By Steve Gow. May 13, 2018.
The Hiscox online art trade report is an annual summary of survey data collected from online art buyers and sellers, collectors, galleries, dealers and other industry participants engaged in the business of buying and selling art around the world. In this article, we dig into some of the key insights and predictions from the 2018 Hiscox Report.
A Growing Online Market
After approximately 10 years of steady growth, online art sales reached $4.2 billion in 2017 out of an approximately $45 billion global art market. $4.2 billion in online art sales is not a trivial number when you consider that the price of art for sale online typically falls within the range of $100 to $10,000 (the “lower” to “middle” art market) and the offline art market benefits from a healthy dose of art sales in the multi-million-dollar range (the “upper” art market). Based on historical growth rates, the Hiscox Report projects that that the online art market will continue to grow steadily year-over-year and will reach an estimated size of $8.3 billion in online art sales by 2023. This is unsurprising given the rampant growth of e-commerce in general and people’s growing desire to buy art online.
Millennials are Leading the Way
Millennials (or the “under-35 crowd”) make up over half of those who are buying art online. Of this demographic, the majority tend to be women. However, men are not far behind (~58% female to 42% male according to the Hiscox Report).
Online auctions are very popular across all age groups. However, millennials and new art buyers prefer online galleries and marketplaces (such as UppstArt) for buying artwork for sale online. According to the 2018 Hiscox Report, 53% of new buyers and 45% of millennials bought art from an online gallery in 2017.
Transparency is Key
The 2018 Hiscox report states that:
“Lack of transparency, especially concerning pricing, seems to be the main stumbling block holding the online art market back and it’s hard to see that being resolved anytime soon.”
This is an interesting finding given that the Hiscox Report has, in previous years, cited the lack of physical inspection of artwork as being the key challenge for the online art market. This change may indicate that the online art market has evolved to address last year’s issues by developing more robust return policies and implementing zoom features and “see it on your wall” apps, but is struggling to convince collectors that prices are fair, transparent and rational.
In a similar vein, the Hiscox Report states that “in a market where everyone haggles on price, it must seem like too high a mountain to climb to publish your best price first, as we see and expect in so many other areas of online shopping.” Here lies the biggest challenge facing the online art market today. How do buyers know whether a work is fairly priced, whether the price is based on rational facts and whether the artist has a history of similar sales to back up that price?
Collectors Care About Authenticity & Provenance
Authenticity and provenance are key concerns for collectors who buy art online. 84% of hesitant online buyers stated that a certificate of authenticity would incentivize them to buy art online and 52% of “offline” collectors cite authenticity and provenance as key reasons why they have not yet purchased art for sale online.
In this respect, the Hiscox Report offers a glimpse at a possible solution:
“New tools for tracking and identifying fakes and copyright infringements, as well as new innovation based on blockchain and new technology around tagging and identification of artworks, could become key catalysts maintaining trust and credibility in the online art market.”
Blockchain to the Rescue?
Blockchain technology was mentioned 52 times in the 2018 Hiscox report compared to 2 mentions in the 2017 report. It is clear that there is a great deal of interest in how blockchain can potentially solve the problems of the art market, or at least act as an enabler to solve such problems. The report states:
“Can blockchain succeed in bringing a fragmented art industry together? Does the advent of blockchain, coupled with rapid growth in companies and new applications built on this technology, offer the potential to address the friction around quality assurance, price transparency and fulfilment? The answer is yes. However, its success relies on the willingness of existing stakeholders and operators in the art market to adapt, build and utilise this new technology.”
This is where Adappcity has seen the opportunity to use blockchain technology to transform the online art market for buyers and sellers of art.
At Adappcity, we are adapting, building and utilizing blockchain technology to address the key concerns identified in the Hiscox Report through our blockchain-enabled online marketplace for original art: UppstArt (www.uppstart.ca).
We created UppstArt with a vision to solve endemic issues in the art market regarding the efficient buying and selling of art online, price transparency, art tracking, secure provenance, ownership and the lack of re-sale royalties for US and Canadian artists. UppstArt was not developed to solve all of the past problems of the global art market. However, with our blockchain-enabled marketplace for original art, UppstArt will help to ensure that the problems and injustices of the past do not happen again.