The artist Molly Soda, 24, is what you might call "Tumblr famous." The short, green-haired Chicago native has about 30,000 followers on the platform, where she posts GIFs, selfie performance pieces, and undulating word art. "I've never sold any work that I wasn't directly commissioned to do," she says.

That changed late last week, when Molly put her first piece of art up for sale at Phillips, a high-end auction house in New York. In the last few years, Molly has largely made money off her art by selling one-off web pieces she's made for specific customers. Occasionally she's asked her Tumblr followers to give her donations in exchange for customized GIFs, or even had food delivered by adoring fans directly to her doorstep. "It's really easy to get people to look at you," she says, "but once you put something on the internet, it's not yours anymore."

The webcam video she put up for auction, Inbox Full, shows Molly reading her entire Tumblr inbox in one single take, an eight-hour-long test of endurance and sheer force of will. In a phone interview prior to the auction, Molly was excited to sell her work, but she also understood the difficulty inherent to selling digital art.

"I think a lot of people have issues making money off the work, because it's not a physical thing," she says. "It's like, ‘You're not an artist. Where is your painting?'"

"You're not an artist. Where is your painting?"

Paddles ON, the auction and gallery show in which Molly was selling her work, sought to make that question irrelevant. Organized through a partnership of high-profile New York technology and art institutions including Tumblr for the benefit of the nonprofit center Rhizome, it billed itself as Phillips' "first digital art auction" and featured webcam video files, GIFs, websites, and pieces of code alongside a handful of prints and sculptures.

Of the 20 works up for auction at Paddles ON, the most expensive were valued at about $18,000, a relatively low price for an international art house like Phillips — at the 327-year-old company's last auction, one series of Helmut Newton's spooky photographs of Graceland fetched a cool $200,000. And that's still cheap in a market where individual works, like a Basquiat painting, can sell for almost $50 million.

Fine art, unlike other media industries, pushes prices this high in part because of the perceived rarity and unique, unquantifiable quality of each individual work. Music, film, and publishing have been forced to adapt as their products became more numerous and often instantly accessible. For many, that's meant making the physical experience of the work more valuable, from 3D movie premieres to limited-edition vinyl pressings. But art, grounded as it is in the practice of paying vast sums for a single irreplaceable object, never faced quite the same challenge. So it can be difficult to market artwork that's impossible to really own, in the "hanging an original Picasso in your antechamber" sense.

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A loop taken from Americans! (2013), a piece of custom software made by Casey Reas, sold for $11,000 (Image: Paddle 8)

This isn't to say that digital work can't move into the highbrow arts market. Artists like Cory Archangel, with his video game modifications and computer-generated works, have been catapulted to fame for their screen-based projects. The Cooper Hewitt museum recently acquired a piece of code as part of its permanent collection, MOMA now houses 14 video games, and members of Rhizome, which received 20 percent of the proceeds from Paddles ON, have sold GIF files at the world-famous Armory show in New York.

Digital artists themselves have dealt with the challenge of selling their work in an object-oriented market in various other creative ways. Some digital works, like Nicholas Sassoon's gentle waterfall-like GIF, are sold in swank packaging to the buyer. His work comes on a laser-engraved USB 3.0 stick, along with the standard certificate of authenticity. Other artists, like Petra Cortright, have more complicated arrangements. Cortright has since 2007 been using a view-based algorithm to price her video work. Even once purchased, the video must remain accessible online, completely for free. Based on that algorithm and the popularity of that video, her 24-second YouTube film eventually sold for $3,200 at auction.

Cortright uses a view-based algorithm to price her video work

But the question of ownership — and how you get someone to pay notoriously high art-market prices for something as relatively immaterial as Molly's webcam video or a 24-second YouTube clip — is still unsolved, and what the organizers of Paddles ON repeatedly called "the elephant in the room." But curator Lindsay Howard waxes poetic about giving digital artist both the recognition and the dollars they deserve.

"Because of economics," she says, digital artists are "forced into situations of needing to work for larger companies. I've made it my mission to build out this market so artists don't have to." And Annie Werner, who works at Tumblr and helped organize Paddles ON, says such an event was long overdue. "We'd seen so many panels and heard so many talks asking, ‘Can digital art sell," she says. "It just seemed like the right time to try it and figure it out." Bringing together Phillips' existing community of art collectors and Tumblr's crew of graphic enthusiasts seemed like a good place to start.

On Thursday it was clear, as Phillips' Newcome had suggested in an email to The Verge, that selling digital art in an auction house "doesn't challenge any of the established paradigms for art commerce." But Paddles ON did draw a far larger — and perhaps weirder — crowd than usually frequents Phillips. "Who are all these people?" muttered one art-market veteran as he watched a girl in a leotard and an airbrushed cape walk across white-walled Park Avenue space in the direction of the bar.

"Who are these people?"

It was no surprise that the highest-selling pieces of art were the less conceptually complicated and more physically present works: a hanging chandelier-like CCTV sculpture raked in the most, selling for $16,000. But eventually the auctioneer called up the first website ever sold at auction, a web-based piece called ifnoyes.com by new media artist Rafaël Rozendall. The Dutch-Brazilian artist's bio is more Google Analytics than museum placard: he describes himself as attracting "over 40 million visits per year" to his various domains and projects.

ifnoyes.com was sold for $3,500, and came with custom-made "Art Website Sales Contract," which transferred the domain name and contractually obliged new owner Benjamin Palmer to renew it yearly. It also required Palmer to keep the website "online and completely accessible to the public." Actually, he might represent the new market Paddles ON organizers dreamed of: he says he's in the "tech industry," though he's quick to add "the creative side." Asked where he plans to display his new piece of art, Palmer grins. "I mean, you know it's a website, right?"

But of all the bidders at Paddles ON Ezra Chowaiki could be said to have come out on top. The New York-based art dealer, who sells Picassos and Monets for a living, acquired three separate works at Paddles. But for this show, he says, he isn't buying for his business — he's buying for himself. "I sell Picassos at work," he says, "but I'm not listening to Bach at home, you know?"

Chowaiki gestures expansively toward Clement Valla's glitched Google Earth images, three of which he now owns, in addition to a hanging video installation and a huge landscape photograph taken inside of a combat video game. When it comes to the art market, he isn't worried about the challenges presented by a medium based in pixels and bits."I don't think about how I'm gonna hang it," he says. "I'm not buying wall decorations. I'm buying art."

For Molly Soda's part, her webcam video Inbox Full sold for $1,500.

Top image: a projection of Rafaël Rozendaal's in-browser work of art ifnoyes.com (2013), the first website to be sold at an art auction (Image: courtesy of Phillips).