‘The future of the online art market is guaranteed, although the shape remains a mystery’, says international specialist global fine art insurer, Hiscox, in its hotly anticipated Online Art Trade Report for 2018.
Produced in partnership with London-based art market research firm, ArtTactic, it is the sixth such annual report and offers some eye-opening insights into the online art trade in 2017/18.
According to the report, online art sales are up by a healthy 12% to an estimated US$4.22 billion (£3.10 billion) in 2017. However, this represents a slight decline in growth from the previous years with a 15% year-on-year growth rate recorded in 2016 and a 24% growth rate in 2015.
Hiscox also found that buyers are still reluctant to shop the online art market. While 49% of art buyers bought online in 2016, this dropped to 43% in 2017.
New online art buyers are said to be deterred by a lack of price transparency and secrecy. Existing collectors are no stranger to this but new buyers find it off-putting. Price transparency was said to be a key criterion for buying online for 90% of new buyers according to Hiscox’s survey for 2017.
Those who are prepared to shop online are growing in confidence. Active online art buyers are buying more frequently and at higher prices with the share of online buyers paying an average price of US$5,000 (£3,668) or more per artwork increasing to 25%. This is a jump from 21% in 2017.
Smartphones are becoming the preferred tool of the savvy online art buyer. The report recorded a rise in mobile usage of 20% in 2018 up from 4% in 2015. Meanwhile, Instagram has become the art world’s favourite social media platform. Hiscox’s survey reveals the app is the platform of choice for 63% of respondents.
The landscape of the online art market is transforming. Several new mergers and acquisitions were recorded in the industry over the last 12 months. This looks set to continue with 81% of online platforms questioned by Hiscox expecting a higher rate of consolidation in the coming years.
Machine learning and artificial intelligence are to play an integral role in the competition for new online art buyers. Over the past year, online auctioneer Artsy, marketplace Etsy and auctioneers Sotheby’s have all acquired teams and companies focussed on machine learning and artificial intelligence to better identify their customer base.
We may also see the rise of new payment technologies in the form of cryptocurrencies. Currently, only 7% of online platforms accept cryptocurrencies as payment but 60% believe they will be the way blockchain technology initially enters the online market.
The future of the online market is not without its pitfalls though. 41% of online art buyers are ‘concerned’ or ‘very concerned’ about cyber crime when purchasing art online. An alarming 54% of online platforms surveyed by Hiscox reported being targeted by attempted cyber attacks in the past 12 months alone.
The report seems to suggest that while the online art market is ripe with opportunities for vendors in the know, it also requires a heightened awareness of the potential risks and a successful marketing strategy to lure hesitant first time buyers.