Eaton Square is an improbable base from which to launch a revolution. The slick, clotted-cream terraces of one of Belgravia’s most expensive addresses exude undisturbed privilege. Yet in a basement of one of the elegantly proportioned houses, marked only by a neatly stencilled sign to the tradesmen’s entrance, lies perhaps London’s closest equivalent to a Silicon Valley garage.

It takes a little while, walking along a corridor past the small, dark offices, to realise that its location is not the most unusual aspect of this start-up’s cluttered premises. On the walls hang frame after frame of the distinctive paintings of Paula Rego and Martin Maloney. The art and the basement belong to Charles Saatchi, ad-man-turned-household-name art collector who lives upstairs with Nigella Lawson, whose innocently lubricious cookery programmes have earned her equal fame.

A decade after his Sensation exhibition created a tabloid uproar with a dung-decorated Madonna and a portrait of killer Myra Hindley composed from children’s handprints, Saatchi is finding new ways to upset and enthrall the art world. This time, he is doing so not with bisected sharks or phallic dolls, but with fast broadband connections. Seated around a heavy wooden table in a large room at the end of the corridor, two of his staff open up a shiny Dell laptop to explain what he has been working on for more than a year.

Neeraj Rattu, in a blue shirt and yellow tie, is the head of Saatchi Online’s technology team. Kieran McCann, sporting a flat cap and ear stud, is the Saatchi Gallery employee in charge of the site’s creative development. The pair have no punchy PowerPoint slides to show, and their marketing message almost has to be cajoled out of them, but the site they pull up quickly grabs the attention with a box of numbers in the middle of the page: “Hits in the last 24 hours: 50,308,913”, it read last week.

In just over a year, with no promotional campaign and no venture-capital funding, Saatchi has created a social networking site aimed at connecting artists around the world with one another and with potential buyers. More than 35,000 artists have signed up to Saatchi Online, and a further 19,000 have registered with Stuart, its student-art section. Museums and art schools worldwide have posted their details and visits to the site have grown 10-fold since February.

Rattu runs through the technological complexities of translating the content so that artists in China, Russia and Brazil can exchange comments and ideas. “Sometimes,” he says, “I spend hours just looking at what they’ve posted.”

Charles Saatchi does not suffer interviewers gladly. In a four-decade career as the most-talked-about advertising executive of his generation and then the most-talked-about art collector, he has succeeded in turning most of them away. The few to which he has consented to speak have elicited answers of Beckettian brevity – “Yes. No.” was one response in an Art Newspaper interview which now features on his website. When I ask his press officer whether Saatchi will pose for an FT photographer, the request is greeted with polite incomprehension. Only half a dozen pictures of Saatchi seem to have made their way into the public domain.

Saatchi is so exercised about his new venture, however, that he is happy to talk – albeit over the telephone. The conversation does not get off to the best start: “You probably don’t know a great deal about the art world, do you?” he ventures, but that is the only dismissive remark in an hour’s enthusiastic conversation.

“The art world is dominated in people’s minds by the thousand artists that are very successful, that are handled by the top 50 dealers around the world,” he explains. “They’re the ones that get all the attention, but the real art world is hundreds of thousands of artists around the world who don’t have dealers and are pretty much unrepresented.” It is this observation that has driven Saatchi Online. As a promoter who says bringing contemporary art to a wider audience is “the thing I’ve enjoyed most”, Saatchi is drawn to the internet’s mass reach – an audience exponentially larger than the 600,000 visitors who used to visit his Thames-side gallery each year. As a collector, he relishes the prospect of diving deeper into that “real art world” without having to wait for dealers, galleries or critics to pick out raw new talent.

“I can see some very talented artists [and] I’m pretty sure among the artists on the site are going to be some of the big names of five, six or seven years’ time,” Saatchi says. “Nearly everything is not going to do well,” he adds cheerfully. “It’s a lousy investment unless you know what you’re doing.”

The same is true offline. “I still trawl through galleries in east and south London all the time, and I get pretty much the same empty feeling some days as I do when I look at the site. There’s 20 per cent which I think is pretty good; there’s this great middle lump which is OK; and 20 per cent is pitiful, really.”

