It's been a long time coming, but the art industry is finally starting to embrace emerging business models and technology. For years, there haven't been many opportunities to avoid the same big commercial galleries and cultural gatekeepers that have been around for ever. But, if the past 18 months are anything to go by, those days look like they're over.
The global pandemic led to big changes in the art world. So much so that online brokerage Artsy reported at the end of 2020 that the market had ‘gone through 10 years' worth of innovation and evolution in the past 10 months’.
A shift to online exhibitions and virtual programming led to online sales doubling to a record $12.4 billion – that's 25% of global art sales, up from a 9% share in 2019, according to a recent report from art organization Art Basel and investment banking company UBS. The report also mentions how, over the same period of time, millennials spent six times more on art than the generation that came before them.
Now that galleries and museums are largely back open again, they're targeting a younger, more digitally savvy audience. And, for the new wave of art businesses as well – and, suddenly, there are loads – the key to success largely comes down to taking advantage of the art market's digital pivot.
The NFT ecosystem
From eco-friendly crypto wallets to physical video content frames, the digital art landscape is spreading far beyond just buying and selling pieces of art.
Digital art has become a billion-dollar business and non-fungible tokens have played a key role. The technology behind NFTs, at least to those in favor of them, offers a revolutionary way of selling art: anyone can buy them, meaning traditional market dynamics have been disrupted beyond recognition.
Put simply, an NFT is a digital certificate of ownership bought and sold using cryptocurrency, to which any digital file – an image, song, video, etc – can be attached. They cut out the need for art dealers, enabling artists to trade directly online. It's also easy for buyers to flip artworks and resell them at a profit; however, every time an NFT is resold, its creator also makes a profit – a kind of royalty system missing from the traditional art world.
The hype around NFTs hit its highest point in spring 2021, when works by famed digital artists like Mike Winkelmann (AKA Beeple) sold for huge prices at auction. It wasn't just a few big-ticket items, though – according to NonFungible, a platform that lets you track NFT marketplaces, nearly 80,000 weekly transactions took place in March last year. Although sales are still volatile, dropping by 69% in September, according to insurance provider Hiscox, there’s no reversing the impact of NFTs on the art landscape.
Lots of new businesses have been launching, aiming to take advantage of the new, sprawling demand for NFTs. Each NFT marketplace has its own unique selling point for discovering upcoming projects – the most popular, OpenSea, partnered with computer software company Adobe to give credentials for NFTs created on its graphics editor Photoshop, while Nifty Gateway is reducing the environmental footprint of the space by going carbon negative. And just as you might need a temperature-controlled, dimly lit room to keep a stash of rare oil paintings, the right storage for NFTs is key, and ‘digital wallets’ like the browser-based, decentralized MetaMask and mobile AlphaWallet enable access to artworks and store the cryptocurrency to pay for them.
Art tech startup Artscapy's end-to-end online platform facilitates browsing digital art collections, connecting with like-minded ‘Artscapers’ and managing a collection of works. Paris-based digital platform LaCollection connects younger NFT audiences with older cultural institutions and partnered with the British Museum for its Katsushika Hokusai exhibition. ‘There are 100 works in the museum and 200 on our platform – we're extending the museum experience to online,’ explains co-founder Jean-Sébastien Beaucamps. Visitors can also buy NFTs at the exhibition's physical on-site store.
When it comes to showing off a digital art collection, however, things are still pretty basic. ‘It's a bummer to invest several thousand dollars in a piece of digital content and have to open Safari on your phone to show your friends,’ says Joe Saavedra, founder of Infinite Objects.
Established in 2018, his New York-based company creates physical frames for video content, each with a certificate of authenticity. ‘When you think about monetizing video today, it's just YouTube ads,’ says Joe. ‘Our product represents a new way to sell video, but it's not for the investor flipping it to make a quick buck.’
For $79 to $199, anyone can use Infinite Objects to create a personalized physical product of their video content, offering something to treasure beyond double tapping, swiping or liking. Joe's tip for those in the space is to ‘focus on the collector experience and make the audiences and the fan communities excited to be connecting.’
New funding models
Artists are being empowered by new ways to find loyal fans – and make serious cash.
