For ten years now the blue chip insurance group Hiscox has been publishing a report on the online art trade, tracking it from modest beginnings to an estimated $10.8 billion in sales last year.
That was a rise of six percent on the year before, a notable slowdown after two years of phenomenal growth. Hiscox suggests that the return to post-pandemic normality meant that online was no longer the only game in town; buyers could once again visit auctions, exhibitions, fairs and galleries in person – and did so.
Things don’t necessarily look too good for the future, either. Thirty percent of all art buyers say they will buy less art online in the next 12 months, because they have less disposable income; online buying tends to attract younger and/or newer art buyers, of course, and these are likely to be most susceptible to the economic headwinds.
On the other hand, slightly more than a third of art buyers said they would be buying at least as much or more in 2023 – though in fact the largest single group of respondents were those who said they didn’t know (36 percent).
So it’s probably no surprise that fractional ownership might be seen as an option. It’s starting from a low base; only nine percent of those polled said they had invested in a share of an artwork or collectible over the previous 12 months. But fully 61 percent said they were likely to do so over the next 12.
Of those, the vast majority said they were looking to diverse investment portfolios to reduce risk. And by comparison with other options such as a managed art fund, fractional ownership gives the buyer some control over their investments – nearly two-thirds said it allowed them to build up their own portfolio themselves. Also mentioned: fractional buying is an easy way to get started with art collecting.
Two-thirds of potential buyers in this area will spend less than $10,000 in 2023, but nearly a fifth (18 percent) were prepared to spend more than $100,000 on fractional ownership. Maybe this is a route to involvement in art whose time is coming ….
The shine has really come off NFTs for these buyers, though. One in five said they had bought an NFT in 2022, virtually unchanged from last year, and just 12 percent of respondents said they were likely to buy an NFT in the coming 12 months (down from 27 percent in 2022).
There were pallid results from the big-name online-only auction sales at Christie’s, Sotheby’s and Phillips – sales were down by a third from 2021 to $898 million, which is more or less where they were in 2020. There were fewer online-only auctions at the big three (a total of 450 sales, down from 533 in 2021 and 630 in 2020) and the average lot price was $16,955 (compared with $23,277 in 2021). Indeed, online-only auctions account for seven percent of total sales at Christie’s, Sotheby’s and Phillips, down from 11 percent in 2021. It looks as though in-person auctions are preferred, particularly for higher-value lots.
And if you had suspicions about the art market’s concern for its environmental credentials, they are confirmed by the 54 percent of buyers who express little or no concern for the carbon footprint of buying art online. Fewer than a third of buyers said they would be prepared to pay extra for a more sustainable option (aka save the planet).
Instagram continues to dominate as the preferred social media channel for online buyers; 74 percent of them are using it, and predictably enough that proportion is even higher (84 percent) for the younger art buyers. And it’s a selling medium as well as a marketing option: in 2023, 29 percent of buyers said they had bought art directly through Instagram.
This reinforces magpie’s view that artists as well as sellers need to invest in Instagram visibility. The Hiscox survey found that nearly eight out of ten of online art buyers see artists as the main influencers of their choices, ahead even of galleries (70 percent) and museums (62 percent).
Incidentally, you can probably forget Facebook and Twitter – in 2023 only 12 percent said they would use either of them for art-related purposes – though LinkedIn remains fairly constant at around 18 percent.
Hiscox also asked about the most important considerations for online buying. The top factors cited:
- Price transparency – 91 percent of online art buyers say they want to see a price tag.
- Quality – 88 percent are looking for works online that are just as good as those they would see at a gallery or auctioneer.
- Information – 85 percent said detailed information about an artwork is a major factor in deciding which online platform to buy from.
As for the online platforms themselves, there’s a warning from the Hiscox analysis: “the Covid boost in growth across the online art market has delayed the anticipated consolidation of the sector by effectively extending the lifespan of those that were struggling. That is likely to change in the next couple of years as a combination of a gloomy global economy and rising interest rates start to bite.”
It’s likely that many of the online art platforms made hefty investments in 2020 and 2021 to meet demand, and now they’re facing higher costs in a slowing market with investors looking for an exit. So 71 percent of the online platforms surveyed said they anticipated more M&A activity in the next 12 months, compared to 64% who said the same in 2021.
In short, we can expect some takeovers (and perhaps some failures) in the online art sector.
The Hiscox Online Art Trade Report 2023 is available as a free download here.