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When venerable auction house Sotheby's joined Amazon.com last year to market high-end art online to the masses, the deal appeared to many as a brushstroke of genius.
It wasn't long before rival auction houses and artworld upstarts followed Sotheby's lead. Soon, Monets and Ming vases were as easy to find online as Beanie Babies.
Ostensibly, a global audience would result in more bidders, which in turn would make for higher sales. But so far, that hasn't proven to be the case. Fine art collectors, perhaps missing the posh surroundings of the auction house, don't seem to feel comfortable shopping online.
"Higher end collectors like the gallery experience," said Gordon Mayer, CEO of online art retailer Guild.com. "They like the exclusive nature of the market."
Over the past year, low sales and sliding stock prices have forced many of the major players to restructure or sever their online operations.
"It's amazing a year ago how many people jumped in to the huge economic frenzy that was going on," Mayer said. "It appears to be such an obvious market. People found out it looked obvious, but it was very difficult to succeed."
Sotheby's (BID) and Amazon.com (AMZN) recently pulled their joint auction website, sothebys.amazon.com, to redirect customers to high-end site, Sotheby's.com.
In the latest example of troubles besetting the industry, eBay (EBAY) recently announced it would lay off 15 percent of its Butterfields staff.
EBay acquired Butterfields last spring in an effort to leverage the traditional auction house's credibility and expertise to reach high-end buyers.
But while low-end collectibles have flourished on eBay, the mid- to high-end art on eBay and Butterfields' joint website, Great Collections, has been slower to take off.
"The transition may take longer than we initially thought," said Kevin Pursglove, senior director of communication for eBay. "Customers have to get accustomed to changing their buying and selling habits."
"The business is not as robust as companies would have expected," said Derek Brown, an analyst at W.R. Hambrecht & Co. "Everyone involved is trying to figure out the best way to utilize this new medium."
Sites like Great Collections and sothebys.amazon.com have failed to resonate with their online customers, who come to their sites mostly to buy lower-end items, Mayer said. Consumers are reluctant to make high-end purchases sight-unseen.
"Art is such a visual medium," Mayer said. "People like to see it."
While Sotheby's and Butterfields have launched mass-market online auction sites, rival Christie's has focused on its live auction sales, canceling plans to enter the online auction business last year. Christie's features live webcasts of the showroom floor, but takes Internet viewers' bids via telephone.
While high-end auction houses are struggling to move online, Guild.com has thrived by targeting middle-tier art buyers.
"We're not going after the person who's never bought art," Mayer said. "Educating them is very difficult and very expensive."
But other sites are attracting first-time buyers.
Artnet.com recently achieved record-breaking prices for its online auction of Andy Warhol prints, paintings and drawings. Warhol's Campbell Soup Can 1 portfolio of screenprints sold for $64,000, the highest price ever recorded for a graphic work sold on the Net.
Artnet has reeled in higher revenues over the past year, largely due to higher sales in its Fine Art Auctions Database, which features over 2 million lots from over 500 auction houses, including Christie's and Sotheby's.
"People are becoming more and more comfortable spending money on the Internet," said Uta Scharf, vice president of auction sales for artnet.com. "Those who felt excluded from the art world can now approach art on their own time, in their own space."
Since artnet.com's inception in March 1999, the top ten items sold through its online auctions have averaged around $50,000.
Although comfort levels may be changing for some high-end items, trust remains a deciding factor for many online art buyers.
"Trust is very important in the art market," Mayer said. "People trust us. They know our brand."
Last May, eBay invalidated the $135,805 sale of a purported Richard Diebenkorn painting after the seller was found guilty of manipulating the bidding.
Unlike works sold on Great Collections, which are screened by Butterfields experts, the purported Diebenkorn was sold through eBay's general category and had no verification of authenticity.
Sites like eBay have fueled consumer fears over making high-end purchases from anonymous buyers and sellers.
EBay recently instituted a buyer's premium on Great Collections, an additional fee that the buyer pays to the seller as part of the total sale price.
Since eBay doesn't require a buyer's premium for items sold on its general site, the move may indicate eBay's attempt to assuage consumer fears about the online marketplace's anonymity, Brown said.
"Sellers may have been reluctant to adopt eBay because they are concerned about quality and commitment (of buyers)."
To assure buyers of quality, sites like sothebys.com, artnet.com, Guild.com and NextMonet.com use jurors to vet each piece for authenticity. For these sites, quality, rather than potential sales volume, drives selection.
"We're not interested in being Pottery Barn," Mayer said. "We're interested ... in original art. This is a market where you don't need hundreds of thousands of customers to be successful."
While most Guild.com customers start at a price point averaging about $1,500 for paintings, the average price point often doubles with their next purchase.
"It's about finding the right customers and attracting them to your site," Mayer said. "It's not just waiting for them to come back to your store."
It may take years before the high-end art market takes off. But enhancements such as increased broadband adoption and live auction technology may speed the transition.
"That just might be the bridge that connects the traditional art world to the online market," Brown said.
