Disruption has been all the rage in the art market for years now, hot on the lips of media savvy collectors, investors and uneasy print journalists. But if the online art market revolution was going to happen, it surely would have happened by now? Shouldn’t we all be visiting galleries with our virtual reality masks on and using blockchain technology to check the provenance of artworks? Scouting unknown artists from townships in Johannesburg on our iPhones while messaging all manner of gallerists, and project spaces from around the world?
In 2013 alone art startups received $1 billion in investment according to Deloitte’s 2016 Art & Finance report. In other words there is emphatic belief that the art market is ripe for a digital shake-up. “Disruption”, as defined by Clayton M. Christensen in his article What Is Disruptive Innovation? describes a process whereby a smaller company with fewer resources is able to successfully challenge established businesses. This usually happens when the established businesses focus too heavily on the most profitable high-end market at the expense of others. New companies then seize the opportunity providing lower cost and start encroaching onto the mainstream market, causing disruption.
Mired in opacity and steeped in inefficiency the largest unregulated market in the world has been ready for digital disruption for some time. But for significant, game-changing disruption to take place, a monopoly needs to explode onto the scene, altering the industry forever. For this to happen one of the internet art players is going to have to go full throttle, in the way that AirBnB and Uber have done with accommodation and taxis.
Central to the success of major disrupters such as Spotify and Houzz is the understanding of a trend towards “individual empowerment through the internet, app technology, digitalisation, and social media.” For such a company to succeed in the art world they would have to target the core middle market—not only the blue chip segment. Provide total price transparency—no doubt by ensuring multiple offers are available. Finally, full democratization of knowledge, which in turn goes hand-in-hand with decentralization and an expansion of the marketplace. But the art world has never been something to move quickly, and is unlikely to shift with the same speed as a market driven by people looking for a cheap ride home.
The truth is that despite the large increase in online sales, and the rise of innumerable online art portals, so far digital disruption has simply not transpired. There have been notable changes: the online market is predicted to increase as much as 25% in the next five years and we are viewing more and more work digitally. As art critic Michael Sanchez noted: “Art is no longer discovered in biennials and fairs and magazines, but on the phone.”
One man who certainly seems to be disrupting and changing the way the art world works—and all from the lofty heights of his Instagram account—is Stefan Simchowitz. The controversial collector bypasses galleries and traditional art collectors by taking his artists straight to his network of celebrities and collectors with middle to high cultural capital to make a profit. So far his strategy is going to plan—just so long as the art looks good as a jpg.
His idea is simple. Swooping in early, he selects a young artist, invests in their practice, materials, studio, and then buys their work at a knock down price. He believes his collection will be worth $100 million in a few years. Despite many being contemptuous of his taste, Simchowitz is managing to disrupt an entrenched art structure through force of personality alone. A disruptive business model not attempting to be expansive, but focusing on a core localized community of interest.
This is one alternate scenario, the surfacing of highly-specialized online portals, each focusing on their own area of expertise. One on blue chip artists, another specializing in outsider art, photography specialists, the list goes on. The very notion of there being a global monopoly forming of the statue of eBay or Amazon for art is maybe too out of step with how people collect, but an entity backed up by a network of reliability could certainly rise to the fore. At any rate buying art has never really been about value for money, nor has it been about investment potential or because it matches the color scheme of your kitchen (not always at any rate). Buying art is aspirational, a feeling attributed to risk and pleasure—when you suddenly know it is right and you know what the acquisition will bring.
Mohamed A. El-Erian, author of the work When Markets Collide, 2008 believes the core requirements for a new disruptive force to take over are “speed, productivity, and convenience.” But most art collectors want also to be engaged by specialists, ones that can respond to their “feedback with real improvements”. A colossus without that backup loses any form of expertise, robbing the process of buying art of its magic. It is going to happen, disruption is on its way, but so far a genuine disrupter has yet to convince this most particular of industries.
By Duncan Ballantyne-Way — Senior Editor