The digital revolution continues to blur the boundaries of our on and offline existence, and the art marketplace is no exception. Huge auction houses such as Sotheby’s now partner with businesses like eBay, and elsewhere Heritage Auctions, another traditional auction house, was recently named the biggest online auction site in the world, processing sales of $357 million in 2014 alone.
But while buyers will always trust the big names whether on or offline, the rise of online platforms such as Paddle8, Artspace, and MyArtBroker has been the success story of the market in the last few years. In the same way that tech platforms like Uber and Airbnb have disrupted traditional markets by harnessing the ‘sharing economy’, these platforms not only offer a far more accessible route to buy and sell art, but in recent years have become the ‘go to’ for acquiring artworks by the likes of Damien Hirst, Salvador Dali and Francis Bacon.
Sites like these act as a gateway when it comes to connecting buyers and sellers, offering a fresh, new way of accessing the marketplace for people that may have historically felt shut out by the intimidating processes of the art world.
But with traditional auction houses still leading the market with art sales of $5.1 billion in 2014, it’s worth assessing the pros and cons of the old and the new.
Works of art have been sold at auction since the 17th century, and this heritage means that traditional auctioneers still attract the most expensive artworks, such as Picasso’s Woman of Algiers (Version O), which sold for a record breaking $179 million at Christie’s earlier this year (see more on this here).
But, even when the subject of the bidding war is a less high profile piece, the fine art auctioneer is a far from ideal environment for even experienced collectors, let alone first time buyers. Whilst it may still be regarded as the best indicator for an artist’s true financial value, the auction house operates at unforgiving pace, and requires split second decisions that can prove to be costly. Buyer’s and seller’s premiums at auction houses such as Christie’s or Sotheby’s could end up being more than 25% of sale price, and this can result in fine art buyers paying a lot more than they originally intended to, while also cutting into the profit margin of the seller.
In comparison, online platforms are for many a far less intimidating way to buy art, with 45% of those surveyed in the annual report by art insurer Hiscox supporting this view. Online platforms afford the buyer the time to carefully consider each purchase without the pressures of a live auction room. They also offer a greater selection of artworks, and an easier way of viewing them, with 80% of those surveyed stating that they found it easier to find artworks that they liked online.
The major galleries and auction houses are cottoning on to this, with the likes of Saatchi and Sotheby’s forging major media and online partnerships in the last 2 years, while the online channels of Christie’s and Heritage Auction’s continue to grow at a seemingly exponential rate.
However, the problem with ‘Click and buy’ style sites is that they invariably lack a human element, with fears over authenticity and transportation being common complaints, as well as not being able to inspect the artworks in person.
Change is coming though, and digital innovators have started to address these problems. When you are looking to buy through MyArtBroker for example, you are assigned a personal Broker with years of experience in the industry, who will help you to not only find the right artwork, but also will also handle the process of authentication, price negotiation, and delivery.
Rates for this kind of service are not only considerably cheaper than the average commission rate at major auctioneers, but also provide a comprehensive service that you simply wouldn’t receive in the traditional auction house.
While the issue of artist authenticity was an early stumbling block for the online art trade to get off the ground, there is growing trust in online buying platforms as businesses gather pace, reviews, and reputations. MyArtBroker chose to address this by assigning individual Brokers to each art deal, who personally verifies the provenance of a piece before proceeding with a sale. With the help of a professional broker, a MyArtBroker member wanting to buy a painting by Matisse can be 100% sure that they will get what they paid for.
Additionally, online channels offer the perfect opportunity to post listings for wanted artworks within the global community of buyers and sellers, which is ideal for collectors searching for particular works that rarely become available through the auction house.
What is interesting is that the bulk of online transactions are still under £10,000. When considering the often-inflated price that many artworks go for at auction, this suggests that the auction house, is the preferred destination for elite collectors looking for the most sought after artworks (for the time being at least).
Of course, there can be no denying that the online marketplace is fertile ground for investment, and with 75% of new online buyers stating that they were drive by value potential, that could well be the case. At any rate, as more and more people – both buyers and sellers – wake up to the opportunities of the online market, we predict that new web platforms for art trading will continue to gain ground on the traditionalists.