Five Distinct Ways the Pandemic Has Improved the Prospects of the Online Art Market

The online art market has been steadily growing over the last years, but there was still significant resistance to the idea. The pandemic's unusual circumstances might've just been the push that the online art market needed to be finally embraced by the skeptics.
6 min read
01/29/21
All articles
By Doron Fagelson
Vice President, Media & Entertainment
Share
Five Distinct Ways the Pandemic Has Improved the Prospects of the Online Art Market

«I wrote in the foreword to the last iteration of this report, that we waited with baited breath to see what happens next. The answer is pretty clear — COVID-19 has turbo-charged the online art market.»
Robert Read, Head of Art and Private Clients, Hiscox, quoted from their Online Art Trade Report 2020, part two

Intro

The spike in global online sales of art and collectibles in 2020 was a well needed silver lining to an otherwise exceptionally difficult and tumultuous year for the art industry. According to Michael Klein of Sotheby’s, sales in the first seven months of 2020 made via online auctions at Sotheby’s, Christie’s and Phillips increased by a record-breaking 388% from 2019.

While the online sales figures compared to 2019 are striking and arguably threw the industry a lifeline after the pandemic unexpectedly forced the sudden closure of museums, galleries, art fairs and marquee auction events the world over, they are only one part of a larger and important story for the industry. Upon closer analysis, we can discern five distinct ways the impact of the pandemic has improved the prospects of the online art market in a post-pandemic world.

A Palpable Shift in Buyer Behavior

Recent survey data from Hiscox shows a wider spectrum of art buyers participated in the online market in 2020: between March and September, 67% of art buyers surveyed bought art online, up from 44% in 2019, and nearly nine-out-of-ten of those who spend more than $50,000 on art a year visited online art sales platforms weekly during the initial lockdown period, up from 69% in 2019. The survey data also suggests strong support for this trend moving forward: Four-out-of-ten hesitant art buyers and new art buyers said they are likely to buy art online in the next 12 months.

Graph: New art buyers who acquired art online in the past 12 months

Raising the Level of Consumer Trust in Online Marketplaces

Galleries helped drive a surge in online adoption from the supply aside in 2020 according to an interview last July with Mike Steib, CEO of Artsy. Not only did more galleries move inventory online through the Artsy platform, but many also opted to provide a higher level of transparency by listing prices. This is a particularly positive development for online art marketplaces given that building consumer trust was deemed by online platforms to be the greatest challenge facing the online art market (according to previous Hiscox reports from 2018 and 2019), and collectors said price transparency was critical when buying art online and thus an important element in building confidence and trust.

Graph: Art buyers who bought art online in the last 12 months

Auction houses improved the quality of lots sold online in 2020, according to ArtTactic, signifying another important step in the cultivation of trust with online art buyers. The quality of art for sale online was flagged by Hiscox in recent reports as a key determinant of buyer trust, with 92% of art buyers saying the quality of art on offer is essential when buying online, and 96% of online platforms saying it was a key factor in building trust.

Embracing of a Wider Array of Online Sales Formats

In addition to improving the quality of works sold online, the auction houses also increased the volume of works sold online: Sotheby’s, for example, restructured their auctions to move 70% of them online in 2020, against only 30% in 2019. Sotheby’s appears to have fared better during the pandemic than its main rival, Christie’s, reporting an increase in global sales from $4.8 billion in 2019 to over $5 million in 2020, while Christie’s global sales declined by 25% in 2020. Sotheby’s considerable sales edge is attributed to its «more successful pivot into innovative digital sales formats,» according to the Art Newspaper, encompassing both online auctions and livestreamed online-only evening auctions. As competition in the online marketplace grows fiercer, online platforms will be pressured to innovate further, explore potential new sales formats and improve the online buying experience.

Graph: % or bidders who bid in an online auction at Sotheby’s

Online Channels Attract New Buyers

The shift to digital sales formats has had considerable upside on the outreach front in some quarters of the market. The Observer reported that Sotheby’s acquired its greatest influx of first-time art buyers in 15 years thanks to its strategy of more online auctions and improved channels to make the online buying experience more convenient. Artsy’s CEO reported a 50% increase in new contact leads for galleries on the platform and noted that online art fairs on Artsy saw on average five times the amount of commercial traffic in 2020 from the year prior. These positive findings will likely encourage galleries, dealers, auction houses and art fairs to further embrace and leverage the power of online art market to bring in new buyers even after the pandemic recedes.

Online Sales Prices Move Higher

In 2020 Sotheby’s recorded its most expensive online sale ever for a painting, when Ivan Konstantinovich Aivazovsky’s The Bay of Naples, 1878, went for $2.9 million. Another upshot of the auction houses’ decision to move more high-quality fine art works online was to raise the average price of the online lots sold through the first eight months of 2020, which were up by 167% from 2019, according to ArtTactic. Anders Peterson, founder of ArtTactic, believes support for higher prices shows both collectors and auction houses are now more confident about higher-value online sales, and this shared confidence will continue to propel online-only sales in the future.

Conclusion

The fact that top auction houses, galleries and art fairs were able to leverage online offerings and sales channels so quickly and successfully is evidence of the depth and scale of their investment in technology and in the online market even before the pandemic hit. The impact of the pandemic has both highlighted the importance of these investments for the industry as a whole, and improved the potential returns from them in the future. The long-term effects of the pandemic in raising online market participation and sales prices, improving online buyer confidence, de-stigmatizing virtual experiences for art, and proving that online sales channels can be both crucial revenue streams in hard times and a very effective means to reach new buyers, all point to better prospects for the online art market in a post-pandemic world.

Sign Up for Updates!

Subscribe now to receive industry-related articles and updates

Choose industries of interest
Thank You for Joining!

You will receive regular updates based on your interests. No spam guaranteed

Add another email address
READ MORE
Sign Up for Updates!
Choose industries of interest
Thank You for Joining!

You will receive regular updates based on your interests. No spam guaranteed

Add another email address
Welcome
We are glad you found us
Please explore our services and find out how we can support your business goals.
Get in Touch Envelope
DataArt-Com-Retail-Report.png
Download the white paper Glancing Forward into 2021: An Industry by Industry Outlook

Explore digital trends and unanticipated benefits engendered by the pandemic, which are likely to last in 2021.