ARTSY: Finding Art at the Intersection of Science and Technology
A look at how one company is mapping out a digital taxonomy of all the world’s art
Artsy’s story began as most startup stories do: in a college dorm room. CEO Carter Cleveland launched Artsy in October 2012, when he—a computer science major at Princeton—couldn’t find a website to discover artwork for his dorm room, so he set out to build one.
In three years, Artsy has catalogued over 360,000 works of art from over 25,000 artists worldwide and secured $50 million of funding in the process. With Peter Thiel, Pandora CEO Joe Kennedy, Twitter co-founder Jack Dorsey, and former Google CEO Eric Schmidt on its bench of investors, it’s no surprise that Artsy has been highly effective at aligning its operating and business models, but how exactly do they do it?
THE ART GENOME PROJECT
Artsy’s success is rooted in its ability to develop highly advanced technology and apply it to the art discovery and education process. Established as a collaboration between art historians and computer engineers, the Art Genome Project builds upon art-historical scholarship and artificial intelligence to codify the “DNA sequencing” of art. Specifically, Artsy’s algorithms ascribe complex values to artwork using 1,000 different “gene” tags in fourteen different categories. Not only do these classifications range from subject matter to period or technique, but they also consider style and movement, even including a category for eye contact. Each artwork then gets assigned 25 genes on average, with each gene weighted according to relevance on a scale of 1 to 100.
Beyond designing a search engine and database for art (a feat in and of itself), the genome system empowers Artsy to draw connections and map out relationships among works of art. This in turn led to the development of a Pandora/Netflix-inspired recommendation engine that aids in the actual discovery of art—a clear pain point for artists and collectors.
OPERATING MODEL
As such, Artsy operates as a platform that connects and serves a two-sided marketplace.
Value to Artists/Galleries:
- Awareness & Distribution – Artists and partnered galleries are willing to upload their work on Artsy (thus functioning as content providers) because they get value from Artsy’s audience/distribution network. When Artsy first partnered with the Armory Show, an event that welcomed 50,000 in-person visitors, Artsy’s site had 270,000 unique visits with over 4 million artwork impressions.
- Technological Aptitude – Artsy plays a key role in educating traditionally old-fashioned artists and galleries on how to apply technology to reach a modern audience, also providing them with a content management system (CMS) to control the content they provide on Artsy.
Value to Art Collectors/Viewers:
- Education & Discovery – Users have the ability to “favorite” artists, so they can subscribe to notifications about upcoming exhibits or new work by artists they follow. They can also easily share/introduce artwork to friends, and of course, purchase it.
- Exclusive Promotions – One of Artsy’s most popular features is their online art fair previews, which allows users to preview, inquire about, and collect works online before they make it to major physical exhibitions like Art Basel, Frieze, or Design/Miami.
BUSINESS MODEL
While Artsy initially took a “look and learn” educational approach to build out its network, it quickly identified ways to monetize the business. First, it implemented a commission-based model where galleries would pay Artsy 1-6% of sales that were generated by Artsy. Because the final sale occurred between the purchaser and the gallery, Artsy had to rely on the galleries to abide by an honor code system of reporting and assigning credit to Artsy for sales that were driven by the site.
By mid-2013, the company transitioned to a subscription-based model through which galleries pay Artsy between $400 and $1400 per month to list an unlimited amount of art, promote relevant exhibits, and reach potential customers through Artsy’s targeted email campaigns to their artists’ “followers”.
Most recently and impressively, Artsy launched an online auction feature that allows collectors to bid on art directly from their iPhone. Of note, Sotheby announced its inaugural online auction partnership with Artsy in November 2015.
