The art market is rapidly adopting digital technologies to deliver better engagement with users, with increased momentum from recent world events.
Chris Eastham from Fieldfisher's technology team explains why it is important to understand the regulatory environment, such as the new Platform to Business Regulation (P2B), before taking steps into the online world.
Times, they are a changing
We're living in interesting times, particularly where art meets technology and online business. The government's £1.57 billion package to help the arts, culture, and heritage industries to weather the impact of coronavirus could provide the necessary incentive to those wishing to invest in new ways of making the arts available.
Covid-19 has forced the art world to adapt and part of this is using technology to deliver different channels for consumers to access art. Director of Gagosian Gallery, Sam Orlofsky, has said that "at least 75% of the conversations we are having right now are brainstorms about how best to present art online”. We've experienced this approach being used successfully, and are regularly advising our clients on the deployment of technological infrastructure to support customer engagement across a wide variety of sectors.
There are still many obstacles to and concerns about physically visiting museums and galleries, as well as auction houses, and technology is offering options to bridge the gap. We've seen galleries using technology to deliver bespoke virtual environments for specific exhibitions that mirror the physical space to give fully immersive experiences, and auction houses have been streaming sales online. Although we will gradually return to physical spaces, we expect extended reality technology (such as VR/AR/MR) to become more prevalent as consumers become more accustomed to multi-channel engagement and more is invested to share art in new ways.
Although the leading auction houses have reported reduced revenue this year, many have been surprised at the success of the reinvention of the online only sales for the headline pieces. Sotheby's reported £1.9 billion in sales so far this year quoting "innovation and adaptation" as main drivers, with over £218 million in revenue being generated through online-only auctions. Online art sale platforms also appear to be thriving.
However, those wishing to make these online marketplaces successful need to be vigilant of any relevant regulations, and there have been recent changes in the law in this area.
Why should the art world care about P2B?
One such change is the new Platform to Business Regulation (P2B) which came into force on 12 July 2020. Put simply, P2B will apply to any organisation that sells art online, on behalf of artists or other businesses, to consumers in the European Union (EU). It applies to organisations not physically located within the EU.
The aim of the P2B is to protect businesses that provide their services to EU consumers through platforms operated by others. The main rationale for this is to provide a fair, transparent, and predictable environment to protect smaller businesses (including self-employed artists) offering their goods or services to EU consumers through online platforms, which often tend to have a more dominant position in the market. Organisations providing these platforms (such as online art sale platforms, galleries, auction houses, etc.) are likely to fall foul of P2B unless they have taken the necessary precautions.
The main impact of P2B is to impose requirements on the terms and conditions of the platform, as well as ensure that certain processes are in place for complaints handling and resolving disputes. A failure to comply may result in contract terms being unenforceable, and can also lead to fines.
Organisations providing a platform for the sale of art will need to review their terms and conditions to ensure they are P2B compliant, and will need to ensure they nominate mediators as part of their disputes processes.
Brexit will have no impact on the Regulation.
Making art available online is set to deliver greater engagement with the art world, and organisations may be looking to use the recently-announced funding to help deliver their online offerings.
If your organisation is selling art online, we'd recommend seeking advice on how P2B will apply and how to stay compliant.
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