Cover art
Insecticide 13 by Mat Collishaw (photogravure etching, 2009), purchased through an online platform by Hiscox in 2017.

Hiscox Online Art Trade Report 2017

Foreword

The long-awaited consolidation in the online art market has yet to happen, with the notable exception of the marriage and subsequent separation of Paddle 8 and Auctionata. We all know it’s going to happen – even our survey of those managing the online platforms shows that a massive 86% expect more consolidation – we just don’t know when and who is going to end up on top.

So, what do we know? The online art market has continued to grow strongly (up 15% to USD $3.75 billion) against the backdrop of a slowly-increasing global art market.

The established global brands in the art market such as Sotheby’s and Christie’s are starting to dominate The Hiscox Online Art Platform Ranking and appear to be getting to grips with the challenge of transforming a bricks-and-mortar business into a multimedia business.

The dealers continue to struggle online; maybe they are making enough elsewhere. None of us know in the gloriously opaque art market, but my bet is that the temptation to bury your head in the sand when you are not tech savvy is all too great.

Finally when it comes to social media, Instagram is now very clearly the medium of choice.

We continue to monitor these developments and I hope you enjoy this year’s report.

Robert Read

Head of Art and Private Clients, Hiscox

Hiscox Online Art Trade Report 2017 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.

Key Findings

  • Online Sales Trends
  • Online art platform trends
  • Addressing the concerns of the hesitant art buyer
  • Social media
    • Online art market sales reached an estimated $3.75 billion in 2016, up 15% from 2015. This gives the online art market an 8.4% share of the overall art market, up from 7.4% in 2015.

    • Whilst the traditional auction houses were slow in adapting to the opportunities of the online art market, 2016 marked a significant shift in their online sales strategy, with Sotheby’s, Christie’s and Heritage Auctions generating combined online sales of $720 million in 2016 – accounting for 19% of the online art market. Online-only auctions saw a particularly strong increase at Christie’s, with an 84% jump in sales. One of the biggest online players, Heritage Auctions, reported that 41% of its auction sales are now conducted online, with $348.5 million in online sales reported in 2016 (up 1.3% from 2015).

    • The conversion of online art buyers remains static for the third consecutive year, signalling that the online art market could be struggling to convert sufficient numbers of hesitant art buyers. However, the good news is that existing online art buyers have been acquiring even more art in the last 12 months. The number of online art buyers that have bought more than a single artwork in the last 12 months has increased to 65% in 2017, up from 63% in 2016.

    • Online art sales growth can only accelerate by increasing the conversion rate of hesitant, non-online buyers by actively addressing their key concerns. These concerns are currently focused around the lack of physical inspection and worries about the work’s condition, authenticity, and the seller’s reputation.

    • In 2013, 15% of galleries surveyed said they would generate online sales by partnering with an existing art e-commerce platform. In 2016, 26% of galleries surveyed said they planned to partner up with a third-party e-commerce platform in the near future, and this year 27% said this was their future e-commerce strategy. In 2017, 49% of galleries that sell art online say they are doing so through third-party online platforms.

    • Despite individual examples and anecdotal evidence that works are increasingly being bought online at higher price points, the future battleground for the online art market is likely to remain in the lower price range. According to the latest survey, 79% of online art buyers spend less than $5,000 per piece when buying art online, up from 78% in 2016 and 67% in 2015.

    • Christie’s came out on top ahead of Sotheby’s, Artsy, 1stdibs and Artnet. Four of the top ten ranking online art platforms were traditional art businesses, which now have an online/digital platform for bidding on, and buying, art. This suggests that the offline art world is catching up with its online-only rivals.

    • The recent failure of the high-profile online auction house Auctionata (announced in January 2017), questions the ability of new online-only players to grow fast enough and become profitable in an increasingly congested market place. On the other hand, the growth in online-only auction sales from traditional auction houses, such as Christie’s, shows sales growth of 84% in 2016, which suggests that the power balance might be shifting back to the incumbent art market players.

