTs themselves can be 1-of-1s or multiple editions, depending on how the creator decides to set them up.

3. PFP Generators are similar to Generative NFTs in that they generate a variety of outcomes based on a single algorithm, but the outcomes themselves are sold as separate commodities, each with its own value. The most famous one of this is CryptoPunks, but this style has basically defined the shape and trajectory of the NFT hype of 2020-2021 - everyone was doing it. Like Generative NFTs, you can technically "own" PFP generators if you want to, but you're most likely going to have to buy the IP rights of the algorithm through a traditional business deal.

4. Individual PFPs, which there are millions of floating around on the internet now after the crypto bull run of 2020-2021. The value of each PFP will vary from project to project, NFT to NFT, but it is similar to the idea of owning collectors items from franchised goods. (Sports and gaming cards, for example.) Price appreciation over time, however, seems less likely in the PFP space since the blockchain will always preserve its supply indefinitely, whereas a lot of the value from collectors items come from the fact that most people either lose or destroy these items over time, making its remaining supply more valuable.

5. All the random stuff you see on the internet that you get for basically free - paid for by your attention and data - is basically what is now known as "Web2". This is the digital environment that most of us spend most of our time on in right now. Most of the content on Web2 actually has negative worth for its creator, since most digital platforms both controls and owns the user's creations in its entirety. But it is abundant - it is everywhere.

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This chart is also similar to the spectrum of narrative styles, ranging from the 1-of-1 "one story one experience" method vs the generative storytelling methods that you sometimes see in gaming/experimental artworks where multiple outcomes/endings are possible even within one "work". Beauty is in the eye of the beholder, of course, but knowing where they stand in relation to their style and market options may help artists make better decisions on where they "fit" into the bigger picture.

So how much should an artist charge for their works? Still...it depends. But part of Web3's mission is to make that question easier to answer - that will only come later after the ecosystem matures to the point where artists are able to make good decisions about their works' supply and demand curves, powered by the data that the blockchain itself provides. That, however, is probably for another post.