What the largest of the pioneering internet companies achieved was to create markets where there were none or make inefficient markets more efficient. Amazon found buyers for books that no store would stock; eBay united knick-knack hunters with car boots; and Google promised advertisers that they need only spend money marketing to those customers who are predisposed to buy their products. In the case of the art world – rarely known for its ruthless commercialism – the inefficiencies, and therefore the opportunities, are plain. “If you visit a studio block with 50 artists, you come away thinking 48 out of the 50 artists are never going to see anybody,” says Saatchi. “Dealers literally do not have time.”

Saatchi Online already has the feel of a MySpace or Bebo, where unsigned bands jostle for their peers’ approval in the hope of being noticed by a major record label. But will it be able to change the hidebound art world in the way those more prominent innovators are transforming music, publishing and entertainment?

The site has evolved since it was launched as Your Gallery in May 2006, but its core idea remains the same. It provides a free platform on which artists can promote their work to a global audience. Painters, photographers, sculptors, graffiti specialists and video artists post high-resolution images of their work, provide details of their biographies and future shows, link to their friends’ sites and “chat” with other users. Collectors can browse, comment on what they find and buy works they are interested in by contacting the artist, without going through a gallery or auction house.

“One advantage is that prices are probably much lower because buyers are in direct contact with the artists,” says Charlotte Bonham-Carter, a freelance critic and assistant curator at the Irish Museum of Modern Art. She adds, however, that when she looked on the site for some of the artists she knew to be emerging on the London art scene, she could not find them.

With tens of thousands of artists on the site, Saatchi admits to an element of chaos: “Like everything else, it’s a lottery,” he says. He has decided not to curate the site, but he has made some efforts to cut through the clutter, with a magazine section, a critics’ corner and a listing of shows put on by artists discovered through the site. The list stretches from Malvern to Kuala Lumpur.

The most popular feature is Showdown, a fortnightly competition in which artists can submit images for users to rate, with a £1,000 prize for the winner. Saatchi admits he stole the idea from Hotornot.com, “a fabulously insane site” which invites people to post pictures of themselves for other people’s approval. “I’ve got absolutely no technical skills at all. I type with one finger,” Saatchi admits. “I have an idea and go down and say: ‘Look, we could do this.’ They all just go ’piss off’, and that’s how it evolves.”

Down in the basement, his team is working on his toughest order: attempting to write software that will automatically translate Mandarin postings into English and vice versa. One third of the site’s artists come from the US, and another 20 per cent from the UK, but the proportion of non-English speakers, especially from China, has been rising. “A lot of Chinese artists have been coming on the site, saying I don’t speak very good English but I want to be here,” says McCann. Having trawled the market for software that translates from Mandarin to English, and finding none with which they were satisfied, the team decided to develop its own.

“The guys we’ve got working on this have cracked it,” says Saatchi. Rattu is more cautious, saying his 30-strong team has had to call in human translators to check that artists’ profiles are comprehensible. A glance at some of the translated pages suggests there is work to be done. “The cloud is auspicious late,” reads one entry.”The low key, the intrinsic rationality, sinks steadily, modest,” reads another.

Saatchi decided to focus on Mandarin ahead of planned Russian, Spanish and Korean language sites. “It’s one of those strange situations where people know very, very little in the west about Chinese art,” he recalls. “I was instantly dismissive of everything, then gradually decided ’don’t be so bloody lazy, take a proper look.’”

Saatchi’s purchases, such as a $1.5m painting by Zhang Xiaogang which is now featured on the site, have helped fuel rapid inflation in the prices China’s top artists can command. “I think their best artists are as good as any in the west,” he says.

In the two months since the Mandarin site went live, it has signed up 10,000 Chinese students – more than all the subscribers to Stuart in the previous eight months, and vastly more than the number of Chinese artists currently represented by the few Beijing and Shanghai galleries which have any contact with western collectors. Quantity is no guarantee of quality, however. “I’ve found 20 – let’s say 50 – really good [Chinese] artists,” Saatchi says. “That’s not a lot. I know there are thousands that are really, really awful.”

The medium Saatchi has chosen seems well-suited to a self-confessed “gorger of the briefly new”. The internet’s restless immediacy indulges what YBA Martin Maloney has described as Saatchi’s insatiable need for “cultural relevance”. Saatchi is as up-to-date on gangster rap as Chinese painting, Maloney told an interviewer in 2003: “When he’s interested in something, he’s fanatical.” Saatchi admits that he looks at every work that comes on to the site: “I can hear you thinking ‘this guy’s got no life at all,’ and you’re right.”