    • Increasing competition is already forcing online art platforms to embrace new strategies to expand their business and diversify their income streams. Among the auction aggregators, Invaluable has ventured into the gallery and dealer space by allowing visitors to buy directly from galleries through fixed-price offers. Artsy, a platform predominantly targeting galleries, has held several online auctions in partnership with Phillips and Heritage during the last 12 months. These trends suggest we could see more consolidation in the industry over the coming years.

    • It is evident from the survey that most online art platforms see the auction space as the key battlefield in the next 12 months, as virtually every online art platform starts to offer an online auction service.

    • Among the online art platforms surveyed, 71% said they expected more consolidation to happen. 48% of companies surveyed felt that ‘horizontal mergers’ (companies operating in the same space such as Paddle8 and Auctionata) will be the most common, while 53% believe ‘vertical mergers’ are more likely, i.e. companies operating in different parts of the value chain.

    • Buying art and collectibles online sight-unseen presents several challenges for the buyer. Many worry that the artwork will look different than it appeared in the digital image, or that the condition of the work might be different from what was stated or anticipated. This hurdle has remained the biggest challenge among hesitant art buyers in the last three years, cited by 80% and 77% respectively.

    • 79% of survey respondents said they wanted more background information about the artist and the object, up from 76% in 2016.

    • 52% of online art buyers state that content is important to their platform choice (up from 42% in 2016). This suggests that buyers are looking for more than just buying artwork. In fact, they are attributing significant value to the educational experience.

    • Although the art market is still notoriously opaque when it comes to revealing prices, 88% of online art buyers find price transparency (that is, the clear labelling of prices and the possibility to check past and comparable prices) an essential ingredient when buying art online. 67% of hesitant art buyers said they would like access to an independent valuation report (up from 51% in 2015, and down from 68% in 2016).

    • 73% said they would like to have the opportunity to talk to an expert before making a decision to buy art online (up from 69% in 2016).

    • 65% of hesitant art buyers surveyed said that customer reviews and feedback from previous clients would be an important ingredient in the art buying process (up from 64% in 2016). Although customer reviews are not common in the art world, the growing use of social media suggests that client feedback (such as likes and followers) as well as comments and reviews could play an increasingly important role in driving the emotional consideration for proceeding with the online art buying process.

    • The large majority (80%) of hesitant online art buyers said that the terms of the return guarantee were important in their decision to buy art online sight-unseen. In fact, 71% said that having the option to insure the artwork at time of purchase would make them feel more confident buying online and 64% said that more information and choice about the shipping options would help in the acquisition process.

    • Instagram has emerged as the most important social media channel in the art world, with 57% of art buyers surveyed saying this is the most frequent social media platform used (up from 48% in 2016 and 34% in 2015). In contrast, 49% said that Facebook was their preferred social media platform, down from 54% in 2016.

    • 91% of the galleries surveyed said they actively use social media to promote their gallery and their art/artists. Whilst Facebook and Twitter were the two dominant channels in 2016, Instagram is now clearly the social media channel of choice, with 57% of galleries saying they are finding Instagram the most effective in terms of raising awareness, compared to 42% who say Facebook.

    • Sotheby’s has seen its Instagram following grow by 102% between March 2016 and March 2017, and currently has more than 430,000 followers. Christie’s has in excess of 267,000 followers (up 78% from March 2016) and Phillips has over 98,000 followers (up 83% over the same period). The use of Instagram among auction house experts is proving to be an effective communications tool, and potentially influences decisions among new and existing buyers.

    Online art sales trends

  • Online art market sales up despite slowing global art market

    Online art market sales reached an estimated $3.75 billion in 2016, up 15% from 2015. This gives the online art market an 8.4% share of the overall art market, up from 7.4% in 2015.

