Critical Success Factors for Starting an Online Art Platform Simon Janzon and Love Regefalk
Total Page:16
File Type:pdf, Size:1020Kb
Critical Success Factors for Starting an Online Art Platform Simon Janzon and Love Regefalk DIVISION OF INNOVATION ENGINEERING | DEPARTMENT OF DESIGN SCIENCES FACULTY OF ENGINEERING LTH | LUND UNIVERSITY 2020 MASTER THESIS Critical Success Factors for Starting an Online Art Platform A qualitative study on the digitalization of the art market Simon Janzon and Love Regefalk Critical Success Factors for Starting an Online Art Platform A qualitative study on the digitalization of the art market Copyright © 2020 Simon Janzon and Love Regefalk Published by Department of Design Sciences Faculty of Engineering LTH, Lund University P.O. Box 118, SE-221 00 Lund, Sweden Subject: Innovation Engineering (INTM01) Division: Innovation Engineering Supervisor: Lars Bengtsson Examiner: Jessica Wadin Abstract The traditional art market is currently experiencing a digital transformation and multi-sided platforms (MSPs) for trading art are a major part of this. Much research has been done in the area of MSPs, however, there is a lack of studies in the field of starting such platforms for art. Therefore, this study aims to determine the critical success factors (CSFs) for starting an online art platform (OAP). To answer this, a two-piece market analysis consisting of a general art market analysis and an examination of existing OAPs was carried out in parallel with qualitative interviews and questionnaires with galleries, art advisors, and industry experts. The interview results were then analyzed inductively, using a grounded theory approach, before all findings were examined from a theoretical perspective. The analysis of existing OAPs revolved around the three major platforms Artsy, artnet, and Saatchi Art, of which Artsy is leading in terms of size, capital raised, and prominent features. Results from interviews indicate galleries want more control on the platforms, higher quality of participating galleries, and easier management. Art buyers appeal to easier browsing, more information about artworks, and transparent pricing. The concluded CSFs for buyer adoption are: (1) publicly available pricing; (2) increased discoverability and easier browsing; (3) less intimidating, and; (4) display price developments. For gallery adoption: (1) clear communication of expected results; (2) stricter selection criteria for participating galleries; (3) ease of management; (4) integration with existing OAPs and social media, and; (5) galleries should be able to control who can send inquiries. Additionally, three CSFs for general adoption were found: (1) advanced searching browsing and filtering; (2) large representation of sellers, and (3); editorial content. To successfully reach the mainstream market, platforms should target galleries struggling financially and buyers who are either unable to attend art fairs or are unsatisfied with existing OAPs. Keywords: critical success factors, online art platforms, art market, multi- sided platforms, diffusion of innovations Sammanfattning Den traditionella konstmarknaden genomgår för närvarande en digital transformation och flersidiga plattformar (multi-sided platform - MSP) för konsthandel är en stor del i detta. Många studier har utförts i MSP-området, men det råder brist på undersökningar som fokuserar på plattformar för konst. Detta arbete avser därför fastställa kritiska framgångsfaktorer (critical success factor - CSF) för startandet av en onlineplattform för konst (online art platform - OAP). För att besvara detta utfördes en tudelad marknadsanalys bestående av en generell analys av konstmarknaden och en kartläggning av existerande OAP:er parallellt med kvalitativa intervjuer och enkäter som genomfördes med gallerister, konstrådgivare och bransch-experter. Intervjuresultaten analyserades sedan induktivt, med en metod baserad på grundad teori, innan alla upptäckter granskades ur ett teoretiskt perspektiv. Analysen av existerande OAP:er kretsade kring de tre betydande plattformarna Artsy, artnet och Saatchi Art, av vilka Artsy är den ledande sett till storlek, riskkapital, och framstående funktioner. Intervjuresultaten indikerar att gallerier vill ha mer kontroll på plattformarna, högre kvalitet på deltagande gallerier och enklare hantering. Köpare lockas av enklare bläddring, mer information om konstverken och transparent prissättning. De funna CSF:erna för köparnas adoption är: (1) publikt tillgängliga priser; (2) ökad upptäckbarhet och enklare bläddring; (3) mindre avskräckande, och; (4) tillgänglig prisutvecklingshistorik. För adoption av gallerier: (1) tydlig kommunikation av förväntade resultat; (2) striktare urvalskriterier för deltagande gallerier; (3) enkel hantering; (4) integration med befintliga OAP:er och sociala medier, och; (5) gallerier ska kunna kontrollera vem som kan skicka förfrågningar. Vidare identifierades tre CSF:er för generell adoption: (1) avancerad sökning, bläddring och filtrering; (2) stor representation av säljare, och; (3) redaktionellt