Art Tech

Large auction houses intermediate transactions and have partly moved their operations online, but they remain the center of gravity for trust. In that regard, thinking that blockchain is a silver bullet and will disrupt the organization of the higher-end of fine art markets can sound a little ingenuous right now.

Artify was an american company founded around the idea that businesses and individuals could enjoy renting artworks on-demand to display at venues, homes etc. In 2012, it received funding from Peter Thiel in an oversubscribed round and was a great topic for excitement in SV, but was shut down a year later; This sparked me to wonder : why the sudden... See more

The global art market* is was a whopping c.$64bn in value as of 2018

The online opportunity lies mid-market (for now). Pre-covid, the distribution of transaction volume online is skewed towards the middle, while most of the high-value sales still happen offline. Just 1% of the >100k€ artworks are sold online, yet make up for 23% of the value.

Companies like Artland (featured below) have started to roll out VR vernissages that cater to novice investors and art collectors. The idea is to try and kickstart communities around specific art styles, regrouping people that do not necessarily have the resources to travel worldwide several times a year to visit art fairs.

Relatively non-digital but ripe for disruption. The online art market is a mere $5.8bn by UBS’s estimates.

Blockchain can be used to issue untamperable certificates that link either to an entire piece of art or divide it into multiple certificates that act like company shares.

Massive cost of intermediation. Think about it: when you buy a multi-million dollar artwork at an auction house, the average commission is 15%. On top of that goes expenses like loss and damage insurance policies, high-end shipping and other ancillary fees that can drive up the intermediation costs upwards of 25% of the price paid

Once artwork tokenization and continuous trading becomes widespread, could we imagine hordes of arty millennials raving on social media about their latest investment into a Warhol or a Monnet ?

Financing skewed towards high-end. Looking at recent data from Crunchbase and CB Insights, roughly three fourths of the investment goes toward the higher-end marketplaces and startups, targeting the affluent 1stdibs, affordable craft arts with Arts.com (extinct).