Director Max Hollein on the impact of the Internet on the art market and collectors.
Digital changes everything--even the international art market. Trade in unique, fragile, precious objects of art, which call for personal agency and sound elucidation, has long been regarded by many as one of the few remaining bastions whose business model (built on trust and longevity) would prove resistant to innovative digital technologies. Yet just four years ago, a tool as simple as the iPad gave rise to an entirely new sales approach. There wasn't a single resourceful gallery owner at the art fairs in Basel, London, or Miami who couldn't show visitors to his or her booth other works on a tablet screen and then during the fair immediately send the images to other potential buyers via email.
In the past, collectors would never have dreamed of purchasing high-priced works of art without looking at them beforehand. Today, however, a substantial share of business is conducted on the basis of digital images alone. Just as consumers buy shoes on Internet sales platforms without first trying them on, collectors now purchase artworks without having seen the originals. Buyers rely on high-definition images. The process is more convenient, cheaper, and above all faster. Customers are spared the time and effort required to view the works, and dealers can build a new customer base that is not limited to a given locale.
Not only does this accelerate the turnover rate for works of art, potential buyers are also compelled to make their decisions more quickly. While at one time it was not at all unusual for art dealer to wait several weeks for the announced visit of an interested client, potential buyers today often have to make up their minds within twenty-four hours after transmission of the corresponding image file--since other collectors also received the very same information at the same time.
Art-price databases available to anyone for a small annual fee, such as Artnet.com and Artprice.com, have narrowed what was once the prevailing information gap between art dealers and clients. All sales at auctions around the world are posted in these databases. Thus both professionals and laypeople have access to the most recent appraisal of a given work. What is more, the market level of any artist whose works have ever been traded at auctions can be determined quickly and relatively reliably.
Every prospective collector should be urged to look into this source of information. A potential buyer can find out within a matter of seconds how much the dealer from whom he wishes to buy a work has paid for it at auction and thus how high the profit margin is. The most significant change is a product of the growing online auction trade. We are currently witnessing the massive expansion of the art market and the gradual elimination of the inhibiting elitist thresholds set by the traditional auctioneering giants. The art market is no longer the exclusive domain of the upper ten thousand. Indeed, virtually all dealers are now moving into the middle population segment, where the most money is to be made.
Although, contrary to conventional wisdom, the profit earned by auction houses on top-class lots is actually very low (as both sellers and buyers often negotiate special terms in order to set auction records with star transactions, which are then feasted upon in the media), much more money can be made with so-called mass goods--especially when a wide, international clientele is addressed inexpensively and simultaneously via the Internet. Any more or less professional auction house in operation today has digitized its catalogues and opened the door to online bidding. And most houses also transact sales of leftover lots in the same way.
As a logical consequence, Sotheby's is now in the process of linking its expertise and brand to one of the largest merchandise exchanges on the Internet, namely eBay. In April of this year, the two companies began conducting selected auctions directly via the Internet. The intent is clear: to cater to the mass market and attract a new segment of the public. Founded in 1744, the venerable auction house Sotheby's is taking on a significant image risk by allying itself with the world's largest Internet merchandiser. But it is surely good news for clients. Internet auction houses such as Paddle 8 or Auctionata lure buyers and sellers with low fees and lower costs than those of the traditional houses, which levy surcharges of at least twenty-five percent on purchases, along with other charges.
The real future, however, lies in the integration of a complex value chain comprising art reception, art interpretation, and art sales. That is the approach currently pursued by the Phaidon art publishing company, which will surely be transformed into a complex art platform in the near future. Leon Black, a highly successful leveraged-buyout king and the owner of Apollo Global Management, is also one of the world's leading art collectors. He acquired Phaidon in 2012. Now, through this acquisition and the impending integration of the Artspace.com art-market platform, his organization is attempting not only to tighten the links in the value chain between art information, publishing and sales but also to eliminate the boundaries between people interested in art, art lovers, and buyers of art as customers: "Do you like books about Picasso? Then you might be interested in buying these prints."