The Observer’s Guelda Voien gets a bit over-excited on her visit to Artsy recently. The thinking seems to be that the bankruptcy of Auctionata, retrenchment of Artspace and supposed Uberization of the art market positions Artsy to clean up in online art sales.
Voiena cites new board members Robert Pittman and Rich Barton, the savvy investors associated with the firm—Peter Thiel, Wendi Deng, Joshua Kushner, Dasha Zhukova and Jack Dorsey—and the list of job openings funded by the $51m in capital raised (and, though she doesn’t say, a Series D round is inevitable) as proof that Artsy has the wind at its back. Then there’s this:
While waiting to meet me in a conference room (with a totally uninhibited view of the Manhattan skyline), it happens that Artsy staffers decide they’d like to see what’s going on with a day sale of prints at Chicago-based auction house Wright that’s going on at the moment. As the bids dance around on the screen in real time, it becomes evident that there’s a bidding war at hand. The Kara Walker print had a high estimate of $3,000, but after a few minutes of watching the bidders wrestle for the top offer, the work ends up selling for more than twice that after heavy bidding both on the floor in Chicago and via Artsy. (It sold to someone on the floor in the end, which disappoints the Artsy staffers).
It’s an uncanny demonstration of just how easy it is to use the Artsy platform, and of the way it can produce something close to the excitement of a live auction, albeit on your laptop. I imagine a collector sitting on his toilet, buying Koons sculptures via iPhone before switching to Ameritrade to reallocate.
The problem with this kind of thinking, and with the whole idea of online art sales or the Uberization of the art market, is that it is built upon a mistaken premise best captured in that last unappealing image Voiena presents: buying Koons sculptures during a bathroom break.
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Let’s start with the slightly newsy aspect of the story. Barton and Pittman joining the board could be taken in two ways. One is that the company is reaching some sort of escape velocity which has attracted old Internet hands like the Zillow and AOL vets. The more likely scenario is that Artsy’s business model cannot outrun its fixed costs let alone its sunk costs. The greybeards have been brought in to find a viable source of revenue before the private equity stakeholders go looking for further funding.
The second scenario is far more likely not because Artsy has failed to attract users but that it still cannot figure out how to monetize that user base. Currently, Artsy’s business model would seem to focus on taking over an art gallery’s marketing budget giving the gallery greater reach buy allowing its inventory to scale through the combined traffic.
The problem is that, unlike packaged goods, the addressable market of art gallery marketing budgets is not vast. Unlike real estate market lead generation, art sales are not driven by any sort of necessity—you need a place to live—though they can be driven by status and aspiration.
What’s so wrong with Voiena’s potty image is that the pain point in art sales isn’t something that a website can eliminate. Art selling is a high-touch business. The expense doesn’t come in making the works available or making it easier to pay for the works (which really isn’t very hard from a gallery or an auction house) but in persuading the buyers of the value of the work.
To put it more directly, no one buys art with enough frequency that Artsy is reducing the barriers to acquiring more with greater efficiency and less friction.
There’s more to say on that subject another time. But before we leave the topic, let’s briefly talk about the idea that art can be Uber-ized. By that, most mean the creation of a kind of double-sided market of buyers and sellers that would counter-balance the growing clout of large galleries and auction houses.
The only problem with this model/fantasy is that Uber has not been able to generate anything close to a profit or a believable path towards profits. The service has been a boon to travelers and, possibly, a benefit to drivers. But there’s no evidence yet that it will be capable of becoming a lasting and sustainable entity despite the massive size of its market and international expansion.
How would a platform in the much smaller art market succeed?