The art market is about to have its Uber moment
This article was originally published in Luxury Daily on August 21, 2015
After the fierce bidding, Preston Truman walked away with the coveted item, having just dropped $104,765. It was absolutely worth it — after all, those were Air Jordan 12, worn in the Game 5 of the 1997 NBA Finals, with flu-ridden Mr. Jordan giving the Bulls a much-needed victory in a game that went down as one of the most memorable in basketball history. GrayFlannelAuctions.com listed the pair.
The exclusive, impenetrable and often intimidating world of art collecting is no more.
Now, the interest and debate around collecting happens everywhere — on art blogs, Instagram, Kickstarter, Twitter, artnet.com, artsy.com, at art fairs and among modern connoisseurs, who shift between investing in their vintage sneaker collection, first issues of Kinfolk and the next coveted artist.
The conversation also happens among a lot more people.
What once was a polarized market has become more of a continuum, with those willing to invest up to $10,000 in their collectible acquisition to those who are not shy to spend $300 million on a Damien Hirst.
There is, of course, a lot of those who are far and in-between, scouting Kickstarter or Instagram to discover the unseen-before, unique items.
The cool factor here is at an all-times-high: those who can afford to work with a personal art dealer or are on the first-name basis with a coveted gallerist still often prefer the anonymity and convenience of the online auction sites, Instagram hashtag rabbit holes and deeply curated destinations where extraordinary items always come with an equally extraordinary story.
The size of the global art market today is $65.9 billion, divided between United States, United Kingdom and China.
The art auction sales market is $15.2 billion. The forces behind these record-breaking numbers are new. It is now all about the next generation of high-net-worth individuals (HNWI) who are coming into their wealth sooner and sooner — think Silicon Valley entrepreneurs — and the seemingly omnipresent and ever-growing digital auction market.
The influence of the digital auction market is such that some claim that “Instagram almost de-incentivizes artists from seeking gallery representation from small or no-name galleries, as it allows artists to promote their work to targeted people free of charge.”
Others, the more snobbish ones, simply say of artists, “If you are not on Instagram, you don’t exist.”
Even though more museums and art galleries opened between 2000 and 2014 than during the entire 19th and 20th century, the ease of search and discovery and the sheer volume of items offered online makes it the fastest growing market for collectibles.
Still in its infancy, this market is mostly an incubator of the new ways for buyers and sellers to connect, as well as the incubator to gauge new trends, promote new artists and test new bidding and auction formats.
More important than the single-digit sales contribution of online auction market are the habits and expectations it creates with collectors.
The next generation of art collectors finds, engages with and buys art in irrevocably more complex ways than in the past. They are younger, highly educated and tech savvy, interested in the pieces that will reflect their nascent tastes and lifestyle.
The range of collectibles they are looking at is much wider than with a legacy collector, as are the prices, and they collect for the emotional and experiential aspect of it.
And right now, their interest in collecting does not translate into their interest in the legacy auction houses.
The traditional industry players need to hit a reset button to win with this audience in the global, digital and complex art-collecting world.
The legacy houses’ business and brand growth will stem from their revamped cultural relevance.
More than the purveyors of beauty and taste in the bygone era, legacy auction houses have an opportunity to transform themselves into the hubs of global cultural conversation, sources of edgy, high-quality editorial content and curators of the coveted events to see and be seen at.
To get there, heritage companies have to become more than auction houses. They need to transform into lifestyle brands, with a clearly articulated role in the modern conversation and an undeniable value-add in modern collectors’ lives.
That is the working framework that is more in synch with 21st-century business and culture.