The Hiscox Online Art Trade Report, produced in association with ArtTactic, is becoming an important barometer of how the online art market is developing, as well as an attempt to forecast what the future holds.
In its first 2013 report, Hiscox wrote: “In recent years, technology has disrupted businesses in the music, film and book industry, and it is likely to have a significant impact on the art market too … The real challenge is how the traditional art market engages both with their existing client base and a potential new audience that increasingly wants the option to conduct their business online.”
The 2015 report opens with the following:
The figures speak for themselves. The evolution of online art sales mean that the value of the global online art market has risen from just under $1 billion in 2013 to an estimated $2.64 billion this year. Based on that growth trajectory, we estimate it to be worth $6.3 billion in 2019; no mean feat.
The report highlights the following findings in its Executive Summary:
- Online art market reaches $2.64 billion.
- Investment return is a strong motivation for online art buyers.
- The trend for ‘click-and-buy’ art is gathering steam.
- The bulk of online transactions take place below £10,000.
- Online art buying is becoming an omni-channel experience.
- Social media is likely to play an important role in driving future online sales.
Acknowledging the immaturity of a sometimes over-hyped market which has rapidly growing numbers of venture capital-fuelled art market startups every month, Hiscox warns:
However, there are too many players in the online art market, as one would expect at this stage of the development cycle, and it is still unclear who the winners will be. We will have to wait for a couple more years of mergers, acquisitions, thrills and spills to see who emerges on top.
- The Hiscox Online Art Trade Report (ArtTactic.com)
In an entertainingly withering Market Note published Thursday October 27, Skate’s performs some fascinating analysis on the numbers underlying Demand Media’s purchase of Saatchi Art (formerly Saatchi Online) in August of this year.
Discounting Saatchi Art as focussing on “low-end contemporary art and prints” Skate’s takes its numbers from Demand Media’s recent financial disclosure on Saatchi Art – itself published against a background of Demand Media’s “tanking” share price.
As a warning to any investor rushing into the overheated art startup market, Skate’s finds that the rate of cash burn in Saatchi Art was $4.2m in the first six months of 2014 and that Saatchi Art’s selling shareholders sold the company “as an alternative to putting more cash into the loss-making business […] losing on average 75 cents on each dollar invested on a cash basis.” (If Demand Media’s share price recovers, they’ll recoup their investment.) Questioning Saatchi Art’s fundamentals, the note finds that although the business’s top line grew by 142% to $2 million in 2014, its losses grew at a faster rate to $4 million.
It’s perfectly possible that Skate’s forensic analysis may miss the potential return of Saatchi’s plans to build the premier global contemporary art sales platform. Demand Media certainly hopes so, and time will tell. The Market Note concludes, with heavy irony:
Given these numbers, Demand Media clearly has a lot of faith in Saatchi Art. Skate’s is thrilled to see the turnaround miracle.
- Saatchi Online: Graceful Exit, Miserable Returns (Skate’s Art Market Notes, Issue #105)
Today, Sotheby’s formally announces its eBay partnership, and both companies flesh out some detail on their future strategies. Intriguingly, Sotheby’s is described as “a preeminent anchor tenant in the revamped marketplace” – a description which will worry those who consider this move a risk to the Sotheby’s premier brand. Continue reading
In 2013, Dan Loeb wrote that “Sotheby’s is like an old master painting in desperate need of restoration.” Now, a little more than a year later after a bloody boardroom battle and with three seats on the Sotheby’s board, the company is getting ready to make its first big digital play with Loeb and his deputies in the room.
The New York Times reports today that Sotheby’s and eBay have formed a partnership to stream Sotheby’s sales worldwide. It’s tempting to ask is this 12-year old idea the best Loeb can come up with? Both companies worked together on a similar project in 2002 but it was quickly shelved. Perhaps this time around it will be different – the difference being that under Loeb’s influence, Sotheby’s is now more comfortable in loosening its collar and using technology to chase a higher volume, lower value end of the art market. This would be consistent with Loeb’s 2013 statement: Continue reading
While its rival Sotheby’s gathers headlines for boardroom dramas, Christie’s CEO Steven P. Murphy has been promoting Christie’s digital strategy in recent weeks. In an interview with Bloomberg TV Murphy set out Christie’s digital plans as well as its 360-degree online/offline approach to ensuring its customers have a “unique and seamless Christie’s experience” via Christie’s online, in their salerooms or through the growing number of Christie’s exhibition spaces..
A number of themes common to any discussion of the web’s impact on art sales run through Murphy’s responses: Continue reading
An important message in the Hiscox Online Art Trade Report 2014 is that although the online art market shows continued growth, systemic barriers exist which could risk the market’s future potential.
Hiscox’s analysis (based on research carried out by ArtTactic) suggests the online art market may be undergoing a sudden evolutionary shift similar to that which traditional retail experienced in 2005 – a year considered to be a ‘tipping point’ in the development of retail e-commerce. The growth of the online art market, forecast to rise from $1.57 billion in 2013 to $3.76 billion in 2018, is being driven by a number of factors: the maturity of the web (including the mobile web), increased buyer confidence in making high value online purchases, and high levels of venture capital in sales platforms (Hiscox list $80m worth of investment across a range of online platforms in 2013-14). Continue reading
The increasingly co-dependent relationship between the online and offline art worlds reaches another milestone on April 2nd, when Saatchi Art (formerly Saatchi Online) holds its first “offline exhibition.”
Titled Continental Shift (a nod to Saatchi Art’s transition of its operations from London to Los Angeles over the last couple of years) the show exhibits works from the Saatchi Art website in the Edition and Print Gallery at the Saatchi Gallery in London. The collection will also be available through Saatchi Art online, and represented artists will receive 70% of any exhibition sales (the same as Saatchi Art’s online commission).
The online art market is becoming increasingly commoditized. Employing the Saatchi Gallery as a shop window for Saatchi Art – even though both operations are now only connected by name – is a valuable differentiator for Saatchi Art and its artists. Exhibition of artworks for sale online in brand name galleries could even create a ‘halo effect‘ so it won’t be a surprise if other platforms emulate Saatchi Art by creating alliances with established bricks-and-mortar galleries. But it would be a supremely ironic one.
- Young art without Saatchi (New York Times)
- Saatchi Art’s Inaugural Exhibition Opens At The Saatchi Gallery, London (Yahoo!/PR Newswire)
- Saatchi Online (@SaatchiOnline) combines curation, technology, and a global brand to “democratize” art sales (Art Market Technology)