innehåll. För att framgångsrikt nå den breda marknaden bör plattformar rikta sig mot gallerier som är finansiellt ansträngda och köpare som antingen inte kan delta på konstmässor, eller är missnöjda med existerande OAP:er. Nyckelord: kritiska framgångsfaktorer, onlineplattformar för konst, konstmarknaden, flersidiga plattformar, diffusionsteori Acknowledgments This master thesis has been conducted at the department for Design Sciences at the Faculty of Engineering at Lund University. It marks the authors’ final step towards a Master of Science in Industrial Engineering and Management. We would like to express our deep gratitude to art market expert, Per Olsson, for inspiring us to write this thesis and for his devotion to steering us in the right direction. Our grateful thanks are also extended to Professor Lars Bengtsson, our supervisor, for his valuable advice and support during the planning and execution of this thesis. His willingness to give his time so generously has been much appreciated. Finally, we would like to acknowledge the generous help from interviewed gallerists, art advisors and industry experts. Truly, this thesis would not have been possible without your inputs. Lund, May 2020 Simon Janzon and Love Regefalk Table of contents 1 Introduction 11 1.1 Background 11 1.2 Purpose 12 1.3 Research Questions 12 1.4 Delimitations 12 1.5 Definitions 13 2 Methodology 14 2.1 Research Strategy 14 2.2 Data Collection 18 2.3 Data Analysis 22 2.4 Research Ethics 24 2.5 Credibility of Research 25 3 Theoretical Framework 27 3.1 Critical Success Factors 27 3.2 Diffusion of Innovations 28 3.3 Multi-sided Platforms 32 4 The Global Art Market 38 4.1 The Art Market in Numbers 38 4.2 Stakeholders in the Art Market 39 4.3 The Online Art Market 44 4.4 Value Creation in the Art Market 48 4.5 Summary of Market Analysis: The Global Art Market 49 5 Existing Online Art Platforms 50 5.1 Categorizing Online Art Platforms 50 5.2 Artsy 51 5.3 artnet 53 5.4 Saatchi Art 54 5.5 Comparison of the Art Platforms 56 5.6 Summary of Market Analysis: Existing Online Art Platforms 59 6 Interviews and Questionnaires 61 6.1 Gallerists 61 6.2 Art Advisors 75 6.3 Industry Experts 79 6.4 Rankings of Important Factors 81 7 Analysis and Discussion 83 7.1 Framework for Analysis and Discussion 83 7.2 Analysis of Gallerist Interviews 85 7.3 Analysis of Art Advisor Interviews 91 7.4 Important Factors for Art Buyers 94 7.5 Important Factors Based on Existing Online Art Platforms 96 7.6 Longlists of Important Factors 96 7.7 Theoretical Lens 98 7.8 Critical Success Factors 104 8 Conclusion 108 8.1 Answers to Research Questions 108 8.2 Contribution to Theory 112 8.3 Suggestions for Further Research 113 8.4 Limitations 113 References 116 Appendix A Interview Guides 123 A.1 Gallerist 123 A.2 Art Advisor 124 Appendix B Questionnaires 125 B.1 Gallerist 125 B.2 Art Advisor 126 List of figures Figure 2.1 Overview of the research process. 17 Figure 2.2. Important factors are filtered to derive CSFs and recommended target groups for increased adoption. 24 Figure 3.1 Diffusion of innovations among adopter categories (blue) and the innovation’s market share (yellow) 30 Figure 3.2 The chasm that separates the early from the mainstream market. 31 Figure 3.3 Comparison of a multi-sided platform and traditional sales channels. 33 Figure 4.1 Share of the global art market by value in 2018. 38 Figure 4.2 Major sales channels’ share of the global art market by value in 2018 39 Figure 4.3 Online Sales in 2018 in the art market and across all industries. 45 Figure 5.1 Artsy’s home page (Artsy, 2020a). Authors’ screenshot. 51 Figure 5.2 artnet’s home page (artnet, 2020a). Authors’ screenshot. 54 Figure 5.3 Saatchi Art’s home page (Saatchi Art, 2020b). Authors’ screenshot. 55 Figure 7.1 Framework for the analysis and discussion. 84 Figure 7.2 Data structure, traditional sales. 85 Figure 7.3 Data structure, online platforms. 88 Figure 7.4 1st order concepts and 2nd order themes, traditional sales. 91 Figure 7.5 1st order concepts and 2nd order themes, online platforms. 92 Figure 8.1 The CSFs for starting an OAP. 108 Figure 8.2 User groups to target and their pain points. 112 List of tables Table 1.1 The research questions of this study. 12 Table 2.1 Distinctions between quantitative and qualitative research. 15 Table 2.2 Examples of deductive, inductive, and abductive reasoning. 16 Table 2.3 List of interviewed gallerists. 20 Table 2.4 List of interviewed art advisors. 21 Table 2.5 List of interviewed industry experts. 21 Table 4.1 Visitor and exhibitor numbers of major art fairs. 42 Table 5.1 Comparison of Artsy, artnet, and Saatchi Art. 59 Table 5.2 Artsy’s, artnet’s and Saatchi Art’s main features and characteristics. 59 Table 6.1 Gallery information. 62 Table 6.2 Information about art advisories. 75 Table 6.3 Important factors for partnering with an OAP. 81 Table 6.4 Important factors for buying art through an OAP. 82 Table 7.1 Important factors for three existing OAPs. 96 Table 8.1 Important factors for galleries. 110 Table 8.2 Important factors for art advisors.