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)
Filtering the web for art market technology news so you don’t have to! Here are some items of interest over the past few weeks.
- Fast Company profiles a number of startups targeting the intersection of authentication and display of digital art (For Digital Art, Watermarks Aim To Bring More Aura—And A Hotter Market). Depict integrates authentication and watermarking software with a HD display device, while Electric Objects is developing digital art frames. Whether watermarking technology could help the digital art market develop a mature secondary market is discussed. The article concludes with an observation from Jacob Ciocco, a New York-based digital artist: “Art is about always questioning value within a contemporary context. And if a certain type of value is defined—watermarking—then another artist will always find a way to subvert that. It’s what art does really well,”
- The Association of Art Museum Directors has published “Next Practices in Digital and Technology”, a collection of 41 US-based case studies of the application of digital technology in a museums context covering a wide range of topics: 3d printing, access programs, apps, collections management, education, in-gallery technology, interpretation, membership, multimedia, open data, publications, research, social media, and visitor services.
- The Guardian is running an occasional series on “young creatives doing interesting and innovative things at the intersection of art and technology.” The latest piece is a commissioned interview with the CEO of Cuseum, one of a growing list of location-aware apps for museums and exhibitions, including some pointers to other uses of technology in museums.
Recently the Met Museum announced a partnership with Khan Academy to make Met-produced educational resources available online. Khan Academy’s global reach was an important consideration in establishing the partnership, according to the Met’s CEO Thomas P. Campbell:
“Khan Academy is an impressive, forward-thinking partner with an extraordinary vision to reach learners everywhere. Together we can build on the Met’s robust program of online content to engage a worldwide community. I want the Met’s audience to reflect the global breadth of our collection, and this collaboration will bring us significantly closer to achieving that goal.”
Through various initiatives run out of its Paris-based Cultural Institute, Google has been extending its reach into the museums sector by building on the infrastructure of projects such as Google Art and Open Gallery, as well as core platforms such as StreetView and YouTube. On December 10, Google announced their latest offering, inviting galleries to take advantage of a museum-specific mobile app platform. According to Google
The platform allows museums to create a simple but powerful mobile app, based on Google’s technology including Street View and YouTube. Without resorting to expensive technical help, museums now can tell their stories.
The press release concludes
The Internet no longer plays just a minor role in diffusing museum knowledge. It has become a major force, allowing museums to expand and strengthen their reach. We look forward to deepening our partnership with museums that see digital media as core to their mission of education and inspiring people about art and culture.
The motivations behind the ‘partnerships’ offered by enormous technology companies such as Google are often called into question. In a 2013 Wired article (See Some Art While You Can — Google Will Eventually Replace Museums) artists João Enxuto and Erica Love put their concerns as follows
Google is single-handedly redefining the public sphere of art spectatorship in much the same way that it is redefining the mapping of public space. As screen interfaces become a primary means for the disembodied spectator to access artworks and as museums give up the responsibility of digitization (of the commons) to a centralized database, Google Art Project will in turn dominate the search for art in the way that it dominates internet search.
This latest venture may be low risk for smaller institutions wanting to experiment in the mobile apps (for Android) space. Google already has a tightly integrated “content ecosystem” (see John Blossom’s 2014 Google update below) and it’s only going to get tighter as Google recoups its investments through monetization. Potential museum partners would be well-advised to pore over the small print and ensure any partnership includes a clear exit strategy.
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)
Innovation and experimentation in the digital art market is not just about technology: the impact of ecommerce business models is prompting established companies such as Christie’s to re-examine their sales strategies in order to shake out new revenue streams.
The Telegraph reports that Christies are “to break with 250 years of tradition by offering items for immediate purchase at a fixed price, similar to how Ebay allows shoppers to bypass the bidding process.” Forty two lots will be offered for sale online and in the company’s Kensington saleroom at a fixed (premium, tax-inclusive) price in advance of their auction sale. Although referring to it as a “new approach to buying” the experiment is cleverly timed to coincide with the Christmas gift-buying market (even offering gift-wrapping). And in a further indication of the importance of reaching out to new customers both online and via their saleroom:
“Buyers don’t have to bid – they can walk into our saleroom in South Kensington and walk out with their purchase, or they can visit our website. If people aren’t familiar with Christie’s or the auction process, it is a good way to introduce them.”
- Christie’s auction house copies eBay’s ‘buy it now’ model (The Telegraph)
In the first of a series of ‘MOOC’ lectures to be published online by Stanford University as part of its CS183B class, Sam Altman (@sama), President of Y Combinator describes ‘How to Start a Startup.’ Drawing on nine years’ of advice to startups, Altman focusses on the 30% of practical advice Y Combinator has given to their portfolio companies that’s applicable to any startup. Based on a hugely successful 2012 course on the same topic by Peter Thiel, this year’s course includes a roster of stellar speakers, including Paul Thiel again, Paul Graham, Marc Andreessen and Marissa Mayer. Altman is publishing all materials including slide decks and further reading lists on a GitHub site, and the annotatable full text of lectures is available on tech.genius.com.