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Click and pay art purchases: Have Cate Blanchett in your living room

28 September 2020

April French Furnell

Are crowded galleries and glitzy opening nights, a thing of the past for the art world? Like many aspects of life, purchasing and experiencing art, has also been affected by the coronavirus pandemic, yet as Citywealth’s April French Furnell explores, innovation is the answer.

In March 2020 when galleries, auction houses and art fairs closed their doors, the art world paused for a moment, but it was not to be defeated. Technological innovation came to the fore to keep the wheels turning.

Click and pay: confidence rises

To set the scene, online art sales in 2018 reached a new high of $6billion (according to UBS’ Art Market Report 2019), but only 4 per cent of collectors had spent $1million or higher on a work of art online – posing quite a challenge for galleries and auction houses dealing with UHNWs and their confidence in high value online purchases. Yet in the first half of 2020, online sales had risen to 37 per cent of total sales globally, up from just 10 per cent in 2019, according to Art Basel and UBS mid-year survey ‘The Impact of Covid-19 on the Gallery Sector’. Of these sales, 74 per cent were regular clients of the gallery and 29 per cent were new to online buying in 2020.

For the survey, insights were gathered from 360 high net worth collectors across three different markets: the US, the UK and Hong Kong SAR. The high net worth survey found that 92% of collectors had purchased a work of art so far in 2020. The value of spending was at a relatively high level across the three markets: a majority (56%) of collectors had spent over $100,000 in the first half of 2020, including 16% spending over $1 million. The millennial segment also had the largest share of high spenders, with 17% of those surveyed each having spent over $1 million in the six-month period (versus just 4% of boomers). “The pandemic disrupted economies and societies, and galleries worldwide had to adapt quickly to new behaviors and realities. Our survey of high net worth collectors illustrates a continued drive to support the market, as it migrates ever faster to online platforms”, said Christl Novakovic, CEO of UBS Europe SE and Head Wealth Management Europe.

Maddox CEO John Russo commented, “Since lockdown there has been unprecedented interest and demand in our artists and our consultant’s expertise to help clients curate their homes and expand their collections. Online sales have been very strong, with June of this year being a record month for our website’s sales”. The gallery surveyed its network of more than 50,000 to understand their buying patterns and found that “despite COVID-19, our collectors continued to be passionate about art and acquiring new pieces: 52% were likely or very likely to buy art this year. A further 66% of respondents confirmed that they were interested in growing their collection in the next 12 months, with Banksy, The Connor Brothers, Harland Miller, and Keith Haring among the most sought-after names in our roster.”

It was a similar experience for auction houses. “Pure online-only auction sales by Christie’s, Sotheby’s and Phillips generated $370 million in the first half of 2020, which was which was more than five-times higher than the same period in 2019”, said Robert Read, head of fine art and private client at Hiscox. In their Online Art Trade Report, he commented, “After three months of a digital-only art market, it is clear that collectors are building their confidence and trust in transacting online. Art Basel’s second edition of its ‘Online Viewing Rooms’ 19-26 June, a virtual substitute for their flagship fair in Basel, reportedly saw many multi-million transactions taking place during the online VIP preview. This suggests that the price ceiling in the online art market is increasingly pushed upwards. Even when the world returns to normality, this digital transformation among art fairs could soon become part of the new normal, as travelling to international art fairs becomes less relevant or necessary”.

Passion investing by zoom: High definition photos and videos

Fred Clark, an associate at law firm Boodle Hatfield explains that clients need not be too wary. “Purchasing art online as a ‘distance sale’ within the EU gives the consumer rights as if they were purchasing a washing machine. Theoretically, if the consumer chose to return the artwork, they could”. Yet he hastened to say, he has not in his experience, encountered an art collector wishing to return a piece in this manner. Fred added that without viewing an artwork in person, a collector could miss a whole number of issues, although by using virtual condition checking and requesting high definition photos or videos it may allow collectors to alleviate these risks. Collectors should ensure they are comfortable with who they are transacting with and what the other terms of the purchase there are, for example around delivery and insurance.

Fake aware: is the art virtually real?

However, if dealing with an unknown person the risks could be greater. Jonathan Tickner, head of commercial litigation and civil fraud at Peters & Peters Solicitors contends that: “Without physically seeing the work and performing vital authenticating tests, not only are forgeries likely to slip through the cracks – whether this be a faked artwork or faked providence documents (which are easier to manipulate online), but also a rise in cases where artworks have been sold that do not actually exist. A recent trend in art fraud prosecutions has been where fraudsters have sold the same artwork many times over to different buyers and fractionally sold portions of one piece amassing more than 100%. In these cases, often the right of ownership or the right to sell the piece has been faked. By moving what was already an information-light platform to the cyber realm, which brings with it a raft of data deficits, fraudsters are more able to exploit these technological vulnerabilities for their own advantage."

Art bootleggers: money laundering surveillance steps up

Jonathan added that during times of recession, money laundering fraud typically rises and as we enter another recession, history is likely to repeat itself. Yet recent HM Treasury-approved guidance produced by the British Art Market Federation aims to secure the industry from these types of abuses. The guidance outlines that “art market participants who deal in sales, purchases and/or storage of works of art with a value, for a single transaction or a series of linked transactions, of 10,000 euros or more, will be subject to further anti money-laundering obligations, under the Money Laundering Regulations 2017.” 

