The art market is one of the very few sectors yet to succumb to the digital revolution – perhaps unsurprising in an industry in which exclusivity, elitism, personal interaction and a certain opacity are the distinctive features. For various reasons the art trade has managed to cling on to its traditional methods of selling, with online sales of art constituting a mere 10% of the total art trade.
However, this situation looks set to change. A huge wave of websites selling fine art online has emerged over the past couple of years – there are now more than 25 websites operating in this sector. And many of these sites have achieved considerable popularity, in addition to wealthy and prominent financial backers. Traditional auction houses have also shown promising signs of moving towards Internet sales, most notably Christie’s. Could this be the beginning of a new era?
Here we take a quick look at a few of the most successful websites in this sector:
Founded in 2011, Paddle8 was originally intended to be an online venue for exhibitions in partnership with galleries and art fairs. However, the company subsequently decided that providing a platform for selling and buying art would be a more profitable venture. Describing itself as a “virtual auction house”, the New York City-based company holds bi-weekly “themed” auctions of fine art and collectibles, all taking place exclusively online.
The auction house also holds regular benefit auctions for non-profit organisations. Paddle8 had held 35 charity auctions by September last year, generating $3 million. In addition, Paddle8 allows galleries and private collectors to subscribe to its inventory management system (known as ARCHIV8) for a fee of $200 per month.
Originally an art database, in 2008 Artnet expanded into online auctions. The site offers 24/7 online auctions of fine art and prints. After suffering an initial decline in profits, it has seen a dramatic rise in interest and the company now turns over more than $13 million a year.
“It’s one thing to point out to someone where they can find something and give them a gallery’s phone number, it’s another thing to make a sale online. That’s a sea change, in my opinion,” says Hans Neuendorf, the company’s chief executive ”and it’s happening.”
“I think [the major auction houses are] very happy doing what they’re doing; we’re not even on their radar. And that’s good because it gives us time to catch up.”
One of the oldest of the online art auction sites still in existence, SaffronArt was founded in 2000 and has become a highly successful global business. The company has even been the subject of a case study in Harvard Business Review.
“The SaffronArt model is very different from that of a live auction. Apart from their extended time span, a host of online features make our auctions of art and jewellery an easy and unique way for collectors to acquire new pieces for their collections,” says co-founder Minal Vazirani. However, the company has so far struggled to penetrate the Western art market – their first auction of Western art in February 2012 was disappointing, with only 32 out of 73 lots being sold.
Perhaps the most high-profile of the new start-ups is Artsy.com (originally art.sy). The company has so far succeeded in raising $7.25 million in funds, and counts amongst its illustrious backers Jack Dorsey (co-founder of Twitter), venture capitalist Peter Thiel, Eric Schmidt (executive chairman of Google) and Dasha Zhukova. The company credits the dramatic globalisation of the art world with its success. “Think about the size of the art market and the fact that it’s growing disproportionately in emerging markets where people are less connected to major art world hubs,” says Sebastian Cwilich, the company’s COO.
The website describes itself as a “lead generator”, connecting potential buyers with galleries and other sellers. Artsy receives a commission only if a sale actually takes place. Currently, the company states its primary mission is to “make all the world’s art freely accessible to anyone with an Internet connection”. However, although there is praise for Artsy’s success in increasing public engagement with art, its business model has been criticised. As The Economist has noted, “If [Artsy] wants to be a player in the market in the long term, its online revolution must be monetised. Only then might it challenge the art-world status quo.”