Planet Money - The $69 Million JPEG

Episode Date: March 13, 2021

An artist called Beeple just sold a piece at Christie's for millions. But it wasn't a painting... it was a kind of crypto. We speak with him and the others behind the first NFT auction. | Subscribe to our weekly newsletter here.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This is Planet Money from NPR. Mike Winkleman is a digital artist living in the suburbs of Charleston, South Carolina. Among many other things, he makes a hot new kind of art investment object you may have heard of, NFTs, non-fungible tokens. And we'll get into the details about those a bit later. Yeah, don't sweat it. We will unpack that. And Mike is pretty famous at this point for making these weird dystopian internet art things under the name Beeple. And he makes a lot of those. Would you describe what the Beyond Meat image is? Honestly, I don't even remember what that is, to be quite honest.

You're going to have to describe it to me a little bit. what that is, to be quite honest. You're going to have to describe it to me a little bit. It looks like a kind of Martian lunarscape, and it looks like they're kind of farming synthetic meat pigs with the head of Elon Musk. Oh, with Elon heads. I mean, to be quite honest, some of it is just kind of like, I have no idea what this even is. And even though his work is super well known, Mike, aka Beeple, had a problem that's common to all artists who make digital work. It is super hard to sell. Beeple, had a problem that's common to all artists who make digital work. It is super hard to sell. Beeple wasn't really able to participate in the traditional art market.

But a few months ago, Mike got a call from a guy named Noah Davis, who works at the esteemed auction house Christie's of London. And Noah specializes in post-war and contemporary art, but he's also kind of Christie's internet guy. He was running their online auctions. And being the internet guy is how he started seeing Mike's work basically everywhere. Just JPEGs floating all around the internet. And we talked to Mike. He asked him, if we wanted to sell one of your works to our global clientele of billionaires and scions and heiresses. Is there a piece of yours that springs

to mind? And Mike was like, oh yeah, definitely. Noah of Christie's told us what Mike had sent over. Basically, it's a self-portrait of Mike as a child doodling in his notebook and then hovering behind him are some of the grotesque characters that reappear in his work all the time, grotesque characters that reappear in his work all the time, notably naked Buzz Lightyear and Kim Jong-un with breasts. And when you saw that, how did you think it would play with the Christie's crowd? Well, I knew it wouldn't. I just knew it wouldn't. Christie's usual fare is generally a little less provocative, you know, like rare antiquities,

precious collectibles, ancient Greek sculptures of almost naked men. And so I said to him, you know, this is amazing, Mike. You're hilarious. Your brain is terrifying. But we need to find an image that's a little more brand appropriate for Christie's. So they had to decide which piece might work for the brand. And it wasn't like they were lacking for material.

Mike had actually become famous for this thing he calls his everydays project. Since 2007, he'd created an original piece of art, usually on a computer, and posted it online every single day for over 5,000 days. So Noah of Christie's asked Mike to dig back into that vast archive to find one that would work. And Mike was like, well, what about all of it? What we're going to do is I'm going to take and make a mosaic of all 5,000 pictures and that's what we'll use. He takes it to Noah, the Christie's guy. And he came back to us with this mosaic collage and that kind of hit me in the forehead, or punched me in the gut, really.

Because not only was this thing just beautiful from an aesthetic perspective, but the idea that you could zoom in and see every single image in the series so close and explore it, they all become unique digital worlds, that illustrated the capability of NFTs to do something that traditional art can't. And two weeks ago, Christie's put this mosaic up for auction as a new kind of digital art product. And they set the opening bid at $100. Like, why not? Whatever. We'll just see what happens. Noah says he and many of his colleagues thought of the auction as kind of a test case for how NFTs and also all digital art could do in the high rolling international art market. This was sort of the debut for digital art.

