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  • Art on the Net: The Second Wave
    August 3, 2005 Sales & Marketing
    By Michelle Dammon Loyalka

    Big names such as Sotheby's tested the market without success. Now new sites are presenting little-known artists' work

    Stephen Parker had worked as a professional artist for less than a year when he learned that his son needed braces. Instead of panicking, Parker calmly pulled up the Web sites where he had posted his artwork and marked the most expensive pieces down by $200, hoping to attract a buyer to effectively foot the looming $2,000 orthodonture bill. It was a moment that, to Parker, illustrated the dynamism the Internet is bringing to an otherwise static art world. "You just can't do stuff like that in a gallery," he says.

    Not only is the Internet allowing him to change his prices and offerings at will, it's also liberating him from having to paint in the style preferred by the galleries near his Atlanta-area home. "I'm not handcuffed by geographical constraints," says Parker, who prefers painting abstracted landscapes. "My look is pushing it for local Southern galleries, but it's rock 'n' roll in California."

    But while many entrepreneurial artists such as Parker are exuberant at the possibilities, the virtual avalanche of art now available online has skeptics questioning whether or not the Web can work for anyone but the most established of artists. "It's like going to Reno and playing the slots," says Alan Bramberger, an art consultant and author of The Art of Buying Art. "You have a 1-in-10,000 chance they'll even land on your art to begin with. That's pretty dismal odds."

    BOOM AND BUST. The debate over whether or not the Internet is a viable marketplace for art was hashed out once already, when dozens of venture-capital backed art sites and online galleries sprang up in the late 1990s. Though purists insisted that people who knew their way around a piece of canvas would never buy fine art electronically, at the height of the Internet frenzy even big names like Sotheby's clamored to get into the game, investing millions in an online partnership with Amazon.com in 1999 and launching an independent Sothebys.com auction site in early 2000.

    It turned out that enticing buyers to purchase original work online wasn't so easy. Though Sotheby's $8 million sale of a rare first printing of the Declaration of Independence silenced debate over whether or not it was possible to peddle high-end works on the Web, overall sales were still sluggish, and, when the Internet bubble burst, many sites, including Sotheby's, folded.

    These days, with New York-based e-commerce firm JupiterResearch projecting that 2005 Internet spending will top $79 billion in the U.S. alone and Web sales will continue to post double-digit growth until at least 2009, the wrangling over art's future on the Internet has been reignited.

    "MARKET NICHE." Critics still insist that unlike books, clothing, and other consumer goods, art really has to be experienced in person before deciding whether or not it's the right fit. But with some 126 million Americans already buying an increasing number of goods electronically, a new batch of entrepreneurs is banking on a bright future in online art.

    Seeing a "second wave," Peter Gregory, a software programmer who helped take Seattle-based BSQUARE from a startup to a 550-employee company before it went public in 1999, recently launched BoundlessGallery.com. "We believe there's a market niche here, and we're doing our best to make a great experience for the buyers and a good place to do business for the artists," he says.

    To accomplish that, Gregory has developed a somewhat unconventional approach. Unlike most sites, which vet artwork first and charge an upfront fee to artists whose work is approved, anyone can post art on BoundlessGallery free of charge. The company then takes a 25% commission if a piece sells.

    VENUE SELECTION. Gregory has also devised a rating system to help buyers locate high-quality pieces quickly. In the site's first eight months in operation, more than 500 artists have posted art, and Gregory says BoundlessGallery is on track to sell approximately 500 pieces this year with an average price of just under $1,000.

    Kelly Devine Thomas, a senior writer at ARTnews Magazine, says the Web has been instrumental in empowering potential buyers to learn more about artists and galleries they're interested in, but so far it hasn't substantially affected the way more upscale art is bought and sold. "I can see it working well in the future on a large scale, but I don't think that the right venue has yet been identified," she says.

    Tanner Tuttle, co-owner of Period Gallery, knows something about trying to identify the right venue. The gallery's original brick-and-mortar version opened in Omaha, Neb., in 1997, but, after proving unprofitable, went electronic-only in 2001. It began holding several juried art exhibitions each year. But while the competitions attracted a large number of entrants, the gallery continued to lose money because very little of the art ever sold.

    PERSONAL PERSPECTIVE. Last year, Tuttle asked the gallery's most loyal artists why they kept with a site that wasn't producing. "Overwhelmingly, they answered that it was cheaper to have their works accepted, scanned, and posted onto the Period Gallery Web site than to actually create a Web site for themselves," he says.

    That's when Tuttle decided to expand the business model and start hosting independent Web sites for artists. Since August, more than 200 artists have signed up with the new spin-off, called MyExpose.com, where they pay $14.95 per month for personal sites where they can post an unlimited number of pictures.

    Tuttle believes there's a market for selling art online, but only as a supplemental tool for artists who regularly display their work in shows, art fairs, and galleries. "There's so many companies out there that say 'Hey, you put your art online, it will be like eBay (EBAY) and people will buy it up in a snap.' That's really not realistic from what we've seen over the past couple years," he says.

    PRINT ADS. But even on eBay, art sales are starting to take off. Each day the online-auction site sells more than 920 pieces in the "Affordable Art" section, which is just one of the eBay's 12 art categories. Sales in the "Self-Representing Artists" section increased 67% from 2003 to 2004, with 460 pieces now sold daily. And Costco (COST), a somewhat unlikely outlet for art, recently sold a crayon-on-paper original Picasso online for almost $40,000.

    One company that survived, and even thrived through the Internet bubble is Guild.com. Building on her experience publishing art source books for designers and architects, in 1999 founder Toni Sikes launched the Web site and an accompanying consumer catalogue, both focusing on home decor and showcasing the work of artists who have been prescreened and are well established.

    The catalogue, which has a circulation of more than 2 million, highlights just a small portion of the work posted on the Web site, and continually refers readers back to the site for a wider selection. In recent years, Guild's Internet sales have skyrocketed -- up more than 40% in the first half of this year alone -- and Sikes now sees the catalogues as simply another advertising vehicle to attract people to the Web site.

    "It's just really clearly where the future is," she says. "It brings the advantages of the Internet along with the advantages of retail that haven't been a part of the traditional art world until now."

    ATTRACTING NEWBIES. áPart of what makes buying on the Web so appealing, Sikes says, is that it consolidates what has traditionally been an extremely fragmented industry. Rather than tromping from gallery to gallery, the Internet allows buyers to browse the work of thousands of artists on a single site, searching by price, artist, theme, or color.

    Sikes thinks that's attracting people who wouldn't otherwise purchase art. "I don't believe for a second that we're taking sales away from galleries," she says. "I believe we're growing the market." For the most part, that means selling lower-priced work: Gregory says the best-selling art on BoundlessGallery is under $500, and Guild's sweet spot is between $500 and $2,500.

    Parker, who has sold an average of three pieces a month on BoundlessGallery and other sites, typically sells paintings for between $300 and $2,500. His son recently got his braces, though the higher-end paintings Parker discounted to cover the expense have not yet sold. But like many, he thinks it's just a matter of time.