In recent art world news, one may think that the digital revolution has provided some “much-needed transparency” to the art market with the sale of artwork now being bought online as regularly as books and music. However, according to last year’s Hiscox Online Art Trade Report (publication of the 2018 edition is forthcoming in April), it is estimated that online platforms accounted for about $3.75 billion of sales in 2016 (up 15% from 2015), which represents just an 8.4 percent share (up from 7.4% in 2015) of the overall art market.
Despite the low overall art market share for online platforms, the art world’s digital sector has seen new developments. In particular, just last week it was announced that online auction house Paddle8 had merged with Swiss tech company The Native, and would develop an auction that accepts virtual currency (i.e., bitcoin). Also, last week Sotheby’s announced that it had acquired Thread Genius, an artificial intelligence (AI) startup company specializing in developing identification software by using algorithms to identify objects and suggest images of similar objects.
While the music and publishing industries have been transformed by retailing via an online platform, this has not been the case for the art market, which has been slower to move in such direction. Some in the art world have made the well taken point that artwork is unique and much more expensive than mass-produced books and music. A high price tag of six figures and up has the effect of deterring digital impulse purchases. Indeed, online art sales tend to be dominated by artwork priced below $5,000.
Prices remain a major hurdle for the expansion of the digital art trade, not just because they are often so high, but because of their lack of availability. Consumers looking to buy, say, a shirt online can browse numerous fashion websites where thousands of items are clearly labeled and priced. But all too often, prices on art dealers’ websites—and in their galleries and booths at fairs—are ‘on application,’ a process that can be both laborious and forbidding.”
Unsurprisingly, from the perspective of the consumer, dedicated online-only art auctions having transparent price structures benefit from a definite edge over dealer transactions in the digital space. Since last May, in an effort to aid transparency, Christie’s website has included results from its online-only art auctions, which had an average lot price of $7,305 (up from $6,047 in 2016). This information is not provided by competitors such as Sotheby’s and Paddle8.
Although results achieved for resold artworks can be accessed via subscription websites such as Artnet and Artprice, the “primary market” prices charged by galleries for new artworks by contemporary artists remain private with “many dealers regarding them as trade secrets available only to insiders.”
A new app started in 2016 named Magnus seeks to disrupt the art market and make it more transparent. In use, the smartphone user simply aims their device at a particular artwork in a gallery or fair and visual recognition technology rapidly provides auction and dealer prices for the specific artist. In such way, it is said that Magnus works for art as Shazam, the mainstream song-identifying app, works for music. The new app’s database stores about 10 million prices, which are compiled through crowdsourcing, and 10 percent of which are from the primary market. The app is said to be especially strong at art fairs with estimates that it identified around 80 percent of the prices at events such as Art Basel.
It will be interesting to see how the art market engages the next generation of art collectors and buyers. The recent developments in the digital space described above seem like a solid start.