It appears that the next wave of Internet speculation has found its target. It’s been dubbed Art 2.0 and it’s generating buzz everywhere from Silicon Valley to Soho galleries to art-buying sites like Art.sy, Paddle8 and ArtSpace. These sites promise to revolutionize the way art is discovered, viewed, and—most importantly—sold.
Last November, the who’s who of the art world—including most top dealers, galleries, and collectors—gathered at Art Basel Miami Beach, and “by week’s end,” reports Departures magazine, “it seemed that coders and engineers would soon be the people to know.”
Indeed, many of the art sites now drawing the most attention boast founders more familiar with Search Engine Optimizations than Picasso. Art.sy, for instance, was started by a computer science major at Princeton University and is now backed by a roster of tech-savvy investors like Google Chief Executive Eric Schmidt and Twitter Chairman and Co-founder Jack Dorsey.
So it reads like the beginning of a now-familiar story; we may as well just sit back and watch as the Internet goads yet another industry into hastily rewriting its business model. Right?
Well, not so fast. There may be more to this story than meets the eye. Thanks to a few quirks of the market, the art world could be an exception to the adapt-or-die rule.
Unlike Amazon, for example, these sites are not in direct competition with their bricks-and-mortar counterparts. On the contrary, they rely on them to survive. This is because, for the most part, the galleries own the inventory and the sites are simply acting as middlemen. Whether the sites like it or not, larger, big-name galleries seem to view them as a marketing tool rather than a selling tool.
“I think these sites are beneficial to our business in terms of connecting with buyers,” says Martha Campbell of New York’s Spanierman Gallery. But will a collector spend a few hundred thousand dollars online? No. “People won’t spend that kind of money sight unseen,” Campbell says.
Another hitch: The art world is notoriously insular and relationships are commodities just as valuable as the art itself. Serious collectors buy from people they know and trust.
Attempts to recreate such relationships online have included everything from editorial commentary written by art-world insiders (Paddle8) to an algorithm that generates personalized art recommendations (Art.sy).
But these tactics are more likely to work on the lower-end of the art market, where buyers are young and curious. These tactics are less likely to attract collectors who have established relationships and know what they want.
“What these sites do well is connect the aspiring middle-class art enthusiast with a potential seller,” says Sergey Skaterschikov, founder of art consultancy Skate’s Art Market Research.
One such seller, Allegra LaViola, owns a small gallery in downtown New York City and began selling her clients’ work about a year ago on the website 1stdibs, calling it “an effortless way to secure sales.” Most recently, she sold a painting by artist Sarah Kurz just twelve hours after posting it online. However, she admits that online sales still represent just a small fraction of her overall business.
Plus, the pieces LaViola sells online typically range in price from $400 to $5,000, mirroring a larger trend: Much of what is sold online is at the cheaperend of the market—usually less than $10,000.
Michael O’Neal, who oversees Christie’s digital strategy effort, says success in the art business is not so much dictated by the medium (online or brick and mortar) but by who can source the best items. “Clients will turn to whoever is able to sell great property,” he explains. Auction houses like Christie’s and Sotheby’s that have been selling art for two hundred years, are formidable at securing and selling the sort of unique inventory seasoned art buyers desire.
Last year, Internet art sales generated a total of $6.5 million, according to the latest figures from pricing service ArtPrice. Compare that to the $6 million a single piece of art often fetches at a Christie’s or Sotheby’s auction, urges Skaterschikov.
Not surprisingly, Skaterschikov says that e-commerce sites are simply “not a concern” for the large auction houses. “We are talking about two different businesses.”
While Art 2.0 has yet to prove its business model, it is one online bidding war from doing something that Christie’s and Sotheby’s often struggle to achieve—injecting excitement into high-end art among a new, younger set of collectors. But if the Internet has taught us anything, it’s that buzz does not necessarily lead to business.