And the scale of the response surprised everyone, including Noah, the Christie's guy. I could have never told you that in the first 10 minutes of bidding, we would get from $100 for our starting bid to more than a million dollars. We had 20 plus bidders from seven countries. And of those 20 plus people that got us from $100 to a million, only three of them were existing Christie's clients. And on Thursday, Mike Winkleman's little digital mosaic, a picture on a screen, ended up selling for $69 million. That is the third highest amount anyone has ever paid for a piece of art by a living artist. He catapulted past Jasper Johns, Ai Weiwei, Yayoi Kusama. He's trailing only Jeff Koons and David Hockney. For that price, you could have filled

your shopping cart with a Frida Kahlo, an Alice Neal, and a small Picasso. Blue period. You could have gotten a hot dog at the Christie's cafeteria. Damn, that sounds good. I'm very hungry. Hello and welcome to Planet Money. I'm Mary Childs. And I'm Alexi Horowitz-Ghazi. Today on the show, why would anyone pay so much money for something they could just copy and paste off the internet? Alexi, you and our colleagues at The Indicator have been doing stuff on the explosion of NFTs all week. Yeah, it's been kind of a wild roller coaster of a story. Just a couple days ago, the Beeple auction was at a near $13 million. And over the course of like a day, it jumped to close at $69 million. It went from

this kind of, you know, funny little internet thing to a historic moment in the art market. Which raises all sorts of fascinating economic questions. Like, does this mean the art market is broken? Or is it brilliant? Or is it brilliant? Mike Winkleman, a.k.a. Beeple, who just sold a digital art piece for 69 million real dollars, says that people are often confused when they meet him for the first time. They're like, you're not what I expected at all. Because I'm very, like, dorky looking.

A lot of people compare me to Bill Gates. And with his heavy framed glasses, his sweater collared shirt combo, Mike does kind of cosplay as Bill Gates every day. So they're not wrong. They're actually, it is pretty, pretty accurate if I'm being totally honest. But his day-to-day life has generally been more, you know, Bill Gates without the billions. I have two kids. My wife is, you know, stays home with the kids. Like, I am at the computer an ungodly amount. It's quite a boring suburban lifestyle, I would say, is quite accurate. But on the internet, he is known to his 1.9 million Instagram followers and many others as Beeple, an art name he explains that he borrowed from a 1980s toy for kids.

It's like an Ewok looking toy that sort of like lights up and makes some noise. I think I've got one around here. It kind of if you cover its eyes, it makes this. Yeah, there you can hear it there. That is the titular beeple. Yeah, that's a beeple. Over the last several years, Mike has been almost religious about his everydays project, creating something each day, no matter what.

Like today, I have literally no idea what I'm going to make. It's 3 o'clock right now. Between now and midnight, I have eight and a half hours. I will come up with something. My expectations per day are to put a JPEG on the internet, not to make a masterpiece. Some of these are otherworldly spacescapes. More recently, they've been kind of disturbingly realistic, often gross sci-fi scenes inspired by things in the news. He sees himself as like a gonzo political cartoonist for the digital age. So when Jeff Bezos announced he'd be stepping down as the CEO of Amazon last month, for example, Beeple made a picture called Release the Bezos. Kind of like release the crack in this sort of, you know, giant squid thing. And so it's

a giant Jeff Bezos head sort of in the ocean with tentacles sort of wreaking havoc. And he's holding up like shipping containers and stuff. And there's helicopters flying around him. Or during the whole GameStop Wall Street bets saga, he made a Lord of the Rings mashup with the Reddit logo as the Flaming Eye of Sauron. There are a lot of mature themes, so many naked Buzz Lightyears. Things get a little weird. I'm very self-aware of this, like to the point where, you know, pre-COVID, I'm like in the airport and stuff. And it's like, okay, like, I don't want somebody to even look over and like, look at me looking at my own work. They're going to think I'm like looking at like some weird porn or something.

Like, it's like embarrassing. Mike has mostly made his money elsewhere. For the first few years after college as a web designer, and then more recently he's worked as a freelance digital artist for performers like Lady Gaga and Justin Bieber. His own personal art, pasted all over the internet though it is, hasn't made him much money. The whole category of digital art, which is basically infinitely reproducible by definition, hasn't really been able to find purchase in the broader art market. Mike says it's basically been ignored by fancy art galleries and auction houses.

And they have ignored it for quite a good reason, actually. There was no way to collect it. Like there was truly no technology available to collect my art in sort of a natively digital form. Or so he thought until about four months ago when his friends started telling him about this new kind of technology that's been ripping through the digital economy. Non-fungible tokens. NFTs. Nifty's. People do say that apparently. I just learned. Okay, we have arrived at the NFT explanation section. Buckle up. Let's just take it letter by letter here.

