Digital solutions provide relief to an art market in flux, allowing sellers to migrate from galleries and auction rooms to online spaces.
When the pandemic hit in early 2020, businesses – and entire sectors – across the world were forced to shut – others, to pivot (or plunder).
For some, pivoting meant adopting business continuity plans to keep manufacturers in factories, medical researchers in labs, restaurants and cafes running – and for the art world it meant moving more sales online.
While 2020 yielded a downturn in the fine market overall as in-person sales became impossible, auction houses and art sellers everywhere increasingly took advantage of the digital space, investing in platforms like Invaluable to market their goods to the right audiences.
A downturn in the fine art market, with a silver lining
According to the recently released, industry-leading Art Basel and UBS Fine Art Market Report, the fall in value of the international fine art market equated to a 22% loss, or $50.1 billion. That’s the biggest hit the market has taken since the 2009 recession.
But it’s not all bad news. While the pandemic accelerated a downturn in the art market, it also accelerated an important trend – the digitization of art sellers and auction houses. Moving to the digital space has helped these players stay afloat, allowing them to cut costs and still reach buyers in their masses.
In fact, online art sales doubled to reach a record $12.4 billion in 2020, according to The Financial Times. That $12.4 billion amounts to 25% of all art sales, and is up 9% from the year prior.
“[This growth] marked the first time that the art market, previously reluctant to venture online, exceeded the general retail industry, where ecommerce accounted for 18 per cent globally last year.” – Melanie Gerlis, The Financial Times, March 2021
In March of 2020, when several countries were undergoing COVID-19 lockdowns, Sotheby’s held 14 online auctions, selling wine, 20th-century Middle Eastern Art, African art, and more – and those sales totalled $24 million. To put that into perspective, that’s more than a quarter of profits from Sotheby’s online sales in 2019, achieved in just one month in 2020. This led the global auction house to increase its online sales over the following months.
Similarly, Christie’s claims 64% of its clientele are online buyers. Christie’s EMEA President, Dirk Boll, shared in an early 2020 company announcement that the house increased its 9 planned online sales in April and May 2020 to a total of 40, planning to sell handbags, jewelry, watches, photography, and more.
Overall, according to the 2021 USB Fine Art Market Report, the US remains the dominant player in terms of art market share, but China moved into first place over the US in overall share of the public auction market.
Embracing a digital landscape (and pivoting as we go)
Despite an overall downturn (the fine art market is far from where it was at its peak in 2014), the acceleration of digitization across the art industry is both promising and exciting. There’s still a huge appetite for buying art, regardless of the pandemic. And new buyers are entering the space every day.
“Around 25 percent of buyers in recent sales have been new to the company and, in some sales, this figure has been as high as 50 per cent,” Edward Gibbs, chairman, Sotheby’s India, told Business Standard in April 2020.
Indeed, ecommerce platforms like Invaluable allow auction houses and galleries to reach new masses of buyers – especially the more connected younger audiences, like Millennials. According to the USB Report, Millennials were the highest spenders in 2020 (30% of buyers in this group spent over $1 million, as compared to 17% of Baby Boomers).
And while several art fairs last year were cancelled (many with no online alternatives), those that did move ahead with online viewing rooms (or OVRs), or alternative digital versions, helped to fuel the rise in online sales in 2020. These OVRs averaged 100,000 viewers each.
“A survey of 2,569 high net worth collectors found that nearly half (45 per cent) had bought via an art fair OVR and just over a third (34 per cent) had bought directly over Instagram in 2020.“ – Melanie Gerlis, The Financial Times, March 2021
In addition, innovative digital platforms and tools are continuing to solve complex seller-buyer problems and disrupting the art market – making it more difficult to identify sale sources. Collectors, for example, are trading privately with artists, or looking into new digital trading platforms.
One event that underscores this is the $69.3 million sale of a “blockchain-backed, non-fungible token by the digital artist Beeple”, says Gerlis.
In addition, new auction formats that were already gaining popularity are now accelerating. As of early 2020, Sonal Singh, the managing director of Christie’s India, explained that the auction house was already looking into what it calls “auctions-in-a-box.” That is, holding traditional brick-and-mortar auctions with artworks and an auctioneer, but without a seated audience. Viewers instead are tuned in digitally. (Christie’s total online sales reached $270 million in 2019).
With the understanding that private sales are also taking off, Christie’s enhanced its private sales site to offer viewing and purchasing options for art, jewelry, and watch collectors. Times may be changing, but one thing is certain in these times of uncertainty and complexity: The future is bright for those selling art online, and for those offering smart solutions to facilitate these sales.
Moving towards a market full of digital innovations
When we look at the numbers highlighted in the USB Report, we can’t ignore that the global pandemic, much like it did across many industries, took its damaging toll on the fine art market.
Sales fell across all regions, the auction market was down 30% (and the US lost its position to China as global leader in the public auction space). Many galleries made job cuts, and art fairs – 365 of which had been planned internationally, and 218 of which were cancelled – caused galleries’ art fair takings to dwindle from 45% of their profit in pre-pandemic times, to just 13%.
With all of this taken into account, we invite you to focus again on the bigger, brighter picture:
- the acceleration of digitization across art galleries, art fairs, and auction houses,
- the rise of new platforms (and the use of existing platforms not typically for art sales, like Instagram),
- new digital art movements and artists (alongside a rise in digital currency),
- the ability to reach more connected, younger collectors – and a heap of new collectors
This raft of trends, as evidenced by the state of the fine art market in 2020, will bring the sector’s key players closer together, pushing us beyond recovery, and perhaps sparking a new boom in art sales like we’ve never seen before.