Growth of the Online Art Market
From ‘Growth of the Online Art Market’ published by Art Market Guru on Wednesday 2nd January 2019.
“Platforms have launched online 3D viewing experiences in collaboration with artists and galleries, one example being V21 Artspace”
ArtMarketGuru’s Digital Transformation Services help collectors, artists, art dealers, gallery owners and auctioneers navigate the online world and transform their digital presence. They take pride in being one of the first resources to study and analyse the impact of new technologies such as Blockchain, Virtual Reality (VR), Augmented Reality (AR) and Artificial Intelligence (AI) on the art market.
The move to online has been a dominant force shaping the art industry over the past ten years. Their recent analysis How Technology Benefits Artist Promotion and Administration confirms the paramount importance of the online art market. However, brand recognition and consumer trust are still issues for online platforms. The main question now is are people ready to trust online? New technologies such as blockchain, artificial intelligence, virtual reality and augmented reality are offering new opportunities and solutions for increased transparency.
According to the latest Hiscox report 62% of those surveyed were concerned about forgeries and fakes online. Will the influx of new platforms encourage the art market to be transparent or will it remain the same? Anders Petterson, founder of ArtTactic predicts that they “won’t do much to increase the overall transparency of the market.”
Major auction houses such as Christie’s and Sotheby’s are putting huge amounts of resources into developing their digital and online technologies as there is an increase in demand for them to create a channel from which millennials feel comfortable buying from. If auction houses with the stature and client base of Christie’s and Sotheby’s are spending time and money on their digital transformation others follow suit.
Gagosian launched its first online viewing room at Art Basel in June 2018 and have made them a permanent fixture since, contributing to millions of dollars in sales. David Zwirner has done the same. Other platforms have launched online 3D viewing experiences in collaboration with artists and galleries, one example being V21 Artspace. However, there may still be feelings of uncertainty associated with not seeing a work in the flesh there may be a sense of uncertainty that you may not feel if you go to a gallery and shake hands with the dealer.
A key trend that has emerged is that big spenders (spending $100,000 or more) are becoming increasingly comfortable browsing and buying art online. In fact, it is big spenders who are visiting online sales platforms most frequently with 50% of them visiting multiple times a week. The most recent Hiscox report noted that this was a significant mark up from the previous year where just 38% of big spender were frequently visiting online art sites. Also reported was that 47% of big spenders claimed to have bought art online in the last 12 months, up by 30% from the 2018 report. This significant shift shows that people are becoming more trusting online and is particularly interesting as it is those dealing with large sums of money.
Millennials are rapidly rising to become the new generation of art collectors, artists, dealers and auctioneers need to meet them through their preferred channels. Instagram is one of the most powerful social media networks connecting artists directly with audiences, cutting out dealers and galleries as intermediaries. A strong online presence is a must, reinforcing brand recognition and helping industry players connect directly with collectors, in turn boost sales. Not only this, but art industry players now have to take into consideration the next generation of collectors, generation Z, the most digitally savvy generation ever.
Art Market Guru’s report How Millennials are Changing the Art World is particularly interesting in that context.
Here, we have selected some of the key players in the online art world who are using and innovating through digital and online technologies. They are split into subsections: online auction, online galleries, online art platforms and marketplace, art market resources, blockchain ventures and new business models.
Online sales and live bidding are now a fundamental aspect of auctions. Christie’s, one of the largest auction houses in the world, announced in 2017 it would be downsizing its Amsterdam space and closing down its London space, instead choosing to focus on their online auctions. Online sales at Christie’s were recorded as attracting the largest number of new buyers, with a 40% growth and a total spend of $119.7 million in the first half of 2018. Christie’s also made the decision to publish its online auction results, signifying a move in the right direction towards total transparency in the art market. In 2018 Sotheby’s announced a collaboration with Thread Genius, a company founded by former Spotify engineers that uses artificial intelligence to distinguish collector’s tastes, offering them recommendations. Sotheby’s has also been partnered with Invaluable, a leading online marketplace since 2016. Key players in the industry such as Artsy have also made significant investments in online auction businesses.
