The Days When The Art Market Will Go Digital: Challenges And Opportunities

Visitors take a close look at the art at the vernissage for TEFAF in Maastricht. Image source Artspace.com

Our world is increasingly digital.

We journey through the city with the help of google maps, book tickets through eventbrite, and pay a coffee with an app installed on our phone. If the fever of digitization has taken the world by storm, and radically changed our experiences, there are still areas yet to be digitized. The world of the art is one of those few sectors.

The reason why is because historically the art sector tends to be seen as fragmented and inefficient, prone to irrational laws, besides being under funded, and very dependent on political circumstances. It has for centuries been largely informal, managed by elites and tribes. It is a sector that is still mostly unregulated and opaque and has led many players to be slow and resistant to innovative disruption, digitization and technological in depth innovation.

But one can actually look at the art market through the lens of a fantastic opportunity, even from a commercial standpoint, since it reaches out to sectors such as heritage, creative industries, technological developments in design, UX, UI, architecture, contemporary art, the cultural sector, trends and fashion among others. The world of art impacts education as well, in all its different sectors. The art economy, valued directly at nearly $50 billion, indirectly reaches around half a trillion USD.

When innovative disruption reaches the art market

As the world by large becomes increasingly digitized, so the art market. As such, that is an area which is experiencing, presently, a tipping point, with immense opportunities. Over the past decade, some larger art museums and institutions made an effort and took impressive leaps to adopt tech innovations to engage/ with audiences, by developing a strong digital presence.

But most of the art world, particularly traditional art-market gatekeepers, like small/medium sized museums, art foundations, galleries and auction houses, have been very slow to adopt the digital world, and have failed to fully digitize their databases, that contain information about prices, details of art work characteristics, provenance, and records of previous sales.

Moreover these organisations still struggle to understand how to use digital tools – besides digitisation of collections, there is so much that can be done – thus they keep a very offline existence.

Ian Robertson, in his book “Understanding Art Markets: Inside the world of art and business  says:

“The art market does not conform to the Efficient Market Hypothesis (EMH). It is an imperfect and asymmetrical place in which prices fail to reflect all published and unpublished data. The assumptions that the irrational trades or art-market players are cancelled out by traditional arbitrageurs (Shleifer 1999), that prices instantaneously adjust to available information (Hagstrom 2001) and that indices capture all economic activity do not apply. Even the weak form of EMH fails to represent art-market activity.”

Image source: http://www.artloans.co.uk/Art%20Time%20Series.png

The process of digitization nonetheless is here now, and in many ways it is already improving the art market, becoming a core element of its DNA.

A positive outcome from this is that it is transforming art-market’s core business model, which has been until now, greatly secretive and complex, ruled by mysterious forces no one understands. The art market is being forced to become more transparent, and this is happening in an irreversible fast forward velocity.
A bog post entitled “The Art Market Shuns Digitalization, But Can It Survive?” posted in a study community fostered by Harvard Business School, states:

“The availability of a plethora of art market e-data has rendered a market that is usually seen as secretive and lacking in disclosure much more transparent. Moreover, digitization has created innumerable possibilities for research on the relationship between information access and social practice in the art world.”

For example, today, even if through a process burdened with a lot of inefficiencies and hardships, one can start tracking in many cases the price histories of some given works of art through time as them exchange hands from buyer to buyer. Secondly, art market data’s is starting (in some markets) to have a wider availability.

This fact has been essential in supporting the globalization and commercialization of art, which has turned new art lovers into buyers and has encouraged growth in emerging markets beyond New York, London and Paris. But a lot needs to be done and there is a need for a global player to disrupt and innovate.

Who will be the disruptive platform, which will transform the art world, is yet to be known.