Earlier this year, the Hiscox Online Art Trade Report estimated the value of the online art trade in 2013 to be around $1.3 billion, suggesting that this was likely to double by 2018. But are online auction houses poised to replace the physical saleroom? Or will the traditional auction house continue to prosper, since so many integral aspects of the saleroom experience cannot be replicated online?
YES: Alexander Gilkes
My co-founder and I created Paddle8 on two premises. First, we recognised that the centuries-old auction industry was ripe for improved efficiency. Second, we identified the emergence of the 21st-century collector – someone who is cost-sensitive, channel-agnostic, nomadic, digitally savvy, craves immediacy, and collects across multiple categories – and saw that he was not being served by the bricks-and-mortar auction houses. The solution was an online auction house: a destination that marries the expertise and elegance of a traditional auction house with the efficiency, global reach and access of the internet.
In three years, we’ve seen this hypothesis bear fruit. In the first half of 2014, Paddle8 sold $17.8 million worth of art – a 400 per cent increase from the same period in 2013, and the highest sales for any online auction house of art and collectables. Armed with these results and mindful of continued shifts in the industry, we feel confident that online auctions are the future – at least for the lower and middle portion of the market.
In our experience, we’ve seen that the online saleroom allows for significant cost efficiencies and savings, which can be passed onto both sellers and buyers. Online auction houses eliminate the pain-points of bricks-and-mortar auction houses by offering:
1. Shorter timelines: we live in an era where consumers expect 24/7 immediacy, and the ability to acquire everything from the latest handbag to new car insurance with the click of a button. Traditional auctions have very strict and long schedules to accommodate publishing catalogues, shipping works to the physical saleroom, and the outdated tradition of only selling specific categories during specific months. Paddle8 can receive information about a work of art on a Tuesday, evaluate it and put it into a sale beginning on a Thursday, sell it by the time the sale closes the following Thursday, and have it shipped directly from seller to buyer, with no middle man.
2. Lower fees: online auctions are able to lower fees for buyers and sellers by eliminating hefty expenses like printing physical catalogues, shipping work, and paying for prime real estate to display works in a physical gallery space, often in the most expensive part of a given city. (Paddle8’s fees are less than half of those of a traditional auction house.)
3. Instant access to art specialists: historically, the traditional auction houses have made no secret of their focus on works valued at over $1 million. Paddle8, meanwhile, concentrates on works priced under $100,000. As a result, we are able to provide ample support, advice, and expertise to collectors looking to buy and sell at that price point – collectors who might not be prioritised at the bricks-and-mortar houses.
We’ve seen that collectors are increasingly indifferent to the acquisition channel for fresh and desirable works, provided that the platform and provenance are trusted. While Paddle8 has sold works sight unseen for up to $900,000, the company focuses on the sale of works below $100,000, given that collectors at this point are, by and large, able to acquire works of art without the need to inspect them in person, on the understanding that in-house specialists – experts with decades of experience at leading galleries and auction houses – have curated and catalogued the work with the appropriate checks and balances.
Today, buying art through a digital image is the norm, no longer the exception. According to the Hiscox Online Art Trade Report 2014, 64 per cent of all collectors profiled for the survey had bought art online through a website, and 71 per cent had acquired works through an online channel without ever seeing the work in person. These findings are further supported by the statistic that 89 per cent of contemporary art galleries have sold works via a digital image alone. These trends continue to gather momentum, in sync with the evolution of today’s collector.
However, we believe that the physical auction room will always serve a purpose for the trophy works that make up the core of Sotheby’s and Christie’s business. The bricks-and-mortar auction houses will continue to be the site for the drama of the evening sales – and we do not underestimate the importance of communing with a $40 million Rothko, or the high-touch, physical experience that sales at a seven-figure price-point demand.
Whereas the bricks-and-mortar titans will remain the venues for million-dollar-plus trophy works, Paddle8 and other online auctions will dominate the sub-$100,000 portion of the market, honing a very
different skill-set: sophisticated technological innovations and operational structures to accommodate high volume, automated shipping and insurance, and remote consignments. In time, online auctions will be the future for the collector seeking an efficient, inclusive, and seamless collecting experience – the destination for the 21st-century collector.
Alexander Gilkes is co-founder and president of Paddle8.
NO: Jane Tennant
At Tennants Auctioneers we fully embrace technology and the opportunities that the internet continues to produce for the art market and in particular auction houses. Live bidding ensures our international client base and those unable to travel can access our sales remotely. However, for all of those bidding online, the number of clients in the room at Tennants always outstrips this total, demonstrating that people want to be in on the action when possible. By expanding our current business with an £8 million building extension we are determined to ensure that this remains the case, but recognise fully that our online presence and technologies need to complement the traditional auctioneering business.
The appreciation of art – be it an Edward Seago painting, a Lenci figure or a Bidjar rug – is subjective and visual, and no amount of catalogue description, condition reports or high resolution photos online can prepare someone for how an object will make them feel in reality. Viewing in a room setting, alongside other objects, offers the chance to stand back and admire; it evokes emotions. The two major London houses regularly exhibit their best lots in venues around the world; they clearly feel more confident in finding the right buyer at the right price by not solely relying on their online presence. Not to mention the fact that viewing in person gives the buyer the chance to satisfy themselves with the condition and suitability of a product, before making an investment.
We of course encourage people to view our sales online and continue to improve the virtual experience. It is a great way of attracting people in, and yet having spent years talking to top dealers and clients we know that if something is very good, it is worth travelling for. On top of this, auction houses frequently offer anywhere from 500–1,500 lots a sale; when this happens there is so much to look through online that clients admit they often miss desirable lots. This is not advantageous to the buyer, seller or auction house. By getting people through the doors, the chances are they’ll see something else they like, or something that they like more.
The art market is fast becoming a retail market. We all know that online shopping has taken over the high-street, and yet new shopping centres out of town centres keep being thrown up. They are a convenient destination offering food, drinks, ample parking, and clean facilities, and are all-weather attractions. You watch people browsing and they invariably run their hands over the clothes, wanting to know how a garment feels to touch, how it hangs, what it looks like on. You don’t get that experience over the internet and there are many more returns of items bought online.
At Tennants we hope to do something similar with our investment. We truly believe that people want a tangible experience. We are creating a destination where there will always be something to see, from exhibitions and lectures, to the very best items coming up for auction; we will be able to display excep- tional and international collections for up to three months ahead of a sale, which is a unique feature of our auction house.
Aside from anything else, online only or timed auctions are dull. The atmosphere in a traditional saleroom is exhilarating, even with live online-bidding, which is standard practice at Tennants across major sales. You only have to switch on daytime television to see the huge array of programmes dedicated to auction houses. If online only, then this type of show simply wouldn’t exist. This might be music to some people’s ears, but if nothing else they demonstrate the following and mass appeal for attending an auction in person and generate a huge amount of interest in our industry, which is not something to be sneered at. It’s theatre and entertainment, and at its most basic level it’s a day out.
Online-only auctions would create a barrier. There are many people who come to Tennants as a first time buyer; they want to meet the team, familiarise themselves with the items and the process. This one-on-one time with a client is invaluable in cultivating relationships and makes auctions accessible to everyone. This is absolutely crucial; being solely online takes away the personal element of the business, a key factor which is important to Tennants as a family business. Take away the public element of an auction, and you are at risk of losing your public sales.
Jane Tennant is a director of Tennants Auctioneers.
What do you think? Join the debate and leave a comment below…