Art Sales Move Online to Attract Buyers
At online art vendor Auctionata’s 4,000-square-foot Midtown Manhattan offices, works for sale by Andy Warhol, Marc Chagall, and Alexander Calder are being hung on the walls. Staffers, seated at long plastic tables, are assigning values to watches, paintings, and handbags. The goods are then stored away in metal lockers.
With $57 million in funding, the Berlin-based startup is preparing for its first U.S. auction on Oct. 23. Auctionata, which sold €12 million ($15.1 million) of fine art and collectibles online in the first half of 2014, plans to stream eight auctions of art, luxury goods, and 20th century design objects from New York by the end of the year.
“The new gold rush is online, and it has been spreading into the art market,” says Alain Servais, a Belgium-based collector. For a market that has remained relatively untouched by the revolution in technology, the move is happening fast, says Anders Petterson, founder and managing director of ArtTactic, a U.K.-based art market research firm. “It’s about engaging with a new audience.”
In August, Demand Media, a digital content company based in Santa Monica, Calif., paid $17 million for Saatchi Art, which sells art at set prices on its site. Sotheby’s is teaming up with EBay to stream its auctions online to EBay’s 145 million users.
“A new online art company pops up every week,” says Alexander Zacke, Auctionata’s chief executive officer and co-founder. Since 2013, a dozen online art companies, from galleries to an art financing firm, have raised at least $230 million in total funding.
“Everybody is online, every age group,” says Christie’s CEO Steven Murphy. “We have a 70-year-old Chinese client who has built a museum or two, who is communicating with us via WeChat every day,” he says.
Christie’s, the world’s largest auction house, allocated $50 million to a digital platform three years ago to tap into an audience seeking less expensive works. Sales from online auctions, separate from its regular auctions, reached £8.7 million ($14.1 million) in the first half of 2014, up 71 percent from the first half of 2013. You won’t find work like Francis Bacon’s Three Studies of Lucian Freud, which went for $142.4 million at Christie’s in 2013, a record. The most expensive work in an online Christie’s auction was Richard Serra’s Pamuk at $905,000. For Christie’s as well as online art startups, the draw is the chance to create an entry point for first-time buyers. About 27 percent of Christie’s online buyers in the first six months of 2014 were new to the auction house.
Paddle8, an online art startup founded in 2011, has focused on charity auctions for museums and foundations, recently adding commercial auctions. In the first half of 2014, total sales reached $17.8 million, a 400 percent increase over the same period in 2013.
Artfinder connects buyers directly with about 4,000 artists. Works range in price from £500 to £1,000. Artfinder, which doesn’t conduct auctions, gets 30 percent from each sale. “These are young collectors who don’t have huge resources, but if you get them started, they get hooked,” says founder Jonas Almgren. The site has raised $1.45 million from investors, including Wellington Partners and Greylock Capital Management, says Almgren, and it’s sold art to about 10,000 customers from 55 countries.
Auctionata has run about 100 online auctions since 2012, Zacke says. The average price of a work is €4,000 to €5,000—translating to about a 27.5 percent profit margin.
Can the market sustain so many players? Zacke says he doubts there’s room for more than one big site. “The question is, who is going to occupy this space?” he says. “That’s what the investors are looking for.”