A Look at Online Art Sales

A couple of weeks ago I posted on insurance company Hiscox's report for online art transactions (click HERE to review the AW post). The NY Times just ran a story on online art sales and quotes and uses data from the report.  The article looks at how fine art multiples, such as prints tend to do well, but as prices go up, collectors have a tendency and wish to actually view and inspect the piece in person.

The article touches on the enormous growth and recent investment into online art transaction, with Christie's increasing online sales for lower valued items, Amazon's entry into online sales, investment in platforms such as Artsy, investment from Chinese portal Alibaba of $15 million into 1st Dibs, and auction sites such as Paddle 8.

All very interesting, not totally unexpected, yet as professional appraisers we need to be aware of the growth and acceptance of online art purchases and when appropriate consider using these emerging sales markets.

The NY Times reports

According to Hiscox’s data, the large majority of pure online transactions are priced below $15,000, a level where people feel more comfortable paying with a credit card. Though the individual prices of the online art market might seem relatively small, it’s nonetheless a rapidly expanding sector, growing at a rate of 19 percent per year. And as blue-chip contemporary works become more expensive, more affordable art presents itself as an opportunity for e-commerce.

Christie’s held 49 online-only auctions of such lower-value items last year, a seven-fold increase on 2012, raising 13.2 million pounds, or $20.8 million. That was only 0.3 percent of the company’s record £4.5 billion in sales, but, more importantly to Christie’s, 45 percent of the buyers were new. Amazon started an online art marketplace in August, and there’s talk of eBay, which sold about $300 million of art priced above $150 in 2013, entering the market for higher value works.

There’s also a swathe of new investment in the young companies and start-ups jostling for supremacy in the online art space. Jack Dorsey, one of the creators of Twitter, has taken a stake in the New York-based website Artsy, which allows visitors to browse the collections of both commercial galleries and museums. The Chinese company Alibaba Group has invested $15 million in 1stdibs, the Paris-based online “flea” market for design and modern collectibles, which last year reported $1 billion in sales. And the venture capitalist firm Mousse Partners is backing the online auction house Paddle8. The three-year-old company, based in New York, offers knock-down fees of just 6 percent to sellers at its own sales, and has recently forged partnerships with the bricks-and-mortar auction houses Piasa of France and Bukowskis of Sweden.

“A lot of people are jumping on board,” said Robert Read, the head of fine art insurance at Hiscox. “They know that whoever wins is going to do well. But there are only going to be one or two winners, and we may not have seen them yet.”

In essence, all of these companies are competing for a new generation of younger professional buyers who are comfortable about shopping online; who’d like to buy art, preferably on-trend contemporary works; but who feel intimidated by established auction houses and galleries, and the cost of the art they sell.

“I go into galleries and now the starting price for paintings by emerging artists is $20,000. That’s a lot of money,” said Lisa Schiff, an art adviser based in New York. “There’s a new market that’s developing for prints, digital art, video and other works in the $400 to $4,000 range. This will create a healthier space that isn’t just all about the money. It could be huge. We just need a net-a-porter.com for the art world,” she added, referring to the online fashion boutique. Ms. Schiff had just bought a 2014 print, “Nadine,” by the well-regarded New York artist Avery Singer, for £250 from the website of the Glasgow International art festival.

“The key to success is transactions and revenues,” said Paddle8’s chief executive, Aditya Julka. “Contemporary art has reached a point of cultural mass acceptance. The winner will be the company that sells vast quantities of art.” So far this year, Paddle8 has realized just under $15 million in online auction sales, mostly for works priced at a few thousand dollars.

But mass acceptance and mass purchasing are two different things. It will be a challenge for a company selling art online to reach the point of ascendancy that, say, Amazon has achieved in consumer retailing, particularly at a time when the salaries of metropolitan professionals are being squeezed by rising living expenses. For most people, a $400 limited-edition print is a big-ticket item compared to a $10 album on iTunes.

Source: NY Times