The Birth of Art Tech: How a Centuries-Old Tradition Is Being Adapted for Today’s Always-Connected Consumer
Change is not a word usually associated with the art market. When we think of the Christie’s and Sotheby’s of the world, we are transported to the traditional auction house, frozen in time with wooden paddles, charismatic auctioneers and distinguished attendees bidding on the world’s finest art. But times have changed.
Today, as the rest of the world has grown dependent on digital tools to discover new products, so too have galleries and art buyers. In response, a new market has emerged, made up of companies that leverage technology to drive the purchase of art objects. You might call it “art tech.” This new market is fueled not only by changed consumer behavior, but also by significant funding from the world’s top investors.
As opposed to other industries, art has had a relatively slow journey to the digital era, but it has definitely arrived. Even in the case of high-ticket items, consumers today are willing to purchase art online more often than not. According to a 2013 Hiscox survey, 64 percent of collectors have previously purchased art through a website with little or no interaction with the seller. In addition, 26 percent of fine art collectors surveyed have spent nearly $80,000 (£50,000) or more on art purchased online, with 25 percent of these collectors willing to spend more than $80,000 on a single artwork purchased online in the future.
Similarly, marketing and buying art based on a digital image has become the norm, not the exception. According to the same Hiscox study, 59 percent of galleries plan to implement an e-commerce strategy in the next 12 months, with 89 percent already regularly selling art to clients on the basis of a digital image only.
Meanwhile, investment in art-buying solutions online has grown in recent years, with millions of dollars coming from high-profile investors. Notable individuals like Jack Dorsey and Peter Thiel have both invested in Artsy, for example. Artspace reportedly raised $8.5 million from investors like Canaan Partners, and Paddle8 secured $4 million in funding in a round led by Founder Collective’s David Frankel. Similarly, Artfinder has received support from angel investor and LinkedIn co-founder Reid Hoffman, along with two rounds of VC investments backed by Wellington, Northzone and Greylock. Our own company, Auctionata, recently raised $20.2 million in a second round of funding from a group of U.S., Russian and German VC firms. The momentum and opportunity in the space is constantly growing. But what is the result?
Approaches in the space range from online auction houses that strive to replicate the “real life” auction experience online to services that rely on databases and curated listings to connect consumers with art sellers. Bigger players are also trying their hand at art tech. Amazon, for example, released its Amazon Art marketplace, which launched this month with over 40,000 works including a $1.45 million Monet and Norman Rockwell’s Willie Gillis: Package From Home for $4.85 million.
During the Internet boom in 2000, Amazon backed out of a joint venture with Sotheby’s after the effort failed to prove successful. EBay and Yahoo had similar starts and stops around the same time. But today, companies built from the ground up as online art marketplaces are proving that they can hold their own among e-commerce giants.
Traditional auction houses, meanwhile, are also making efforts to adapt. Christie’s currently offers “online only” auctions, but the technology doesn’t hold up against some of the more nimble and innovative companies out there. Christie’s CEO Steven Murphy recently hinted that he is building an online platform for the auction house in an effort to “grab some of the business.” Sotheby’s also offers online options for art buyers, and with the recent news that it is selling its New York headquarters, the auction house may be placing less emphasis on the physical, in-person aspects of the auction experience and more on the virtual.
Translating the art buying experience to the Web is no easy task. Not surprisingly, one of the biggest concerns of art buyers is reputation and trust. Among collectors, 80 percent indicate that the issue of provenance and authenticity is the main barrier to buying art online. This is where traditional auction houses may have an advantage, as they can rely on their existing reputations to quell any fears from collectors. What these auction houses lack, however, is the ability to scale and create seamless, technology-driven experiences on the Web. That’s where companies built from the ground up with technology and a digitally connected, international community in mind can thrive.
With so many players of different shapes and sizes, those who can build the most sustainable and profitable model to deliver the most relevant and high quality art will win. As more and more resources are dedicated to this industry and companies continue to improve their technology and business models in this space, anyone who wants to compete should get in sooner rather than later. The market is ripe for further investment, disruption and growth, and the time is now.
Alexander Zacke has over 20 years of experience in the evolving art market, including stints in live auctions at eBay and in the Asian art department at Vienna’s Dorotheum.