How the Internet Interrupted the Art Market
“The art market can really only grow if there’s enough information available and if it’s transparent,” says YPO member Jacob Pabst, CEO of artnet, a publicly held company with offices in New York, New York, USA, Berlin, Germany, London, England, UK, and Beijing, China.
Founded in 1989 with the goal of bringing transparency to the art market, artnet is a leading platform for buying, selling and researching fine art, design and decorative art. Pabst started in sales at artnet in 2000 and quickly became involved as a leader in product development and new technologies, serving as chief information officer beginning in 2009 and as president of artnet Worldwide Corporation in January 2012.
The YPO Art Network recently held a global conference call with Pabst, giving him the opportunity to share his insights on how the internet impacted the art market, and continues to do so today.
Why do you think the art market was not transparent?
There was no price information easily available. Auction houses publish their sales results after every sale but that information was not centrally stored and made available to everyone which is what we organized. If you were interested in buying a painting in 1985, the only way to get access to information was typically from the people you were buying from or collector friends who had access to that information or by subscribing to auction house catalogs. After the sale, auction houses sent out the pricing information but there were so many auctions all over the world all the time. To get a good overview of the market was really very complicated and costly, if at all possible.
How does the internet transform the buying experience of art?
In many ways. People get access to art in a much easier way now because of the internet and you don’t have to walk into a gallery. That can be an intimidating experience plus there are only so many galleries close by. Today everything you need to know in order to make an educated buying decision is only a click away.
What role do online companies play within the larger art market?
Creating transparency in the art market has helped it grow tremendously. Of course the market grew not only because of us, but providing the market with the information it needed certainly was instrumental.
Besides that, artists, galleries and auction houses today have the opportunity to reach a very large audience 24/7, 365 days a year and at a much lower cost than ever before. That’s a tremendous advantage.
Additionally we publish around 20 to 30 articles every day on artnet news, the first news service for the art market.
The biggest shift, however, is happening as we speak: transactions in the art market are more and more moving online. Buying and selling art was very expensive and slow. We created an online marketplace focusing for now on contemporary art where art can be sold and bought much more efficiently.
Most people when they buy at auction don’t even show up at the auction houses anymore, so why tolerate the inefficiencies time and cost wise of having to organize a physical auction?
Of course, not everything can be sold online today. The primary market to a large degree will not move online anytime soon because dealing with unknown or lesser known artists may require a personal experience, but for the secondary market, most artists are very well known and then it’s only a question of price and condition if you want to buy or not.
Will the online marketplace supplant galleries and auction houses?
We want to make the market more efficient, more transparent, faster and cheaper. At a traditional auction house, selling something can take up to six months until you get your money and transaction fees average around 35 percent. This is a condition that cannot last for very long. The model will change but we will not replace galleries and auction houses, of course. Galleries have a whole slew of other responsibilities in the market: They discover artists, they manage artists, they market them, and that’s something that will always exist.
What are some trends in the global art market?
The art market consists of many different individual markets and they are all behaving very differently. Galleries are taking a bigger role in the art market. They’re taking market share away from auction houses. Auction houses are doing more private sales. The contemporary market has grown tremendously but also here we’ve seen a bit of cooling down last year. People are still buying the big artists but not as much as before. They are looking more for treasures now. The Chinese auction market has grown quite tremendously in the last decade but cooled down the last couple of years and is becoming more and more important in a global context especially as the Chinese are now also buying more and more Western art. In the United States last year, we saw a significant decline year over year. It was down around 41 percent.