Barely a month goes by without the launch of an online initiative that aims to disrupt the art market and bring the “Uber and Airbnb effect” to art transactions. But witness the crowds pacing the aisles at a big-league art fair, or spilling out of the salesrooms during the evening auctions, and the impact of the internet on this object-and-people-business seems minimal.
Pass October saw the official launch of two online art sales platforms: ArtAndOnly, for works valued at typically up to $500,000 and, at the other end of the scale, Arteby’s, an online auction and peer-to-peer marketplace, which has a current minimum lot value of £100.
Meanwhile, ahead of its inaugural New York edition, in late October, the Tefaf art fair announced the launch of a new Digital Excellence Program, supported by its new sponsor, Invaluable, to help the fair’s dealers reach new audiences online.
Invariably, most new online businesses cite data from the latest Hiscox Online Art Trade Report, which found that this market grew 24% to $3.3bn in 2015 and predicted it to reach $9.6bn by 2020.
All this rather glosses over the fact that the online market seems to have hit a bit of a brick wall. Hiscox finds there is “still resistance”, especially from buyers who are 35 and younger. The report says that Generation Y (people born in the 1980s and 90s) is put off by not being able to physically inspect a work and that there is not enough information about quality available online. While this can of course also apply to physical businesses, perception counts for a lot in the art market.
When Saatchi Art, an online gallery, merged with The Other Art Fair, a Frieze satellite fair, in September, Sean Moriarty, the chief executive of Saatchi Art’s owner, emphasized “the important role physical presence plays in the art buying decision for many consumers”. The strategy seems less about giving the fair, which focuses on unrepresented artists, a greater online reach and more about growing its offline presence.
The social and personalized aspects of art events cannot be ignored. For this year’s Lapada fair in London in September, its director Mieka Sywak sent out nearly 500,000, thick-card invitations to the VIP opening. “We recognize that we are part of both the art and luxury markets,” Sywak says. Validation is key—in a market where value is largely intangible, buyers find comfort in a physical brand they can trust. Hiscox’s online art sales platform ranking, based on a survey of 672 buyers, is topped by Christie’s Live. These new online auction platforms have relatively alluring fees for their buyers. The big brand auction houses keep raising their own (currently between 12% and 25%), though this did not seem to harm London’s October sales. Meanwhile, Sotheby’s latest change (effective from 13 November) ups the rate for the priciest lots, from 12% to 12.5%.
While technology can help cut costs and improve efficiency, an algorithm cannot nurture an artist’s career in the way that a gallery does. “Building up an artist’s career is a slow, labor intensive process that you can’t hot-wire,” says Marc Spiegler, the global director of Art Basel. In all areas of the art market, “clients still rely on us for our ‘eye’”, says Nicholas Maclean, the co-founder of Eykyn Maclean gallery. All the online sales providers are keen to emphasize the expertise of the people behind the computer screens.
Arguably the art market has already been partly disrupted, or at least changed, by technology. Many cite price databases, alongside the growing use of art as an investment vehicle, as changing the way business is conducted. Efforts to bring price transparency to the dealer segment of the market may prove more disruptive still. And art fairs have clearly altered the day-to-day life of many in the art world.
According to Clayton Christensen’s original definition, “disruptive innovation” is a change that begins at the lower-resourced, overlooked bottom end of a market and goes on to upset the incumbents at the top. In the art world, however, most online ventures, even established ones such as Artsy, which provides a platform both for online auctions and for galleries, are predominantly wooing existing customers that buy art priced around the five-figure mark or lower. This is not disruptive, merely competitive, and the art market’s high barriers to entry may limit the innovations that can be implemented.
Most of its incumbent players recognize that technology is powering the sheer volume of interest in the market, but believe that, for now, it is more of a tool than a game changer.