Online auction houses are increasing the global appetite for art
The art world encompasses various types of art, including more traditional forms such as art, antiques and artifacts, and newer contemporary media such as non-fungible tokens (NFT) and digital collectibles. Today, these are gathered in one place through a common digital denominator: the digital marketplace where auctions take place. Digital marketplaces have unlocked the wider traditional and digital art market to global audiences, spurring greater engagement in the sector and increased revenue.
The value digital marketplaces add to the sector became clear during the pandemic. Despite global uncertainty and headwinds on several fronts, the arts sector has continued to grow, with technology helping to underpin resilience and innovation in the sector.
The art market is still robust
Throughout the pandemic, the art market continued to grow. Revenue from global art auctions in the first half of 2022 reached $7.49 billion, up 8.8 percent from the same period last year, with a record 326,000 lots sold compared to 313,400 in the first half of 2021. Meanwhile, sales of all types of NFT in last year reached a record $24.9 billion, which has almost been matched in the first three quarters of 2022 with sales of $24.3 billion.
Auction houses have seen astonishing figures for art sales. Microsoft co-founder Paul Allen’s art collection brought in a record $1.6 billion, while Andy Warhol’s Shot sage blue Marilyn earlier this year was named the second best art auction result of all time at 195 million dollars.
In fact, ultra-contemporary art and NFTs have been a significant part of the art auction market – Beeple’s NFT Weekdays: The first 5,000 days was auctioned for $69.3 million, making it the most expensive NFT sold at the time of the auction. To a large extent, the growth in NFT sales has been facilitated by the digital marketplace infrastructure that was originally developed and put in place for more traditional art forms.
Online auctions must mirror offline auctions
Ten years ago traditional art, antiques, photography, jewelry and so on dominated the auctions. At the time, the new digital auction technology offered well-designed, user-friendly tools, capable of handling large volumes of both sales and end users.
Since then, technology has evolved along with art and products auctioned on it. The role of digital marketplaces, including digital auctions, has grown dramatically in recent years as companies recognize their benefits. Clear pricing, transparent inventory and seamless functionality on mobile devices with customer-friendly interfaces, in multiple languages and without geographic restrictions, are all features that make such marketplaces a compelling proposition.
Not only has the shift to digital marketplaces opened up new geographic markets for auction houses and art sellers, but it has also expanded the demographic customer base. Online auctions appeal more to younger people, for example, who may be more likely to use smartphones to participate. By using online marketplaces, auction houses can reach a wider range of people.
The more innovative auction platforms can secure incredibly useful data-driven insights that help them make the most of their changing customer base. In particular, those with machine learning capabilities can help auctioneers be matched to the appetites of registered consumers based on their bidding history, allowing them to bid more effectively.
As global platforms, the technology also enables auction houses to enforce rules about which individuals and companies can and cannot participate in auctions, in addition to which currencies can be used. Leading auction houses emphasize the rigor of their anti-money laundering (AML) and know-your-customer (KYC) procedures, which include checking clients against sanctions lists, registers of politically exposed individuals and unwanted media reports.
These checks and measures are important from a legal point of view, but also for the artists who may not want to be associated with certain auctioneers or other third parties. It’s also important for the new buyers, as millennials and Gen-Z are more likely to engage in the art market long-term if it meets their demand for high-spec digital experiences and ethical standards.
Digital marketplaces offer a level of transparency around the item for sale – its origin, features, price, parties involved and more – on a scale that wasn’t possible a decade ago. In addition, digital marketplaces have helped make art more accessible, transparent and revolutionary – something artists, collectors and auction houses can all be grateful for.
Editor’s note: This guest post was written by Brittany Boles, head of sales and business development at NovaFori.