Big changes are afoot. One of the biggest (and most obvious) disruptions to the art market in the 21st century, however, is the growing importance of the decidedly social, public and ubiquitous tradeshow called the “art fair.”
Art fairs have been on the rise since 2000. And while the basic groundwork established by galleries and museums still provides a guiding light to today’s art world, it won’t be long, however, before the landscape presented by art fairs shifts the art market to a more digitized way of working.
The art world may seem to have been slow to adapt to technology. But those days are over and all things Web 2.0 – digital marketing, social media, e-commerce – are starting to infiltrate. The increasing savvyness of art dealers to leverage technology to boost sales, is changing the way business gets done.
It’s not just the way art is bought and sold that is changing, however. New art forms are popping up on the horizon. Next-generation dealer-curators are building partnerships with these artists, forging a trail with new ideas and inspirations that match the structure of tomorrow’s world.
Where’s it all going? Like everything else that’s been touched by the Internet, the revolution will not be televised, homogenized, or institutionalized. It will be digitized.
The State of the Art Market: TEFAF vs. Art Basel & UBS
Two reports about the state of the art market were released in March: The 2017 TEFAF Art Market Report and the Art Basel & UBS The Art Market | 2017. Both reports got the art world talking—and trying to read the numbers like tea leaves to determine the true state of the art market.
While the reports are pretty far apart when it comes to the overall size of the market, the authors agree on two things: that dealer profits are up and public auction house profits are down.
The TEFAF Report, which has been published annually since 2002 by TEFAF Maastricht, has a new author at its helm: Professor Rachel A. J. Pownall, who holds the TEFAF chair in the art market at the School of Business Economics at Maastricht University.
As is typical during changing-of-the-guard moments, Pownall altered a number of methodologies and narrowed her definition of dealers and galleries in order to make the Report, she told the Financial Times, “more representative of the art and antiques market globally.”
According to Pownall and her team, the global sales for art and antiquities are up 1.7%, even though she estimates that the overall size of the market is down—from $63 billion to $45 billion because of the change in the way she and her team approached statistics.
The Art Basel and UBS Report is authored by Dr. Clare McAndrews, the founding author of the TEFAF Report. According to McAndrews, who appears to have used similar methodologies to her previous TEFAF Reports, the overall global art market is down a whopping 11% from $63 billion in 2015 to $56.6 billion in 2016.
If you want to explore their positions more deeply, you can read more about Pownall’s positions in the Report itself and on Artnet, Artsy, The Art Newspaper. And you can download full Art Basel & UBS report here.
While Pownall and McAndrews don’t agree on the overall size of the market, and whether or not the market was up or down in 2016, they do agree on two things: that art dealer profits are up and auction house profits are down.
Art dealer profits: Pownall says they are up 24% and account for 62.5 % of the global art market. McAndrews says they are only up 3% and account for 57% of art market sales.
Public auction house profits: Pownall says they are are down 18.8%; McAndrews says they are down 26%.
It is hard to tell which report is more accurate, but it is clear that the balance of art market power is shifting away from public auction houses towards private dealers.
The Auction House vs. The Dealer: The Art Fair as the New Normal
Why are today’s buyers moving away from public auction forums to private ones? Perhaps this is due to a greater need for privacy, stability, trust, and discretion, as Pownall suggests. Or perhaps it’s due to the maturation and increasing ubiquity of art fairs globally.
Auction Houses first appeared in the late 18th century alongside the rise of the mercantile class and the international art trade after the French Revolution, which laid the groundwork for auction houses like Sotheby’s in 1744, Christie’s in 1766, and Bonham’s 1793.
A handful of art fairs started between 1960 and 2000: The Art Dealers Association of America (ADAA), for example, started in 1962 and Art Basel in 1970, while TEFAF Maastricht launched in 1988 and The Armory Show in 1994.
On the other hand, the art fair as a massive selling machine has only risen to the forefront of the art market since 9/11—and they have been proliferating like rabbits ever since.
Scope and New Art Dealers Alliance (NADA) were founded in 2002; Frieze was founded in 2003, Pulse in 2005 and the list goes on and on. All of them started as a single fair and now have multiple venues.
In 2015, The Art Newspaper reported, there were more than 269 fairs worldwide! While there seems to be a glut of fairs and consolidation and down-sizing – as would be expected when any marketplace matures – the sheer increase in art fair numbers is pretty astounding.
Join the Circus: The Art Fair as Social Phenomenon 2.0
The meteoric rise of the art fair phenomenon is obvious to anyone who is trying to keep up with them. What’s less talked about, however, is the way the art fair, which is born in the age of Internet, is making the sales process more like the Internet itself—accessible, agile and gluttonous.