  • Bricks-and-clicks are gaining ground

    Whilst the traditional auction houses were slow in adapting to the opportunities of the online art market, 2016 marked a significant shift in their online sales strategy, with Sotheby’s, Christie’s and Heritage Auctions generating combined online sales of $720 million in 2016 – accounting for 19% of the online art market. Online-only auctions saw a particularly strong increase at Christie’s, with an 84% jump in sales. One of the biggest online players, Heritage Auctions, reported that 41% of its auction sales are now conducted online, with $348.5 million in online sales reported in 2016 (up 1.3% from 2015).

  • Hesitant art buyers remain unconvinced about buying art online

    The conversion of online art buyers remains static for the third consecutive year, signalling that the online art market could be struggling to convert sufficient numbers of hesitant art buyers. However, the good news is that existing online art buyers have been acquiring even more art in the last 12 months. The number of online art buyers that have bought more than a single artwork in the last 12 months has increased to 65% in 2017, up from 63% in 2016.

  • Obstacles to future growth

    Online art sales growth can only accelerate by increasing the conversion rate of hesitant, non-online buyers by actively addressing their key concerns. These concerns are currently focused around the lack of physical inspection and worries about the work’s condition, authenticity, and the seller’s reputation.

  • Third-party sales channels are gaining in popularity

    In 2013, 15% of galleries surveyed said they would generate online sales by partnering with an existing art e-commerce platform. In 2016, 26% of galleries surveyed said they planned to partner up with a third-party e-commerce platform in the near future, and this year 27% said this was their future e-commerce strategy. In 2017, 49% of galleries that sell art online say they are doing so through third-party online platforms.

  • Online art sales are dominated by pieces priced below $5,000

    Despite individual examples and anecdotal evidence that works are increasingly being bought online at higher price points, the future battleground for the online art market is likely to remain in the lower price range. According to the latest survey, 79% of online art buyers spend less than $5,000 per piece when buying art online, up from 78% in 2016 and 67% in 2015.

    Online art platform trends

  • Bricks-and-clicks account for four of the top ten companies listed in The Hiscox Online Art Sales Platform Ranking

    Christie’s came out on top ahead of Sotheby’s, Artsy, 1stdibs and Artnet. Four of the top 10 ranking online art platforms were traditional art businesses, which now have an online/digital platform for bidding on, and buying, art. This suggests that the offline art world is catching up with its online-only rivals.

  • The balance of power could be shifting back to the traditional art market

    The recent failure of the high-profile online auction house Auctionata (announced in January 2017), questions the ability of new online-only players to grow fast enough and become profitable in an increasingly congested market place. On the other hand, the growth in online-only auction sales from traditional auction houses, such as Christie’s, shows sales growth of 84% in 2016, which suggests that the power balance might be shifting back to the incumbent art market players.

  • Business models are converging towards a one-stop shop

    Increasing competition is already forcing online art platforms to embrace new strategies to expand their business and diversify their income streams. Among the auction aggregators, Invaluable has ventured into the gallery and dealer space by allowing visitors to buy directly from galleries through fixed-price offers. Artsy, a platform predominantly targeting galleries, has held several online auctions in partnership with Phillips and Heritage during the last 12 months. These trends suggest we could see more consolidation in the industry over the coming years.

  • Online auctions will become a key battlefield in 2017

    It is evident from the survey that most online art platforms see the auction space as the key battlefield in the next 12 months, as virtually every online art platform starts to offer an online auction service.

  • The majority of online art platforms expect to see more industry consolidation

    Among the online art platforms surveyed, 71% said they expected more consolidation to happen. 48% of companies surveyed felt that ‘horizontal mergers’ (companies operating in the same space such as Paddle8 and Auctionata) will be the most common, while 53% believe ‘vertical mergers’ are more likely, i.e. companies operating in different parts of the value chain.

