You may have noticed more art coverage in Silicon Valley and the San Francisco Bay Area over the last few months. From the spectacular relaunch of SFMOMA to the influx of world-class galleries and fairs, the region has catapulted into the upper echelon of the art world. And in true Silicon Valley fashion, this happened practically overnight.
Despite the exciting developments, many stories seem to hint at anxiety over the lack of art sales in Silicon Valley. They playfully ask, “Will tech eventually buy art?” but never quite answer the question.
In my experience as the gallery director of UGallery.com, a San Francisco-based online art gallery, this question isn’t being answered because there hasn’t been data available on just how much art this part of the world is already buying.
The Bay Area’s relationship with collecting art is more complex than the picture being painted in the headlines. In the last 10 years, many of San Francisco’s established mid-market galleries were priced out of downtown and forced to move or close. The city has a long history of buying “affordable” art, but the old guard has been disrupted by galleries and fairs catering to the new tech elite. This has led to the angst around high-end art collecting.
So, the real questions are, where did the buyers go, and can the new tech workforce replace them?
The tech industry has a notoriously young workforce. Almost half of the unicorns were founded by twentysomethings, and the average Silicon Valley developer is a mere 28 years old. While there is plenty of money flowing around the Valley and into paychecks, there’s more to buying art than simply having discretionary income.
A recent study points to a deep generational divide between how younger and older collectors value art. Only 35 percent of millennials believe the real value of art to be the art itself, as opposed to 30 percent who said investment. Conversely, 66 percent of boomers value art’s intrinsic value, as opposed to a mere 10 percent who said investment.
As the tech industry matures, the people who helped make it happen – the many senior managers and mid-level execs – are moving to suburbs like Burlingame or Los Gatos, having children and buying houses. The mass affluent of tech are settling down and beginning to enjoy the wealth they worked so hard to create. According to the WSJ, the Bay Area is now home to 200,000 millionaires. For every Mark Zuckerberg, there are hundreds, if not thousands of wealthy tech veterans buying reasonably priced art.
So where are they buying? As the local galleries become increasingly stratified, these collectors are turning to a natural destination: online.
“ 64 percent of online art sales fall between $100 and $5,000 ”
Over the last few years, thanks to back-end innovation and consumer comfort with ecommerce, the online art market has grown steadily. According to the 2016 Hiscox Online Art Trade Report, the value of the online market reached $3.27 billion in 2015; and based on its current 24 percent annual growth rate, will hit $9.58 billion by 2020.
Despite increasing uncertainty in the high-end auction market, the online art market, which predominantly represents the lower end – 64 percent of online art sales fall between $100 and $5,000 – is thriving. Online galleries are able to reach an audience of art buyer who has never felt welcome walking into a brick-and-mortar gallery.
Our goal at UGallery.com has always been to democratize the insular art world and make original art accessible. This movement is gaining steam. While New York City has long been the epicenter of American art buying, Northern California became UGallery’s largest market in 2011, and hasn’t looked back. Our data shows San Francisco beating out the Big Apple in sales volume by 50 percent. Furthermore, the conversion rate of Bay Area art buyers is three times that of NYC, and four to five times that of our next largest markets.
So who is buying all that art? Tech personalities who are known to be collectors include Marissa Mayer, Eric Schmidt and Marc Andreessen and Laura Arrilaga-Andreessen. Our typical client is generally 40 to 60 years old or older, purchasing more often on desktop than mobile devices — however, the tech-savvy Bay Area is most likely to purchase on a mobile device — and will spend, on average, $1,250 on a piece of artwork. Our clients are coming from Oracle, Cisco and VMware rather than the younger Airbnbs and Twitters.
Going back to the original question, how do you translate interest in art to actually purchasing art? Simply nurture young interest and wait a few years. If millennials or Gen Xers are attending art fairs or strolling through the Minnesota Street Project today, there’s a good chance they’ll be doing more than tweeting and taking pictures when they come back in 10 or 15 years, like the current baby boomers.
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Published on 06 Jul 2016 under E-Commerce
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