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Art buyers flock to online sales

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Topics: Private Client

Online art market could treble in size by the end of 2021 compared to 2019...

  • The rise of Non-Fungible Tokens (NFTs) could herald the domination of digital collectables

2021 saw the biggest indicator yet the online art market is here to stay. The Hiscox Online Art Trade Report 2021(Part 1) found online art sales reached a record $6.8 billion in the first six months of the year (72% up on the first half of 2020) and could hit a record-breaking $13.5 billion by the year end if sales continue at the same pace.

Commenting on the report, Robert Read, Head of Fine Art at Hiscox said: “The online art market has laid down some serious roots in the last 18 months with buyers embracing online platforms in a way that hadn’t seemed possible pre-Covid. The physical art market will never be replaced, but we can expect the online market to continue to grow until we see what, I hope, will be a happy equilibrium between the two.”

The explosion in the use of Non-Fungible Tokens for sales of digital art and collectibles is attracting a new breed of collector/speculator. 

Read continued: “NFT trading has been frenzied and dramatic with all the hallmarks of a classic investment bubble. Some will no doubt make a fortune whilst many will end up shedding a tear before the market settles, but this is definitely one space to watch.”

Key findings:

  • Buyer confidence has been the main trigger for the upsurge in online sales, with many willing to pay higher prices for art works. In the first half of 2021, the average price paid in online-only auctions at Sotheby’s, Christie’s and Phillips was $24,291 (almost triple that of 2019 - $8,529).
  • The shift to online is likely to outlast the pandemic; 56% of art buyers and 65% of online art platforms surveyed in 2020’s report said they believed the switch to digital sales will be permanent.
  • An estimated $3.125 billion, or 46% of online art sales in the first half of 2021 were sold through mobile devices such as smartphones and tablets. This was up from an estimated $1.92 billion for the pre-pandemic year of 2019 (accounting for 40% of total online art sales that year).
  • Fine art accounted for the largest share of online sales from the platforms; 27%, down from 32% in 2020. While other collectibles held steady, sales of furniture and decorative arts increased. This contrasts with the auction houses, where fine art accounted for 66% of online-only sales in the first half of the year.
  • Although slow out of the gates, the traditional art market stakeholders are likely to regain control of the online art market. Most online platforms surveyed (69%) believe auction houses and art galleries  could emerge as the big online players – when they finally embrace the technology’s potential.
  • More online platforms are going to accept cryptocurrency payments, with nearly four in ten (38%) planning to accept crypto payments within the next 12 months, a big rise on last year (15%).
  • There has been a significant rise in the number of online art platforms that intend to embed blockchain technology into their businesses. Four in ten (41%) plan to use blockchain, up from 30% in 2020. The growth of the NFT market is one likely reason for this increase – as 14% have already included NFTs as part of what they offer, while a further 38% are considering doing so in the near future.
  • An estimated $3.5 billion of NFT crypto art and collectibles have been sold from the beginning of January to the end of September 2021 with NFTs opening new possibilities in the collection of both digital and physical art.

You can read the Hiscox Online Art Trade Report: Part One, including key insights and our detailed look at the online customer journey by visiting:  https://www.hiscox.co.uk/online-art-trade-report

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