The Art Markets Presence Online: A Curated Survey

Joseph F. Del Vecchio, Esq. MONTAGE FINANCE 433 West 14th Street, New York, NY 10014 646 998 8270 Rudolf Stingel, Untitled

Cy Twombly, Cold Stream

Imagine you are navigating a warehouse full of Saatchi inventory on your own. Imagine thousands of unframed paintings presented to you, one after the other and in no particular order, absent any context. Now imagine doing the same for every private dealer, gallery1, auction house 2, and museum3 across the globe, then multiply that information by a social media factor of at least two. Not at your computer? Dont worry; all of the aforementioned content is available on your mobile phone, and further supplemented by text message and email alerts. Conspicuously blunt, this hypothetical illustrates the typical Art Market experience on the Internet overwhelming. The Art Market is in the midst of its very own dot com boom, and its current Hobbesian State of Nature is begging for gatekeepers to shape our online experience. The Internets power to democratize is a myth; someone (usually Google) has to perform triage on the trillions of bits of information that instantaneously travel across the World Wide Web. This important process of selecting, organizing, and looking after the plethora of content available online is magnied when viewed through the plutocratic lens of the Art Market. This paper serves as a formal survey of the Art Markets presence online, aiming to provide readers with a vividly concrete understanding of Fine Arts relationship with e-commerce. Beginning with a look at Christies and Sothebys, this paper will consider both traditional auction houses online operations as well as those auction houses functioning exclusively on the Internet. Next, we will consider artnets shift from information terminal to online marketplace as an effort exemplifying the current state of the Art Markets presence online. And nally, we take a curated look at those Art Market websites that act as curators themselves - selecting, organizing, and presenting (for sale) Art online. The best of these sites aim to shape our digital experience by collapsing educational content into opportunities for purchase and sale, all done with a tasteful efcacy.
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There were 4,658 galleries present at 51 major international art fairs in 2007-2008. A list of the top 300 sales at auction (since 2008) includes results from 14 auction houses. 3 The worlds museums hold over 100 million works of art, with approximately 100,000 of those sold each year.

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AUCTIONS ONLINE AND ONLINE AUCTIONS

Whether at your computer or on your mobile phone, the historically dominant duopoly - Christies and Sothebys - offer nearly identical online experiences for their clients. Creating an account on either auction house website is free, and once registered, users can customize their interests by category or by sale department. Pursuant to registered interests, clients may elect to receive email or text message alerts regarding relevant sales. Both Christies and Sothebys websites allow users to navigate auction schedules, peruse an e-catalogue, register to bid, and place an absentee bid online. When an auction is physically occurring, Christies Live and Sothebys BidNow transmit live audio/video of the proceedings, allowing for real-time bidding from any internet-connected personal computer. For smartphone users, Christies and Sothebys mobile applications combine sleek formatting with exhaustive information, however, their applications function only as subtle marketing instruments. Clients cannot participate live in a Christies or Sothebys auction via their smartphone - unless they use it to make a telephone call.

It is important to note that Christies and Sothebys online experiences are ultimately governed by physical sales. Rather than radically alter their well-established business models, Christies and Sothebys have decided to gently nod in the direction of the online marketplace. Perhaps inuenced by Sothebys failure in the virtual auction marketplace a decade ago (discussed below), both auction houses have chosen to carve out a neo-luddite niche that best serves their traditional dominance. Although current records reect 28 per cent of Christies buyers bidding online, the average price of on online sale is only $8,123, a number that pales in comparison to the current global lot average of $48,900. And while winning bids can be made on the Internet, payment and shipping arrangements are taken care of the oldfashioned way. In a interview with the Financial Times, Michael ONeal, senior vice-president and head of digital media for Christies, said it himself: ... it is all about how the online experience can be as close as possible to the in-room experience. Christies and Sothebys are not in direct competition with the Art Markets dot com startup ventures - they are above them.

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With a majority of the Art Markets online presence focused on Modern and Contemporary Art, wet paint specialists Phillips de Pury & Company have a slightly different Internet presence than either Christies or Sothebys. The Phillips website design is simple, elegant and easy to navigate. As with the Christies and Sothebys websites, users can sign up for email alerts tailored to their interests, and auction catalogues and calendars are readily accessible. Living up to its reputation, Phillips also offers an auction house blog with quite a few (quirky) features. For example: the blog showcases grainy videos of Simon de Purys accented answers to questions like What is an art expert? and Who buys art? Interestingly, Phillips outsources its online bidding platform to another company - Live Auctioneers - for a decidedly less streamlined experience than either Christies or Sothebys. Founded in 2002, Live Auctioneers is a Manhattan-based company that provides potential bidders with digital connections to over 800 auction houses, thousands of auctions, and millions of lots. Users wishing to bid remotely on an object at a Phillips auction must do so via the Live Auctioneers website, not Phillips; yet, Live Auctioneers does have its own mobile application which allows for real-time bidding via mobile phone. Pragmatically speaking, Phillips approach is paradoxical, for it invites the very question it begs: why bid via mobile phone application when you are holding a telephone? Before you sneer, consider how often you text message a friend instead of calling him or her. Expect Phillips to consolidate its online presence in the near future, in an effort to keep up with Christies and Sothebys offerings.

