Why the $70 billion art market hasn’t joined the internet’s marketplace revolution

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The modern internet was built for marketplaces. Its emergence has led to the creation of large-scale marketplaces matching vacationers with homeowners (AirBNB), riders with drivers (Uber) and romantic partners with each other (Tinder).

You’d imagine that the fundamentals of this shift would apply to the art market too, where an inefficient $70 billion market is waiting for an online company to help match artwork with empty walls. But it hasn’t happened yet. The hundreds of startups trying to solve this problem have struggled mightily, and just yesterday two well-funded art tech companies went bankrupt.

Art startups fail not because art sales don’t work on the internet (they can and will, and in some cases sorta do) but because founders and investors exercise bad judgement due to the strong emotions that art evokes. And while my company is not always perfect, I believe there’s a blueprint to fix the mistakes that will finally open this market . And when that happens, finding the perfect piece of art for your home, office or friend will be as easy as calling an Uber.

Art is Sexy

The human element of the industry plays a large role. Art is sexy, and pervasive in pop culture, leading to bad decisions from startups that think making a splash is a long-term business strategy. When you have Kanye WestEric Schmidt and Leonardo Dicaprio headlining the art news, it’s no wonder that founders are drawn in like a moth to a flame. The intrigue leads them to spend lots of time and money on partnerships with the rich and famous, creating a flashy brand and trying to capture the cameras/Twitterati. These are all great ways to build hype, attention and followers. They are not ways to build a successful company.

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Focusing on Supply

The next big mistake art startups make is diving headlong into signing up throngs of artists and suppliers in an effort to quickly build supply. Art is not your average marketplace industry. Too many founders assume, incorrectly, that art startups haven’t found success yet because the millions of talented artists around the world have never been brought online successfully. I can’t count the number of times I have heard art startup founder say “we are bringing artists online and democratizing the art market” (hell, I think I said that when we started Indiewalls).

Following the Herd

So many founders look at other unsuccessful art startups and foolishly copy their model, forgetting the idea that “insanity is repeating the same process and expecting different results”. Founders need to stop repeating the exact same mistakes. They need to do thorough competitive analysis. It’s a huge cohort… there are almost double the number of art startups as there are hotel startups according to AngelList. Point being, entrepreneurs need to be more creative to truly crack this nut.

Thinking Inside the Box

Lastly, art startups are often founded by “art insiders”. While industry experience can be an asset in other fields, in the case of art it can also be an achilles heel. The fine art world is so traditional and insular that market experience often leads to in-the-box thinking. In my opinion, this market will be captured by people who can look at a 2D problem and present a 3D solution.

My recommended solution? Find your target customer. Learn their problems inside and out. Then build products and experiences that fix them. Do not throw lots of money at the customer or over-saturate your artist community until you’ve charted a long-term course. None of this is super original in the tech world. But so many art companies have ignored this advice in our industry that it bears repeating.

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More and more the public needs art and creativity to expand their minds and enhance their lives. Though it hasn’t happened yet, the internet will inevitably make access to this art much easier. A successful art marketplace will be difficult to build , but luckily the worst mistakes have already been made, clearing the way for the industry to learn and bring the works of millions of artists into our lives.

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