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Online auctions boost global demand for art

Online auctions boost global demand for art

The art world spans a variety of art forms, including more traditional forms such as fine art, antiques, and artifacts, as well as newer contemporary media such as non-fungible tokens (NFTs) and digital collectibles. Today, it all comes together in one place thanks to a digital common denominator: the digital marketplace that hosts auctions. Digital marketplaces have opened up a wider market for traditional and digital art to a global audience, spurring greater participation in the sector and increasing revenue.

The value of digital marketplaces for the sector has become clear during the pandemic. Despite global uncertainty and hurdles on multiple fronts, the arts sector continues to grow and technology is helping to support sustainability and innovation in the sector.

The art market remains resilient

Throughout the pandemic, the art market has continued to grow. Revenue from global fine art auctions in the first half of 2022 reached $7.49 billion, up 8.8% year-on-year, with a record 326,000 lots sold, up from 313,400 in the first half of 2021. Meanwhile, sales of all types of NFTs reached a record $24.9 billion last year, almost on par with sales in the first three quarters of 2022, which reached $24.3 billion.

Auction houses are seeing staggering numbers in fine art sales. Microsoft co-founder Paul Allen’s art collection sold for a record $1.6 billion, while Andy Warhol’s Shot sage blue Marilyn earlier this year was voted the second-best art auction result of all time with $195 million.

In fact, cutting edge art and NFTs made up a significant part of the art auction market, the NFT Beeple. Daily: first 5000 days was auctioned for $69.3 million, making it the most expensive NFT sold at the time of the auction. Much of the growth in NFT sales has been driven by the digital marketplace infrastructure originally designed and implemented for more traditional art forms.

Online auctions must reflect offline auctions.

A decade ago, auctions were dominated by traditional fine art, antiques, photography, jewelry, etc. At the time, new digital auction technology offered well-designed, easy-to-use tools that could handle high volumes of both sales and end users.

Since then, technology has evolved along with art and the products sold on it. The role of digital marketplaces, including digital auctions, has exploded in recent years as companies realize their benefits. Clear pricing, transparent stocks, and seamless functionality on mobile devices with customer-friendly interfaces, multiple languages, and no geographic restrictions are all features that make these marketplaces attractive.

The transition to digital markets has not only opened up new geographic markets for auction houses and art dealers, but has also expanded the demographic customer base. For example, online auctions are more attractive to younger people, who may be more inclined to use smartphones to visit. By using online marketplaces, auction houses can reach a wider range of people.

More innovative auction platforms can provide incredibly useful data-driven insights to help them make the most of their changing customer base. In particular, those with machine learning features can help auctioneers tune in to the appetites of registered consumers based on their bidding history, allowing them to set price estimates more efficiently.

Being global platforms, this technology also allows auction houses to set rules under which individuals and entities can and cannot participate in auctions, in addition to which currencies can be used. Leading auction houses highlight the rigor of their anti-money laundering (AML) and know-your-customer (KYC) procedures, which include screening clients against sanctions lists, PEP registries and negative media reports.

These checks and measures are important from a legal standpoint as well as for artists who may not want to be associated with certain auctioneers or other third parties. This is important for new buyers as well, as millennials and Gen Z are more likely to engage with the art market in the long term if it satisfies their demand for high-tech digital experiences and ethical standards.

Digital marketplaces offer a level of transparency about the item being sold – its origin, features, price, parties involved, etc. – on a scale that was not possible a decade ago. In addition, digital marketplaces have helped make art more accessible, transparent, and revolutionary—for which artists, collectors, and auction houses can be grateful.

Editor’s Note: This guest post was written by Brittany Bowles, Head of Sales and Business Development at NovaFory.

Written by khirou

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