While Christies, Sothebys, and (to a lesser extent) Phillips de Pury, have chosen to supplement their traditional auction format with online bidding mechanisms, there is an emerging auction marketplace that exists almost entirely online. Perhaps best exemplifying the Internets rapidly globalizing effect on the auction market is Saffronart. Founded in 2000, Saffronart is a Mumbai based online auction house specializing in modern and contemporary Indian Art. While clients may view works at Saffronart galleries in London or Mumbai before a sale, the auctions take place entirely online. Saffronart holds four auctions a year, each taking place over a two day period, and their buyers premium is a competitive 15%. Clients are encouraged to check bid history online, a means toward increasing informational transparency and - according to Saffronart - democratizing the traditional auction experience. Saffronarts inaugural auction sold $125,000 in art; six years later, just one of its online auctions sold $17 million. Most recently, its Summer 2011 sale received a bid from a mobile device that exceeded $1 million, a milestone. In addition, Saffronarts June 2010 auction sold 10 of the top 15 lots sight unseen, and of the 73 lots sold, 10 were sold via the Saffronart mobile application. By taking a narrowly-tailored subject matter (Indian Art) and marketing it efciently (online), Saffronart has simultaneously created its own niche while establishing itself as a leader in it. This type of approach is crucial to successfully navigating the Art Market; that is, one that guides users through the enduring and exhaustive supply of purchase and/or sale opportunities with curatorial rigor and humility.

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HOW ARTNET EXEMPLIFIES THE ART MARKETS PRESENCE ONLINE

artnet has traditionally been the Bloomberg terminal of the Art Market, providing users with a database of millions of historical auction results. Over a decade ago, both artnet and Sothebys tried to pioneer the online auction marketplace, but failed after a few short and costly years. While today Sothebys online offerings are (reasonably) limited by physical sales, artnet reopened artnet auctions in late 2007, placing a signicant bet that much of the art market below a certain price level will soon operate entirely online. This shift, artnet claims, draws from growing consumer comfort in the online marketplace as well as the increasing popularity of the pursuit of contemporary art as an investment. It appears that this bet has paid off. Primarily dealing in prints by Modern and Contemporary masters (e.g., Warhol, Calder, Lichtenstein), artnet auctions operate as an online auction marketplace for mostly dealer to dealer transactions wherein buyers pay a 15% commission and sellers pay 10%. In 2010, artnet auctions moved over 6,500 pieces, generating $2.5 million in commissions on $12 million in sales. The average price of an auction object won on artnet is approximately $6,800; however, artnet auctions typically modest prices are not without exception. In July 2011, artnet auctions broke the million dollar barrier, selling a 1978 Andy Warhol Flower painting for $1.322.500. artnet is not yet protable largely due to development costs, but predicts protability by the end of 2012. It claims it will need to broker sales for $27 million worth of online art to break even, but Skates Art Market Research has forecasted a higher number - $35 million - due to concerns over increased competition. ARTINFO is rumoured to be entering the online auction marketplace in the near future, setting the stage for a major rivalry between the two. The challenge artnet auctions face is one that exemplies an issue inherent to the entire online Art Market - how to manage the innite selection, organization, and presentation possibilities for an endless supply of art and information on the Internet. artnet auctions take an encyclopedic approach, simultaneously offering hundreds of objects for sale, with each lot accompanied by information about the artist and a condition report on the object itself. Remarkably innovative is the incorporation of artnets welldeveloped database into artnet auctions online interface. For each lot offered at auction artnet auctions automatically includes prices for comparable works, giving users unparalleled access to information. This potentially overwhelming perspective is mitigated by artnet auctions targeted users (i.e., dealers) Art Market familiarity.

A CURATED SURVEY
With users often left on their own to navigate the e-plethora, our digital experiences need a degree of prescriptivism. Websites providing a curated distillation of art and information offer a more comfortable experience for users, not because they are participating in the Art Market from their couch, but because they can operate more effectively - without feeling overwhelmed. The following survey of the online Art Markets curated presences (presented alphabetically) offers readers a summary and analysis regarding the current state of affairs. 1stdibs is an online marketplace that offers a rened aggregation of thousands of art and antique dealers. Within the greater context of the Art Markets Internet presence, 1stdibs operates as an instrument of online introduction, providing users with a list of rst-tier gallery exhibitions sortable by city and including light editorial content.