NFTs, non-fungible tokens. So the T in NFT, token, we all kind of know what we mean by that. It's like a little piece or a unit within a system. You can think of this as like a unit of currency. Now, the F in NFT, fungible, that basically means like interchangeable, replaceable. The standard example of something fungible is cash. Cash is all the same. If you and I trade $50 bills, Mary, so what?

That's right. I don't care. It's the same $50 bills. My dollar is your dollar. Every dollar is the same. That's right. I don't care. It's the same $50 bills. My dollar is your dollar. Every dollar is the same. So non-fungible, the NF in NFT, means that it's the only one ever. Entirely unique. I look at it as just nothing more than a proof of ownership, backed by the blockchains. The blockchain. This is the technology that underlies different cryptocurrencies like, you know, Bitcoin, Dogecoin, Ethereum.

It's an open ledger system where every transaction of every token is clearly recorded for all to see. So any buyer is assured of the token's authenticity. Everyone can see the provenance, to borrow a fancy art term. And you can attach NFTs to all sorts of digital things. Over the last few months, we've seen NFTs attached to images, video clips, cat gifs, songs, tweets. The NBA, for example, has created a type of NFT and corresponding platform called Top Shots. These are video clips of NBA players doing NBA things, you know, dunking,

alley-ooping, playing with a basketball, dribbbling. Passing. Maybe traveling. And each of these clips has an NFT attached to it and can be bought and sold on the platform by individual collectors. But here's the kind of mind bending thing about NFTs. When you buy an NFT, the asset that that number refers to, the, you know, epic LeBron James dunking clip or whatever, that is technically infinitely replicable. It has hypothetically unlimited supply. Anyone can sit there and just like watch it over and over and over. But the tokens, the non-fungible tokens, NFTs, those are not unlimited. Whether it's, you know, basketball videos or cat gifs, the platforms that create and manage these NFTs spend a lot of time thinking very carefully about how many will ever be made. Because the key to an NFT's value is that they

are part of a limited set. They are finite by design. That scarcity is essential. And what all this is leading to is basically that NFTs are a kind of cryptocurrency, a number that you trade. They are non-fungible as opposed to something like Bitcoin, which is closer to cash. One Bitcoin equals one Bitcoin. But NFTs, like many cryptocurrencies, have costs that we're still figuring out. Externalities, like the environmental impact from all the electricity needed to create and run these platforms. And like Bitcoin, all of this may seem ridiculous to a lot of people. Like, why are you paying to own something that I can just go look at for free?

There are a few reasons. There's collector culture. Why does anyone buy anything like Beanie Babies or baseball cards? There's patronage. You might want to support an artist like Beeple. And it's also that thing where people want somehow to get like a little bit of that beautiful Beeple dust on them. This is a way to reach out and touch a beloved public figure. But to me, the most compelling one is the literal benefit of what you get out of the thing kind of doesn't matter.

The utility is knowing that you own it. And to some extent, everyone else knowing that you own it. It's sort of like how your name could be on a little plaque at MoMA under some beautiful, important piece of art that you lent to the museum. Except thanks to the blockchain, thanks to the ledger, that plaque at MoMA can now be visible to the entire world. But NFT sales are very real. Across the different arenas, people are spending hundreds of millions of dollars on these things. And it clicked for me.

And it was sort of like, OK, this is crazy. People are paying like ridiculous amounts of money for something I didn't even think you could charge any money for. And I recognized like a lot of the people in the space. And it was sort of like, well, I mean, to be quite honest, I'm actually, you know, more popular than a lot of these people. Like, if they're making that much money, like, I feel like I can make some money here. After the break, Mike Winkleman dips his toes into the NFT art market and pretty quickly gets totally soaked in money. art market and pretty quickly gets totally soaked in money. So Mike decided to get into NFTs last October, and he set up an initial auction on one of these platforms, a marketplace called Nifty Gateway. And in addition to a couple of individual NFTs Mike put up for auction,

