Online Sales and Confidentiality

Le 20 mai 2021, par Pierre Naquin and Carine Claude

At a time of booming online art sales, user data are worth their weight in gold. But what are the consequences for collectors and galleries?

Photo Lianhao Qu

Will the pandemic usher in the golden age of online art sales platforms? All the studies tend to point that way. Despite the art market’s overall contraction in 2020, online purchases are estimated to have reached a record $12.4 billion, double the 2019 figure, according to The Art Market Report 2021 by Art Basel and UBS. The Hiscox report’s findings on collector behavior are similar: over two-thirds (67%) of art buyers surveyed purchased art online in 2020, up from 44% in 2019.

All the indicators—Internet and social media searches, transactions on platforms, average prices, etc.—are up sharply. But the more online transactions there are, the more the mass of data collected from users increases—a windfall for online sales platforms. Every week, 72% of art lovers visit them, up from 54% in 2019. The figure is even higher for art collectors who spend over $50,000 a year: 86% now log on every week, compared to 69% in 2019, according to the Hiscox report. This means that the top buyers are already registered on the major platforms, such as 1stdibs, Artsy, Artnet and Artsper.

Capitalizing on Buyers’ History
The more online transactions increase, the more data marketplaces big and small—and not just in art—collect to enhance users’ experience with the aim of keeping them on the website as long as possible and developing their loyalty. Every action, whether looking for an artist or an artwork, leaves a trace. A mere click is far from insignificant: it says a lot about buyer behavior. But it is not always easy to understand the consequences of consenting to the use of personal data.

To start with, the idea of “personal data” covers a huge amount of ground. The CNIL (the French data protection agency) defines personal data as any direct or indirect “information about an identified or identifiable physical person.” Of course, a willingly given name, address, customer number or photo is obviously personal data. But sometimes, information on how that data will be used is hidden in the fine print of a website's terms of use. Very often, consent is given with a click at the first connection with no awareness of what this implies in terms of collecting, keeping, sharing and using the data. The platforms’ privacy policies and definitions of what they mean by "personal data" are often indigestible and hard to find. For example, Artsy, one of the main platforms, provides an impressive list of data considered personal, including site navigation, bids, the tracking of artists, works, institutions or galleries, communication with other users and connections to other social platforms. There is also the information gathered automatically, such as IP addresses, operating systems, browsers, locations, connection frequency, length of visits, searches, number of pages viewed, time spent per page, etc., as well as cookies and data provided to third parties.

Why is so much information stored for processing? Because online art platforms capitalize on tracking a customer's browsing history. Unlike other areas, the information transmitted here is highly qualified. If you spend 20 minutes looking at a specific work, there is no doubt about your interest. Now, the platform has crucial information about your tastes and desires, enabling it to narrow down suggested works during the next visit.

There is also confusion over the General Data Protection Regulation (GDPR), which in no way prevents websites from collecting and processing personal data. The GDPR, which went into effect on May 25, 2018, strengthens European Union citizens’ control over the use of their personal data by requiring companies to show customers how they are used in actual practice. Clearly, online art sales platforms must ensure that their customers consent to the purpose of gathering data. This is often summarized in a pop-up window succinctly listing the marketplace’s different purposes. The obligation of transparency, which could have profoundly changed relations between customers and companies in the digital age, is reduced to laconic user information.

Galleries Weakened
But it is mainly art galleries that might suffer from the rise of online art sales platforms because the latter, not the galleries, hold the customers' information. Visits to websites generate a large amount of data, but galleries receive only a tiny proportion when they are put in contact with the buyer—for a price request, for example. However, dealers’ core business is maintaining their files, which contain each customer’s acquisition history, wishes, tastes and other relevant information enabling gallerists to propose appropriate works or artists.

Online platforms do allow galleries to reach customers they could not have accessed otherwise—a vital breath of fresh air since the beginning of the pandemic, despite high service fees of $300 to $1,000 a month for small galleries. But connections to new digital customers remain marginal compared to the physical updating of their files at fairs and face-to-face meetings with hundreds of visitors in a few days. Nothing beats a good handshake to seal a lasting relationship.

The platforms’ strategy is also evolving. Long limited to suggesting lists of works, they increasingly accompany customers through to the end of the transaction. It is no longer the gallery that finalizes the act of purchase. Again, this strategy allows platforms to collect more data while delivering an even smaller amount to galleries, as the entire purchasing process is integrated. Acquiring prospects who ask for prices without necessarily buying is a thing of the past. The customer’s "value" decreases for the dealer who, sometimes, does not even have direct contact details to follow up and offer new pieces. Rather than being an intermediary, the platform becomes an essential cog in the wheel to boost the gallery's profile and the continuity of its activity.

Despite the online art market’s bright figures in 2020, its growth seems to have hit a plateau. According to the Hiscox report, collectors who have no choice but to buy on the Internet are growing weary of the "all online" approach. When first-time buyers were asked if they felt a sense of loyalty to the online platforms from which they purchased a work, nearly half replied "never" or "rarely". If platforms cannot find new customers, they must offer more services. That is why big players like Artsy are now exploring all possible sales avenues, including auctions—and with them, reaping a bountiful harvest of fresh personal data.

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