    Addressing the concerns of the hesitant art buyer

  • Lack of physical inspection remains the key challenge for hesitant art buyers

    Buying art and collectibles online sight-unseen presents several challenges for the buyer. Many worry that the artwork will look different than it appeared in the digital image, or that the condition of the work might be different from what was stated or anticipated. This hurdle has remained the biggest challenge among hesitant art buyers in the last three years, cited by 80% and 77% respectively.

  • More information needed

    79% of survey respondents said they wanted more background information about the artist and the object, up from 76% in 2016.

  • Buyer education is key

    52% of online art buyers state that content is important to their platform choice (up from 42% in 2016). This suggests that buyers are looking for more than just buying artwork. In fact, they are attributing significant value to the educational experience.

  • Price transparency will become the norm rather than the exception

    Although the art market is still notoriously opaque when it comes to revealing prices, 88% of online art buyers find price transparency (that is, the clear labelling of prices and the possibility to check past and comparable prices) an essential ingredient when buying art online. 67% of hesitant art buyers said they would like access to an independent valuation report (up from 51% in 2015, and down from 68% in 2016).

  • Human interaction is still very important

    73% said they would like to have the opportunity to talk to an expert before making a decision to buy art online (up from 69% in 2016).

  • Customer reviews and feedback

    65% of hesitant art buyers surveyed said that customer reviews and feedback from previous clients would be an important ingredient in the art buying process (up from 64% in 2016). Although customer reviews are not common in the art world, the growing use of social media suggests that client feedback (such as likes and followers) as well as comments and reviews could play an increasingly important role in driving the emotional consideration for proceeding with the online art buying process.

  • Return guarantees

    The large majority (80%) of hesitant online art buyers said that the terms of the return guarantee were important in their decision to buy art online sight-unseen. In fact, 71% said that having the option to insure the artwork at time of purchase would make them feel more confident buying online and 64% said that more information and choice about the shipping options would help in the acquisition process.

    Social media

  • Instagram overtakes Facebook as the preferred social media channel for the art world

    Instagram has emerged as the most important social media channel in the art world, with 57% of art buyers surveyed saying this is the most frequent social media platform used (up from 48% in 2016 and 34% in 2015). In contrast, 49% said that Facebook was their preferred social media platform, down from 54% in 2016.

  • Social media is becoming an increasingly important tool for galleries and dealers

    91% of the galleries surveyed said they actively use social media to promote their gallery and their art/artists. Whilst Facebook and Twitter were the two dominant channels in 2016, Instagram is now clearly the social media channel of choice, with 57% of galleries saying they are finding Instagram the most effective in terms of raising awareness, compared to 42% who say Facebook.

  • Auction houses embrace social media

    Sotheby’s has seen its Instagram following grow by 102% between March 2016 and March 2017, and currently has more than 430,000 followers. Christie’s has in excess of 267,000 followers (up 78% from March 2016) and Phillips has over 98,000 followers (up 83% over the same period). The use of Instagram among auction house experts is proving to be an effective communications tool, and potentially influences decisions among new and existing buyers.

The Hiscox Online Art Trade Report 2017

Hiscox’s Robert Read and ArtTactic’s Anders Petterson discuss this year’s findings, and share their predictions for the next 12 months.

Key moments in the last 12 months

Key:

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

Scroll

Drag

May 2016

Auctionata and Paddle8 merged, bringing together 800,000 registered users and $150 million in joint annual sales, aiming to grow the global mid-market for art, collectibles and vintage luxury items.

May 2016

Barnebys launched in Hong Kong to gain entry to the Chinese art market, where there is a potential 20 million Chinese buyers and 25 million Chinese sellers.

May 2016

Artprice developed its own Art Market Blockchain with the goal of lowering transaction costs and replacing catalogue raisonnés. Through its data, Artprice’s Blockchain can trace artworks, particularly those that have been lost or stolen.

June 2016

The ArtAttack app provides a social network which allows users to view, buy and sell artwork. The app focuses on emerging artists to provide young artists with a platform to sell their works.