MARKET OPPORTUNITY & SCALABILITY
Artsy’s impressive ability to reconcile its operating and business models and create value for all art market participants points to a huge opportunity to increase share of a growing market. While the European Fine Art Foundation reported that only 5% of $65.9 billion in 2013 global art sales occurred online, it forecasts art e-commerce will grow 25% each year for the next several years. This combined with the fact that the demographic of art buyers is shifting to a younger, tech-savvy audience that is willing to purchase artwork sight unseen leaves Artsy well-positioned to capitalize on market growth and expand internationally. In 2014, Artsy was able to increase the average distance between art buyer and seller to 2,700 miles.
Looking ahead, developments in virtual reality technology should broaden the scope of art forms that Artsy can list on its site. It has already experimented with video, dance, and performance art, and it’s likely just a matter of time before Artsy achieves its mission of “mak[ing] all the world’s art accessible to anyone with an Internet connection.” And if their patent registration for the Wine Genome Project is any indicator, the potential cross-industry applications of their coding technology are boundless.
SOURCES
[2] Arsty.net – Art Genome Project
[3] X-traOnline
[4] SF Chronicle
[5] NYT
[6] WSJ
[7] AlleyWatch
[8] Fortune
Very cool post. I had no idea. Really neat concept.
Michelle, I really love that they have seemingly created an integrated market where there was none before. It seems kind of like Craigslist for artists or something of the like. I think that one logical next step would be to start selling art directly from the site and removing the gallery from the process. I do not think they would want to eliminate the partnership with the gallery entirely, but perhaps have some artists just selling directly. Is this something they are already doing? If not, do you think their operating model could make that shift?
Michelle – great post! I had a good friend (who you know too!) who worked at Artsy but this gave me an even clearer picture of their operating and business models. The way that they leveraged community innovation to create & capture value kind of reminds me our Threadless case… definitely some potential for network effects? It’s also interesting how they have capitalized on this opportunity to savvily help usher members of a more old world art community into the digital age through technology… just creating more value to be captured by multiple parties: the company, the artist, the gallery, community members/customers, etc.. The switch from a commission- to subscription- based monetization model is really interesting… clearly has been a key driver of their success. I’m curious if/how they’ll adjust this as they grow and continue to create value for all beneficiaries of the site.
Thanks for sharing!
Michelle – this is a cool post. I’m curious about the decision that they’ve made to enter the online auction space, in art it seems that buying and selling has been dominated by auctioneers and discovery of art by galleries – is it possible to combine these 2 while still retaining the core value proposition to consumers. Also, first movers into these kind of online spaces can quite often get outdone by newer organizations – what do you see as the main risks of this happening for artsy?
Very interesting post! Pandora came to mind immediately when I read “Art Genome Project.” As someone who appreciates art but is not very educated about it, I find Artsy’s value proposition intriguing and will definitely be checking out their site. I also love that they provide a variety of images free to download for educational use (based on a quick peek at their homepage).
I found Nina’s question around the role of galleries in the future to be a really interesting one. I’m curious to see how Artsy’s relationship with galleries will continue to evolve moving forward. It also brought to mind the “Iron Law of Distribution” from marketing (I know, I know, isn’t that class over already?) “you can choose who does a function but you can’t eliminate the function.” Artsy should take care to know what function galleries are providing if they do look at disintermediating them in the future.
Michelle – This is super interesting. Art is one of those industries that is so opaque in terms of pricing and general information availability so I love that they are looking to ‘map’ the art world. I also find it very impressive that they have been able to find ways to monetize this so quickly. Their value proposition will grow exponentially as they continue to build out their database. It will be interesting to see what further avenues for monetization will open as their dataset grows.
Yes! Such a good example. Jealous I didn’t think of it. I’ve been a user of Artsy from the time it was art.sy! As you mention, I think buying high-price art sight unseen is a huge hurdle (especially works executed decades ago where you have no idea as to the condition) but it’s great for discovery and makes it easy to track up and comers. You’re probably aware of it, but you should definitely check out Google Art Project as well. They are in the process of cataloging all the world’s art held in museums. Awesome free educational tool and the technology/detail of the images is really astounding. I’ve never been to the Uffizi Gallery but I feel like I have! Look forward to discussing with you:)