Shifts in the art world

imgresInvestors look at the size of markets.  The art market did almost $70B last year.  That is a big number yet the business is very fractured.  There are big auction houses, there are galleries across the globe, there are art fairs, there are online sites dedicated to editions and the primary and secondary market (resale) and more.

I have seen so many people in different businesses afraid to change because what they are doing works.  If they are doing really well I sometimes refer to that as the golden handcuffs.  Why change when the money is coming in.  What happens when one day the money trail shifts and profitability changes and market share shifts….you are screwed.  So in order to continue to be successful in a market you have to be see what’s coming down the pike and make the necessary changes.

A culmination of a variety of things are hitting the art world straight on and this year could be the time of change because it has to.  Selling to the collectors has changed.  The art world has become flat because of the internet.  We can see what just sold and for how much.  We can have images sent to us around the globe  People are buying what they want from who they want.  It isn’t necessarily a gallery or an auction house but directly from someone who wants to sell their work.  They no longer need to use an auction house or a gallery on either end.

Another big change is the explosion of shows such as Frieze, Basel and others.  Galleries pay a lot of money to have those booths.  You need a gallery to have a booth but that booth could cost as much as your rent that month.  So to be a cutting edge gallery hoping to bring really unique thoughtful art to the world doesn’t always sell.  How can a gallery rationalize an expensive booth for an up and coming artist pushing the edge that might not sell a piece.  They can’t.

Galleries need to change the 50/50 split that has been the standard for years among artists and galleries. Now it needs to be more like 70 for the gallery and 30 for the artist after the gallery has spent money on rent, marketing, shows, employees, etc.  The numbers just don’t add up anymore.

Sotheby’s just cut back the staff and then turned around to buy a blue chip advisory firm that helps bring together buyers and sellers and advises them on building out their collection.  Doesn’t seem like future thinking here but old school guns with major power.

Auction houses and galleries are not museums.  Museums are non-profit places that educate the public on art through collecting.

I just see a storm coming in this world and somehow or another we are going to see more galleries close, fairs rethink the rules of the game for galleries to show, auctions to think more like a company with powerful backend technology and then there is always the education component.  Should be an interesting year in the art world.

Comments (Archived):

  1. pointsnfigures

    I don’t know the art business at all but what you say makes a lot of sense. I have seen startups attack this market and fail-and other than not generating enough revenue I don’t know why they failed. One thing I do know; most people are not confident in choosing a painting or photograph. They get wrapped up in all the misinformation (will it appreciate? is this the hot artist? will it be worth something when I die?) rather than whether they like it or not.I do know that if you are into buying art and having it appreciate, you have to take a lot of risk. In the late 1800’s, early 1900’s, Bertha Potter went to France and bought painters that were out of favor like Monet and Impressionists. She had persuaded a bunch of commodity traders to donate money. Then she bought Picasso when no one wanted his stuff. She couldn’t afford the Dutch masters and other painting styles that were in vogue. She bought what she could afford. Turned into a really good buy as the world came to discover what she saw.She is why the Art Institute in Chicago has a tremendous collection.

    1. Gotham Gal

      I didn’t know that. Very cool

    2. Susan Rubinsky

      Still, it comes down to having a good eye which is risky.

      1. Gotham Gal

        True and that is why galleries have existed. They have made the market.

        1. pointsnfigures

          <div style=”padding:8px;”> <div style=” background:#F8F8F8; line-height:0; margin-top:40px; padding:50.0% 0; text-align:center; width:100%;”> <div style=” background:url(data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAACwAAAAsCAMAAAApWqozAAAAGFBMVEUiIiI9PT0eHh4gIB4hIBkcHBwcHBwcHBydr+JQAAAACHRSTlMABA4YHyQsM5jtaMwAAADfSURBVDjL7ZVBEgMhCAQBAf//42xcNbpAqakcM0ftUmFAAIBE81IqBJdS3lS6zs3bIpB9WED3YYXFPmHRfT8sgyrCP1x8uEUxLMzNWElFOYCV6mHWWwMzdPEKHlhLw7NWJqkHc4uIZphavDzA2JPzUDsBZziNae2S6owH8xPmX8G7zzgKEOPUoYHvGz1TBCxMkd3kwNVbU0gKHkx+iZILf77IofhrY1nYFnB/lQPb79drWOyJVa/DAvg9B/rLB4cC+Nqgdz/TvBbBnr6GBReqn/nRmDgaQEej7WhonozjF+Y2I/fZou/qAAAAAElFTkSuQmCC); display:block; height:44px; margin:0 auto -44px; position:relative; top:-22px; width:44px;”></div></div>A photo posted by Jeff Carter (@pointsnfigures:disqus ) on <time style=” font-family:Arial,sans-serif; font-size:14px; line-height:17px;” datetime=”2016-01-08T03:32:30+00:00″>Jan 7, 2016 at 7:32pm PST</time></div><script async=”” defer=”” src=”//…”></script>Here is my first attempt at anything artistic. Did it in a class. They are rolling out right now in Chicago.

  2. Yinka!

    I agree with you that a storm is coming, albeit in fragmented form, just like the industry. Due to lack of transparency (especially with auction and gallery giants in secondary market), market volume estimates are debatable. Also because of this opacity, changes within some sectors aren’t immediately apparent even to insiders.Shows are good but online channels like dedicated sites/marketplaces and Instagram are better – increasingly more sales at less overhead. Galleries and their artists probably have to recalibrate the financial threshold (#sales, etc) at which it makes sense to appear at shows and reassess which shows have the most market(ing) impact (sales, awareness, etc).

  3. awaldstein

    This is a very complex issue as you well know.Not easy to disrupt as the aspect of manufactured scarcity will never go away.

  4. ellen sing

    Online is good, but for me in person is better. As a consumer, If you buy what you like, you will never be disappointed. Value is based on so many different perceptions. That is why if a gallery is holding a bunch of paintings by a certain artist, and one goes up for action, the gallery will bid it up to keep their own inventory perceived as high value. As for changing the artist/gallery split, so many artists will be hurt financially.

    1. Gotham Gal

      artists will be hurt financially. the industry needs to change.

  5. Pranay Srinivasan

    what if I had a live video auction for a painting that has been authenticated on the blockchain for genuineness, and I can double click with my bid thats binding because my escrow account is linked to it.

    1. Gotham Gal