The Internet is already changing the collector demographic of the fine arts industry, and its impact will only continue to grow stronger. 

If numbers can speak, then they’re telling us volumes.  They’re saying that in 2009, despite the recession, total sales in the global art market reached $41.9 billion, approximately 28% lower than 2006, according to metrics published by Artvest Partners.  Christie’s reported its 2009 totals were $3.3 billion, and fully 30% of all bids and 14% of sales, or $462 million, came directly from online sources.  Forrester Research notes that in 2009 Internet sales of art and collectibles reached $8.1 billion in the U.S. alone, out of $135 billion in total U.S. retail e-commerce for that year.  They forecast that the art and collectibles category will grow from 6% currently to 11% of all U.S. e-commerce by 2014.  Forrester also projects collectors will continue to shift their buying preferences to online sources because of the convenience, selection and price advantages, driving the annual growth rate in this category to 16%.

So there’s little doubt that the typical art buyer from now on will not be matching the buyer profile dealers have used in the past to pre-qualify prospects walking into their galleries.

Future sales transactions will increasingly involve a minimal amount of personal contact between the buying and selling parties, and not only because of the distance involved. Internet exposure is educating a new breed of art consumer who can and will evaluate digital images, conduct price comparison surveys, and pay electronically from the comfort of home.

While it’s true that a fine art purchase is not comparable to a generic consumer product (such as buying a book or computer accessory), Internet buying horizons for fine art are expanding rapidly.  'The sky's the limit' for virtual galleries, as the marketing capabilities of artists, galleries, auction houses, and resellers expand, with greater opportunities to engage in dialogue and cultivate their unique patronage base online.

The Internet is certainly not a cure for poor marketing efforts and will not advance mediocre art.  It will, however, make artwork more accessible through greater viewer outlets, exposing works to those who traditionally would never have had the opportunity to view it.

There’s a substantial financial input required in cultivating preferences for specialty collecting, and proper advisement comes with a price...  Prospective art buyers of this ilk, will continue to utilize a walk-in gallery or dealer in the buying process, as specialty collecting is a progressive system of education and aesthetic refinement. 

Yet purchasing from dealers and galleries online offers several unique value propositions for collectors of all types:
•    The potential for eliminating retail gallery overhead and markups, as well as sales tax avoidance with an out-of-state gallery (reducing the overall cost of expenditure substantially);
•    Purchasing discretion as many buyers prefer their anonymity to avoid public scrutiny and maintain the privacy of their collection;
•    Avoiding the discomfort of bargaining on price, as face-to-face negotiating is uncomfortable for some.  One can negotiate online, but at the buyer’s pace and schedule, avoiding intimidating direct personal contact or condescending gallery behavior;
•    Range of selection is vastly broadened to a worldwide scope, as the buyer’s source is no longer limited by geographical region.

The greatest threat to the existing gallery sales status quo is the next generation of collectors’ technology preferences.  They will reshape the art marketplace because they’ve been weaned on the Internet.  These individuals are comfortable with online purchases and are time stressed enough to want to avoid the gallery experience – which is an uncomfortable one for many buyers.

Bear in mind that the average dealer markup on a work sold from a gallery is typically between 50-100 percent.  In extreme cases and particularly with emerging artists, the markup may be as high as 200-300 percent. 

In exchange for potentially lower pricing and greater inventory selection, online buyers may relinquish, but not necessarily, some of the benefits traditional galleries offer.  These services may include:  money-back guarantees, certificates of authenticity, full condition reports, updated appraisals, trade-back arrangements, and personal consultations on the scope and direction of one’s collection.  The question is whether these services are worth a 50-200 percent markup?  The answer is contingent on the unique needs of the buyer.

If the statistics provided above say anything on the matter, they’re saying that for a large percentage of present and future buyers, this markup level is excessive and will necessitate a role modification for traditional dealers and galleries.  The change may not be immediate, but they’re a comin’ and they’ll be quite noticeable over time.

-TS

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