Global Art Market

‘A work of art is a rare, fixed asset, which provides its owner with services of an aesthetic (aesthetic pleasure), social (distinction and prestige) and financial nature. It is not a source of revenues but, considering its mobile character and possibility of profitable resale, it constitutes a potential form of alternative financial deposit’.[1] This is how Raymonde Moulin, French sociologist specialising in broadly-conceived art market and author of pioneering monographs of the connections among artists, public institutions and the market, defines works of art.

Such a definition seems hardly surprising at the beginning of the 21^st century, however, we must remember that for a long time artists were treated more like artisans, producing items of a purely decorative value. What was expected from them was mostly high manual agility. The situation changed in the 17^th century with the establishment of the Royal Academy in Western Europe. According to its criteria, ‘the artist is no longer a craftsman or a low-ranking tradesman, but rather a person of knowledge, teaching the principles of beauty and taste’.[2] Artists were granted a status comparable to philosophers and writers only in 1816, when this institution had been restructured. However, their creative liberty was subject to a system of rules, supervised by two official institutions: the conservative Académie des Beaux-Arts and the Salon. The Academy provided standard, classical education, while the Salon testified to the professional nature of the work of artists qualified to compete within exhibitions. The academic criteria required artists to be able to produce skilful imitations, and the value of their work was evaluated according to five basic touchstones (topic, inspiration with nature, character of human poses, harmony of composition, drafting precision).

The 19^th century allowed for producing numerous copies of the same painting, which sometimes attained even higher prices than the original. However, this mode of functioning on the art market was quickly disturbed by the emergence of photography, even though daguerreotypy was for a long time considered to be but a merely technical representation of reality. Photography started to be perceived as art only in the second half of the 20^th century, and was de facto granted the status of art at the beginning of the 1980s.

The shift in the way in which art objects are valued is connected with the emergence in the second half of the 19^th century of the first promotional galleries that went against the traditions of the Academy and the Salon. The pioneering art dealers who transformed the art market permanently, shaping the foundations of the contemporary system, came from France: Paul Durand-Ruel, Ambroise Vollard and Daniel-Henry Kahnweiler. In most cases they signed contracts with artists and paid them a fixed salary in exchange for the right to be the first viewer of their work. Quite often, artists were obliged to give all their creations to the dealer, who, in turn, organised exhibitions and promoted their art. Considering the amounts they invested, we may conclude that they were treated as experts, warranting the high quality of advertised works. The French hegemony on the art market ended with World War II. Afterwards, in 1964, Robert Rauschenberg won the grand prix at the Venice Biennale. This event is now treated as the symbolic date on which the global art centre moved to New York. It was indeed at the beginning of the 1960s that gallery owners based in this metropolis started to make decisions as to how the art market would develop. The most famous and influential of this group was Leo Castelli, the man who, for the most part, promoted American pop artists and introduced them on global markets. One might say that even the French dealers towards the end of the 19^th century appreciated the necessity of co-operation with foreign galleries to attract international attention to their artists. However, it was Leo Castelli who created the friendly gallery co-operation system in the USA, Canada and Europe. At one point, almost 70 percent of all works of art sold throughout the world came directly or indirectly from the ‘parent gallery’, the New York establishment run by Leo Castelli.

When we discuss art sales, we tend to limit ourselves just to the results of big auctions. Such an attitude is faulty, however, since public biddings usually offer the works of already ‘classified’ art, i.e. old art, impressionism and renowned contemporary artists. Works produced by active, living artists are usually only acquired by auction houses once their authors have gained a stable position in the art world. Meanwhile, many artists operate under a completely separate system. According to reliable data sourced by commercial chambers, the turnover generated by art galleries is five times as high as that of auction houses. Works of art are also purchased by big museums, and such institutions are not obliged to disclose the value of their transactions. While they usually have only modest financial means at their disposal, the well-developed private sponsoring system and favourable tax regulations usually enable renowned museums to acquire unique works for less than their market value. It is connected with a crucial psychological factor of prestige: in this way, in November 2011, Centre Pompidou in Paris became the owner of a unique collection of modernist photography, assembled throughout many years by Christian Bouqueret. This assembly of over seven thousand items was acquired thanks to Yves Rocher, a cosmetics company. The total value of transaction, estimated by experts at millions of euros, is unknown.

In their latest publication[3] on the principles governing the art market, Nathalie Moureau and Dominique Sagot-Duvauroux, two French economists, separate art circles into four basic categories. The first one, dubbed ‘integrated professionals’, describes people who know the rules of the game perfectly well and use this knowledge to their fullest advantage.  The ‘naive artists’ are their antithesis, operating outside the established art circles and completely ignorant of any rules. They make art because they like it and are unable to function within the system of galleries, museums and auctions, which does not necessarily mean that their work does not sell. The next group are ‘freelancers’, usually artists that despite being acknowledged by public institutions refuse to adjust to market rules. Quite often they earn their living by teaching and public procurement revenues. The largest group are artists that observe traditional rules of making art. Their works are often sold by galleries. This classification applies to all artists throughout the world and is independent of the division, relevant until recently, between the centre and peripheries of art. In any case, the onset of the 21^st century is characterised by all-pervasive globalisation, also in the domain of art, so the long-standing hegemony of Western artists now seems to become a thing of the past.

