In recent art world news, specialist global fine art insurer Hiscox in partnership with London-based art market research firm ArtTactic has published its sixth annual Hiscox Online Art Trade Report 2018. This latest report reveals an online art market worth an estimated $4.22 billion (up 12% this past year). While this represents a solid year on year increase, it is notable that this was lower than the 15% growth in 2016, and the 24% growth in 2015. This week’s Art Law blog post will highlight several key findings from the report.
Fewer art buyers buy art online, but those that do spend more. Approximately 43% art buyers bought art online in the past year (down from 49% in the previous year). Notwithstanding the decrease in online art buyers, the share of online art buyers paying (on average) more than $5,000 per fine artwork increased to 25% (up from 21% the previous year). Notably, active online art buyers are also buying more online art than in previous years with 74% making multiple online art purchases (up from 65% in 2017).
Lack of price transparency is an issue for new online art buyers. While existing art collectors are used to lack of price transparency in the purchase of art, for 90% of new art buyers, lack of price transparency is a significant issue that isn’t being addressed.
New media art is gradually making traction. New media art (e.g., video or digital art) is gaining traction right behind preferred mediums, paintings and prints, for online buyers. About 17% of online art consumers purchased new media art this past year and average prices paid for same have seen a gradual increase.
Significant growth for mobile commerce and Instagram is preferred platform among art buyers on social media. The use of a mobile device to buy art has steadily climbed from 4% in 2015 to 20% in 2018. As for social media, 63% of art buyers consider Instagram as their preferred platform (up from 57% in 2017 and 48% in 2016). Instagram has become a key tool for the art industry in reaching consumers beyond the existing art market with nearly 1 billion users. For the Art Law blog’s recent coverage on the effect that Instagram is having on the art world, click here.
Higher rate of industry consolidation is expected in the future and online auction market is expected to be highly competitive. As a result of the number of new mergers and acquisitions that took place this past year, 81% of online platforms are expecting a higher rate of consolidation going forward, especially in the form of vertical mergers. The online art auction market is expecting a highly competitive environment this year.
Third-party marketplaces are helpful sales tools. Perhaps not surprisingly 75% of galleries used third-party marketplaces to sell art online in 2018—this is up from 59% in 2017 and 41% in 2016. Nearly 20% are presently using such marketplaces as an outlet for at least half of their online sales (up from 3% in the previous year).
Prevalence of cybercrime hitting platforms and galleries affects buyer confidence. Over half (54%) of platforms and nearly 30% of galleries have been targeted in an attempted cyber attack this past year (10% to 15% of attempts were successful). Just under half (41%) of online art buyers indicated that they are concerned or very concerned when buying art online.
High expectations for incorporation of blockchain technology, but minimal adoption. Over half (60%) of online platforms believe that the use of cryptocurrencies will be the way blockchain technology makes its debut in the online art market. However, only 7% presently accept cryptocurrencies as a payment method and just under 10% have embedded blockchain technology into their businesses. Further, well over half (64%) of online platforms believe that using blockchain technology as a “title/ownership registry for the art and collectibles market” will be the “most successful use of blockchain technology in the future.”
Regulatory readiness for forthcoming EU regulation is questionable. The new General Data Protection Regulation (“GDPR”) is coming into effect on May 25, 2018 and will have widespread applicability as it seeks to unify data privacy standards and provide greater data privacy protection for citizens of the European Union. Surprisingly though, 41% of galleries and 21% of online platforms surveyed were unaware of this forthcoming new regulation and many were unprepared for it.
For those interested in reviewing the widely anticipated sixth annual Hiscox Online Art Trade Report 2018 in its entirety, click here.