No, I’m not talking about the 2003 movie starring Julia Roberts and Kirsten Dunst.
I’m talking about the world of art auctions.
Throughout this course we’ve seen the impact of social media on…well almost everything. The list includes horse racing, venture capital, finding a job, finding work to do, religion, vacations and travel, teaching, terrorism, fundraising, football, basketball, golf, food, dating and on and on. It really has been amazing, social media’s invasiveness, into almost all aspects of our daily lives both good and bad.
A week ago, I read an article in Barron’s regarding the impact of social media and art auctions. Current “old school” art auctions are dominated by two auction powerhouses, Christie’s and Sotheby’s.
The world of art auctions is being disrupted by social media. Mona Lisa is going online. From upstart Paddle8 to Amazon.com (which started selling art in August) their pitch is the same – we can sell art more cost-effectively and reach a wider audience than the traditional auction houses.
We’ve seen this in class on a number subjects. From MOOC’s which open up course content to anyone with an internet connection, to my daily commute with Waze which uses crowd-sourced data to make my daily commute more efficient, the impact of social media has been immediate and profound.
Paddle8 was founded in 2011 by Alexander Gilkes, a former LVMH Moët Hennessy executive, and Aditya Julka, a biotech entrepreneur. This unlikely pair has secured $10 million in funding to date from a collage of investors, including tradition-smashing contemporary artist Damien Hirst, Matthew Mellon of the Mellon banking family, and the venture capital firm Founder Collective. Below are some of the current artworks at auction online:
Untitled (2013), 2013 – $5,000 /14 bids
Mick Jagger signed Stratocaster guitar – Courtesy of Mick Jagger
Signed on front, Estimate £5,000
Untitled (Crack Rubbing, pink), 2013 Estimate $7,000
les BALLETS de FAILE NYC , 2013, Courtesy of Artist
Signed & Dated Faile 2013 – Estimate $500, Current Bid $600 / 6 Bids
Since inception, Paddle8 has held more than 230 auctions, mostly for pieces up to $50,000, generating $40 million in sales. Paddle8 further claims to have 150,000 registered bidders on its platform. By the end of 2013, it will have completed 25 themed auctions, including coming sales focused on performance art and fashion.
Paddle8 also successfully runs fund-raising auctions for the likes of the Solomon R. Guggenheim Foundation and The Prince’s Trust. The New York Academy of Art says that Paddle8 is responsible for a 400% increase in pre-event bidding for its fund-raising sales. The firm itself says that, on average, it has helped its nonprofit clients exceed their fund-raising goals by 20% to 30%.
Paddle8 is also undercutting Christie’s and Sotheby’s on price. How? Well, in a traditional art auction the seller has to ship their art to the auction house. The seller has to pay shipping, insurance and catalog costs which can add up to a few thousand dollars. The seller has to pay these fixed costs even if the art doesn’t sell. Paddle8, in contrast, lets sellers keep the works in their own space, without shipping it to a central warehouse. By stripping out this overhead and related charges, its fees to customers are about half those of traditional auction houses.
Unlike the traditional auction houses, Paddle8 doesn’t physically inspect the artwork it puts up for sale. However, it does verify authenticity via standard documentation, and provides provenance and condition reports. Paddle8 leverages social media sites Tumblr and Instagram to let potential bidders zoom-in for close-ups as part of this virtual inspection process.
Paddle8 has found the use of social media to sell art, works fine for artwork valued up to $50,000. Over that amount and potential buyers want to see and touch what they are bidding on. So for the time being, painting and sculptures commanding bids in the millions of dollars will remain with the traditional auction houses. So, while the low-end portion of the market is captured by online auctions, Christie’s and Sotheby’s core upscale market segment is safe. For now.
The power of social media is its ability to break down barriers and open up the world to all of us. If the online auction houses can figure out a way to provide a gallery type experience to high-end artwork then no market segment will be safe. The only mistake that Christie’s and Sotheby’s can make is to underestimate social media’s disruptive ability on their business model.