We should also clarify the notion of contemporary art, which poses many problems and is erroneously used as a synonym for modern art. Experts agree that art produced by living creators should be referred to as ‘current art’. Depending on the understanding of the work and the method of its technical production, current art may be divided into three categories (a classification proposed by Nathalie Heinich, a French sociologist specialising in new art analyses): classic art, modernist art and contemporary art. Living artists who create realistic works and follow traditionally prescribed principles are referred to by Heinich as classic artists. The second group encompasses modernist artists, i.e. those who reject the classic canon, but still use traditional materials and attach great weight to the style of the work as more important than highlighting the artist’s own personality. Meanwhile, contemporary art spurns all art-related conventions and crosses the boundaries that separate various domains of art, as well as those that used to mark all that was permitted and socially accepted. Since the turn of the 1970s and 1980s, cultural institutions throughout the world have seemed to favour this type of art, which does not mean that the average art consumer easily accepts the choices made by renowned museum curators. This is why there are now several independent art circles, each of which turns to various, sometimes radically opposing, aesthetic theories to substantiate its own path.

In general terms, the art market may be divided into four basic categories. The ‘chromos’ market refers to trading in works of art created by living artists that allude to the style of past decades or even centuries. They are inspired by fauvism, impressionism, portraits or just the usual, run-of-the-mill seaside landscapes. The term ‘chromos’ was put forward by the French sociologist Pierre Bourdieu to underline that such works were by no means original. The second category includes works created by artists ‘seeking’ acknowledgement. Quite often, they bear the mark of the individual and are indeed unique. Unfortunately their authors are not widely known. They are rarely contracted by galleries and occasionally sell their works via so-called alternative means. This is probably the largest group of today’s artists. The third group is constituted by artists that enjoy institutional acknowledgement (quite often international), participate in important biennales and are supported by respectable galleries. Sociologists call the transactions concluded within this circle ‘the mediatised avant-garde market’. Such works are sold by auction houses, purchased by reputable museums, and the artists themselves receive orders from public institutions. Nevertheless, the price of their works may fluctuate. The last group encompasses ‘acknowledged talents’. The works of such artists are available to a handful of the wealthiest collectors and usually constitute a reliable investment of capital. Their position within the history of art is so stable that the risk of sharp drops in prices is negligible.

Painting is the most sought-after and the best-selling art technique, while drawing, lithography and sculpture being much less popular among art collectors. The situation of photography is particularly complicated, given that just as in the case of print, this technique enables producing numerous copies. Therefore, it is recommended that the author make a series of up to six numbered copies and sign them by hand. However, this practice has led to such paradoxes in which well-known photographers destroyed negatives in order to safeguard that there are only two or three identical copies. In any case, although photography has only recently been admitted to the real art market, it has already triumphed in auction houses on several occasions within the last few years. The works of Richard Prince, Andreas Gursky and Cindy Sherman attained exceptionally high prices, enabling their authors to storm the lists of the most expensive artists in the world.

Yet another interesting phenomenon of the beginning of the 21^st century is the market success of Asian artists, mostly Chinese but also Indian. They became clearly visible in the early 2000s, and 2006 marked a sharp increase in demand for their art. In 2007, China for the first time in history outdistanced France in terms of art trade, reaching the third position in the ranking of countries. This dynamically developing country with its largest percentage of young millionaires in the world (average age 39) needed only three years to become the global leader in art trade, leaving the USA and the United Kingdom behind. Currently, more than one in three global art transactions take place in China, and 70 percent of works sold in this country never left Asia. Western museums, curators and critics have lost their absolute power and now need to follow the developments on the Asian continent very carefully, even if they tend to accuse these new collectors of bad taste and lack of expertise regarding new art.

In the first decade of the 21^st century, major auction houses, Sotheby’s and Phillips de Pury & Company, quickly established their agencies in Hong Kong, Shanghai and Beijing. Christie’s, a pioneer in this respect, installed its first branch in Beijing already in 1995. Newly created local institutions keep apace, to mention for instance Poly International Auction and China Guardian Auctions. In 2006–2007, resourceful dealers and Western critics with a good understanding of the spirit of the time contributed to the establishment of first, now much more numerous, art fairs and biennales in Asia. Some of them, for instance Jérôme Sans, co-founder of Palais de Tokyo in Paris with Nicolas Bourriaud, move to Hong Kong for good. We should also mention the failed attempt to set up a branch of the Parisian Centre Pompidou in Shanghai in 2004–2007. This initiative, which had for a long time enjoyed the support of the French government, was finally cancelled for reasons never publicly disclosed.

