The Hiscox online art trade report 2019 was released this week and besides revealing some very discouraging growth figures, it has explored the indeterminate world of Instagram as part of their analysis. When posing the question, Has the art world reached its limit with Instagram accounts? The answer was, ‘Not quite’, although growth in followers of museums, auctions, galleries and art fairs slowed in the last 12 months. Average increases in Instagram followers for Tate, MoMA, Guggenheim, and the Met was just 27% in 2019 (down from 41% growth in 2018) was recorded. Among the top auction houses, Christie’s, Sotheby’s and Phillips saw an average 39% growth in Instagram followers (down from 44% a year ago).
Art fairs are also seeing a slowdown in Instagram follower growth, with Art Basel, Frieze Art Fair, Armory Show, and TEFAF experiencing an average increase of 20% between February 2018 to February 2019, less than half the growth rate of 44% suffered the year before.
Many of the top galleries are seeing a similar trend, with Gagosian, Pace Gallery, David Zwirner, White Cube, Hauser & Wirth and Lisson Gallery seeing an average growth rate of 27% in Instagram followers in the last 12 months against 32% last year. However, the real winners seem to be the artists. Banksy added an incredible 3.5 million followers in the previous 12 months, most of these were added when Banksy’s work was shredded during a live Sotheby’s auction in October 2018.
Online art market sales were up 9.8% to $4.64bn The seventh annual Hiscox Online Art Trade Report 2019 shows that online art market growth is steady but slow, with more consolidation among online art platforms likely.
The Hiscox Online Art Trade Report 2019, the seventh annual report of its kind stated that research was carried out by specialist art market analysis firm ArtTactic during January and February 2019. The findings are based on interviews with 128 art galleries and art dealers, 42 online art trade platforms, and 706 international art buyers.
Online art market sales increased by 9.8% in aggregate in 2018 to reach an estimated $4.64 billion, but the annual growth rate has slowed for the third consecutive year.
The online art market may have benefited from the broader art market boom in recent years, but according to the Hiscox Online Art Trade Report 2019, economic and geopolitical uncertainty could test the resilience of online art buyers in 2019. Even so, based on the current growth trajectory, the report estimates that the online art market could be worth as much as $9.32 billion in five years.
Robert Read, Head of Fine Art at Hiscox, commented: “The online art market plods on with steady growth. 2018 was not a game-changing year, and we wait to see where the consolidation and casualties will be in a market place that remains undeniably overcrowded. Perhaps the penny is starting to drop as confidence levels about the future amongst online platforms has fallen again this year. Most will have planned on the online art market gaining traction and market share quicker than it has in reality.”
Key findings from the report:
· Although 77% of the online platforms surveyed feel positive about the online art market in the coming 12 months, this is down significantly from 96% in 2018.
· 71% of the online platforms said they expect more consolidation among online art platforms in the coming 12 months.
· 55% of the online art buyers surveyed said they were likely to buy more art over the next 12 months, up from 52% in 2018.
· Instagram continues to be the art world’s favoured social media platform, with 65% choosing it as their preferred social media for art related purposes, up from 63% in 2018.
· 29% of millennial art buyers said they preferred buying art online as opposed to offline, up from 14% in 2018.
· More millennials bought art online in the last 12 months, and 79% said they had bought more than once (up from 64% in 2018). At the same time, 23% of millennials said they had never bought an artwork in a physical space (e.g. gallery, auction or art fair) before buying art online, up from 18% in 2018.
· Provenance tracking and ownership-registry remain the most relevant user-case for blockchain in the art market as half of the online platforms said that a title/ownership registry for the art market would be the likely area where blockchain technology would succeed.
· 51% of art buyers surveyed under the age of 30 said they would consider fractional ownership of art as a form of investment.
Despite the online art market growing around 20-25% between 2013 and 2015 (comparable with growth rates observed in the online luxury goods industry), the last 36 months show signs of slowing down, with growth rates stagnating for the third year in a row.
Although there was a significant spread of growth rates among the different online art sales platforms in 2018, the estimated aggregate online sales figure of $4.64 billion shows an increase of 9.8% from last year, down from the 12% growth rate experienced in 2017.
This is not to say that all online platforms are growing at a slower rate. Public data available from Sotheby’s, Christie’s and Heritage Auctions show that their online growth was between 11% and 17%
Under-investment in technology may be slowing down the growth for this sector. While many auction houses were quick in adapting to the new digital era, other areas of the industry such as galleries and dealers are still getting to grips with the online art market and deciding whether they should embrace it or not, and how to go about it. Only recently have we seen large galleries setting up their online viewing rooms, with David Zwirner launching their online viewing room in January 2017 and joined by a similar initiative by Gagosian in June 2018. Similar efforts are likely to follow from other galleries and dealers in the coming 12 months.
Although growth has been slowing, there are indications that current buyers are buying more online. We estimate an average future growth rate for the online art market of 15% per year. This is the same as in last year’s report, but down from 19.5% in 2017. Based on this growth trajectory, we could expect the online art market to be worth $9.32 billion by 2024.