ALEXIA WALKER: Freedom to buy art wherever and whenever you want
The move online has been one of the biggest trends in the art market over the past 10 years
Although e-commerce has long revolutionised music and books, its impact on the art market is more recent. It was only a matter of time, though.
Over the past 10 years, the move online has been one of the biggest trends in the art market, second to the inexorable rise of the art fairs.
Cultural economist Clare McAndrew says: “The biggest driver is the wider acceptance of e-commerce. This is how collectors buy everything else, so why not art?”
The online art market has matured and buyers have a few options. Traditional auction houses offer timed auctions where the bidding takes place online only and over a set period.
Early adopters like Sotheby’s launched their bricks-and-clicks formats in 2004. There are also online-only auctioneers such as Paddle8 and Heritage Auctions, the largest online platform for art and collectibles.
Online marketplaces, such as online galleries and aggregators that offer fixed-price options, are gaining traction too.
Artsy, a New York-based start-up, partners with international galleries, auction houses and art fairs to provide collectors a central destination to discover, buy and sell artworks from anywhere.
Online shopping giants like Amazon and eBay have also entered the art market. Amazon Art was launched in 2013 offering more than 60,000 artworks supplied by more than 150 galleries and dealers.
Artsy highlights some of the challenges facing the online art trade. It also exemplifies why the uptake has been slower than in other industries.
The art market relies quite a bit on confidentiality. Dealers sometimes create a sense of scarcity and introduce collectors to works by certain artists as a privilege.
Prices bound to subjective factors are highly volatile.
When an artwork sells for too little or too much, the artist’s future prices may be affected. So at first the art world was resistant to moving online and relinquishing the secrecy.
When Artsy planned to take the galleries’ inventories and publish them online with a price tag, the reception was more than icy, eventually forcing the start-up to overhaul its business model to maintain the status quo and redirect the actual sale transaction to the gallery.
Artsy convinced two superstar galleries, Gagosian and Pace, to come on board and launched to the public in 2012 as a technology platform helping galleries expand their audiences across the globe and generating revenue through galleries’ subscriptions.
Today Artsy is probably the biggest player in the online market, offering more than 800,000 works from more than 2,000 galleries and facilitating more than $20m in art sales each month with an average distance of 4,800km between buyer and seller.
It hosted more than 190 auctions in 2017 with partners, including the world’s top three auction houses, Christie’s, Sotheby’s, and Phillips.
In 2017, Artsy raised $50m in venture capital, including from Larry Gagosian and the co-founders of Airbnb, MTV and Zillow. For collectors, there are many advantages to purchasing art online. It forms part of humanity’s new habits and gives access to artworks and artists from all around the world. It also bypasses what new buyers can experience as the pretence of the art world.
In 2017, Sotheby’s announced the elimination of the buyer’s premium for online-only sales, a step that makes art even more accessible.
Price transparency constitutes a barrier and an opportunity. Not surprisingly, younger buyers expect more transparency. Christie’s seems to be leading the way in meeting their expectations.
Art buyers have cause for concern, however, starting with the quality of the art. An image is not as good as the physical object and cannot replace seeing and engaging with the real thing.
A certificate of authenticity and a condition report can mitigate the risks.
Despite these vagaries, collectors seem to find the sale of artworks online adequate.
According to the latest Hiscox Online Art Trade Report, the online art market grew 12% in 2017 and went from $1.5bn in 2013 to $4.22bn in 2017. This represents a small portion of the collecting landscape but Hiscox predicts that it will roughly double to $8.37bn by 2023.
Local major art auction houses seem confident about the future of online sales.
Aspire runs five online auctions a year and plans to concentrate on the online market to grow and diversify its local and global collector base.
“Currently, we present less expensive artworks on this platform to encourage younger and new collectors. We are also able to use the online channel to run thematic, curated auctions as the overhead costs are significantly lower,” says Aspire founding director Ruarc Peffers.
Strauss & Co launched its first online platform in 2013 and has seven online auctions planned for 2018.
“Our total turnover for 2017 was R329m, of which R21m was generated by our online-only auction platform, accounting for 6.5% of our turnover.
“Considering that online auctions are focused on more affordable art and decorative arts, we particularly welcome the income they generate,” says joint-MD Bina Genovese.
Artsy has developed The Art Genome Project to give recommendations. Unlike Amazon or Spotify, whose recommendations are based on what others like, the project focuses on similar objects and has an in-house team manually assigning traits and a value to individual artworks.
The data science start-up Art Advisor, snapped up by Artsy in 2017, has developed a system that focuses on art investment with algorithms to predict the potential future value of an artist. Not developed with art in mind, Instagram has become the most popular app to share and discover art.
Cryptocurrencies and blockchain technology are affecting the art trade too. London-based Dadiani Gallery announced in 2017 it was the first British gallery to accept cryptocurrencies as a payment method. In August 2018, Paddle8 will accept bitcoin.
Blockchain has the capacity to deeply transform the art market. It can provide a global register for art objects and impart much needed transparency regarding transaction prices, title and provenance, condition and shipping reports.
• Alexia Walker is a partner at Walker Scott, which offers end-to-end art management services. www.walkerscott.co.za