2018 was not a game changing year for the online Art Market. According to Hiscox’s report, the online market remains overcrowded and the confidence level about the future of e-platforms dropped significantly this year. From Key numbers to buying patterns and cryptocurrency… we are pleased to give you a quick take on the freshly released Hiscox report.
A- Key numbers & trends
In 2018, the online Art Market grew by 9.8% to reach $4.64 billion, a figure which represents an important slowdown from the 12% growth experienced in the 2016 - 2017 period.
This deceleration can be explained by different factors: the global economic/political uncertainty, underinvestment in technology, difficulty in logistics and an overcrowded market. 77% of online platforms feel positive about the segment’s future. This highlights a strong decrease in confidence compared to the previous year. Although it is true that numerous galleries and dealers are hesitant to enter this segment, we believe that this number should be taken with a grain of salt. Building trust online is a critical point for online platforms and well-established standing names have definitely a key competitive advantage. For instance, blue chip galleries such Gagosian and David Zwirner adopted a more bullish approach to their online conquest e.g. by launching their own e-galleries. One main expectation for the industry’s future is that the bigger players are definitely going to absorb smaller ones e.g. Barnebys acquisition of CollectorsWeekly.com and valuemystuff.
B- Millennials & fractional ownership
The millennials remain the most important target market of e-commerce. According to Hiscox, the ‘Amazon Generation’ are definitely considering fractional ownership as a point of entry to start investing in art. 51% of art buyers under the age of 30 believe that co-ownership of art is a great way to start collecting. Millennials want to actively contribute to the art industry and sees it as a form of philanthropy. Many companies such as Maecena or Feral Horses are offering the possibility to co-invest in art pieces and are becoming more and more popular.
C- Cryptocurrency market and blockchain technology
Since December 2017, cryptocurrencies have experienced a lot of volatility-are they a right fit for the art world? Several new businesses such as ArtChain, Fresco, DADA Art or Codex are offering the opportunity to invest in artworks using art-related tokens or cryptomoney. This remains a market side that is not completely established and is still in development. It is true that the integration of blockchain technology in the market could be a game changer for the digitization of art by widening the industry to new networks of collectors. At Convelio we believe that blockchains will definitely bring more transparency to this opaque market. This technology could clearly revolutionize the Art World (provenance, pricing, authenticity…) however its integration remains limited. According to Hiscox, only 30% of the online platforms surveyed are considering to use blockchain.
D- The importance of social media
Instagram continues to be the Art World’s favoured social media platform with 65% of survey respondents choosing it as their preferred platform for art related communication. The increasing influence of social media in the Art World as a tool to influence buying patterns has proved to be extremely powerful. For instance, 67% of all respondents said that posts by artists and galleries impact their buying habits. But the real winners from this instagram revolution are the artists. For example JR, Kaws, and Banksy have managed to use their social media profile as an important way to communicate their art and reach millions of individuals (e.g. instagram in 2019 counts more than 1 billion users).
Another success story is the famous gallery Unit London, that in just a few years by leveraging channel such as Instagram, has managed to become increasingly popular and is in the process to become a blue-chip gallery. For reference the two co-founders started back in 2013. Their goal was to provide a unique and experimental platform for emerging talents to express themselves and to showcase their work across the globe. Using new technologies and an avant-gard approach to communication, they managed to grow from a pop-up gallery in Chiswick to a 6000 sq ft space in the heart of Mayfair in just a few years. Today they represent around 30 artists with numerous collectors from everywhere in the world. They organise many openings and talks-we strongly advise you to check them out if you happen to be in London!
The use of social media in numbers
1- Discover artists: 80% of art buyers
2- Follow artists: 79% of art buyers
3- Buying: 75% of art buyers use instagram to find art to purchase
E- The question of logistics
Logistics remains a key hurdle to future growth. Half of the platforms surveyed stated that delivery and customer fulfilment are obstacles in furthering the expansion of the online Art Market. In our opinion, the necessity to build a comprehensive user experience is a priority. For decades, the question of logistics has been holding back e-commerces because of the numerous inefficiencies ingrained in the process. At Convelio, we know that vendors are searching for solutions to smooth out their clients’ buying experience and make it as easy as possible to ‘click & buy’. We believe that the logistics industry needs to adapt to this proliferation of online marketplaces and find new ways to respond to the digital challenge. Hence, it is with a lot of pride that, we decided to respond to this demand by creating our own logistics Application Programming Interface (API) plugin to get instant quotes directly on any website digital system.
The survey findings are based on responses from 706 art buyers surveyed through ArtTactic’s contact mailing list. For this report Hiscox also surveyed 128 galleries and dealers representing a wider range of art and collectibles.