The art market has long arrived on the Internet.

Whatever the business model its virtual counterpart already exists: galleries, auction houses, meeting points, archives, collections, magazines and trade fairs.

For several years the art market has changed, within and outside the digital world.

On the one hand there is a supposed democratisation of the visual and intellectual access to art.

On the other side, art is increasingly becoming a short-term investment, which is not different from other tools on the capital market.

For both, the Internet provides the appropriate instruments - and sometimes one and the same platform serves both purposes at the same time...

ONLINE ART MARKET CHECKLIST

  • ​It is difficult to draw a dividing line between the analogue and digital art market.
  • ​Even though the online art market shows enormous growth rates, most transactions seem to be of modest value.
  • Buying art over the Internet does not entail any greater risks than analog business.
  • Gifting and inheritance of art can be tax-exempt at 100% or at least 60% under certain conditions.
  • The information about our surfing behavior and our preferences means money for all the players on the net.
  • Specialized platforms work to expand our knowledge of art in all directions.
  • Algorithms speak with, mainly with purchase recommendations.

The way the collection is handled differs from each phase of the collector’s lifetime.

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THE NUMBER HAS STARTED

Artnet and art fair

In fact is the distribution and marketing of art is changing. This applies not only to the relationship between analogue and digital world, but also to the developments in the World Wide Web itself.

At first, the institutions and customs of the analogue art market were largely mirrored on the Internet, and the agents in both worlds were the same.

Now, however, new platforms, with their technical possibilities and a changed mentality, open up new viewer and buyer groups, the trade with art arrives on websites, which have been conceived in the origin for quite different purposes.

The first platforms of the digitized art world were still completely tailored to collectors and specialists. The sale was primarily information.

For a long time - in Internet years - before galleries had their own data and image-rich websites Artnet offered selected dealers the opportunity to present their program in the virtual space.

Founded as a database for auction prices in 1989 and online since 1996, Artnet is one of the oldest Internet-based platforms and has been active in the auction trade for several years beyond the core business: a research tool and price database.

This also applies to Artprice with its comparable services.

Established in 1987, Artprice is no longer only an overview of price developments on the auction market, but also acts as a trading platform on which commercial entities, as well as private providers, can set up works of art for auctioning.

WHO WILL BUY AT WHAT PRICE?

$ 1.5 bn 2013
$ 2.64 bn 2014
$ 3.27 bn 2015
$ 3.75 bn 2016

If any segment on the art market is booming, then it is the online trade.

According to the TEFAF Art Market Report, which is considered as an impartial serious barometer, the global art market recovered with a 1.7% increase to $45 billion - after a 7% a year before.

However Hiscox has revealed the lucrative nature of online trade with continued growth since their report started in 2013.​

The share of online trading is estimated to be $3.75 billion, an up 15% and a share of 8.4% of the total art market.

But how important is online trade for galleries? And where does he begin at all? Am I already in it, if a work is acquired due to a JPG?

In fact, the real-world sales channels continue to play an essential role in the classic gallery business. "No digital platform can replace the actual trade fair visit," said Marc Spiegler, Global Director at Art Basel.

"Most collectors want to see works personally and in real life before they decide, even if they know the artist and the gallery well. Personal contact with art must not be underestimated. Collectors are also coming to the fair to expand their existing contacts or create new ones."

This personal assessment is consistent with the data on the website Statista.com, which are based on the statements of dealers, even if such surveys are not always representative.

However, one can clearly see in published data that on the Internet trade is more too do with mass rather than class.

According to Hiscox's Online Art Trade Report for the year 2016, 79% of all online art purchases were in a price segment below $5,000 British pounds, with 35% less than £1,000.

This is consistent with the observations of the current TEFAF report. And it is the price framework in which, according to Hiscox report, first-time buyers are active. For them there is a rich offer on the net.

As a perfect entry platform, edition artworks, where digital art is sold via virtual channels, and authenticated, to download for the Internet-capable terminal.

There are some butterflies, dots or psychedelics by Damien Hirst already for super democratic €12. The so-called ready-to-hang art is also suitable for a first time collector.

And online galleries often curate works by young academy graduates with prints starting at €69 euros for editions of 150, but then unframed

It is more expensive in the online shop of Artstation.

Here one can buy photographs and print editions from well-known artists, but also at prestigious prices; a Takashi Murakami (in a 300 edition) will cost you €3,000; while the print of a black cat by Kevin Gray costs relatively moderate €600 euros.

FROM EBAY TO SOTHEBY'S: ONLINE AUCTIONS

In addition to Artprice and Artnet, which have added auction trade to the portfolio, more and more specialized online auctioneers have joined the digital art market in recent years.