“The core focus of the Money Laundering Regulations in relation to the art world, is that market participants must conduct thorough customer due diligence by identifying the person with whom they are transacting, or in the case of corporates, identifying the individuals who control the entity. The deadline for registering as an art market participant for the purposes of the anti-money laundering regulations is to be extended a further six months, from 10 January to 10 June 2021, no doubt in recognition of the enormity of the task faced by the industry and the impact of the pandemic on their resources”, explained Jonathan.

VR: walk around art-tech developments

Perhaps one of the reasons online sales have accelerated is the advent of technological enhancements to the online art experience. 2020 saw several new launches in the space such as ArtLab based in Los Angeles launched by mega gallery Hauser and Wirth. Its first initiative was a VR-based exhibition in late April on the site of its future gallery, Hauser & Wirth Menorca, allowing visitors an online preview of ahead of its 2021 opening.

Even established companies, used the opportunity the pandemic provided to grow global reach and launch new products.

Acute Art in London, described by Director Daniel Birnbaum as an “art and technology laboratory”, was founded on the vision of democratising art and bringing it to places where it could not be before. “We have explored AR, VR and Mixed Reality with some of the world’s leading artists. We created a series of quite overwhelming VR works with artists such as Jeff Koons, Marina Abramovic, Olafur Eliasson and Anish Kapoor. Today we focus more on AR and have launched a series of works on the AR app, already the world’s biggest art and technology app”. The app was launched in March 2020 and already has half a million viewers engaging with works.

Cate Blanchett in your living room

The most recent work is ‘The Four Temperaments AR’ by Marco Brambilla featuring Cate Blanchett. It was launched at the Berlin Gallery Weekend but can of course be seen anywhere. Anyone can now have Cate at home in the living room”, he added.

Commenting on the impact of COVID-19, Daniel said, “In these difficult times, our aspiration has gained new relevance and urgency. Hundreds of thousands of people have enjoyed AR sculptures by KAWS and Olafur Eliasson at home during a time in which museums and galleries have been closed. At the moment it is quite a strength to be able to work outside of the classical institutions. We launch new things almost every week now. We just placed geo-located sculptures by New York artist Nina Chanel Abney in cities across the US and launched works by German sculptor Alicja Kwade”.

Chinese know how

Pushed to select a favourite work, Daniel responded, “I really like the Cao Fei work that we launched at the Serpentine Gallery earlier this year. When they had to close we turned it into an AR work and it is surprising how well that works. Cao Fei is an artist who always works with the latest technologies and finds new ways to make them artistically exciting.”

Oculus exhibition experience

Vortic is a further new launch which while in development for a number of years, brought its launch forwards due to the pandemic. Vortic VR enables audiences to fully immerse themselves in virtual reality exhibitions, private views, and art fair previews. Supported by Oculus VR headsets, the VR app will enable audiences to experience exhibitions in 3D and walk around a gallery space as though they were physically there. Vortic’s CEO Nick Walter said: “With galleries forced to close, they have been keen to find new and innovative digital solutions that enable them to continue with their public programming as well as their private collector engagement and Vortic enables them to connect with both of those audiences. Vortic was created with galleries in mind and unlike other platforms, galleries are able to share their exhibitions, private views and presentations with specific audiences, enabling them to tailor content to their collectors’ individual interests”.

Extended Reality: Virtually hang artworks in your home

“Galleries are able to curate exhibitions using Vortic’s content management system and publish them in high res 2k on the Vortic Collect App. The app uses extended reality (XR) to create a fully immersive experience – using augmented reality collectors can virtually hang multiple artworks in their own homes using just the camera on their smartphone. Video and audio features also provide the opportunity to delve into the context of art works in depth. Vortic differs from other platforms in its use of ground-breaking 3D rendering techniques that have never before been used within the industry. Using this technology, Vortic is the first platform of its kind to incorporate 3D works including sculpture and textiles, as well as 2D works”, he added. In the pipeline, is a new feature, offering collectors the chance to experience private views and exhibitions in virtual reality and walk through exhibitions as though they were physically there.

Maddox also embraced virtual reality at the start of lockdown with a dedicated digital showroom showcasing the work of David Yarrow, The Connor Brothers and Terry O’Neill.

“In these dedicated virtual spaces, we continue to see visitors enjoying the space with over 10,000 guests exploring the various showrooms, which we will continue to run in parallel with our physical exhibitions offering collectors an integrated experience and a opportunities to enjoy artworks both in person and digitally. This worked really well for our recent exhibition, Terry O’Neill: Every Picture Tells a Story, A Retrospective at our Gstaad gallery and online”, explained John.

Reality still beats virtual: but “nothing to do” helps art-tech innovation succeed

One side of the art world which virtual reality cannot replicate yet, are physical encounters. The Art Basel and UBS art market survey found that 70 per cent of collectors reported they prefer to view art for sale in person and placed a high or very high value on the sense of discovery and the opportunities for discussion and social contact afforded by in-person events. Yet despite this, sentiments among UHNW collectors remain positive. Fifty-nine per cent felt that the COVID-19 pandemic had increased their interest in collecting – perhaps due to the time spent within their homes in recent months with as Tik Tok would say “nothing to do”. Perhaps a reason for using the phone ‘devil’, which has found swift work for idle hands and credit cards.

 

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