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20x200s aim is to provide art for everyone. Offering limited-edition prints at affordable prices (ranging from $20 to $5,000), 20x200 serves the entry-level collector already comfortable shopping in an online marketplace. A niche market for limited edition prints and photographs is thriving online, serving the demand for objects that are more than a poster, but not quite ne art. 20x200 simultaneously offers hundreds of items, designed for the high volume sales necessary for protability when dealing in affordable art. Founded by a former investment banker, Artlog operates as a contemporary art online travel guide. It provides multimedia content, email newsletters, and publicizes events to help over 4,000 galleries and museums market their information to new collectors. Similarly focused is Bettina Koreks Los Angeles based ForYourArt. ForYourArt offers recommendations on gallery exhibitions, information on local artists of note, and brilliantly utilizes Google Maps for event listings. Artspace primarily offers for sale limited edition prints from recognized artists; for example, clients may purchase a photograph by Chuck Close for the relatively affordable sum of $1,800. Artspaces partnerships with pedigreed museums and galleries offer new collectors mass market, low cost entry to the art world in a shrewd and innovative manner. Like other online Art Market ventures, the Artspace business model begs the question of scalability. In an industry where the underlying goods often derive value from their scarcity, websites offering limited edition prints will have to sell in high volumes in order to turn a prot. Highly publicized - yet still under construction - Art.sy plans to build an Art Genome algorithm similar to that of popular music website Pandoras Music Genome Project. By breaking down artworks into 500+ dimensions (e.g., art historical movement, subject matter, formal qualities), and then pointing individuals in the direction of more art they might like based on reported preferences, Art.sy aims to introduce users to art they might not nd on their own. Once a user has found something he or she likes, Art.sy will provide a link to the galleries selling those objects. Of note, Art.sy investors include Google CEO Eric Schmidt, Wendi Murdoch, Jack Dorsey (of Twitter) and Dasha Zhukova. Both Larry Gagosian and Marc Glimcher (of Pace) are on-board as advisors.

Dealing mostly in prints ranging from $1,000 - $25,000, Blacklots auction a single object every 24 hours, with a ash sale efcacy. The Blacklots website has a superior design - clean, simple, and modern. Once a user lists a piece to sell, it will go up to auction on the website in less than seven days, cutting out the traditionally required adherence to brick-and-mortar auction houses calendars. Blacklots offers both auction and private sales, with in-house specialists strategically curat[ing] the site to maximize the selling potential of your art... There is no listing fee, but Blacklots does take a 7% sellers commission. Cofounded by Rodman Primack, formerly Chairman of Phillips De Pury & Company, London and a Gagosian Gallery Director; Minor Childers, entrepreneur in the Entertainment and Internet industries; and CJ Little, serial technology entrepreneur, the site draws from myriad industries to create an efcient and minimalist online auction experience. Again, scalability is an inherent issue, especially considering Blacklots one a day auction approach. Generously assuming one $10,000 sale per day - each sale generating a $700

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sales commission - multiplied by the 260 weekdays in a year, results in an annual Blacklots income of just $182,000. Part of the aforementioned online Art Markets burgeoning niche, Exhibition As svelte website offers its members weekly sales of limited edition prints by contemporary artists at entry-level prices. Because Exhibition A works directly with its artists, its relationships offer users an unparalleled accessibility to both art and educational content. Soon to be fully-equipped for international sales, Exhibition A is also expanding its business to feature two sales per week as an effort to increase sale volume. KiptonART specializes in guiding and supporting emerging artists by providing them with exposure to dealers, galleries, and nanciers. Upand-coming talent can upload work to KiptonART, and if a buyer is interested, KiptonART then handles everything from payment to shipping the art, charging 20% to 30% commission. Its fundamental aw, however, is the required (and unguided) navigation of offerings from hundreds of artists, most of whom operate outside the rst tier gallery system. Paddle 8 operates as a online exhibition space, offering users myriad opportunities for edication and acquisition. Every month, Paddle 8 invites a curator to select approximately 20 works of modern and contemporary art centered around a theme; the selected objects are also made available for sale to site members. Paddle 8 effectively facilitates transactions between its users and its galleries, offering selected gallery listings and inventory offerings for users who might want to pursue artworks related to, but not featured in, that months curated exhibition. For each artist represented in its exhibitions, Paddle 8 assembles and presents a dossier intended to provide context and insight to the interested user. The Paddle8 Blog, Scroll, includes artist spotlights, behind-the-scenes access, and other educational supplements. While anyone can view exhibition objects and educational content, only Paddle 8 members can view prices and acquire pieces. Operating via an invitation system, registration for membership is both a social media networking device and also as a method for vetting potential users. One might argue that the exclusivity of some brick-and-mortar Art Market establishments is even more important when magnied by the Internets global reach. Overall, Paddle 8s website provides the curated navigation necessary for survival in the online Art Market, offering ne art in a tastefully cultivated online experience. VIP (Viewing in Private) Art Fair is a digitalization of the traditional art fair experience, wherein Internet users can peruse gallery booths (and back room inventory) from the comfort of their own homes. Users interested in purchasing the e-installed art are then directed to chat rooms with gallery representatives. Essentially, the VIP Art Fair functions as an instrument catalyzing online introductions as opposed to online sales. It takes advantage of the online marketplaces freedom from geographic constraints. Not everyone can be in Basel in June; and galleries with multiple locations can pick and choose what to virtually display from the inventory in their galleries across the globe - eliminating overhead costs for packing, shipping, insurance, et c. Further, whereas a booth at Art Basel Miami Beach rents from $10,500 to $65,000, galleries pay between $5,000 and $20,000 for virtual booths on the VIP website.

