Online sales of art and collectibles rose by 12% to $4.22 billion in 2017 but the pace of growth slowed and the share of collectors buying online fell, according to the annual Online Art Trade Report, released Tuesday by the Hamilton, Bermuda-based insurance company Hiscox Ltd.

The 12% growth pace was a slowdown from the 15% rise in 2016 and the 24% increase in 2015. The report is based on data provided by the art market analysis firm ArtTactic.

The total figure differs somewhat from The Art Market | 2018, the report written by Clare McAndrew and released this past March by UBS and Art Basel. That report estimated that $5.4 billion in art and antiques were sold online in 2017, a rise of 10% from 2016.

Robert Read, head of art and private clients at Hiscox, said that deceleration in growth made sense as the online art market transitions from an emerging market to a more established one.

“The slowing growth in the online art market comes as no surprise,” he said in a statement. “It has now reached a level of maturity where the business is broadly sustainable. The next phase will involve further consolidation as well as resolving the principal stumbling block of price transparency, which is essential to attract new buyers.”

The Hiscox report relied on responses from 831 art buyers who signed up for the ArtTactic mailing list, as well as 130 galleries and dealers, and interviews with representatives from 45 of the 66 online art platforms listed in the report’s appendix. The number of buyers was up slightly from last year, when 758 responded.  But it’s still just a slice of the larger collecting landscape.

Despite the slowdown, the report found reasons for optimism. More than half of the respondents who self-identified as online art buyers said they will buy more art online in 2018 than they did last year.

The overall growth slowdown may be related to a dip in the share of people placing bids online—43% of art buyers polled said they snapped up work online in 2017, compared to 49% of buyers in 2016.  Some of the buyers, though, are what Hiscox calls the “big spenders”—defined in the report as “Individuals who spend more than US$100,000 a year on purchasing art both offline and online.” Nearly half of them bought work online, around the same figure as the year before.  

Curiously, interest in buying art amongst those under 35, presumably among more tech-savvy consumers, fell in 2017, with 36% of young art buyers reporting having purchased work on the internet, down from 44% the year prior. When they do buy, they like to go through the online portals used by many galleries—45% of buyers under 35 went through gallery portals in 2017, compared to just 29% in 2016.

The market in general rebounded big time in 2017, and auction houses reaped the rewards. The report notes that business at the three big houses, Christie’s, Sotheby’s and Phillips, were up 25% in 2017 across both online and live auctions, according to the ArtTactic Annual Auction Review. Online sales, which typically feature lower-priced lots (no or , for example), posted a lower growth rate of 15.6% across the three houses. The leader in online auction sales, though, is Heritage, which for the last few years has beaten the major auction houses on both total sales and annual growth rates. Heritage saw a 25.8% surge in online sales in 2017 en route to a $438 million haul, double that of Christie’s, which brought in $215 million.

In one of the survey’s more conclusive stats, 90% of new buyers said that price transparency was a major factor for them before they started to buy online. “Although existing collectors are used to secrecy and non-transparency when it comes to pricing, this is an aspect which clearly doesn’t sit comfortably with new buyers,” the report explained. The report goes on to note that the art market’s general reputation for secrecy may make it difficult to hope for a fully transparent system, but views Christie’s decision to post online sales results as a step in the right direction, as it allows new buyers to check an artist’s track record before ponying up.

It took just two years for Instagram to dethrone Facebook as the social media platform favored by galleries. In 2016, galleries said they used the two platforms about the same amount to promote shows, with 56% of respondents favoring Facebook. In the 2018 report, only 31% of respondents said Facebook was the best tool to raise awareness, and a whopping 62% said Instagram was the most effective, up from 57% the year before. It’s also the favored platform for collectors under 35, 79% of whom said they discover new artists on Instagram and 82% of whom said they use it to keep up with artists they already follow.

The Hiscox report also looks at which institutions and art world figures have the most Instagram clout. The Museum of Modern Art leads the pack among institutions with 3.3 million followers, followed by the Metropolitan Museum of Art with 2.3 million, and the Tate with 2.1 million. A few artists such as , , and , each have more than a million followers, and saw his count go up by over 100% (Hirst’s account now has 381,000 followers) after he started writing the captions himself and sharing backstories behind some of his better known works and series.

Hiscox concludes online sales will continue to grow in the next five years, roughly doubling to $8.37 billion by 2023. There’s reason to believe that is a conservative estimate. In 2014, the report predicted $3.76 billion in sales by 2018, a figure the market surpassed one year early.

And one graph seems particularly telling. Last year, only 29% of the under-35 respondents said they were ambivalent about whether they bought art in a physical space or online space, with nearly half of respondents saying they preferred to buy in a physical space.

In just a year, the percentage of young collectors who said they had no preference between physical and virtual galleries grew to 42%. Wherever the art is, the next generation will buy it.