We can hardly go a day without reading about a record-breaking sale in the art world. While individual artworks at the masterpiece level are the market makers and headliners, the most exciting story unfolding is that of the overall art market. The dazzling returns realized at auction have inspired art enthusiasts of all levels to jump in, and as a result, owning original works of art has become increasingly important to the American public. This is reflected by the significant and steady increase in sales volume at the middle to lower end of the art market, where a larger audience than ever before is now able to participate. One place where growth is most easily visible is at art fairs, the number of which has increased dramatically over the past 10 years.
The runaway success of art fairs is partially due to the fact that novice art buyers find it far more convenient to walk into an art fair, see works from dozens or even hundreds of galleries and interact with them directly in a contained environment. In contrast, many new buyers report that the traditional gallery- and auction-buying experience can feel intimidating and inaccessible.
This concept is why we also see that the traffic and sales volume in the online art space has been growing exponentially. The online market, as reported by the Hiscox 2014 report is projected to grow at a rate of 25% year on year, moving millions of dollars of sales from new buyers into the art market. Potential buyers now have access to thousands of works at their fingertips when they signing on to one of the numerous and proliferating art and technology ventures.
A major part of this success is due to price transparency. Anyone who has walked into enough galleries is certainly familiar with the daunting task of inquiring about the prices of works on display. Enter the online art market. Now, buyers are able to navigate multiple platforms and view and compare works with clearly stated prices at the touch of a button. Previously, this was nearly impossible without spending a whole day in Chelsea gallery hopping, or working directly with an art advisor on retainer — activities both believed to be reserved for the ultra-wealthy.
Greater price transparency has shown buyers that they can own original works by artists they enjoy at an enormous variety of price points, including at prices lower than expected. Will all of these artists prove to be the Christopher Wools of the future? Probably not, but this shouldn’t deter new buyers from entering the market. More buyer participation means that there is more capital to fund more artists to create work. Some of the greatest gains and highest liquidity are occurring in the $1,000 to $50,000 range. Not surprisingly, this is also the dominant price range for online sales.
Despite its impressive growth, the intersection of the art and technology still presents challenges. Even though the online market is providing more access and transparency than ever before, new buyers are still left wondering, how do I know what to purchase?
When studying buyer behavior, Deloitte’s 2014 Art and Finance Report found that 76% of art buyers purchase art with investment in mind. This implies that the majority of buyers are purchasing works in part because they expect them to increase in value. But, playing the market for investment is nearly impossible without the expertise of a seasoned art professional.
The internet is littered with stories of novice buyers making ‘investments’ that end up losing part or all of their monetary value. Frequently these buyers feel disenchanted and are unlikely to continue participating in the art world – taking away valuable capital from the art market and the artists that work within it.
I created Arthena to give new buyers the opportunity to participate in the online space and become educated art collectors in the process. Led by notable art advisors and with an investment foot forward, Arthena is shaping the next generation of art collectors.