The Battle for the Online Collector: Inside 3 Companies That Are Betting Big on Art E-Commerce
The Battle for the Online Collector: Inside 3 Companies That Are Betting Big on Art E-Commerce
Not too long ago in an article on what we have been calling the "art-tech industry," ARTINFO quoted a pundit, James Hedges of Montage Finance, saying that most of the relatively new art sites that have sprung up over the last half-decade are "nothing more than glorified poster companies." This is, of course, a radical simplification of the different business models at play among the numerous ventures wagering on the Internet's ability to revolutionize the art market.
Nevertheless, the quip does capture the fact that a number of these sites seem to be betting big on becoming leaders in the trade in multiples and editions online. And it bears mentioning that, after all, posters are pretty big business. At a moment when visual art seems to have growing media cachet, it seems only logical for someone to try to cash in by targeting a demographic that is still relatively highbrow, but broader than the traditional collector base — the kind of people who may be willing to pay a few hundred to a few thousand dollars to own real art, rather than what is referred to in the biz as "wall décor."
None of these companies are claiming multi-million dollar profits yet — but then you have to start somewhere, and they certainly have attracted a lot of attention. Changing consumer behavior is easier said than done, and it is still up in the air whether these sites can educate the young and upwardly-mobile into developing a dedicated online art habit. But investors are betting millions that they will succeed.
For the moment, the three sites that we picked out for this compare-and-contrast — all based in New York with firm footing in both the art and the tech worlds — have a few things in common, factors which seem to be leading to successful sales and growing traction in the lower end of the art market. They all can claim smart and experienced leadership; a passion for educating new collectors, both on and offline; and a genuine desire to democratize, but not dumb down, contemporary art.
Though no company offered to send us its balance sheet, all claimed solid revenues, sold-out editions, and growing interest from emerging collectors. So just what are they doing to get people to buy their art, and how do they plan to set themselves apart in this increasingly competitive niche? ARTINFO investigates.
At the Helm: Writer, curator, gallerist, and entrepreneur Jen Bekman, the founder of Jen Bekman Projects.
The Deal: 20x200's Web site claims to be "transforming design-minded consumers into art collectors." It has raised at least $2.9 million in venture capital, and Bekman claims the company grew 70 percent in 2011 and anticipates it will double in size this year. The site focuses on working with emerging artists and educating the broader public in contemporary art. "There are many more people who do not buy art than people who buy art," explained Bekman. That group, in her opinion, is full of untapped potential. Many of those people have the means to buy, but "no one has tried to sell it to them." In that sense, 20x200 is about getting the word out — there's a big focus on education — that anyone can be a collector, for as little as $24 (plus shipping).
Bekman also noted that her site isn't competing with galleries, or even Web-based companies focused on originals. "I'm not so much interested in transcending the gallery experience online as I am getting new collectors interested," she said. "I'm not trying to solve the problem of how you translate the gallery experience to the online experience."
Moreover, as far as ARTINFO can tell, 20x200's Amazon-esque "you might also like" function is just as good as the still-in-beta $6 million Art.sy project.
The Price: $24-2,000 (though prices can climb higher, especially with framing)
Offline Presence: 20x200 is just one arm of Bekman's various ventures. She also has a gallery in New York, and hosts a photo contest for artists. All three work together as part of her business. "Doing real world events regularly really helps people see the product in person, see how we frame things, and have confidence going forward when they buy [online]," said Bekman.
At the Helm: Former investment banker Chris Vroom and former Daily Candy COO Catherine Levene
The Deal: Of the three, Artspace is furthest into the middle market, with quite a few higher-end prints by the likes of Tracey Emin, Cindy Sherman, and Andreas Gursky priced up to $25,000 (and notably selling out at that level), and some original works — an angle they will be working more in the future, according to Levene. In this part of the market, Levene noted that the Internet is the most cost-effective way to reach an international audience, as even people who pay $20,000 for a print can't make it to several art fairs a year.
