Jury’s still out on Amazon Art
Skate’s report says online platform could “conquer the art market”, but there are serious flaws in the research
By Charlotte Burns. Art Market, Issue 249, September 2013
Published online: 05 September 2013
Amazon Art, the online art department launched by the retail giant last month, could “conquer the art market”, according to a report issued by Skate’s Art Market Research.
Closer inspection of the report, however, reveals holes in its findings. Skate’s does not mention the huge operating loss—between $65m and $440m, according to Forbes—projected for Amazon in the third quarter this year. The retailer lost $7m in the most recent quarter and has also been spending heavily (it added 27,900 posts in the past year—a 40% rise). Although it recorded a 22% sales increase in the second quarter, it has not been making the profit to match. “We just looked at Amazon in terms of art trading. We haven’t looked at its [financial] numbers just yet,” says Anna Lipskaya, the senior analyst at Skate’s who compiled the report.
The report uses two data charts to demonstrate Amazon’s potential to dominate the art market. The first ranks the top ten e-commerce art businesses by their “distribution power”, according to the volume and frequency of visits to their sites. (The data are drawn from the web information company Alexa.com.) Amazon soars to the top of this list —unsurprisingly, as it is the sixth most visited website in the world (in comparison, Christie’s has the 19,775th most visited website; Artnet ranks 24,700th). The data relate to visits to the entire Amazon site, rather than to Amazon Art, so the comparisons are misleading.
The second chart is a more subjective analysis of the top e-market platforms, ranked by artistic merit. Four Skate’s analysts used their personal appraisals to produce average scores. Amazon comes third with a score of 8.1 out of ten, below Christie’s (9.1) and eBay (8.5).
One of the four categories used to appraise the sites is vetting. Despite the fact that Amazon has no liability for vetting the quality (or authenticity) of the works on its site, the firm scores seven out of ten. Responsibility lies with the galleries themselves, and Skate’s grading is based on its appraisal of the quality of those galleries. But since there is no way to obtain a comprehensive list of the businesses involved—short of looking at each of the 40,000-plus works by more than 4,500 artists that are being offered by more than 150 galleries on the site—Skate’s had to base its judgement on a sample. “We looked at several works with several galleries and acted as collectors who wanted to purchase something,” Lipskaya says.
“We only have relationships with prestigious and known galleries because customer trust is very important to anyone, especially Amazon,” says Erik Fairleigh, a spokesman for Amazon.com. He could not confirm how Amazon defines “prestigious” and “known”.
Some of Amazon Art’s terminology is similarly loose. Paddle8 is labelled as a “featured gallery”, although it is actually an online auctioneer.
Complicating matters further is the possibility that galleries are operating under pseudonyms. When we broke the story about the launch of Amazon Art, at least one dealer said he had been told that his gallery could offer art under a pseudonym until the website became successful. (Amazon is unable to confirm or deny that, Fairleigh says.)
There are connections between Skate’s, Amazon and Paddle8. Skate’s was founded by Sergey Skaterschikov, who no longer controls the company but says he remains on its board. He is the managing director and a board member of Redline Capital Management, which recently acquired a stake of around 5% in Paddle8. Skaterschikov is also on the board of Paddle8, which is working with Amazon.
As to whether there might be vested interests behind Skate’s support of Amazon Art, Skaterschikov says: “I didn’t ask Skate’s to write this report—Amazon deserves attention. It’s fully disclosed that we have all these small interests. The marketplace benefits from the entrance of Amazon. It gives functionality and convenience to Amazon customers. The biggest challenge Amazon has is the product quality.”
Skaterschikov says: “It will be interesting to see whether [the report] translates, because anyone who has tried to make online art commerce work has failed. But if Amazon produces a few quarters of significant growth, then other [big] retailers will follow.”
Others are taking the arrival of Amazon Art seriously. In an interview with Fortune magazine, Christie’s chief executive, Stephen Murphy, said: “Why shouldn’t I take Amazon going into the art business seriously? I can hear the trucks. It’s Amazon… it’s huge.”
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