The site also satisfies another of his driving desires. Saatchi says he buys art primarily in order “to show it off”. The internet provides him with an opportunity to do so on an unprecedented scale, at a time when he has no permanent outlet for displaying his collection.

The plans for Saatchi Online germinated after Saatchi fell out with the landlords at his former gallery at County Hall. He is moving his collection into the Duke of York’s Headquarters, a 50,000 sq ft space set back from the Kings Road in Chelsea, but the building works have dragged on. When I ask when the new gallery will open, he sighs: “I wish you could have a word with my builders. At the moment they’ve promised me November.” Saatchi is already looking for ways to link the site and the real-life gallery, saying part of the new space will be devoted to artists who have come to prominence through the web, such as winners of the Showdown competitions.

The gallery’s opening could provide the first indication of what Saatchi has found on the website. He decided at its launch to buy nothing from the site for the first 12 months, but reset the clock in November with the launch of Stuart. “I make a list of the people I think are good,” he says, but he is not giving away any names.

Saatchi has undoubtedly put more effort into identifying the stars of the site than anyone else, but other would-be collectors have exactly the same access to its artists, and the same ability to see what is popular. Even if he has no inside track, however, the site is sure to consolidate Saatchi’s reputation as an arbiter of contemporary taste and his ability to move the art market.

When he does start to buy, the artists he chooses can be confident of a transformation in their market value simply because of Saatchi’s renown as the art world equivalent of a music-industry scout, spotting the next hit band from the back seats of an unpromising dive. “I’d never thought of it that way but that truly was my dream,” he says. “I always thought being an A&R man was the best job on earth.”

Other players in the art market may have reason to feel more nervous. In each major online innovation to date, the flipside of a more efficient market has been “disintermediation” – a grim euphemism for the once established businesses suddenly cut out by the upstarts. Napster and then Apple’s iTunes have shrunk the CD market by more than a fifth, and the founders of Craigslist have taken hundreds of millions of dollars out of local newspapers’ classified advertising revenue.

Does Saatchi Online pose a similar threat to the hierarchies of the art world? In the past, Saatchi has been withering about dealers who “feel castrated by any loss to their power base”, newspaper critics who ”could as easily have been assigned gardening or travel”, and “dead-eyed, soulless, rent-a-curator exhibitions...with their socio-political pretensions”.

In his own buying, he will buy a Zhang Xiaogang at Christie’s, but will also bypass dealers to go to artists’ studios. As Saatchi Online opens up similar opportunities for those art buyers who may never attend an auction or be invited to a vernissage, should the upper echelons of the art world feel threatened? “The dealers at the top of the tree couldn’t give a fig,” Saatchi reckons. “We’re not treading on Larry Gagosian’s toes in any way. That doesn’t mean that in five years he won’t be showing the best artists that we have.” The dealers who are quick to see the site’s advantages should instead find an opportunity, he argues. Ynon Kreiz of Balderton Capital, the venture group behind Setanta Sports, cautions against assuming that successful websites have to destroy the markets they enter. “You’ve got to be able to embrace the market,” he says. “You can’t just cater for supply or demand. You’ve got to cater for both – otherwise you’re taking on the world.”

Many in the art establishment challenge the idea that a website will ever replace their intimate network of contacts, and question the extent to which an image on a screen can replicate the experience of seeing a work of art at close quarters. “I would always tend to back Charles,” says Lord Gowrie, the former chairman of Sotheby’s, but he questions whether a website can capture art’s emotional impact. “I can intellectualise art, just as I can intellectualise coarse fishing, but it’s the sensuous engagement which art creates which should precede the intellectual.

“My view is that sight-unseen can work well for linear or conceptual art, but it’s still a photograph of a girl or boy as distinct from a date with them, and the date seems to me rather important”. A former dealer himself, Gowrie argues that where large sums of money are involved, the relationship between dealer and collector will always remain. Previous attempts to sell art online, including Sotheby’s own online experiments during the first dotcom wave bombed for precisely these reasons. Saatchi stands a chance of learning from such mistakes, Lord Gowrie predicts. “The pioneers commit the blunders and the second generation realise where the snake pits are.”

