Hiscox Online Art Trade Report 2020

Image credit
Flora Yukhnovich,
Lick into Shape, 2021
Oil on linenCourtesy the artist and Victoria Miro

Hiscox Online Art Trade Report 2020

Foreword

The online art market has well and truly found its feet and business is prospering. But look beneath this rosy picture and it is clear that the online market needs to be friendlier to use. It must improve its customer journey and service if it is to cement its share of the business as the art market physically re-opens. So, time is of the essence. The online art trade needs to deliver more price transparency, better information on condition and authenticity, help with shipping, framing and insurance if its recent success is to prove more permanent.

It's not long since Beeple sold a digital artwork for $69 million. Call me a dinosaur, but that is enough to buy a good Picasso, which is what I would go for any day of the week. Digital art's affair with non-fungible tokens is sucking in new money and in the very near future looks likely to replace contemporary art as the dominant sector in the art market.

That potentially turns the online art market on its head, with existing platforms that are selling physical art online scrabbling to meet this new demand. Otherwise, in the immortal words of the late, great Sean Connery, they risk "bringing a knife to a gunfight".

Robert Read
Head of Fine Art and Private Clients
Hiscox

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Key Findings

Part One

Online art and collectible sales stalled in 2019, with growth in this market having steadily declined in recent years. Against a backdrop of a slowing global art economy, the outlook for digital sales at the beginning of 2020 was modest, at best.

Fine art accounts for 32% of online sales, significantly ahead of watches and jewelry (23%), decorative arts (12%) and furniture (8%). ‘Other collectables’ such as stamps and memorabilia now account for a quarter (25%) of all sales. As traditional auction houses look to attract younger collectors, we expect to see a greater focus on this segment moving forwards.

For most traditional art world operators, the pandemic has exposed an over-dependence on traditional channels (physical art fairs, gallery exhibitions, auctions etc.) An online presence is more likely now than ever before to keep the art world afloat.

Halfway through 2020 the impact of Covid-19 appears to have accelerated online sales, with online-only auction sales by Christie’s, Sotheby’s and Phillips 436% higher than the same period last year.

At this stage, nothing is certain. When questioned about the longevity of these changes, 65% of online sales platforms said they expected the pandemic to have a permanent and transformative impact on the sector.

A large majority (67%) of platforms believe the online art market will be dominated be a few global players within the next five years. The ten biggest platforms surveyed globally already account for approximately 68% of the total market.

Some 63% expect existing art market operators such as galleries to emerge as the big online players, while 48% expect an outsider (such as a start-up or tech giant) to disrupt the market.

Part Two

Increases in online browsing activity, spend, auction sales and prices all witnessed between March – September 2020.

82% of new art collectors (those collecting for fewer than three years) bought works online between March and September 2020, up from 36% in 2019. Some 69% of millennial art enthusiasts said they’d bought art online during the same period (vs. 40% in 2019).

Support for struggling artists emerged as an important motivation for spending between March and September 2020 (according to 68%) – second only to passion for art (95%). A quarter 25% said they had purchased art directly through fundraising campaigns’ Instagram pages, such as the Artist Support Pledge; rising to 36% for younger collectors.

Nearly half (47%) of new art buyers said they ‘never’ or ‘rarely’ felt any loyalty towards the online platforms they transacted with, up from 40% in 2019.

Cited by 68% as the preferred platform for art-related purposes, support for Instagram has increased consecutively since 2015 when it was just 34%. Key art market players such as Christie’s and Sotheby’s are already using the ‘swipe-up’ function on their Instagram Stories, linking potential buyers directly to the art works or collectibles that they prefer.

Part Three

2020 saw a dramatic shift towards online art buying as a result of the Covid-19 pandemic. Christie’s, Sotheby’s and Phillips online-only auction sales broke $1 billion in 2020, up 524% from 2019, while more than three quarters (82%) of new art collectors we surveyed bought works online last year vs. just 36% in 2019.

The recent growth of non-fungible token (NFT) platforms help digital artists sell their work. Mike Winkelmann, known as Beeple, made history in March when his NFT titled “Everydays: The First 5000 Days” sold for over $69 million at auction.

Art lovers have more concerns about buying online than they do buying from a gallery. We explore the issues experienced by online art buyers in five key stages:

  1. Trust in the seller
  2. The artwork
  3. Valuation and pricing
  4. Transaction
  5. Fulfilment

The online art market has a golden opportunity to create lasting growth if it can get the customer journey right. It has made great strides in 2020, but we expect more online art sellers to raise their game to meet buyers’ expectations in 2021.