The biggest advantage of the Internet for art collectors and other buyers is access to information and the opportunity to compare prices. Recently, a prospective buyer found that a painting he was interested in cost differently on two online art galleries. As both the galleries could not have had the same painting one deduced that they were probably from the same series with minor variations. What was amazing was that the prices could vary so much - more than double. Eventually, it turned out that one was a ‘primary’ price and the other the ‘secondary’ one.
In the art market too, there is a primary and a secondary market similar to what exists in the stock market. The primary sale is the initial or the first sale of an artwork whereas when it is resold it is called the secondary market. In a resale the seller may raise the price substantially to improve his profit margins but unless there is a real demand in the market for either that artist or that particular work the sale may materialize or not. Therefore it is safe to say that the secondary price is driven completely by demand.
It therefore goes without saying that if one is not alert about cross-checking and verifying data, one may end up overspending. The Internet as well as specific online groups offer a unique opportunity to select artworks, research on the artist, compare prices and solicit advice from specialised networks - all for free. In fact, this offers a tremendous advantage to new and unsure buyers who can gain from others’ expertise. Right from information about the investment potential of an artist, his current market value and availability to reputation of online galleries and websites, these networks offer a valuable support system to its members. However, one must not completely depend on virtual sources to collate all relevant information. Remember, it is difficult to evaluate motives and credibility through only online communication.
The best way one can utilize online groups and supports is to use it as a learning tool and build your own information base. Over time, you will find yourself gaining in confidence and will be able to take independent decisions relating to art investment.
(Published in Financial Times)