As astonishing as it may seem, art market players of all kinds – dealers, galleries, auction houses, art fairs, artists and collectors – were anything but tech-savvy until just recently. Exclusively digital and purely web-based concepts such as online auctions, digital sales platforms and augmented reality art shows were still meeting with a very muted response even in early 2020.  The “aura” of the original and pulling power of the unmediated, physical appreciation of art were simply too strong; then there were the social and communicative aspects of traditional art events, which their disembodied online equivalents come nowhere near to satisfying. Even if the physical, in-person enjoyment of art remains the benchmark experience, the Covid-19 pandemic has given digitalization such an almighty shove that it is bound to transform the art market with lasting effect.   

The annus horribilis 2020 turned the whole art market on its head. Art Basel Hong Kong, originally scheduled to open in March 2020, was the first of the mega-events to be cancelled as visitors had to content themselves with the Art Basel Online Viewing Rooms (Art Basel OVRs) installed in its stead. Next came The European Fine Art Fair (TEFAF), which followed suit with an online platform of its own. That art fairs will return to business as usual once the Covid-19 pandemic is over now seems highly unlikely. The online formats are here to stay and hybrid models that promise a new kind of art fair experience are sure to arise.

The international auction houses were much quicker off the mark in their response to the new normal and have actually been outbidding each other with new auction formats. Many of these are going very well so that here, too, we can predict with some confidence that a return to the centuries-old tradition of exclusively on-the-floor bidding is no longer on the cards. 

Traditional or original?
Like the auction houses, most major art dealers and international galleries had set up their own digital departments even before corona struck. For classical galleries with a limited stable or field, however, the long-term prospects of survival have surely diminished. The traditional solo exhibition of an artist whom the gallery has been carefully nurturing over a number of years is likely to dwindle in importance, as not even these specialist institutions will be able to eschew digital formats in the long run.

Artists, for their part, are already asking themselves whether the “classical practice” of signing an exclusive contract with a gallery really is in their best interests, or whether it might not be better to decide freely from case to case with whom they wish to collaborate and how. Or might they be better off selling their works directly via social media platforms like Instagram?

(Solo exhibition: the classical exhibition format for small galleries which generally entails an invitation-only (physical) preview event and opportunities for personal contact with collectors)

Art as an asset class?
And collectors? Here, too, there are signs of a trend, especially among younger and/or more tech-savvy collectors. While the archetype of the classical art collector – the passionate connoisseur chasing after rare objects of desire – is becoming increasingly rare, today’s collectors are much more likely to be investors. They are concerned less with being able to savour their treasures on a daily basis than with art as an asset class with which to diversify their portfolio. This also explains the emergence of co-ownership of art so that a high-value work by Picasso, say, can become the property of dozens, if not hundreds, of owners (a practice known as “tokenization”).

The digitalization of many areas expedited by the pandemic will lead to an expansion of classical art trading as it embraces innovative new sales models. Where the deployment of digital tools would make the most sense is in art transactions, which could be made easier and a lot less risky. The past few years have shown very clearly that the ability of the vendor to provide a gap-free provenance and of the buyer to control the flow of funds are increasingly critical factors in an art purchase. Hence the need for innovative solutions, which digitalization will undoubtedly facilitate.

Digitalization already far advanced
Thanks to the latest technologies, a three-dimensional work of art can be read into a smart phone to capture its digital fingerprint even today. A detailed condition report, for example, can thus be produced in a matter of minutes. If the work is to be sent overseas for an exhibition, the conservator on the receiving end can “read it out” on a smart phone in just a few seconds and so check that the work is indeed the (shipped) original, and also inspect it for signs of any changes or damage that might have occurred in transit. Any damage can be assessed without further ado and forgeries are also more easily detected. 

Other digital applications that are almost ready for roll-out will enable art dealers to verify the identity of a buyer within a matter of minutes. A simple scan of the buyer’s ID using the dealer’s own smart phone will start a background check to ascertain whether the transaction can go ahead without any money-laundering risks. Dealers, in other words, will be able to contract out time-consuming due diligence to a firm of auditors. This innovation will make sales much less risky, which in turn will have a beneficial knock-on effect for the dealer’s reputation. 

Transparency thanks to blockchain
A new digital tool that will enable secure and fraud-proof transactions – and, as a last step, file the whole sales process in the blockchain, where it can no longer be changed – is already on the horizon. The transparency that all serious art market players have for so long been calling for will thus have been achieved without jeopardizing the anonymity of those involved. My prediction is that this really does have what it takes to revolutionize the art market.