With around 80,000 unique visitors a month, according to Levene, the site certainly gets more traffic than the average gallery and is moving into art fair territory — in fact, that's almost exactly the same as the visitor tally reported by the Armory Show earlier this month — except Artspace is open every day rather than just a week per year. "We are about 50 times the size of any other player," said Vroom. (ARTINFO checked both Compete.com and Alexa, which have their problems but are decent comparative indicators, and they both list Artspace's traffic slightly lower than 20x200, but quite a bit above Exhibition A and other sites like Paddle8.)
Artspace also claims to operate in a manner that is not disruptive but complementary to a gallery's core business — high price point sales are less likely to cross over to the anonymous Internet, but selling prints through Artspace can help a gallery offload lower price point inventory with an easy transaction, while getting to know younger, Web-savvy collectors. Vroom posits that there has been an "evolution of consumer comfort and behavior" in Internet commerce. Though "the art world is not particularly on the cutting edge in terms of technology," he said, people now purchase cars, jewelry, and haute couture online. Why not art?
A key issue, of course, in creating a new segment of the art market is educating the public. Without a certain level of intellectual investment, the high prices paid for contemporary art make little sense. Thus, Artspace is investing heavily in creating an encyclopedic compendium of information for visitors about their various featured artists. Notably, it also has a side publishing business producing prints, photographs, and sculptures for museums and other cultural institutions (to sell in museum stores and the like).
Price Point: $200-125,000
Offline Presence: Artspace is putting a lot of effort into building up a classy lineup of real-world events. The site has recently begun hosting talks where site members are invited to watch (and participate in) discussions with artists who have had work featured on the site. The first two were with artists Mark Dennis and Anh Duong, and next week’s much-anticipated discussion will feature superstar Icelandic performance artist Ragnar Kjartansson (cousin of Björk).
In keeping with the educational aspect, Artspace hosts events for new collectors on how to start an art collection, as well as events related to its artist, museum, and gallery partners. The site has done a brunch at Art Basel Miami Beach, an event to support Nick Cave's dual openings at Mary Boone and Jack Shainman last fall, and an event at the New Museum during this year's Armory Show. It has also inked partnerships with an eclectic variety of art fairs, all in the U.S.: the new Expo Chicago, the Texas Contemporary Art Fair, artMRKT San Francisco, artMRKT Hamptons, and New York's AIPAD photography show, whose image is currently splashed all over its site.
At the Helm: Co-Founders include fashion designer Cynthia Rowley; her husband, gallerist (and "Work of Art" judge) Bill Powers; and Laura Martin, Rowley's former business director
The Deal: "We really do compete price-wise with the wall décor market, which in my opinion is a pretty abysmal place," said Martin. That's the gap in the market that Martin saw as a young 20-something who was interested in contemporary art without a huge budget. She went to Rowley and Powers, and together they launched Exhibition A, which claims to be finding success in the middle ground between those who are "too sophisticated for a poster" but at the same time aren't yet at the point financially where they can buy into the contemporary original market. The majority of members on the site are in the 25-45 demographic.
Powers's connections in the art world have allowed the company to lure in artists as famous as Richard Prince to create limited-edition works that sell for less than $1,000 — an edition that sold out in 12 minutes, according to Martin. When asked why an artist that sells originals in the six- and seven-figure range would create a $1,000 print, she didn't skip a beat. "For artists it is away to generate an additional stream of revenue without having to create new work," she said. "Also, it's nice exposure. The membership base gets very excited once they launch. And it's nice for artists to be able to establish a different type of clientele."
Price Point: $150-1200
Offline Presence: Exhibition A does a fair amount of offline business, and has had a string of increasingly notable partnerships. It first set up a pop-up shop at Gagosian's Madison Avenue storefront, moved to the boutique shop Colette, and now is exhibiting on the ninth floor of Barney's department store on the Upper East Side — where prints are flying off the wall, according to Martin. In the words of Barney's "The Window" blog, "Just think about it: You can pick up a collector's item on your way to coffee at Fred's."