The Art Fair Advantage #1: User-Friendly Atmosphere
By all accounts, the art fair is creating a better user experience for dealers and collectors. Not only does it make buying and selling art more efficient, it also provides easy access to art at every price point and enables personal, one-on-one interactions between dealers and collectors.
Unlike auctions or gallery exhibitions, the art fairs’ tradeshow environment offers one-stop shopping convenience and is incredibly user-friendly for collectors of all kinds, from armchair art fans to aficionados.
Navigating an art fair may seem, at first glance, to be hit-or-miss affair with its maze of hierarchies, relationships and who-knows-who. But that’s part of the art fairs hyperlink-like adventure: Go where you want to go. Seek and ye shall find.
The Art Fair Advantage #2: Dealer-Generated Content
What dealers bring to the art fair is what’s making today’s art market. By changing what’s available for sale, art dealers at art fairs are changing what people buy—and turning the art fair into a platform of art dealer-selected content.
Both Pownall’s and McAndrews’ reports note that taste for blue chip artists is down. This could be because of quality and prices of blue chips works at auction last year – or it could be the availability or new products with a pedigree at lower prices that so many art dealers have been showcasing recently at art fairs and in galleries.
Ermanno Rivetti, reporting for The ArtNewspaper has called this “The great estates race…,” suggesting that collectors who are looking for stability are shying away from emerging art to historical, perhaps undervalued, artists. And that buyer’s lower appetite for risk is pushing dealers to go after artist’s estates.
Perhaps the answer is more art-fair driven, however. Like social media, the art fair is a beast that needs to be fed. That, combined with the high cost of being on the art fair circuit, requires dealers to showcase artists with a track record and higher price points in order to stay in business.
This strengthens the art dealer’s role as “Citizen Curator,” moving the power away from public institutions and towards the individual seller.
Content is always king in the art world. Art, and the artists who make it, are at its center. But with the rise of the art fair, the power of content creation has shifted to the dealer. They may not be the content creators themselves, but they are the ones creating the show.
The Art Fair Advantage #3: On-Site/Online Synergy
The art fair is also proving to be an invaluable lead generator—that plays well with online marketing initiatives. Art dealers can be (and need to be) anywhere at any time, literally (at the fair) and virtually (online.)
Art dealers now meet tens of thousands of potential collectors at art fairs every year – the big ones draw 50,000 plus potential collectors over a single weekend. And, according to our research of the world’s top galleries, most attend three art fairs every year: one in the US, one in Asia and one in Europe.
The art fair alone, however, is not an efficient way to foster and develop the kind of relationships required to sell high-ticket items to art-collecting globetrotters. Dealers need technology-enhanced methods to manage 24/7 art market hours.
Enter third-party marketplaces and websites, about which, according to both Pownall’s and McAndrew’s dealer surveys, dealers are increasingly optimistic.
In terms of third party marketplaces, sites like Artnet and Artsy are helping dealers amplify their wares, by making it easy for their sites’ users to discover art and make contact with the people selling it.
Internet Marketing is also on the rise. Dealers are starting to take advantage of affordable, easy-to-use platforms like Google Adwords, social media, newsletters and email both to stay in contact with the customers they meet at the fairs and to cast a bigger net on a global scale.
No doubt, technology is facilitating the dealer/buyer relationship—before, during, and after the art fair.
Good News for Big Budgets, Bad News for In-Between, Great News for Next Generation
Near-term projection: Dealers with big budgets and big ticket artworks for sale who can easily afford to make personal connections at fairs, and spread news about their programs via online marketing, social media and third party platforms, will be tomorrow’s best sellers.
Middle market dealers will be crunched by the rising costs of doing business, which will lower profit margins. Many, like Andrea Rosen and Vilma Gold have already done, will shutter and focus on representing a handful of artists and their estates in partnership with bigger galleries.
Expect to see younger galleries forego brick-and-mortar spaces altogether in favor of third party marketplaces as their storefronts. They will rely on their social media savvy to spread the word about the artists they represent.
Online auctions and sale sites will continue to grow, perhaps quickly, but most likely slowly. To break through and capture the market on artworks over $5,000 (the average sale price for online sales according to both Pownall and McAndrews), these sites will not only have to get more efficient, they will also have to get more social.
Down the road: Like everything else, the art market will probably move more and more into the virtual. All visual, all interactive, all on demand. What we’re starting to see is an emerging set of artists working with a whole new set of ideas and inspirations that match our current world.
Art is not just for showing and selling anymore. It’s for sharing, for connecting and for storytelling. That’s where we expect to see the next level of disruption. And that’s where we’ll find the future’s big winners.