Auctionata, "Founded in a hotel room in Berlin" 2012, offers not only art from all eras, but also most of the auction houses lots as well as various luxury items.

Net sales in the first half of 2015 reached € 35.7 million, an increase of 195% compared to the same period of the previous year.

According to the Annual Report 2014, Artnet auctions generated sales of €2.4 million, a growth of 13% compared to the previous year.

Nevertheless, the analogy is still being played in quite different categories: Christie's market sales for the same fiscal year total sales of £5.1 billion.

Thus, the art auction trade confirms the general finding that the Internet market is predominantly low-price art: Artnet auctions announced an average selling price of $9,578 per hammer for 2014.

The old-time auction giants are also involved in the online trade

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Auctionata’s first "contemporary art" auction in January 2016 closed with prices in the mostly lower four-digit range.

The digital auctioneer boasts as inventor of the Livestream auction, which may make it more attractive than other providers.

Of course, the old-time auction giants are also involved in the online trade.

Sotheby's has joined eBay in 2015: eBay is now also accessible to Livestream through conventional Sotheby's auctions and allows its own users virtual access to the hall.

But the digital and economic revolution has apparently stopped.

The first event of this kind, a photography auction on April 1, 2015, was called "sedate" by the New York Times, for which "contemplative" is still a delicate transmission.

Although, online auctions differ little from their analogous cousins, the risks are the same.

For buyers, they are likely to be of interest, at least as far as current conditions are concerned, especially with regard to their lower fees and surcharges.

ONLINE FAIR DATABASES

VIP Art Fair and art market

In January 2011 the first virtual art fair opened its doors, the VIP Art Fair, whose abbreviation was confusing and ironic for "Viewing in Private".

The participating galleries presented their works on the web and the communication ran in real time via the chat function of the site... If it ran.

In the first edition the online rush was so great that the server was overloaded within a few hours, which caused little enthusiasm for gallery owners and collectors.

A year later, there was the second edition of the website, including technical updates.

The list of participants was impressive - apparently, many traders were afraid to miss the digital revolution on the art market.

But this time there was the big disgruntling sound to be heard from participating galleries.

“The most dead trousers of all time" was the talk.

Thomas Schulte from Berlin was more diplomatic. He had "very little contact", however, a work that was purchased became a permanent with a collector's family, which also led to good sales.

Thus, the continuation and announced expansion of the fair, which according to the press should have raised attendance fees of up to $20,000, remained in numerous specialized individual exhibitions, for example, for contemporary art or paperwork.

The VIP Art Fair left without major obituaries.

The format was sold to Artspace in 2013, one of the many dealers on the net who try to underline their commercial orientation with additional information in the form of an art magazine.

The takeover of the VIP Art Fair would have been tempting for a company like Artspace if only because of the customer database.

For specialized providers, the access to correspondence with specialized, potential customers is of vital economic interest.

When the more ambitious start-up Artsy was launched with the beta version before the official launch in October 2012, people interested in access were asked about artistic preferences and financial capacities.

There was a waiting list. However, access to Artsy was made immediately if you got five friends to enroll.

Then there is the business model of the notorious Larry's List, created 2012 by the self-proclaimed art market expert Magnus Resch, which consists in bundling and selling collector's information in the style of "Who buys what?”

The art market, especially on the Internet, does not just live by the art sales alone.

Your data, your links, your clicks, your interests and your consumption behavior are probably the most valuable asset a website has in its portfolio.

Start-ups, who want to collect capital and / or to sell themselves at a later date with great profit, need recurring paying users and traffic.

ARTSY: THE JACK OF ALL TRADES

Artsy is something like the art all-rounder in the World Wide Web, a skillful cocktail of digital dinosaurs and new, "thoughtful" systems.

These include investors such as Eric Schmidt, Wendi Murdoch, major collector Dasha Zhukova and PayPal co-founder Peter Thiel.

The core business is reminiscent of the galleries network at the online veteran Artnet: galleries (currently around 900) can promote their program, their trade fair participation and exhibitions on Artsy for a monthly fee.

When it comes to the side of a business transaction, Artsy does not require a commission according to own data.

The business model can therefore only work if as many galleries as possible build their own internet presence as a member of Artsy.

Even if many galleries use platforms such as Artnet or Artsy, as a marketing tool to increase their own visibility, the third party site must be able to attract and convert art buyers from as many art-lovers as possible.

For this reason, Artsy offers, among other things, an auction calendar as well as auction results, an art magazine, numerous data on art and artists as well as the category museum exhibitions.

Thanks to this material filling and internal links, Artsy is sometimes like a streaming platform for music. And that is what they wanted:

if I like a song there, similar songs are suggested to me. Artsy is supposed to function similarly, making art similarly popular.

