The art market: Overview of its digital transformation

When the art market makes headlines, it’s mainly down to jaw-dropping works, venues and prices. But an internet connection offers access to artistic variations and themes from any period.

Despite some slight residual resistance to the “digital revolution”, from private galleries to exclusive auctions, the art market has taken the technological path. In just a few years, it has successfully developed a new, increasingly mature version of itself.  This article is based on the  Hiscox report, the leading art market research paper, and aims to examine the trends in order to enhance the e-retailer’s analysis.

Growth: a sign of customer digitisation

Worth $1.5 billion back in 2013, the art market has grown significantly, hitting $4.64 billion in 2018. Growth was lower in 2018 than previous years, marking the start of a stabilisation phase.?This stabilisation can provide an ideal opportunity to revamp the market, including, for example, greater investment and more measures favouring the development of digitised services, the democratisation of the purchasing of works of art, and even the emergence of new services.

One thing is sure, the art market is proving that it meets a marked demand for online accessibility and that consumers are ready. Growth prospects are still good. These statements are based on the following behavioural statistics: 

  • Instagram is a happy hunting ground to identify new customers and the place where 65% of art lovers do their window shopping 
  • 29% of generation-Y art buyers prefer buying online 
  • Digital customers are less loyal and more fickle than brick-and-mortar store customers 
  • Mobile is less and less an option to sell well 

From art gallery to digitised gallery

The “storefront” website is now the norm for all galleries, each choosing their level of communication: basic business card, presentation of the gallery’s history and philosophy, or demonstration of its expertise.  It goes without saying, the storefront is the strict minimum. But art galleries are slowly but surely entering the world of e-commerce. A little like luxury brands before them, major galleries are giving e-shops a go.

These e-commerce sections added to corporate sites sell tie-in merchandise and books. Is the price an issue? Not for serious competitors! A first generation of physical gallery owners decided to opt for more radical change, like Hugo Galerie in New York, Bouillon d’Art in Bordeaux, or the Carré d’Artistes franchised gallery group, to name but a few. In the meantime, the keyword “art gallery” reveals fresh competition with excellent search engine positioning. Google is the logical place to start when looking for online art galleries.

They explore new approaches, continue to curate works and artists, and set themselves apart. This includes the choice of their slogan. On the one hand,  Kazoart facilitates and simplifies art buying through digitisation (“Taking the intimidation out of buying art”), and on the other,  Artistics makes contemporary art accessible to all (“Contemporary art is not the privilege of the few”). 

To be a pure player, you have to rework and adapt your services to meet digital consumption needs, offering an optimised user experience, including: 

  • Displaying prices, 90% of new online buyers want transparent art prices 
  • Visualisation, letting you look at a work as though you were in the same room. In practical terms, this means presenting the work hung or set up near a piece of furniture providing scale
  • Scenarisation and custom recommendations: virtual galleries make the most of their exhibition spaces to offer a large number of works and, to make it easier to find the right work of art for you, they challenge the limits of ingenuity and technology by proposing selections meeting user expectations as closely as possible. Artificial intelligence is also becoming a subject of interest 
  • The possibility of following an artist, to build and maintain a connection 
  • Private sales,?allowing the opportunity to quickly purchase a work of art at an exclusive and temporary price to be exploited 

Online art merchandising also features services recreating what is sometimes possible on the physical market: negotiation (to a reasonable extent), commissioning of artists’ works, and maybe one day live creation? Clearly, there are now many committed companies looking to establish themselves. Some of them have made marketplaces their main line of business.

Art marketplaces 

Some entrepreneurs have decided to propose a space where the depth and breadth of what is on offer is also a service for art traders. The principle of the marketplace is to offer a sales space on a site with high visitor numbers in return for commission on sales, and in some cases, payment for additional services (logistics, financial services, promotion, etc.). The virtuous circle of marketplaces is based on their ability to attract a high number of the best sellers. The increased number of works on offer generates more traffic, which attracts even more sellers.

