Art Market

4 Key Challenges Preventing the Art Industry from Attracting New Buyers

Sep 23, 2019 5:40PM

The art industry is at a crossroads. Never before have more people been engaged with art. Yet over the past decade the market has largely stagnated and the number of artworks trading annually has decreased. Galleries and auction houses are looking for new ways to survive and thrive, with online sales receiving increased attention, given the significant opportunity to connect with and cultivate new collectors.

Who are these online art collectors and how can the industry better serve them? This report unpacks the similarities and differences between online collectors’ spending patterns, motivations, and challenges, and compares them to those of traditional art buyers. It confirms some perceptions about online buyers and shatters others. Better understanding and supporting these online art collectors at every step of their journey will benefit the online art market, improve the health of the art market overall, and provide more opportunities for artists.

To download a PDF of the complete report, click here.

Several key challenges about how collectors discover and purchase art emerged from the survey and subsequent interviews with respondents.

Making prices available

The lack of access to artworks’ prices was the most frequently mentioned roadblock for collectors when trying to buy art. More than any other factor, survey respondents cited the lack of publicly available pricing as holding them back from purchasing artworks. Public pricing was mentioned at 4 times the rate of other types of contextual information, such as biographical information about the artist or the story behind the artwork.

In interviews, collectors mentioned feeling discomfort at the prospect of asking for the price of a work that they could not afford—regardless of whether the interaction was in-person or online—and said they often opted not to ask at all, in order to avoid the potential embarrassment. Analysis of Artsy sales data backs this up: Artworks uploaded with their prices publicly available are between 2 and 6 times more likely to sell than similar works with their prices hidden.

“It’s unfortunate, because there’s this misconception that art is unavailable to everybody,” said one collector. “But if art was listed with the price, a lot of people would be surprised at how attainable it could be.”

Collectors with the highest average budgets and the most experience in the market were the most likely to mention the lack of available pricing as a pain point. This runs contrary to the notion common in the art industry that only newer entrants are put off by information asymmetries, like having to ask for a price. It also raises the financial stakes of the industry ignoring collectors’ calls to update this business practice.

Embracing collectors’ desire to resell works

Finding easier and more lucrative options to sell works from their collections is another challenge collectors reported facing in the current market. This challenge spans across budget brackets and the collectors’ experience levels. But reselling works purchased on the primary market remains taboo for collectors who want access to the most sought-after inventory. And secondary market liquidity is generally limited to a small subset of a few thousand artists.

Consistent with our finding that fewer collectors are motivated by art’s ability to appreciate in value than are motivated by its ability to hold value, collectors said demand for better reselling options is driven by the desire to feel more confident in purchasing art today. They said more leeway to sell later allows them to feel more secure in purchasing a more expensive work than they might otherwise, or to buy more individual works by more artists.

“We don’t collect to sell; we collect because we enjoy these things,” said one collector who reported spending between $10,000 and $24,999 on art annually. “We’ve never sold anything up until now, but especially for things that are a bit more expensive, feeling that if we need to, we would be able to sell it, that’s important.”

Making art more affordable

Among newer buyers, finding ways to afford the works they desire is a primary concern. These newer collectors were more than twice as likely to mention affordability and the possibility of financing a work than other buyers with similar budgets who are older and have been collecting for longer periods of time.

In interviews, established collectors demonstrated that they are generally aware of many galleries’ willingness to allow collectors to pay over time, with one collector who spends between $50,000 and $99,999 annually on art saying he will pay for more expensive works over 4–6 installments. Newer entrants to the market, however, have not frequently been aware of this possibility in Artsy’s research. This suggests that a more widespread adoption of user-friendly payment options could help unlock a greater share of these newer art buyers’ wallets and give dealers money to invest in their businesses now, rather than 6 or 12 months after what is typically already a lengthy sales cycle.

The strategy has proven fruitful both outside and inside the art industry. Payment-plan provider Affirm reports an average 87% increase in order values across the industries where the company’s solution—which allows buyers to pay over 3–36 months—has been implemented. Meanwhile, Art Money—a company that allows collectors to finance a work interest-free over 10 months—reports that its partner galleries have seen the average price of artworks purchased by collectors who use the service increase by 2.5 times, as well as a 200% increase in the conversion rate for artworks on which Art Money is offered as a payment option.

Helping collectors support regional hubs

Several of the challenges most frequently cited by collectors as preventing them from buying more art relate to finding new art and artists outside of the mainstream Western canon. Buyers newer to the market, in particular, frequently mentioned an interest in discovering artists from specific regions—particularly those far from where they live—and in diving into niches within the wider field of emerging artists.

This tendency echoes younger buyers’ propensity to be more interested in art that can express something unique about their personal identity—especially when compared with older generations, who tend to be drawn more to trends and blue-chip artists (budget may also play a role here). This represents an opportunity for the art industry to more evenly distribute sales across galleries and artists, and to foster healthier art ecosystems globally.

Industry insiders have expressed concern about the concentration of demand for a handful of artists represented by a handful of major galleries. Art fairs have been cited as a key driver of this tendency given their incentive to attract the most prestigious galleries and collectors, sometimes in lieu of dealers within their region. Improved matching of the broad demand of these new buyers in the online ecosystem can help counterbalance these effects and support more galleries and artists.

Click here to read the rest of the report and for notes on the demographics and methodology of Artsy’s survey of online art collectors.