Hiscox Online Art Trade Report 2016

Foreword

Another year on and what have we learnt? Well, we are in a protracted game of hide and seek as we try and find who will win the online art market battle and what it will look like. A few things are clearer.

The online art market has continued to grow strongly (up 24% to $3.27 billion) despite the global art market slowing in 2015.

Sotheby’s and Christie's do really well in our newly created Online Art Platform Ranking 2016, but have they done enough or are they still stuck in a time warp?

Dealers are struggling to deal with the online challenge but remain insulated from reality as the traditional model still works (just about) and most are too small to take such a high risk gamble – probably a case of damned if they do and damned if they don’t.

Finally, in the online art world, mobile devices are becoming our weapon of choice and social media is becoming increasingly influential in persuading us that the Emperor’s new clothes really are magnificent.

I hope you enjoy the report.

Robert Read

Head of Fine Art, Hiscox

Hiscox Online Art Trade Report 2016 Download the report

Robert Read

Robert joined Hiscox in 1992 initially writing the Fine Art book and is now the Head of Art and Private Clients for the Group. Robert is a Hiscox Partner and has a Philosophy degree from University College, London.

He is also a failed artist and collects modern British Art as well as Victorian taxidermy. And yes…he has bought art online.

Executive summary

  • Despite a decrease in global art auction sales in 2015, the online art market grew an estimated 24% last year, indicating that the lower end of the art market could be more resilient to a slowdown than works selling in the mid- to high-end price range.

  • Pure-play online auction houses such as Auctionata and Paddle8 continue to expand their client base and more than double their sales growth in 2015. Invaluable, the auction aggregator who recently also announced their expansion into fixed-price sales, grew its online sales by 60%. It also looks like traditional auction houses are starting to gain momentum in this space, with Sotheby’s reporting online sales of over $100 million in 2016. Christie’s reported an 11% growth rate in digital sales in 2015 to $36.4 million and Heritage Auction, one of the dominant online auction houses, saw online sales of $344 million in 2015, slightly below the $357 million achieved in 2014.

  • 48% of the online art buyers surveyed said they would buy more art and collectibles online in the next 12 months compared to the previous 12 months. 44% said they would buy ‘about the same’ and only 8% said they would buy less art and collectibles online.

  • About half (49%) of respondents said they have bought art directly online, which is the same result as last year (but up from 39% in 2014). However, among ‘new art buyers’ 41% said they had bought art online in the last 12 months (down from 43% in 2015) and 43% of young art buyers said they had bought art directly online (down from 46% in 2015), which could suggest that the online art buying trend might not be catching on as fast as in previous years. In addition, a significant number of young collectors cite financial motivation (expected return) when buying art, so slower art market growth teamed with economic uncertainty could have an impact on their willingness to buy art.

  • The Hiscox Online Art Platform Ranking 2016 signals that art buyers are still rating the traditional auction houses highly, with Christie’s online platform ranked number one and Sotheby’s in fourth place, despite stiff competition from the growing number of pure-play online companies such as Artnet, Artsy, Paddle8 and Auctionata.

  • 28% of the galleries surveyed said they now offered their clients the option to buy and pay directly online, up from 22% in our last gallery survey in 2013. However, some friction still remains between the traditional relationship-based gallery/dealer model and the online click-and-buy model where there is often little or no interaction between the seller and the buyer. At the same time though, 41% of galleries say they generate online sales through third party marketplaces such as 1stdibs, Artsy, Artnet and Ocula and a further 26% said they planned to partner up with a third-party e-commerce platform in the near future (up from 15% in 2013). However, 39% of galleries in the survey (down from 41% in 2013) indicated that they had no e-commerce strategy in place.

  • Despite a decrease in global art auction sales in 2015, the online art market grew an estimated 24% last year, indicating that the lower end of the art market could be more resilient to a slowdown than works selling in the mid- to high-end price range.

  • Pure-play online auction houses such as Auctionata and Paddle8 continue to expand their client base and more than double their sales growth in 2015. Invaluable, the auction aggregator who recently also announced their expansion into fixed-price sales, grew its online sales by 60%. It also looks like traditional auction houses are starting to gain momentum in this space, with Sotheby’s reporting online sales of over $100 million in 2016. Christie’s reported an 11% growth rate in digital sales in 2015 to $36.4 million and Heritage Auction, one of the dominant online auction houses, saw online sales of $344 million in 2015, slightly below the $357 million achieved in 2014.

  • 48% of the online art buyers surveyed said they would buy more art and collectibles online in the next 12 months compared to the previous 12 months. 44% said they would buy ‘about the same’ and only 8% said they would buy less art and collectibles online.

