In the beginning they said it could be done. When Hans Neuendorf, a former art dealer and one of the founders of the first international art fair in Cologne in 1967, launched on-line art auctions on his website, artnet, in March 1999, the move was a mark of Mr Neuendorf’s belief that the internet could sell high-value works of art. Artnet, which includes a comprehensive auction results database, a magazine, and a network of galleries and artists, became the first website to offer blue-chip works of art for on-line sale.
Now, less than two years later, artnet are implementing “a cost cutting program” which includes “reductions of personnel” and “the focus [of] resources on the two strongest product lines,” according to a company press release. In other words, the company has given up trying to sell paintings on-line, choosing to concentrate on prints and photographs and 18 members of staff have lost their jobs in the process (17% of the company total).
The move is expected to reduce artnet’s annual operating loss by $11 million. According to Mr Neuendorf, artnet will break even in the fourth quarter of this year.
Artnet’s first sale in 1999 included works by Warhol, Chagall, and Lichtenstein. It attracted bids from the US, Canada, Europe, and Singapore and a slashed canvas by the Italian artist Lucio Fontana, which sold for $168,000, is still claimed to be the most expensive work of art sold over the internet to date.
In the vast, uncharted territory of on-line art sales, the artnet leap of faith in 1999 spearheaded by art world insider Mr Neuendorf and combined with his company’s aggressive targeting of high-profile bricks and mortar galleries (today artnet represents 1,178 of them) sent a strong message to dealers and auction houses: get on-line or get left behind.
What followed was a frenzy of internet activity supported by a rush of venture capital funding and a buoyant US economy. Almost overnight hundreds of art selling sites appeared. Then came the Nasdaq crash last April, the increasing difficulty of obtaining VC funding, and the disappearance of many of the sites that had made their appearance only a few months earlier, including sothebys.amazon.com, a joint venture between the auction house and the e-retailer (The Art Newspaper, No.109, December 2000, p.59).
For the most part, expensive works of art (in excess of $50,000) have failed to sell over the internet. Buyers have proved unwilling to spend large amounts of money acquiring works they have not examined in person. Photographs, prints, modern and contemporary design, and collectibles have been the clear best sellers.
According to artnet’s chief financial officer, Grace Schalkwyk, “the largest revenues by far have been generated by prints and photography. Most of our top auction sellers are prints; for instance, Warhol’s “Campbell Soup” which sold for $64,000 or Picasso’s “Faune devoilant une femme” which sold for $46,000.”
Artnet’s experience is by no means unique and many of the art-selling sites that survive are re-evaluating their strategies, a sign that the on-line art market is in the process of correcting itself.
The demand for art and collectibles on-line does, however, seem certain to grow. Jupiter Communications, an internet market research company, estimates that the on-line art and collectibles market, worth $300 million in 2000 will rise to $1.8 billion by 2005. But precisely in what price range the value of the goods will settle remains to be seen.
Icollector, a portal with links to 300 auction houses and 650 galleries, told The Art Newspaper that it was also “tightening up its structure and refocusing its business” and that “certain roles would be made redundant” early this year.
The largest icollector shareholder is Bernard Arnault, chairman of LVMH, the world’s biggest producer of luxury goods, and owner of bricks and mortar auction house Phillips. Despite Mr Arnault’s connections with the world of luxury goods, from the beginning icollector has targeted the middle-value sector of the market.
According to Miles Barton, an auction specialist with icollector, “one of the categories that has been selling best is modern and contemporary prints. Prints are the affordable way for the average person to own a work by a major artist such as Picasso.” The average price of a print sold through icollector is $4,000.
From 7 to 15 January, icollector is offering 10 images of Marilyn Monroe taken two weeks before her death by Hollywood photographer Bert Stern. The pictures, which will be sold as one lot, are being offered at an estimate of $90,000-110,000. British pop singer Elton John has reportedly shown strong interest in the sale.
While Mr Neuendorf’s belief that expensive paintings could sell on-line has not yet been borne out, the internet has provided dealers and auction houses with access to a global customer base.
“Our conviction that the internet provides a unique opportunity for our dealers and gallerists to develop new business is steadfast. Many galleries that do business in high-end paintings prefer to use the [artnet] gallery network as a vehicle rather than [off-line] auctions or an on-line store,” says Grace Schalkwyk.
Originally appeared in The Art Newspaper as 'Artnet give up on paintings'