That second generation includes sites such as Eyestorm, a survivor of the earlier dotcom era now under new management and focusing on contemporary art limited editions, and specialists such as Saffronart.com, an online auction site which works with Indian galleries. The highlight of Saffronart’s latest auction was a Tyeb Mehta oil sold for almost $1m.

Saatchi is confident the internet can have a “profound” impact on the way people buy art. “People have got very comfortable about buying off the net things they haven’t seen. eBay is a wonder,” he says. The crucial development, he adds, is that fast networks have made it easy for artists and collectors to exchange high-resolution images. Of course, nothing would ever compensate for the fact you can’t actually feel and touch [the works] and see how the artist laid on the paint. But that doesn’t mean there’s not a huge majority of people out there who don’t feel that way. They’re not particularly sophisticated. They just like the look of it.”

If he is right, will Saatchi Online become the marketplace in which this lucrative meeting of frustrated supply and untapped demand takes place? Like all early-stage dotcom executives, Saatchi and his team are frustratingly vague about the financial details of the site. Business is certainly being done – a tab on the site clicks through to details of exhibitions in London’s Brick Lane and Mumbai which have been spawned by the site – but Saatchi’s team has to rely on anecdotal evidence of how many sales have been generated by the site. Most of the transactions about which artists have informed them have been at prices between £500 and £5,000 – a far cry from the prices would-be Ron Muecks and Tracy Emins can expect. Hannah Bureau, an abstract painter studying for an MA in Painting at the Massachusetts College of Art, says her experience has been mixed. “I have sold one piece and have almost sold a few others, but those sales did not go through.”

James Burke, who is a few weeks away from graduating from London’s Central Saint Martins, joined the site in November and promptly sold one of his drawings to Bernard Jacobson, a Mayfair gallery whose artists include Sol LeWitt and Howard Hodgkin. “I wouldn’t have sold work to Bernard Jacobson if it weren’t for the site,” he says, adding that Saatchi Online helped him meet other artists, three of whom are now working with him on a joint show. But not all his peers at Central Saint Martin’s have embraced the venture. “There are a few mixed opinions about it, to be honest,” he says. “I guess it’s the commerciality of the realm surrounding the whole Saatchi idea.”

For now, though, the site is anything but commercial. It charges no fee for membership, takes no commission on any sale, and has no other form of revenue. “This is not a study for the Harvard Business School in good management, this is something emotional,” Saatchi says. “I’m doing it because I enjoy it. I’ve got that messed up psyche that if you’re going to do it you may as well do it as best you can.” He claims to have no idea how much he has spent on the site.

At some stage, Saatchi hints, he may decide to stop paying for it himself. “I’ve had a couple of people who read the FT say ‘can we meet you and do something with your site?’ There have been a couple of meetings with the banker classes. They all say: ‘why don’t you charge people or take advertising?’ Well, I don’t want to.”

Adam Valkin of Arts Alliance, a venture capital group which has backed Lovefilm and Lastminute.com, says “there is no question there’s a significant business opportunity here” should Saatchi decide to create one. “It will all come down to execution, like any business.”

Valkin identifies several ways of making money from Saatchi Online: taking a cut of sales made over the site, charging artists to put up information about their art, or offering subscription services such as mailings about new exhibitions. The one Saatchi has already ruled out, however, is advertising. Saatchi & Saatchi was famous for helping Margaret Thatcher to power in 1979 and convincing the world that British Airways was its favourite airline, but its co-founder appears to be one of the few in his industry not to be bewitched by the potential of online advertising. “You could obviously make a lot of money with advertising on the site, yes, there’s no question about it. But I think it would rather ruin things.”

There could be other business models, he concedes. “If there’s a way I could do something that wouldn’t interfere with the site, and have people sponsor things, I’d do it. But until my auditors turn up and say ‘idiot brain, you’ve spent a lot of money in this and aren’t making anything,’ I’ll carry on.” For now, he says, Eaton Square is still a long way from the slick campuses of Silicon Valley’s Sand Hill Road. “I’m currently unwaged. I’ve currently got no work. All I do is go and look at pictures or go and see an artist in his studio, and then I play around with the site and then I wait for the football to start.”

Andrew Edgecliffe-Johnson is the FT’s media editor.