The rise of clicks; the decline of bricks

During the period of economic stagnation and then modest growth from the 1980s until the 2000s, there was no shortage of run-down urban areas that artists and other creative minds found hospitable, such as Shoreditch in London and Chelsea and Bushwick in New York City.

Since 2005, global human capital flows into London and New York which has ended the era of affordable urban real estate. Today, there is almost nowhere to go for a new generation of aspiring gallery owners on limited budgets like those without access to family inheritance or wealthy investors. The only affordable option is to venture into the digital realm and open a virtual gallery, and/or sell art through any of a number of the online platforms, such as Artsy. There is no company in the world that got it right when it comes to the art market and digitalisation. Many have tried and failed, some tried and are still working on improving the system to find the right solution.

According to Georgina Adam, trust is the key ingredient when it comes to getting people to feel comfortable when buying anything online. Out of many online platforms, Artvisor has captured my attention. It is a very young online platform that has already gained 750 registered users and is working with 40 galleries from 10 different countries. (Epstein, 2018) Unlike Artsy galleries, users that register with Artvisor do not pay in order to show works on the platform. However, they do have to go through a very diligent process of being approved by the team at Artvisor. Every single artist out of the 150 represented on the platform, has been personally selected by Artvisor, which has allowed the platform to maintain quality control. (Epstein, 2018)

They are trying to marry users with art based on collector’s/user’s preferences. However, it has been proving quite tricky to digitally understand the preferences of your client/collector, unless you know them personally. You can also track their preferences by recording the browsing clicks of your client, but Artvisor does not have that option on their platform yet. Unlike the well established online retailers such as Amazon and Net-a-Porter which (between them) sell everything from basic household items to designer clothes and jewellery and for some people have entirely replaced the need to shop in person, at the moment, the digital art market has not reached the same level of progress.

This process of digitalisation is empowering young gallerists and even artists by giving them the chance to bypass the traditional gallery system with its high overhead costs. Before the Internet Age, if an artist didn’t have a gallery then they were limited to selling art to one’s limited social circle. Today, thanks to the many digital online marketing tools and platforms, artists can easily reach the market globally without a gallerist.

Currently, nearly 300 startup companies offer data, information and research on the art market: London-based New Blood Art, founded in 2004, sells works online by emerging artists; New York-based Paddle 8, founded in 2010, sells high-end Post-War and Contemporary art; online Artlery is an online network of artists helping each other to register artworks and establish provenance; and Verisart uses blockchain technology to safeguard the collector’s ownership of artworks. (Adam, 2014, p. 119).

By far the most successful up on the digital art market is Artsy, which launched in June 2011 with $5.4 million in investment from famous people such as Twitter founder Jack Dorsey and Google executive chairman Eric Schmidt, heiress Dasha Zhukova, and wife to Rupert Murdoch, Wendi Deng. Advisors include top officials from Gagosian and Pace galleries (Adam, 2014, p. 119).

Previously, buying art was seen as something rather elitist, especially in the U.S. Clare McAndrew, the founder of Art Economics, made research that shows how high-end art buyers are unwilling to buy online. At the low and mid-end of the market, however, it’s a different story. More and more people browse sites such as Amazon and Art.com and buy works that are under 1,000 pounds/ US dollars. (New York Times, Jan. 11, 2015).

“The average person is becoming a little more confident,” said Ms McAndrew. “The whole market itself is getting better and dealing with things like returns and transactions.” (New York Times, Jan. 11, 2015)

According to Sebastian Cwilich, president and chief operating officer of Artsy, his company’s goal is to “create a larger class of people who will appreciate art broadly and a subset that wants to make it a part of their daily lives by acquiring art.” (New York Times, Jan. 11, 2015)

An estimated half of the 300,000 pieces on sale on Artsy come from 4,000 galleries and hundreds of art fairs. Potential buyers can view high-resolution images and contact the seller for more information and then negotiate a final price. Artsy makes money from subscription fees charged to the galleries, usually ranging from $400 to $1,400 per month. (Adam, 2014, p. 124)

From 2014, online sales of art and antiques grew by 23% and, according to UBS’ 2018 art market report, in 2017 the global online art market reached a new high of $5.4 billion, up 10% from 2016 and accounting for 8% of the value of global sales. Online sales are crucial in widening one’s client base, and art dealers reported that 45% of their online buyers were entirely new clients. “Most of the traditional offline dealers and auction houses surveyed in 2017 recognized the online channel as a key area of growth over the next five years.” (UBS, 2018, p. 230-234)

Established players are proving themselves just as nimble as startups. Sotheby’s is particularly active in online marketing, which included not charging buyers’ premium on all online-only sales. Christie’s is keeping pace, making major use of social media platforms such as Facebook, as well as WeChat, which is the “single biggest means” of engaging with clients in China.

“When we do campaigns, 10 years ago it would have been pretty much 100% print. We don’t do TV, we’re not a broad enough audience. Now if I look at the campaigns that we’re doing, they vary depending on the type of auction to 100% digital, through to probably maximum topping out at 60% to 70% analogue and 30% digital,” said Marc Sands, chief marketing officer at Christie’s.

(M&M Global, Oct. 19, 2016)

Some of the biggest successes in the online market have been third-party platforms and auction aggregators, such as Invaluable, the-saleroom.com, LiveAuctioneers. They continue to grow despite greater competition. Invaluable grew in size and scope in 2017, representing 5,000 auction houses and hosting 16,000 auctions via their platform. Its online sales were $342 million, 14% up from 2016, with an increase in sales by 17%. (UBS, 2018, p. 234-240)