The pandemic initially hit artists hard – 95% of those in the US lost out on income and 80% didn't have a recovery plan, according to an April 2020 survey by funding organization Artist Relief. But art was hardly equitable in the first place. In the UK, there are 55,500 registered visual artists and around 1,597 commercial art galleries. Talk about under-served.
Since her undergraduate degree, LA-born, London-based artist Stacie McCormick has been against the traditional model where artists put all the effort in and a gallery gets half the sale value. ‘That metric never computed for me,’ she explains. ‘We're enabling the consumer and the artist to find each other.’
Stacie bought the URL for her community platform Fair Art Fair five years ago, and began studying subscription business models alongside the running of her West London-based gallery, Unit 1. She compares Fair Art Fair to dating app Tinder: artists pay a monthly fee to display images of their work and connect with potential buyers; all other communication takes place off the app. By digitizing the admin of art dealing, like generating invoices and certifications of authenticity, the need for a middleman is no more. Seven weeks after its September launch, Fair Art Fair had 300 global artists and thousands of artworks.
Taking inspiration from other subscription models is a winning formula. Art-lending innovator Gertrude charges subscribers £50 a month to rent artworks, and they can buy at any time. Artists are paid £30 for each rental, earning them a potential £300 a month while retaining ownership.
Membership platform Patreon is home to more than 200,000 creators, with visual artists one of its biggest categories. In 2020, their total combined earnings increased by half, according to company data – digital artist Loish makes around £19,000 a month from her subscribers. OnlyFans could become a refuge for artists, too, given that censorship on TikTok and Facebook led the Vienna Tourist Board to host Schiele and Modigliani works on the mostly 18+ platform.
‘We wanted to show solidarity with artists who are censored,’ says Helena Hartlauer, head of media relations at the Vienna Tourist Board. ‘If you can’t show your artwork on social media, it can be an obstacle to your career.’
Three forward-thinking companies out to modernize the art industry
1. The problem. During visits behind the scenes at art fairs, galleries and museums, Sean Green, Raymond Nguyen and Steve Miller noticed that people were using address books, post-its, spreadsheets and their memories to store information. There was no customer relationship management (CRM) system built for the art world.
The solution. Arternal's workflow software gives galleries the tools to leverage data, professionalize operations and maximize efficiency. From instantly scanning new business cards for contact info to systematizing follow-ups after an art fair, the LA-based company helps small dealers scale up. Next on Arternal's agenda is a streamlined payment system to improve galleries' cash flow.
2. The problem. Shipping a valuable object is cumbersome and expensive. Steps to consider include: collection, soft packing, crating, handling export customs, freight, import costs, delivery and installation. The Online Art Trade Report from insurance provider Hiscox found that shipping comes up as one of the top-three biggest challenges in growing the online art market, with 37% of art buyers naming the complications around artwork shipping as their main obstruction to buying art online.
The solution. Digital tool and freight forwarder Convelio's dispatch algorithm considers various parameters such as fragility, dimensions and value to assemble the most appropriate logistics chain for each artwork. Pieces shipped by Convelio range from paintings and sculptures to high-end furniture, with values ranging from €5,000 to €1 million. The benefit to galleries, interior designers and auction houses is significant: ‘Not only does this system dramatically reduce the amount of time spent on logistics, it also means clients are much more likely to purchase online when offered an instant shipping quote,’ says global partnerships manager Chloe Newcombe.
‘The conversion likelihood increases by 30%.’ Founders Edouard Gouin and Clément Ouizille began by focusing on antiques for local markets like the Decorative Antiques and Textiles Fair in Battersea, London, or the Puces de Saint-Ouen in Paris, then worked up to more complex art transport assignments. Now the team is 160-strong, and is spread across offices in Paris, London and New York.
3. The problem. Conservators, registrars and restorers must provide a condition report of any piece of art when it changes hands – much of which is still done on paper, with wildly varied levels of quality and attention to detail.
The solution. Founded by London-based Annika Erikson, a former conservator at the Tate family of galleries, Articheck's mobile app and web platform analyzes and catalogs the physical condition of pieces of art. It created a new industry standard in digital shorthand to quickly and accurately share condition reports – an unglamorous but essential tool for both lending and selling art. Next in Articheck's pipeline is a virtual courier system to streamline transportation and help institutions reduce staff travel, budgets and carbon emissions.