ONLINE PLATFORMS / MARKETPLACES
Online platforms act as an entry point for new buyers, making the art market far easier to manoeuvre than the traditional art world which can often be an intimidating experience. Many of these platforms allow their users to communicate directly with galleries and artists without the added anxieties. Although online platforms are hugely popular, it often the case that big spenders buy their art from a physical space before buying online. However, once collectors have bought online once they tend to do so again as they have a heightened send of trust. For platforms like Artsy it is also the case that the vast majority of collectors use the platform to inquire directly and then are able to take the process offline and go directly to the gallery. In this way platforms are expanding the reach of galleries, working with the industry to widen the market.
There is a marked rise in online galleries, this includes galleries that already have brick and mortar locations who are putting their collections online. Gallery owners are now questioning why they should spend money renting a physical space, however, often it is still needed for branding purposes. The current offline equivalents to many of the online galleries would be similar the Affordable Art Fair which brings together hundreds of pieces from all over the world, ranging in price and style to one location. The increased use of machine learning and artificial intelligence helps users navigate their way through artworks, enhancing the search and discovery experience for site users, and in turn increased the possibility of increased sales for galleries.
ART MARKET RESOURCES (NEWS AND MAGAZINES)
Knowing about the latest art fair, emerging artist or stylistic movement in the Contemporary Art world is only half the battle for serious collectors in today’s market. Good collectors not only understand but actively seek expert advice, real-time market analysis, sales data, and financial trends from a variety of trusted sources. Today, the Internet provides a large choice of online resources and we have gathered the best art market research/info/data sites in one place to give you a one-stop-shop to stay up-to-date on everything that is happening behind the canvas.
Blockchain’s decentralised record-keeping technology has been suggested as a way for us to create a “more welcoming art ecosystem.” The technology’s potential for verifying provenance, authenticity and ownership is widely acknowledged, however, there are still those who remain sceptical. Sebastien Genco, a blockchain specialist at Deloitte spoke at the Christie’s 2018 Art + Tech Summit on the topic “Why the Art World Wasn’t Ready for Blockchain”. There are still parts of blockchain which are not yet fully understood, there is a lack of trust, as well as high costs which can be suggested as some of the reasons why blockchain has not yet had a more drastic impact on the art market. Cybercrime is a major factor as to why people are nervous to buy online, with around 41% of art buyers concerned about cybercrime. Cryptocurrencies are predicted by many to be the entry point for blockchain into the online art market, with 60% of online platforms predicting the payment method will be used. Currently only 7% accept cryptocurrencies as payment method and a further 8% have installed blockchain technology within their business (Hiscox Report).
ONLINE ART MANAGEMENT SYSTEMS
Online Art Inventory Management Systems act as a useful tool for artists, galleries, museums and collectors to keep track of their artworks. Most major art organisations now use these kinds of systems as they an efficient way of collecting important information about artworks. They are also regularly backed up, so users do not have to worry about data being lost. Information is stored and readily available for clients and galleries to view at any time from any device. Helping greatly with art management the systems also allow users to trace where an artwork is showing, archive when and how it was created, as well as where it goes on to be sold and who will be buying it.
NEW BUSINESS MODELS
With the introduction of new technologies such as Artificial Intelligence (AI) and Virtual Reality (VR) we are seeing rippling effects within the art market. Artificial intelligence is changing value chains for creative content, helping creators match content with audiences by learning about and classifying their interests, enabling them to recommend specifically tailored content. We are seeing art platforms use this technology, creating a filtering system for when users are browsing works and making suggestions based on their tastes. Virtual Reality has the ability to change the way we experience content, with the power to promote new feelings, skills and understanding which can make content more powerful than how it appears through traditional media. Companies are still identifying the potential in using these kinds of technologies and creating new and ground-breaking business models.