This field is highly competitive and unforgiving. Some seem to make a success of it and set themselves apart: internationally, Artsy is the most popular with professionals; in France, it’s Artsper. These businesses have pulled off something quite incredible when you look at the number of galleries and works that they present. They are fully committed to their positioning: showcasing galleries and convincing the biggest ones to display prices on their pages (major gallery institutional sites don’t do this).

These marketplaces offer access to their traffic and let experts express their talents as sellers. As in other sectors such as fashion (La Redoute, Spartoo), the marketplace for works of art will probably prove the most powerful model.

Firstly, works of art need an appropriate UX (user experience); Amazon is involved in this general area but not this particular niche, so specialist marketplaces definitely have a role to play. Secondly, digital commerce is very economically engaging; gallery owners and art traders, even though these aren’t digital professions, also benefit from the services provided by a marketplace in terms of infrastructure and traffic generation (large numbers of visitors = large number of potential customers). 

Many traders in other sectors hesitated before realising that synergy with marketplaces existed after all. BUT… Refusing to use these platforms can be a strategic choice, it all depends on the brand / distributor’s positioning and the strength of its customer base.

The auction, the queen of the art market

Auctions make up the segment of the art market accounting for the majority of financial flows. We all have the image of an auctioneer banging their hammer but this is actually the area where digitisation is moving fastest! Professionals distinguish between 2 types of online auctions: 

  • Online sales: like on eBay, buyers bid over a given period; 
  • Live sales: the web version of the telephone bidder seen in some films. The sale and bids start at the same time. 
Live sales are what attract the most interest. They involve a protocol and timing that create emotion, even online! It’s also at these sales that you can see the most incredible works. Live sales have added all the following useful features to auctions: 
  • Product presentation (increasingly qualitative) 
  • Maximum bid programming 
  • Sale start alerts 
  • Live bidding 
  • Live video (in development) 
  • Mobile payment 

You could say that on the art market “content is really king”, and this content is first and foremost the “object” up for auction. The leading auction houses are all involved in the segment: Artprecium, Artcurial, Rossini, Paddle8, and Heritage Auctions, among others. Marketplaces, such as Artsy and Invaluable, which are always looking to promote what they’ve got on offer, have got in on the act, too. In France, the business with the biggest market share is Interencheres. This association of 245 French auction houses accounted for 45% of overall national auction sales in 2017, i.e. €1.43 billion.

But let’s be clear, it’s inevitable that all auctions will end up on the web given the extent to which the very principle of immediacy is central to both the web and bidding, plus the excellent user experience it provides! In addition, at Interencheres: 

  • The average cart for the Paintings, Furniture and the Art Objects speciality is €350 
  • Branded watches, iconic designers, major 20th-century artists, and famous car brands top the list of the keywords most searched for 
  • 47% of the most regular bidders have been registered on Interencheres Live for less than three years 

The web may even generate “drive-to-auction” (drive-to-store being the Holy Grail for retailers). Growth in live auctions could actually encourage people to head down to the auction house. The art market’s digitisation is in full swing, with possible effects on its ecosystem. Some firms are increasingly focused on one area, particularly auctions.

Online galleries are multiplying; after all, they’re first and foremost talent spotters. Exponential and immediate increases in artists’ standing are probably to be expected. Imagine, if Bernard Arnaud (the French business magnate) bought the work of an artist sold by a small online gallery, the website’s servers would melt down within 24 hours! Experts in transporting works of art like LP Art could develop digitally to seize opportunities (e.g. more non-corporate customers, higher shuttle fill rates). 

Blockchain could be adopted quicker than expected. It secures transactions and allows information to be stored in the most secure way possible. And that’s lucky because one of the biggest fears buyers have is falling for a counterfeit! In any case, what’s nice about this market is that it exists only because of and for art; there’ll always be a place for ingenious gallery owners with a knack for discovering fabulous creatives. This digital commerce will doubtlessly develop for the good of art itself.

Published in La Tribune