Art insurance company Hiscox releases an annual report presenting the state of the online art market, through the data gathered by ArtTactic, the art market research firm. The European Fine Art Foundation (TEFAF) presents a global perspective on financial trends in the international art market and is published since 2000. Below are the 10 things you need to know about the online art market from the most important annual reports in the sector, combined with expert opinions from leading auction houses around the world.
1. Online art market persists growth despite cooling of the global market
The most important thing both reports agree on is that the global art market is shrinking, however this has not yet affected the online market. Quite the reverse, online art sales are at their peak. For example, established Swedish auction house Bukowski’s has seen the online auctions exceed the in house auctions for the first time in 2015. Confirming the suspicions in the sector, according to the TEFAF report, in 2015, the art market contracted for the first time since 2011. Globally, sales of artworks decreased 7% to $63.8 billion in 2015, compared to $68.2 billion in 2014. The amount of art transactions also decreased to 38.1 million, a 2% decrease. However, the online art market has grown 24% in 2015, to a record of $ 3.27. This exceeds Hiscox’s forecast of growth for 2015, which was at 19%. If growth continues at this rate, the online art market will be worth around $9.58 billion by 2020. It is possibly surmised that Hiscox report shows a conservative take on the momentum of growth in the online art market since they take into account only the public results of sales and they do not account for part of China’s gigantic online art market. Besides it is possible that the online art market owes its continuous growth, in the face of a sector contraction, to being on the lower steps of the market, with most sales under $10,000.
2. Most of the online sales are still below the £ 10,000 margin but online buyers are increasing their confidence.
82% of galleries said that the average price of online transactions remained below £10,000, up from 77% in 2013. While positive, this still suggests that the online art market continues to cater for the lower-end of the art market. 67% of the online art buyers made purchases in the £ 5,000 and below range, which shows their confidence and the growth of the overall online art market, signaling rising client numbers. Despite the majority of transactions remaining below £ 10,000, 42% of galleries indicated an increasing willingness among their clients to spend more money on art works bought online, which could suggest that buyers within this price band are moving up the average price bracket as their confidence increases.
Looking at individual cases at online auctions proves the increasing confidence of online buyers. The Director of Media and Digital Marketing from the French auction house Tajan, Romain Monteaux-Sarmiento states that when they started online sales in 2011, they held auctions only related specialties such as design, watches, wine, Asian and Oriental Art, for the lower price bracket. However, Monteaux-Sarmiento says, by now all buyers became accustomed to the practicality, comfort and privacy of the online purchases. So they have now included the traditional segments of Old Masters and other schools of painting and designer furniture, which are higher in the price list, and these auctions proved to be successful. On June 15, Tajan sold a painting online for € 160,000 (hammer price). Also Paulina Sokolow from Bukowski’s states that the average prices on online sales have doubled in the last two years.
3. Advantages of the Online Art Market:
The Hiscox report from 2015 revealed in detail why the online art buyers love the online art market. The principal advantage listed by 80% was being able to easily search for art and collectibles. The Internet makes it possible for buyers to efficiently connect with marketplaces and auctions all over the world by breaking down geographical barriers. According to Rainer Kämmerer from Nagel Auctions, “the ongoing use of the Internet makes it a lot easier to access the art market and thus also ensures its availability for everyone. This simultaneously leads to a growing number of international clients, i.e. consignors as well as bidders.” 71% of the Hiscox survey participants took this into account and stated that the ability to discover new art and artists was the primary advantage for them. Online art market as a one-step platform for art discovery and buying is becoming increasingly attractive, especially among new and younger buyers. 67% said that the convenience of bidding and buying art online carries foremost importance to them and this percentage rises to 78% among buyers aged 35 and below. 66% of the respondents (up from 65% in 2014) stated that the range on offer is the key advantage for them. They said that online galleries and auction houses provide a larger selection of artworks across different mediums and price brackets. Affordability played an important part for 46% of the online art buyers, because as stated in the last segment, online market offers works on a wider price range. Finding artworks for their budgets was even more attractive to younger buyers, about which 56% of respondents aged 35 and below said it was important to them. Lastly, 45% said buying art online was less intimidating whereas the circles of the art world seem exclusive and inaccessible. Again this option was significantly more popular among the Generation Y with 63%.
There are considerable advantages of online auctions for the auction houses as well. Traditional auction houses around the world took these advantages into account and have started to do internet auctions, sometimes even online exclusive auctions that take place on the website only. Bruun Rasmussen Auctioneers, the Danish auction house with half of their revenue from internet auctions, holds online auctions 46 weeks a year, 4-5 days a week. Their auctions range from art, antiques, design, jewellery and all kinds of varia like stamps, coins, books and wine. Bruun Ramussen’s Evaluation and Sales Director Kasper Nielsen states their online clientele spreads over a wide range of age and nationality. He sites the top advantages of holding online auctions as the quick and effective sale, directly towards the potential buyer where ever he or she may live in the world. Romain Monteaux-Sarmiento from Tajan adds the cost of online auctions are significantly lower on the auction house and the accessibility to their client base is easier, especially with online catalogues that cost less and take less time to publish and distribute.
4. Challenges of the Online Art Market:
Although the online art market is attractive to many, there are still challenges to consider. According to the Hiscox Report 2015, the biggest challenge seems to be linked to trust. 82% of online art buyers stated that the biggest challenge is not being able to inspect the physical work. Hiscox Group suggests that better information (e.g. high-resolution zoom, 3D image rotation) and compulsory condition reports by an expert could help. Another challenge for the 66% of the respondents was the fear of buying a fake object. The online art market is trying to solve this by anti-forgery operations and authentication certificates signed by the artist, publisher or an established dealer, agent or expert of the artist. Building trust online is not as easy or natural as in the physical world. 57% of the online art buyers state that the foremost importance to them is reputation and 49% of current buyers say other buyers’ reviews would help create trust and confidence in the online buying process. Other challenges listed by the online art buyers are the lack of information about the work (57%), the logistical aspect -including packing, method of shipment and returns- (43%), insurance (73%) and repayment plans (46%). To read more about art insurance go to our article A 10-step guide to Art Insurance.
