In recent art world news, Verisart has launched the “P8Pass,” developed in partnership with online auction house Paddle8, to offer blockchain certification and authentication services to the worldwide art marketplace.  According to Paddle8’s website, the “P8Pass is a digital certificate with data encoded continuously onto the Bitcoin blockchain.  The certificate will be offered for any work of art or object purchased on Paddle8 and will detail provenance including ownership history and artist authorship.  P8Passes will leverage the Bitcoin blockchain to build a decentralized database containing certificates of authenticity and provenance for artworks providing a guarantee, accessible and verified at any time.”  Buyers, consignors and partners will have access to the P8Pass in all curated and benefit auctions featured on Paddle8.

Paddle8 believes that the P8Pass has “the potential to significantly reduce transaction costs for the trade with art [and] collectibles and broaden the market by including new buyers encouraged by authentication process simplicity and transaction safety offered by the P8Pass blockchain product, the risks traditionally being the primary reason for affluent consumers to stay away from the art trade.”

Paddle8’s strategic investor, The Native SA, believes that this innovative new application of blockchain technology to the art market has “the potential to disrupt the art market for good[.]”

Verisart claims to be “the world’s leading platform to certify and verify artworks and collectibles using the Bitcoin blockchain.”  Since the start-up’s 2015 launch, Verisart has offered contemporary artists a simple way to generate permanent certificates of authenticity and reduce the extent of fraudulent activity.  Verisart “combines museum certification standards, distributed ledger technology and image recognition to its provenance and registry services.”

In addition to its partnership with Paddle8 on development of the P8Pass, Verisart has partnered with ArtSystems to offer blockchain certification to leading galleries throughout the world.  This would be the first art inventory management platform to integrate such kind of blockchain-based certificate.

New start-up Codex Protocol is another player, among others, entering this dynamic growing field of placing art on the blockchain.  Specifically, the start-up is a blockchain-based decentralized title registry for art and collectibles.

This is certainly a fascinating area that I will be keeping an eye on in the application of blockchain technology to the global art market.

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.

 

 

As recently reported by Skate’s earlier this week, four art auction houses with online art trading platforms, namely, Auctionata, Paddle8, Christie’s, and artnet.com AG, generated a combined $144 million in gross merchandise volume (“GMV”) in 2014, which represents on average a doubling of the volume of global online trade compared to 2013.

Berlin-based Auctionata came out on top with 2014 results that provided for an increase in online auction trade volume over that originally anticipated.  Auctionata captured $41 million in GMV sold, which represents a 148% increase in dollar terms to 2013.  These results catapult Auctionata into the top position as the leading global online art trading platform followed by Paddle8, Christie’s, and artnet.com AG.

Paddle8 and artnet.com AG have yet to publish their results, however, Skate’s closely tracks each firm’s online auctions and expects Paddle8 to report about $37-40 million GMV and notes that artnet.com AG is unlikely to exceed $30 million GMV for 2014.

Christie’s experienced a 60% growth compared to 2013 for its online-only sales in 2014 generating $35.1 million GMV.  For further information on Christie’s results, click here.

It will be interesting to see if these top four players for 2014 remain in their respective positions for 2015.  Indeed, the online art trading platform is quickly establishing itself as the way to collect and sell art in the 21st century.