Coming back to the art market, the most readily available data on this area of business are compiled by ArtPrice on the basis of sales reports published by auction houses. In reality however, such analyses do not account for all art sales performed throughout the year. As I have mentioned before, a lion’s share of all sales take place in galleries and, sometimes during just a few days, at the most important art fairs. Hence the crucial significance of the pioneer fair Art Basel or its ‘younger sister’, Miami Art Basel, established in 2002. Traditionally, all important global fairs, including Art Basel, FIAC in Paris and Freeze in London, encompass many smaller fairs and commercial exhibitions. Prices offered by galleries participating in major art fairs are markedly higher than those displayed at accompanying events, an expression of the high cost of participation in shows of greater prestige, where the rental price per one square metre is comparable to the monthly rent for a one-room flat in the hosting city.

The continuing emergence of new events of this type serves as  the best evidence that they provide probably the most effective means of selling art and at the same time offer artists the best opportunity to enter the international circulation. However, it has one important drawback: many galleries cannot afford the participation fee.

 

Paris, 24 February 2013

Major global art fairs:

Art Cologne (Cologne) – held since 1966. Open during five days in April and attended by 200 galleries, number of guests: 56 thousand. Price per 1 sq. m.: 225 euro.

Art Basel (Basel) – held since 1970. Open during five days in June and attended by 270 galleries, number of guests: 55 thousand. Price per 1 sq. m.: 320 euro.

FIAC (Paris) – held since 1974. Open during four days in October and attended by 190 galleries, number of guests: 65 thousand. Price per 1 sq. m.: 440 euro.

Arco (Madrid) – held since 1982. Open during five days in February and attended by 295 galleries, number of guests: 190 thousand. Price per 1 sq. m.: 250 euro.

Armory Show (New York) – held since 1999. Open during four days in March and attended by 175 galleries, number of guests: 52 thousand. Price per 1 sq. m.: 450 euro.

Art Basel Miami (Miami) – held since 2002. Open during four days in December and attended by 200 galleries, number of guests: 40 thousand. Price per 1 sq. m.: 340 euro.

Frieze (London) – held since 2003. Open during four days in October and attended by 150 galleries, number of guests: 63 thousand. Price per 1 sq. m.: 340 euro.

2008 data, quoted from: N. Moreau, D. Sagot-Duvauroux, Le marché de l’art contemporain, Editions La Découverte, Paris 2010.

 

Auction houses

Sotheby’s – the world’s oldest auction house, opened in 1744 by Samuel Baker. Currently based in London. Direct competition for Christie’s. Usually a global leader in terms of art trade. Employs over 400 experts, organises 350 auctions per year and controls art trade in 58 countries across the globe.

Christie’s – an auction house founded in December 1766 in London by James Christie. In 1995, Christie’s was the first international enterprise to open an agency in Beijing. Since 1998, owned by the French billionaire François Pinault. The company organises 450 auctions across 80 domains per year. Christie’s staged the largest auction of all time on 8 November 2006, when it sold 86 works of impressionism and modernist art for a record sum of USD 491.072 million.

Phillips de Pury & Company – a company set up in 1796 in London by young entrepreneur Harry Phillips, former employee of Charles Christie. The brand changed in 2001. The company has offices in London, New York, Geneva, Berlin, Brussels, Los Angeles, Milan, Munich and Paris. It specialises in contemporary art, photography, design and jewellery.

Poly International Auction – a Chinese auctioneer established in 2005, successfully competing with Western companies of 250-year standing. The most important institution of this type in China. In 2010 and 2011, it ranked third (behind Sotheby’s and Christie’s) in the global ranking, earning EUR 1.36 billion in art sales in 2011.

China Guardian Auctions – a Chinese enterprise opened in May 1993, specialising in a broad spectrum of Chinese art. So far, it has organised over 300 auctions and sold over 200 thousand works of art. In China, it is second only to Poly International Auction.

Hôtel Drouout – the oldest auction house in France. Its history goes back to the French tradition of commissaires-priseurs. In 1801, auctioneers set up an association and motioned for the introduction of a new professional code (including a mandatory official dress). The first hall was opened in 1807, ten years later there were six more. In the first years following World War II, Hôtel Drouout was the global leader and obtained results comparable to the combined profits of Sotheby’s and Christie’s in our times, i.e. 70 percent share of global auction sales.

Artcurial – currently the most important French auction house. Established in 2001, first opened as a contemporary art gallery Artcurial, owned by the L’Oréal group. Once the gallery had been closed, the brand was adopted by the new auction house run by three commissaires-priseurs: Francis Briest, Hervé Poulain and François Tajan. The majority share in Artcurial belongs to Groupe Dassault, a French enterprise run by Serge Dassault. Artcurial China opened in Shanghai in 2008.