The Online Art Market Series — Part II: Online Galleries Need a Double Espresso!
We have seen tremendous growth in online platforms the past five years going from 30 to 300+ online platforms. However, as articulated in the last part of the series (which looked at the buyer experience) I feel that online platforms need to step it up when it comes to being innovative and to understanding the needs of the consumer. For the online art world to “wake up” online platforms need to awaken first and move as if they’ve just had a double espresso (or two).
I believe most of the hesitations buyers have are easily solvable. In fact, the solution isn’t even that innovative. If online galleries just copied more digital trends, they would be in much better shape. The three big ones that come to mind are mobile, video, and augmented reality (AR) / Virtual Reality (VR). By using these digital trends to our advantage, I know we can eliminate buyer hesitation or, at least, drastically reduce it.
However, in this part of the series, my focus is on breaking down the three key issues outlined in the Art Tactic 2017 Online Art Report while providing my thoughts on each.
Consolidation (Winter) is coming?!?
I find it interesting that the report says, “Overall 81% of senior
management from online art platforms are positive about the online art market in the next 12 months,” but that, “Among the online art platforms surveyed, 71% said they expected more consolidation to happen. 48% of companies surveyed felt that ‘horizontal mergers’ [companies operating in the same space such as Paddle8 and Auctionata] will be the most common,
while 53% believe ‘vertical mergers’ are more likely, i.e. companies operating in different parts of the value chain.” So this tells me that either they talked to a tiny group of people, or the ones they talked to are out of touch as they not only think their company will be the only one performing well but so well that they can buy out their competitors. My guess is it’s the former.
There have been a lot of online art companies that have failed. If you look at this list of 250 places to sell art online, 40 companies went out of business last year. In my opinion, none of them were doing anything unique; they were showcasing 50 artists on a WordPress website with thumbnails and no real discovery or tech behind it. I would like to see online galleries use technology to help address buyer concerns (i.e. create a Klout score for artists), and do more with mobile and AR.
Aside from the Paddle8/Auctionata acquisition — which has since fallen apart — and AuctionMobility acquiring Lofty, I have not seen many meaningful acquisitions (a few acqui-hires by Artsy | Rise Art). Furthermore, I do not see any others that I think will have an impact (I have talked to Art founders looking to make more acqui-hires, but not meaningful as far combination of tech or processes to create a super gallery).
Online Auctions the next battleground…for who?
I also have major questions about the report stating that “Online auctions will become a key battlefield in 2017”. The
following line says it all: “It is evident from the survey that most online art platforms see the auction space as the key battlefield in the next year.” I believe the authors of the report came to this reasoning because they only surveyed auction companies like Sotheby’s, Paddle8, Artsy.
I have talked to nearly a dozen of the founders from the companies listed in this report, and none of them mentioned auctions. Additionally, I have spoken with hundreds of collectors and artists, and none of them discussed auctions.
So I believe that if Art Tactics’ statement is true, it means online art companies have failed and are not doing what we can to grow the online art market.
From Clicks to Bricks
The last point the report makes about online galleries is that 29% of online
art platforms surveyed have already established or are thinking of opening a bricks-and-mortar space to complement their existing online offering. On the one hand, I believe this may be an attempt to assimilate more into the traditional art world, which I am not so keen. However, we have seen this as a trend in consumer brands (i.e. Warby Parker, Amazon).
Where I think this is interesting is threefold:
- Artist acquisition and retention — an artist’s primary goal is to be shown in a physical gallery, so having a physical space would be a way to have artists stay engaged in the hopes of showing there.
- Learning from potential collectors — it’s a great way to do free user testing on potential collectors. You can showcase your online platform’s new features and have potential collectors come in and try them.
- Used as logistics point to provide services to artists — if you had these galleries in areas with a lot of artists, they could drop their artwork off to have it packed and shipped — this benefits both parties.
I should make it clear that I don’t think these galleries will be viable channels economically, so you would need to get more out of it, such as the three ideas above. If it were me, I would focus more on doing pop-up spaces — 12 cities in 12 months; now that is rethinking the traditional model.
Reviewing the Art Market Series 2017
- Prelude: As Vango turns three, we look at our position in the art world
- Part I — Why buyers have yet to sink their teeth into the “sleeping art world”
- June 24 — Part III: Offline galleries began to move more online
- July 1 — Part IV: The (Forgotten) Artist Experience
- July 8 — Part V: The Future of Vango and the Online Art Space