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Yet reviewers of VIP Art Fairs January 2011 event were disappointed, to say the least. Plagued by technical difculties, the VIP chat functions failure highlighted the virtual fairs fundamental limitations. Users encouraged to place a telephone call to galleries from whom they were interested in purchasing art may have been left wondering why they paid the VIP Art Fair for an online introduction in the rst place. Improvements to VIP Art Fair version 2.0 are expected, and users should be able to better capitalize on VIPs digitally rened accessibility to the well-established international art fair circuit.

A DEEPLY SUPERFICIAL CONCLUSION

As exemplied by Christies and Sothebys offerings, the Art Markets rapidly expanding presence online can not and will not replace traditional methods of buying and selling - it can only accompany them. A niche market for limited edition prints has already developed, but it is inherently restricted by the high volume necessary when dealing in affordable art. The online marketplace for unique objects, however, has not yet hit its ceiling. Regarding current online presences, a distinction must be drawn between lead generation and actual sales, between buying ne art online and using the Internet to nd art to purchase in-person. Looking ahead, the most attractive and ingenious of the Art Markets online presences will subtly blur those lines, providing users with an all-inclusive experience while delicately maintaining a curated manner.

MONTAGE FINANCE is a specialized nancial advisor to the art world; for more information please contact: James R. Hedges IV, President jrh@montagenance.com 212 671 0522

Andy Warhol, Self-Portrait in Fright Wig (Polaroid)

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BIBLIOGRAPHY
Adams, Susan, The Art of Being Charles Saatchi, Forbes Magazine, December 28, 2009. Brown, Griselda Murray, VIP Art Fair: a virtual failure? Financial Times, February 4, 2011. Crow, Kelly and Gamerman, Ellen, Clicking on a Masterpiece, The Wall Street Journal, January 14, 2011. Dizard, John, Lessons from IMFs Egypt Blunder Financial Times, February 6, 2011. Hirsch, Faye, The Everyone Artwork, Art in America, May 2, 2011. Kazakina, Katya, Fear Factor From Stock Turmoil Sparks Deal Hunt in Art Market, Bloomberg, August 23, 2011 Kennedy, Randy, A Resurgence in Buying Art Buying Over the Web, The New York Times, June 21, 2011. Kimball, Whitney, Market Analyst Sergey Skaterschikov, on Investment Quality Art and Whether Were All Going to be Poor, Art Fag City, August 22, 2011 Panero, James, Gallery Chronicle, The New Criterion, March 2011 Rangachari, Gayatri, Indias Online Auction Pioneers, The New York Times, September 7, 2010. Schonfeld, Erick, Art.sy Raises $1.25 Million From Schmidt, Murdoch, Dorsey, and SuperArtsy Angels, Tech Crunch, November 24, 2010. Skates Art Market Notes, Artnet Returns to Protability (But to What Extent?) and Renes Strategic Focus, April 6, 2011. Skaterschikov, Sergey, Skates Art Investment Handbook, KunstAM GmbH 2008 Sobleva, Elena, Sothebys Panel Contemplates Digital Future of Art, Art Market Monitor, January 25, 2011. Spiegler, Marc, Five Theories on Why the Art Market Cant Crash (and why it will anyway), New York Magazine, March 26, 2011.

www.1stdibs.com www.20x200.com www.artlog.com www.artnet.com www.artspace.com www.blacklots.com www.christies.com www.exhibitiona.com www.kiptonart.com www.paddle8.com www.phillipsdepury.com www.saffronart.com www.sothebys.com www.vipartfair.com