5. Challenges for the Online Auction Platform:
We talked enough about the challenges of the users. What about the challenges of transforming the traditional auctions into an online process? According to Rainer Kämmerer from Nagel Auctions, providing a stable and functioning platform, continuously compatible to all kinds of systems users have, integrating online bidding in the physical auction room while remaining transparent and understandable towards all participants, and lastly to assure the validity and liability of online bidding. Another challenge cited by Paulina Sokolow from Bukowski’s is to keep the aura of fine art and luxury while appealing to a wider public.
6. Facebook and Instagram remain the most preferred social media platforms over the past two years: Among art buyers, Instagram experienced a significant jump in popularity – from 34% of respondents using it in 2015 to 48% in 2016. The same trend was found among younger buyers, where 65% said they used Instagram for art-related purposes (up from 48% in 2015). With 400 million monthly active users, Instagram has become the fastest growing mobile photo-sharing app in the world, and is increasingly used by artists, galleries, museums and auction houses. The reason for Instagram’s success lies in the nature of its visual content, with photos liked twice as much as text updates and videos shared 12 times more than links and text posts combined. So it is not surprising that the art world is all aboard.
7. Buyers tend to prefer online marketplaces with fixed prices rather than online auction platforms:
In spite of all online platforms earning an increase in buyers in the past year, the online art marketplaces exceeded the online auction platforms for the first time. Double of 21% in 2015, 41% said they had purchased art from online marketplaces, where as 37% said they purchased at auctions. Online marketplaces proved to be even more popular among the “Millennials” (18-35), where 53% said they buy at online marketplaces. 36% said they prefer gallery portals while 35% buy on online auctions. Traditional auction house Christie’s seems to have predicted the results since a portion of their online sales are already on a fixed price basis.
However, some auction houses prefer to stay traditional and not go through with the fixed price trend. Kasper Nielsen from Bruun Rasmussen says they do not consider the “buy now” sales good for their business. “We believe”, he says “that our sellers will miss the opportunity of an optimal result, if a “buy now” feature is included.” Nielsen adds the fixed price sales are for either the very low or very high price segment, and either way result in a low sales percentage. Another traditional and established auction house -and one of the big players- Bukowski’s also didn’t consider doing fixed price sales. Coming years will show if this trend of fixed price marketplaces is here to stay or just a bubble.
8. Generation Y or “The Millennials” continue to be the hope for the future of the online art market, while Baby Boomers (60+) shouldn’t be forgotten since they are also big art spenders and frequent online visitors and buyers:
19% of the 18-35 year olds made their first ever art purchase online (up from 9% 2015) indicating how important the online art market is for the first-time buyers in Generation Y. The Hiscox Report gives us an insight into the habits of this young and tech savvy generation, which is so important to the online art market. First of all, they are quite emotional: 92% says the reason they buy art is emotional. However, they are also logical and smart with their money: 57% citing investment as their main motivation to buy art. As a known fact, they also care about what others think about them: 44% shows identity and status as to why they buy art. This is followed by 39% who shows social reasons behind their purchases. We reckon peer pressure has never been this innocent. In the buying preference, 81% of the young segment buys Fine Art while %61 buys Decorative Arts and Design. Jewellery follows with 48% and antiques with %35. The lowest percentage is wine with 23%, which is consistent with how much of the auctions are wine related.
While the Generation Y might be the future of the online art market, and most online art platforms are directing their marketing efforts on them, the 60+ age group should not be forgotten. Over 80% of this group states they spent more than £ 10,000 on buying art online in total, while with Generation Y, it is just above 20%, which indicates the Baby Boomers are the ones holding the market afoot.
9. Online customers are loyal and once they buy online, the process normalizes and they tend to come back.
92% of the online buyers say that they plan buying the same amount of (44%), or more (48%) artworks online in the next 12 months. Only 8% said they would buy less, decreased from 14% last year. The new buyers decreased slightly from 43% to 41% indicating the seasoned online buyers are among the 92% who will buy more or same. However, the report states that most online customers don’t see the online market as a substitute to the physical world but rather an alternative. So the online art market might not be so immune to the cooling of the global art scene.
10. The global switch from desktop to mobile shows its face in online art sales as well. However, Hiscox suggests don’t throw away your desktop just yet.
Data shows that 80% of Internet users own a smartphone and in 2015, and mobile internet users exceeded the desktop users by hundreds of millions globally, according to Morgan Stanley Research. In the online art market, on average, 40% of visitor traffic and 24% of bids and transactions came through mobile, according to data collected from 9 online art sellers. However, when it comes to actually buying something, 81 % turn to their laptop or PC while 19% uses a tablet and only 13% prefers their mobile device. As tech-savvy and ground breaking as the Generation Y is, even they (82% of them) prefer to purchase art on a desktop computer. Data indicated that mobile devices might be popular for browsing, but when it comes to do serious things like purchasing, people turn to their PC or laptop.
We thank Kasper Nielsen from Bruun Rasmussen, Romain Monteaux-Sarmiento from Tajan, Paulina Sokolow from Bukowski’s and Rainer Kämmerer from Nagel Auctions for their insight and help.
Cover image courtesy of the Auctionata Website, “Jean Miotte, Composition Rouge, Bleue, Jaune et Noir, 20th C.”.