Online - The New Art Market?

The online art market is a significant and quickly growing segment of the art market, but it will probably never replace brick and mortargalleries.

Estimates say that it is currently less than 6% of the market.

Here’s what I was able to figure out. First off, the statistics were very confusing, sometimes outright contradictory. Bottom line? We just don’t know yet. The online art market is an emerging market. There are no long term trends to look at. There are only a few sources for research information. Evaluation tools are not well tested or even fully developed. A great deal of the information is in the hands of companies who keep their data private.

One source said the value of the online art market in 2013 at $1.57 billion. Another source said the value of the 2014 online market at $2.64 billion. The estimated total value of the total global art market in the same basic time frame ranges from $55 to $65 billion. Other estimates say the portion of the total global art market that online sales account for ranges from about 2.5% to 6%, not a huge portion of the overall global art market.

There a few things that everyone agrees on. Online art sales are growing very fast. Hiscox Group, an insurance company in Bermuda and one of the few research resources, projects annual growth of 19%for the online art market, increasing from about $1.57 billion in 2013 to $3.76 billion by 2018.

Venture capitalists are betting big money on the online art market by investing in sales platforms. Sites like Paddle8, Artsy, Artspace, Lofty and 500px have raised over$ 120 million in funding. Big art market players are getting in on the action. Christies has online auctions. Their 2013 online sales were $20.8 million, up from $4.7 million in 2012. Sotheby’s just entered into a new partnership with Ebay by allowing eBay users to place bids online, during a live auction, along with on-site and telephone bidders.

The online art customer has a distinct profile as well. Not surprisingly, they tend to be younger. They buy lower priced art. Hiscox also says that 84% of online art purchases were below $15,000. Most of the art that sold on Bay in 2014 was priced at less than $200. They are flooding the market. Christies held 49 online auctions in 2013, more than 7 times than in 2012. 75 percent of one survey said that what they like about an online art marketplace was that they could find a much wider range of artworks than they would find in a physical space. They learn about online sales platforms through the media, blogs and word of mouth. Not many buy art through social media sites but social media does influence what they buy.

Galleries continue to offer the more serious, higher end buyer an experience they prefer. So…Online is not the new market. Worth keeping an eye on? Certainly. But gallery owners can relax.