November 26, 2010 10:03 pm

Bidding in pyjamas

Most people think nothing of doing their banking, booking a holiday, buying books, clothes and jewellery on the internet. But what about art? Until now, apart from a few highly publicised sales (most recently, a $3.3m ancient Chinese vessel), the business of selling high-priced art has remained firmly in the real world.

This is not to say that dealers and auction houses don’t use the internet. Dealers say they sell an increasing amount directly to clients through their websites, and you can bid and buy directly in many auctions. The only exceptions are Christie’s high-value, smart evening sales, sessions that see hundreds of millions spent on the most expensive art. Christie’s says: “At present there is not a sufficient demand from clients to offer live bidding at these sales.” Nevertheless, the company racked up $41.6m from online art sales in the first half of this year.

Many believe it is only a question of time before collectors will buy high-priced art on the internet, and new initiatives are constantly popping up. Among the most innovative is the online VIP art fair (launching January 22), which has many of the trappings of the real-life event: open for a fixed period, privileged access for VIPs, different sections for established and more cutting-edge dealers. The fair has attracted 120 exhibitors, who are paying between $5,000 and $20,000 to participate – far less than the $100,000-plus that a real-world fair costs. The participant line-up is impressive, including Larry Gagosian, David Zwirner, Barbara Gladstone, Marian Goodman, Emmanuel Perrotin of Paris, Roslyn Oxley of Australia and Luisa Strina of Brazil.

Equally innovative is Art.sy, just launched in New York. This start-up will apparently use the same technology as for music playlists to match art with buyers, and has a powerful group of backers: Wendi Deng, wife of media baron Rupert Murdoch; Dasha Zhukova, partner of Russian billionaire Roman Abramovich and Google chief executive Eric Schmidt. Gagosian is advising the venture, which is the brainchild of a 24-year-old entrepreneur, Carter Cleveland. “This fusion of leaders from the arts, technology, media and business is recognition of the great opportunity that exists in Art.sy’s art genome technology,” says Cleveland.

Of course, we have been here before, not least with the bullish language. The 1995-2000 internet bubble saw overweening confidence in selling art online. Auction specialists and art dealers scrambled to join dotcoms or launch internet start-ups; Sotheby’s poured money into sothebys.com and took a $70m haircut. Ebay launched “Great Collections”, dangling a $1.77m unauthenticated Monet as bait (it didn’t sell). At the height of the frenzy, artnet.com shares hit $49 (they are currently about €5). But as we know, the bubble popped in March 2000; many art sales sites crashed out or only survived by concentrating on prints and posters.

A decade on, and James Cohan, founder of the VIP fair, says: “The mentality of purchasing anything online has totally changed.” Lori Yarotsky, modern and contemporary art specialist at artnet, explains: “A decade ago the image resolution was poor and people were not comfortable with the internet: now they are happy to buy online in their pyjamas. The technology is amazing, and there is a whole new generation of buyers out there.” Yet artnet’s most recent auction – which included a Keith Haring estimated at $800,000-$1.2m – did not see spectacular results: the Haring and many other lots went unsold.

The fundamental question for online art sales is how comfortable buyers will be with buying art they haven’t seen. Dealers and auction house specialists say that this is not rare: an extreme example was when London dealer Giuseppe Eskenazi sold a Cézanne watercolour at Sotheby’s New York in 2007. A telephone buyer stumped up $25.5m without actually having seen it in the flesh.

Gregory Rohan, president and joint owner of the Dallas-based Heritage Auctions, says that its highest price of $1.6m, made in 2007 for Aivazovsky’s “Pushkin at Water’s Edge”, was paid by a Russian in Moscow, again “bidding online in his pyjamas”. Heritage claims the number three slot in the world’s line-up of auction houses, with $650m worth of sales every year. Of that, 34 per cent comes from online sales, although much comes from non-art categories such as coins and collectibles. Artnet says that $20,000-$50,000 is the “sweet spot” [most selling] range for online art sales while Heritage – newer to this field – has an average of a little over $10,300 for art.

But not everyone has drunk the Kool-Aid as far as the internet is concerned. “Eventually, online art sales will be substantial, but they are not there yet,” says London dealer Kenny Schachter. “Even the present technology has its limits, particularly for showing 3D works.”

Joe La Placa, who worked for artnet.com before founding a hybrid gallery/investment venture, is even more doubtful. “The whole concept has its limits,” he says. “In most cases, you have to have physical contact with art.” He dismisses the idea that better image technology changes everything: “However good, it’s still the difference between seeing someone on TV and actually meeting them!” he says.

And selling art is a “high-touch” business, depending heavily on knowing who you are selling to, particularly at the top end. Angela Westwater of New York’s Sperone Westwater, who decided not to participate in VIP, explains: “Art fairs are an opportunity to meet old and new collectors and discuss the work of gallery artists in person,” she says. “Also, since we like to ensure that the work of our artists is placed well, we enjoy meeting the people and considering the ‘fit’.”

Indeed, many players are not claiming that the internet will take over from real world sales. Christie’s says that online bidding is just “one of the platforms we offer”. And even James Cohan seems to be hedging his bets. Rather surprisingly, he denies that VIP is about selling art; “This is not e-commerce,” he emphasises. “We’re not selling art online; we’re selling access to leading art galleries around the world.”

New York adviser Todd Levin has the last word: “The social aspect of buying high-end art is very important; the internet can’t compete with fairs, with their mixture of Wall Street and Hollywood, or with the glamour of an evening auction,” he says. “The internet is a new platform, but it won’t fundamentally change the art world.” So don’t swap your Prada for your pyjamas, at least not yet.

www.vipartfair.com

http://art.sy/

www.ha.com

www.artnet.com

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