he set up a kind of price experiment to give his fans a cheap way into NFT ownership while also testing out the market. He decided to create a limited set of 100 identical NFTs and sell them for a dollar each. I knew they were worth more than a dollar, but I thought they were maybe worth like maybe 50 or 100 dollars. And so these instantly sold out, obviously. And pretty immediately people started trading them because the thing with NFTs is you can immediately sort of resell them through the different platforms. There's a built-in secondary market. Built-in secondary markets right there. There's

much less friction than sort of, you know, traditional art where you buy a painting and it's like, okay, if you want to resell the painting, well, that's quite a bit of work. And NFTs offer another nice kind of bonus. If he were to sell a piece of art like in a gallery, it would just be gone. People can resell it without him. He gets none of those dollars. But because NFT transactions are conducted on the blockchain and governed by so-called smart contracts, he can get a commission every time his piece of art is sold.

And the platforms like Nifty Gateway want artists like him to sell work in their ecosystems. So, for example, Nifty Gateway is able to offer a 10% cut to people like Beeple every time one of his NFTs is sold as a condition of selling the work there in the first place. This was basically unimaginable in the traditional art market. And Mike says within hours, people were flipping those $1 tokens for thousands of dollars. So fast forward to today, those $1 additions recently this week sold for $300,000. You know, when it resells, 10% just automatically goes into my wallet. For the art establishment, all of this feels like kind of a radical departure.

They finally have to take the world of digital art seriously. But in a lot of ways, it's kind of a perfect match. Like, for example, the, you know, openly visible documentation of ownership. This is like half of what the art establishment spends its time on. Because in their market, the only art that has value is art that has been meticulously accounted for. There is no better place than the art world to express how totally abstract and arbitrary the concepts of price and value can be. Like, when you're bidding in that mahogany paneled room on a beautiful painting of haystacks,

what do you think you're going to do with that painting? You can't live in it. You could eat it, but it is toxic. Someone else can print a high-res version of it at home and frame that up real nice. And yet, art is like a $70 billion market. And Mike Winkleman, Beeple, says the thing that for a long time seemed like digital art's greatest weakness when it came to making a market, the fact that you can infinitely screen grab and share any individual art piece, has actually turned into an advantage in this non-fungible world. Okay, look at the Mona Lisa. If you go into the Louvre and take a picture of the Mona Lisa, do you think you just devalued it? No, I literally think quite the opposite.

Do you think you just devalued it? No, I literally think quite the opposite. Because everybody knows about it, that makes it more popular. And so I think it's really this ironic, it feels like it shouldn't be like this, that we get to kind of have our cake and eat it too. That you can have this proliferation of copies, but then you can also prove that one person owns that thing. Mike thinks NFTs are a lot like the early Internet, a new exciting technology that inevitably will have a lot of failures and weirdness, but that has a real use. Does any part of you worry that this is a bubble or a flash in the pan of some sort?

I actually believe it is a bubble, to be quite honest. I think you're going to see a mad rush of people come to this space. And a lot of the stuff that people are making into NFTs is junk. And that stuff will not hold its value. When the bubble bursts, it's not going to wipe out this technology. It's just going to wipe out the junk. This week, to a buyer who goes by the pseudonym Medicoven, Beeple's piece at Christie's had $69 million worth of value. Christie's of London will get a 15% cut of that, around $10 million. Not bad for their first foray into the crypto art market. The lion's share then goes to the Beeple, Mike Winkleman,

along with a cut of whatever it sells for next time, if the new owner ever decides to trade it. Huge thank you this week to The Indicator, whose great episode was the foundation for this piece. The Indicator is a daily 10-minute or less podcast, and they have yet another NFT episode that is a great companion to this one. It's all about the NBA top shot stuff. That's The Indicator from Planet Money. If you like absurd economic art for free,

check out our TikTok at Planet Money. One day we too will be at Christie's, I'm sure of it. We're also on all the other social media channels, Facebook, Twitter, Instagram, at Planet Money. You can also email us at planetmoney at npr.org. Today's show was produced by Darian Woods and James Sneed with engineering help from Gilly Moon. Alex Goldmark is our supervising producer. Bryant Erstadt edits the show. I'm Alexi Horowitz-Ghazi. I'm Mary Childs.

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