Three Key Takeaways from the Hiscox Online Art Market Report
In the past four months, the vast majority of art market transactions have taken place online as fairs, galleries, and auction houses have gone virtual due to the COVID-19 pandemic. In this period of incredible hardship, online art sales have become a lifeline for many dealers and artists, and several auction houses have notched their biggest online sales ever. In this context, it’s difficult to imagine growth in online art sales slowing down, but that was the case right up until the spread of COVID-19.
According to the 2020 edition of the annual Online Art Trade Report, the first part of which was released today by insurance giant Hiscox and art market research firm ArtTactic, online art sales totaled $4.8 billion in 2019, up just 4% from $4.6 billion in 2018. That minimal growth represents the fourth consecutive year of declining market expansion, after online sales saw enormous growth of 24.2% in 2015, but just a 9.8% uptick in 2018. Those numbers lagged well behind figures for e-commerce sales overall—which saw growth of 16.4% year over year in the United States in 2019—and online sales of luxury goods, which were up 22% last year worldwide, according to a Bain report.
Courtesy of Hiscox.
Despite the slowing growth, the Online Art Trade Report shows online sales faring better than the market overall, which dipped by 5% last year, according to the 2020 edition of Art Basel and UBS’s Art Market Report. Still, online sales represented just 7.5% of the overall $64.1-billion art market in 2019.
“Online wasn’t universally being taken seriously as a viable stand-alone sales channel,” said Anders Petterson, ArtTactic’s founder and managing director. “However, this has changed as a result of COVID-19—arguably more has happened in the last four months than in the last four years, and 65% of the senior management of the platforms we interviewed for the report believe these changes will be permanent and transformative for the sector going forward.”
The dramatic transformations of the first half of 2020 will likely be reflected more fully in the second and third installments of the report, scheduled for the fall and winter, respectively. For now, the first installment offers a clear picture of the state of the online art market at the beginning of 2020, and early insights into the sea change we’ve witnessed since the pandemic took hold.
Pricing remains opaque
Courtesy of Hiscox.
Among the 62 online platforms conducting online art sales that ArtTactic and Hiscox surveyed (of which, in full disclosure, Artsy is one), 96% agreed that price transparency was key to building trust in online art sales. This resonated with the 87% of art buyers who, when polled for last year’s edition of the report, said price transparency was a major factor in their decision to buy art online.
“If you’re an online buyer in any other area of the luxury goods market—whether it’s watches, rare wines, whatever it is—you are looking for the best price to be published,” said Robert Read, Hiscox’s global head of art and private clients. “We haven’t psychologically gotten to that stage in the art market yet.”
Auction houses see online sales success
Courtesy of Hiscox.
Online sales at the three most active auction houses online—Sotheby’s, Christie’s, and Heritage Auctions—reached $1 billion in 2019, up from $636 million in 2015. Heritage has long dominated this space, and actually saw its sales tick down slightly to $484 million last year. Sotheby’s and Christie’s saw significant growth over the same period (25.5% and 8% respectively), reaching $250 million and $270 million in total sales. Though its overall total was lower at $75 million, Phillips saw its online sales grow a full 50% last year.
That strong growth is poised to skyrocket in 2020. The Online Art Trade Report notes that Sotheby’s has already seen a 131% increase in the number of lots it has sold online so far this year. In its virtual auction last week, the auction house sold a major Jean-Michel Basquiat work on paper for $15.1 million to an online bidder—making it the biggest online sale ever at Sotheby’s.
Will 2020 end in fundamental or temporary changes?
The report makes clear that this year will be an exceptional one for online art sales: Auction houses’ online transactions are already vastly outpacing their 2019 numbers; several of the year’s biggest art fairs have been conducted wholly online; and galleries big and small have launched or expanded their digital offerings.
Lingering questions concern not only how much of this year’s art market will shift online (how will that 7.5% share of the art market that transacted online in 2019 grow?) but also how enduring that shift will be. Among the platforms polled by ArtTactic and Hiscox, 65% said they expect that the shifts made due to the COVID-19 crisis will become permanent.
“I don’t believe this year’s growth rate will be representative for the future years—this has been an exceptional period, the art world has been forced to embrace online, as no other alternative was available,” Petterson said. “However, I believe we have seen a significant change in ‘perception and attitude’ in the art market towards the potential and importance of online—and I believe this will continue to drive future growth.”
For his part, Read offered a more specific prediction: that online sales could account for half of the art market within the next six years.
“We’re never going to get to a stage where it’s just an online art market—of course there’s going to be the physical side, because that’s fun as well, and when people are having fun they buy,” Read said. “What’s abundantly clear is that maybe we get over the COVID pandemic, but there are likely to be other pandemics in the future, and you as an art sales business can’t afford to not have a plan B in place working and functioning.”