  • About half (49%) of respondents said they have bought art directly online, which is the same result as last year (but up from 39% in 2014). However, among ‘new art buyers’ 41% said they had bought art online in the last 12 months (down from 43% in 2015) and 43% of young art buyers said they had bought art directly online (down from 46% in 2015), which could suggest that the online art buying trend might not be catching on as fast as in previous years. In addition, a significant number of young collectors cite financial motivation (expected return) when buying art, slower art market growth teamed with economic uncertainty could have an impact on their willingness to buy art.

  • The Hiscox Online Art Platform Ranking 2016 signals that art buyers are still rating the traditional auction houses highly, with Christie’s online platform ranked number one and Sotheby’s in fourth place, despite stiff competition from the growing number of pure-play online companies such as Artnet, Artsy, Paddle8 and Auctionata.

  • 28% of the galleries surveyed said they now offered their clients the option to buy and pay directly online, up from 22% in our last gallery survey in 2013. However, some friction still remains between the traditional relationship-based gallery/ dealer model and the online click-and-buy model where there is often little or no interaction between the seller and the buyer. At the same time though, 41% of galleries say they generate online sales through third party marketplaces such as 1stdibs, Artsy, Artnet and Ocula and a further 26% said they planned to partner up with a third-party e-commerce platform in the near future (up from 15% in 2013). However, 39% of galleries in the survey (down from 41% in 2013) indicated that they had no e-commerce strategy in place.

Online Art Platform Ranking 2016

This ranking is based on the qualitative responses of 672 art buyers when asked about their visiting and purchasing habits, perception and satisfaction of different online art platforms.

Key moments in the last 12 months

Key:

  • Partnerships
  • Launch of online venture
  • Fundraising/investment
  • Online sales
  • Acquisitions

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March 2015

Verisart delivers a new way to certify and verify artworks and collectables in real time. By using distributed ledger technology provided by the blockchain, the company aims to build a permanent, decentralised and anonymous ledger for the world’s art and collectibles.

April 2015

NeonMob makes headlines as one of the first combinations between digital creation centre and marketplace for digital works. Patrons can buy editions of the work online. The company is the first to introduce the notion of digital scarcity, that is the idea that a digital work can be editioned. The company has raised $2 million in seed money so far.

May 2015

Bernard Arnault buys a stake in Auctionata, raising total invested capital to approximately $96 million.

June 2015

Art:i:curate, a website that allows patrons to donate funds for a particular project and share in the profit of its sale, launches its beta. Individuals can wholly or partially fund a project, which requires 40% of its purchase price. The site has 2,000 works by 150 artists, all priced between $300 and $15,000.

June 2015

Ascribe raises $2 million to ensure artists get credit for their work. Ascribe, a “notary and timestamp for intellectual property and creative works,” helps digital creators attribute and share their digital works.

August 2015

Invaluable announces that it is Sotheby’s core technology partner for online bidding. The partnership has seen the number of collectors bidding online increase nearly 55%, leading to a 35% increase in the value of successful bids.

September 2015

Traffic to Sotheby’s eBay channel increased 55% in the first half of 2015, compared to the same period in 2014.

September 2015

Auctionata acquires ValueMyStuff (VMS), the London-based valuation service which has market-leading valuations expertise and a customer base of 400,000 clients.

October 2015

Sotheby’s offers its first sale in collaboration with Artsy, called “Input/Output.” The sale comprised of 25 works, focusing on the digital age from established and emerging contemporary artists.

November 2015

Unseen Art, a not-for-profit project to create a site to list and print 3D art for free, launched a crowdfunding campaign via Indiegogo. The company aims to make great works of art available to all, at no cost, especially for the visually impaired.

December 2015

David Zwirner invests in Paddle8. To date, the company has raised $44 million, and says it will be profitable by early 2017.

January 2016

Rhizome, a New-York based organisation that focuses on the preservation and promotion of digitally based art, received $600,000 to fund its Webrecorder project. The project will make it easy to digitally archive anything from websites, particularly those that use complex Java-based software.

January 2016

Crowdfunding-based art investment firm Arthena launches. They give investors the ability to examine collectors, pool their capital, and invest in selected artworks. They aim to streamline the collection process for new collectors with services like storage and insurance, and give them access to world-renowned collections.

February 2016

Curioos opens up a marketplace for its digital art platform. The online curator for digital art has opened up itself as a submission-based platform, which will greatly increase the number of artists listed on the site.

February 2016

The Curator’s Eye (TCE), a US digital marketing firm for art dealers and galleries, announces its move into virtual auctions. The Curator’s Eye will start hosting digitally-based live auctions beginning in the second quarter of 2016.

March 2016

Invaluable announces that they are expanding by adding galleries and dealers to their client list and will start to offer fixed price options.

April 2016

Vastari announces partnership with Everledger, the blockchain ledger.

April 2016

Artrunners launches a beta version of their new logistics platform, which aims to greatly simplify fine art logistics for clients and service providers.