A special feature is the so-called "previews". Here invited guests can say hello to the analogous world 24 hours before the opening of a non-digital fair, and see what participating galleries at Artsy put on the web.

Perhaps the two worlds in which the digital world attracts attention for the analogous and vice versa are also supported in this case.

Marc Spiegler, Global Director, Art Basel, sees it this way:

"When I started at Art Basel in 2007, the online area was seen as a threat and competition to what we offer as a marketplace.

It was feared that collectors would not be able to know which works would bring galleries to the show and that there would be less incentive to go to the show.

Now we see the whole thing differently. Today, we use our own online presence to communicate in advance about artists and works.

Art Basel was also the first art fair on Facebook and Twitter that had an app, and we also use these platforms to share this information with our guests in advance."

NEW PLAYER: FROM THE MARKET RANK TO THE INVESTOR

If you are afraid of your judgment or a gallery of trust, you may be looking at ranking platforms. Again, information has its price.

Sites such as Artfacts.net offer paid memberships, which offer different amounts of data depending on the amount of contributions.

Most of these rankings are based on the so-called attention economy, in addition to the factor price, so they include exhibitions, entries in art magazines and similar factors.

However, the ArtRank web site, which was launched in February 2014, is based on an algorithm developed at the origin of an art fund.

ArtRank creates ranking lists of so-called emerging artists on the basis of its own evaluation criteria and sorts them according to purchase or sales recommendations - right up to the target "liquidate".

These categories are released in various timed stages, paying subscribers have a week access to data, after which the information is freely accessible on the Internet.

The topic of art foundations is always polarizing, whether it is a collector, an artist or an inheritance.

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It is to be expected that such a purely economically motivated view of art does not meet with just any interest. The online magazine Artinfo24 calls ArtRank the "best-known website in the art scene".

In fact, some artists, who found ArtRank abhorrent, experienced dramatic price declines on the secondary market.

But the fact that algorithmic recommendations are reflected in the market reality may simply lie in the principle of the self-fulfilling prophecy…

…If enough speculators follow a buy or sell recommendation, this will inevitably affect the rise and fall of the price of an artist.

And that a work which is rather poorly formulated, which is treated as pure speculative commodity, will be subject to dramatic price fluctuations, one can calculate oneself.

So here, too, the assumption suggests that the makers of ArtRank in fact speculate that their tool including user data will eventually be integrated against corresponding capital into a larger art platform.

BUY BUTTONS! INSTAGRAM AND PINTEREST

social media and art market

On image focused social platforms, such Instagram as and Pinterest, it is self-regulating what Artsy tries to control: a broad set of data, images and information that when positively formulated, creates artificial intelligence.

Here, every user can find and share images, but also simply view them and put them into their own files.

Of course, artists and collectors also use the completely hierarchical platforms to spread their products or acquisitions.

Especially among the so-called art flippers, who want to make their art sell quickly again for short term profits, the networks are very popular.

People often have their pictures on Instagram, hashtagging them, communicating them to their friends, and try to sell them to their other buddies.

In any case, the power of social media is enormous to consumers. According to the Hiscox Online Trade Report 2016, 42% of the purchase decisions are already influenced by social media on the art market.

It was only a matter of time before passive consumption became more active.

Pinterest introduced the "Buy Button" in the summer of 2015 in the US. It is only a question of time that art purchases will become a habit here.

On Instagram, the second largest image sharing platform, the purchase option is already a reality. In the field of art, Ashley Longshore is the figurehead.

The very colorful pictures of prolific, and often affluent, women are discussed in magazines in which VIP and other cultures have long since fused.

If you think of the online edition of the Vogue from May 2014, for example, Longshore sells its screens at prices by $30,000, over the Internet.

At the latest, however, the blurring of the figures and concepts reveals itself, since no one is "the art market," analogous or digital. So where is the border? Can it be defined.

The current TEFAF report considers platforms such as Amazon, Ebay or Etsy, but how do you summarize the sales of an Ashley Longshore?

Diving in the data of the online market artists it’s hard to find explanations for individual artists since their works would not appear in statistics, as they are based on the sales of international galleries.

Undoubtedly, social media artists offer the entirely democratic access to a wide audience or even a collection - and vice versa.

According to the Hiscox report, 45% of the interviewees said they felt the online purchase was less intimidating than visiting a gallery or an auction house.

But whether this is a development in which gallerists, critics, and guide collectors are completely obsolete is hard to imagine.

The fact that the Internet is changing, shortening and / or accelerating the communication channels is beyond question.

And also the fact that, even more art on these channels will change the art collecting process beyond all social or artistic conventions.

It is likely that the existing institutions in the art business will continue to extend their analogous life even further into the net than has so far been the case.

Ultimately, we all determine this with our click and visitor behavior.

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