Why The Hiscox Online Art Trade Report 2015 Is Misleading Nonsense
We read this garbage so you don't have to.
Have you all seen the Hiscox Online Art Trade Report 2015? What a joke.
The world is awash in so-called meaningful art market reports, few of which seem to have any real basis in fact or offering conclusions that are meaningful and beyond the obvious. Here’s one nugget of wisdom from the 2015 Hiscox Report: “Drawings are increasing in popularity for online buyers.” Now here’s another: “New media and digital art is still in its infancy but likely to increase in appeal for younger buyers.”
That last bit of wisdom is from page 17, in case you’d like to look it up yourself. It reminds me of what the English comedian John Cleese once called “theory of the bleeding obvious.”
It’s not that the report doesn’t make sense—the annual Hiscox update is typically a pretty decent one. And from what we can tell, the latest version is as fair and evenhanded as it is possible to be in reporting on a market that is still in its infancy. However the art market overall is still dominated by the brick and mortar art trade and at all levels in all media is shrouded in secrecy and full of bluster and misinformation (see Weighing The Pros and Cons of the Sotheby’s eBay Partnership and Picassos and Pez Dispensers: Sotheby’s and eBay Team Up Again).
Unfortunately, reports like this one that purport to demystify the art market do nothing of the sort. They rather repeat banal platitudes with a smattering of statistics to provide a fig leaf of objectivity. Basically the sample for an online report like this is simply too small, the data largely unverifiable and dealing with such a tiny segment of the market, that almost any conclusions are questionable.
Of real concern however is what the report claims about the behavior by buyers and sellers of art online. According to the folks at Hiscox, buying art online is where a sucker is born every minute: they detect a clear pattern emerging of novice art buyers entering the market at the low-end and thinking that they are making an investment in fine art.
It is true that many new online art sellers are not only encouraging this belief but they are promoting art as a safe investment. The truth is of course than nothing could be further from the truth (there is a conclusion the Hiscox team might like to consider!) and there is no doubt that some websites engage in misleading advertising in an attempt to get art buyers engaged.
Artspace, for one, used to send out a monthly newsletter hawking inexpensive, crappy prints, with the (in our opinion, astounding) title “Artworks to Invest In.” That’s crossing the line from editorial into advocacy, though it is important to note that we haven’t seen that particular column in a while, so is it possible Artspace writers and editors have come to their senses where that concept is concerned.
But how really is this any different from advertisements for face creams that promise to make you younger or a new pair of jeans that will make you look skinny or even a blow-wave Baptist promising “long term investment potential” on swamp real estate in Florida?
Caveat emptor—buyer beware. That’s the law of the marketplace.
To back up their assertion that online art buyers are by and large being duped, the Hiscox report claims that: “As many as 63% [of buyers of art online] are driven by the value potential of works of art, with 75% of new buyers saying they buy art for investment.” Meantime they also say that 84% of these sales are under GBP10,000 (USD$15,000).
Leaving aside the issue of the sample (what is the demographic of these supposed art buyers interviewed for the survey, where do they live, and where exactly are they buying art) who on earth seriously thinks investing in art happens in the under GBP10,000 category? That’s nonsense. This isn’t investment level art buying it is discretionary spending.
More to the point, it seems like the questions the Hiscox team are asking are skewing the survey results. Think about it: No one wants to buy art and watch the value of it plummet, right? That said, even when the price of a work increases or leaps between sales, there are numerous costs to consider, starting with sales tax, insurance, shipping costs, commissions, resale rights (in some cases).
Need we say more? Making money as an investment in art requires an understanding of the real costs and benefits.
Other key “findings” of the report include this: “The value of the online art market has risen from $1.57 billion in 2013 to an estimated $2.64 billion in 2014. Based on these figures, online art buying therefore accounts for 4.8% of the estimated $55.2 billion value of the global art market.” No new information here. That is more or less word for word what Claire McAndrew’s TEFAF Report, published in March, had already said (see Clare McAndrew Explains How She Prepares the TEFAF Report and 40 Percent of World Gallery Art Sales Made At Fairs and Other Key Findings of the 2015 TEFAF Report).
Meanwhile, some of the findings are, well, simply banal. Check this one out: “Online art market platforms are providing options when it comes to how buyers engage with and ultimately buy art—having a physical gallery or auction house has become less important but is not redundant.” Wow, it really took a report to tell us that? Has anyone been to an art fair lately?
But here’s the most bizarre and possibly ridiculous assertion: “Social media affects art buying decisions, with 24% of respondents saying posts by museums, galleries and artist studios had a direct influence on their art buying decisions.” Firstly, 24% is small, not large, just under a quarter of respondents. Secondly, how old were the respondents to the survey–that would be helpful to know.
Moreover everyone knows that online businesses are aggressively using social media to target and attract buyers: such tactics are being used in online sales for fashion, film, television and restaurants/dining. Given the art market price point we are dealing with here, under GBP10,000 (USD$15,000), and presumably a young and affluent audience, this conclusion makes some sense without, actually, revealing anything tremendously actionable or interesting about the online art market.
Once again we are in the realm of the banal.
I’m all for more knowledge, more transparency, more access in the art market. Bring it on. But please, lets have some reporting that has a real basis in fact and is conducted in such a way that it produces meaningful results. This thing is toilet paper.
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