The art world encompasses all types of art, including more traditional forms such as fine art, antiques, and crafts, as well as newer contemporary mediums such as non-fungible tokens (NFTs) and digital collectibles. Today, all of these come together in one place through a common digital denominator: the digital marketplace where auctions are conducted. The digital marketplace has opened up a wider market for traditional and digital art to a global audience, stimulating greater participation in the industry and increasing revenues. The value digital marketplaces bring to the industry has become apparent during the pandemic. Despite global uncertainty and multifaceted headwinds, the arts industry continues to grow, with technology helping to underpin the industry’s resilience and innovation.
The art market remains strong
The art market has continued to grow throughout the pandemic. Global art auction revenue reached $7.49 billion in the first half of 2022, an 8.8% increase from the same period last year, with a record 326,000 lots sold compared to 313,400 in the first half of 2021. At the same time, sales of various NFTs reached a record $24.9 billion last year, almost matching the $24.3 billion sales in the first three quarters of 2022. Art sales figures at auction houses are mind-boggling. The art collection of Microsoft co-founder Paul Allen hit a record $1.6 billion, while Andy Warhol’s Shot sage blue Marilyn was the second-best art auction result ever when it sold for $195 million earlier this year . In fact, ultra-contemporary art and NFTs have always been an important part of the art auction market – Beeple’s NFT Everydays: The First 5000 Days sold for $69.3 million, making it the most expensive NFT ever sold at auction. The growth in NFT sales has largely been driven by digital marketplace infrastructure initially developed and implemented for more traditional art forms.
Online Auctions Must Mirror Offline Auctions
Ten years ago, auctions were dominated by traditional fine art, antiques, photography, jewelry and more. At the time, new digital auction technologies offered well-designed, easy-to-use tools capable of handling high volumes of sales and end users. Since then, technology has evolved along with the artwork and auction offerings. The role of digital marketplaces, including digital auctions, has increased dramatically in recent years as companies recognize their advantages. Clear pricing, transparent inventory and seamless functionality on mobile devices along with a customer-friendly interface, multilingual and independent of geography, all these features make this type of marketplace a compelling proposition. The transition to digital marketplaces has not only opened up new geographic markets for auction houses and art sellers, but has also broadened the demographics of their customer base. For example, online auctions are more attractive among young people, who may be more inclined to use their smartphones to participate. By leveraging online marketplaces, auction houses can reach a wider audience. More innovative auction platforms can gain very useful data-driven insights that help them capitalize on their ever-changing customer base. In particular, auctioneers with machine learning capabilities can help auctioneers understand registered consumers’ preferences based on their bidding history to more effectively set estimates. As a global platform, the technology enables auction houses to enforce rules about what individuals and businesses can and cannot participate in auctions, in addition to which currencies can be used. Leading auction houses stress the rigor of their anti-money laundering (AML) and know-your-customer (KYC) procedures, which include checking clients against sanctions lists, politically exposed persons registers and negative media coverage. These checks and measures are important from a legal perspective, but also for artists who may not want to be associated with certain auctioneers or other third parties. This is also important for new buyers, as millennials and Gen Z are more likely to engage in the art market in the long term if their needs for a high-profile digital experience and ethical standards are met. Digital marketplaces offer a level of transparency about what is being sold—its origins, characteristics, prices, parties involved, and so on—on a scale that was not possible a decade ago. Moreover, digital marketplaces have helped art become more accessible, transparent and revolutionary — artists, collectors and auction houses should all be grateful. Editor’s Note: This guest column is written by Brittany Boles, NovaFori’s Director of Sales and Business Development.