June 2016

Rise Art bought the Irish curated sales platform Artfetch for an undisclosed sum. Artfetch brings Rise Art over 70 international artists to add to their selection.

June 2016

Artsy has partnered with auction houses Phillips and Koller to provide live bidding services. This was the first time Artsy users were able to bid in live auctions, and provides access to auctions for Artsy’s community of global collectors.

June 2016

Lauritz.com launched its listing and public offering of shares on Nasdaq First North (LAUR).

July 2016

Wydr launched an online platform designed for mobile devices that gives users suggestions on artwork, based on accumulated likes/dislikes. The app targets first-time buyers at the lower-end of the market, and provides emerging artists with new buyers.

July 2016

ArtList, a platform for online secondary market sales, which allowed vendors to sell their artworks anonymously, ceased operations due to a lack of sales.

August 2016

The Magnus app was removed from the Apple Store due to complaints regarding copyright.

September 2016

The Other Art Fair was acquired by Demand Media, owner of Saatchi Art, to offer buyers the chance to buy art both online and offline. Both the fair and the online gallery provide buyers with a chance to discover emerging artists, unifying two important sectors of the art market.

September 2016

Online auction marketplace Invaluable appointed Bill Ruprecht as its Chairman of Advisory Board, who will be joined by Contemporary dealer Paul Kasmin in early 2017.

October 2016

Sotheby’s acquired Mei Moses Art Indices, the auctions sales database with 45,000 repeat sales, providing an index of art prices over time. Sotheby’s intends to use the database to provide their clients with information personalised to their collections.

October 2016

American art and antiques collector Stephen Smith invested $1.5 million in the auction and e-commerce platform Bidsquare for website development and to increase their international presence in the art world.

October 2016

The launch of the TEFAF Digital Excellence Programme powered by Invaluable is targeted at helping dealers to grow their businesses using digital tools. The programme aims to provide a cost effective way for dealers to be able to grow their online presence and reach new buyers whilst emphasising the high quality of their works.

October 2016

Twyla raised $14 million in new funding led by GV, to bring total funding raised to $19 million. The company creates exclusive prints by collaborating with contemporary artists, which it then sells online in limited editions priced between $1,000 and $5,000.

November 2016

Online auction database and auctioneer Artnet acquired Tutela Capital. Dr. Fabian Bocart, cofounder of Tutela Capital, will head Artnet Analytics and hopes to provide accessible information to would-be buyers.

December 2016

Auction Mobility, the mobile and online auction software, announced the acquisition of Lofty.com, the online marketplace for fine and decorative art.

December 2016

MutualArt.com and The Artist Pension Trust merged to form the MutualArt Group which facilitates art sales by combining MutualArt.com’s website and 500,000 members with The Artist Pension Trust’s collection of 13,000 artworks by over 2,000 different artists.

December 2016

Artfinder, an online art marketplace, secured $2.2 million of funding to improve its visual search technology and for US expansion. The investors include Oxford Capital, Wellington Partners, Cambridge Angels and entrepreneur William Tunstall-Pedoe.

December 2016

Venture capital company NextStage AM invested €2 million into French auction house Hôtel Drouot to launch Drouot Digital, an online platform to sell art live. The move also brings Expertissim, also funded by NextStage AM, into the partnership, and will combine Drouot Live’s 120,000 members with Expertissim’s 80,000 members and network of experts.

January 2017

Artnet acquired the intellectual property of online secondary market sales company ArtList, along with two out of three of the founders. ArtList ran from January 2015 to July 2016, and will now help Artnet expand its private sales online.

February 2017

Frédéric Jousset, the cofounder of Webhelp and owner of Beaux Arts magazine, purchased 30% of Artsper for €2 million. The investment will be used by the online gallery for international development and to double its staff.

March 2017

Auctionata announced it will cease operations. Paddle8 and ValueMyStuff have been spun out, and will now operate as independent companies.