The Woes and Worries of an Online Art Market
In order to grow their audiences and increase their sales, many artists turn to this big wonderful thing called the internet. Auction houses such as Sothesbys and Christies had initially predicted a boom when art entered the online world and that boom still hasn’t happened. A variety of variables keep the physical market as the undisputed king of art sales. New incentives such as crypto currency based purchases and distributed ledgers through Blockchain are getting people excited about the online market again, but will they be enough to save the slowly stagnating market.
The online art market is home to some unique problems. For example, whether artists like it or not, the art market is one with a heavy history of haggling. Buyers are constantly trying to get the best prices for their purchased pieces. Online marketplaces tend to push an artist’s highest prices and offer little room for negotiation, turning off a lot of potential purchasers. Art is also commonly purchased because of a visceral physical reaction, which can be lost when it is translated to pixels. The real nail in the coffin though is the oversaturation of the online art marketplace and the lack of any real heavy hitters. Standards are not the same across the crowded marketplace, which is a turn off to new customers. The main cause of concern among buyers is a lack of transparency in pricing. The 2018 Annual Online Art Trade Report study by Hiscox noted that about 90% of new collectors sought transparent pricing when purchasing art online.
Although online sales remain only a small portion of the art markets estimated $50 billion annual global sales, the percentage of sales continually rises year after year but at a much slower rate. In 2017 online art sales went up about 12% from 2016, drawing in about a $4.22 billion total profit. However, this is a smaller growth than the 15% growth from 2015–2016 and a significantly smaller growth than the 24% from 2014–2015. What is exciting though is that there have been a significant increase in repeat buyers, with 74% of collectors purchasing more than one art item or collectable in 2017.
Blockchain remains the much touted savior of the art market because of its ability to document provenance in a way that is nearly impossible to change and which anyone can see. This means that an artworks history, which is usually a widely contested and problematic subject, can be kept track of in a completely transparent way. However, will Blockchain actually prove useful to the art market and will it be the saving grace everybody is making it out to be? In Hiscox’s 2018 report, about 64% of art markets surveyed speculated that Blockchain will be “the most successful use of Blockchain Technologies in the future.” While I personally think that Blockchain could be a very useful asset to the online art market, I think that the technology is still in its infancy and that a wide implementation into the online art market would be easier said than done. Blockchain takes an enormous amount of processing power and is expensive to implement, creating some obvious barriers. Only about 8% of online art sales platforms currently incorporate Blockchain in some way and while I think that number will rise, I expect the climb to be very gradual. Still the potential is very exciting.
What will become of the online art market is still very up in the air. While online purchases are increasing from year to year, they are also rising slower rate with each passing year. New collectors are increasingly looking for transparency in prices and deliverables, something that the online market pales in comparison to with the already lackluster physical market. New incentives such as Blockchain provide exciting answers to transparency problems although implementation is easier said than done. Only time will tell whether the online art market will ever be able to hold a candle to the physical market.
— Article by: Chris Rahmeh
For more information check out the wonderful Hiscox study where I retrieved most of my demographics.