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Unpacking ‘Philanthropy in the Arts’

Leslie Ramos’ Book Under Review

 

As expected from Lund Humphries’ Hot Topics in the Art World series, Leslie Ramos’ Philanthropy in the Arts: A Game of Give and Take is an insightful, analytical overview of arts philanthropy, looking at both giving and taking at the arts organisation level. In spite of the scarcity of data in this area, Ramos constructs clear frameworks for how philanthropy works within arts organisations at the level of ‘true’ philanthropy – what  Ramos defines as extending beyond  being mere patronage, or the status of being a “friend,” to an arts organisation, which is typically associated with receiving perks like free exhibition entry. Instead, she focuses on a true philanthropist’s engagement with organisations and institutions, particularly emphasising small, local organisations rather than individual artists. Ramos clearly lays out good and bad giving and taking, explaining why getting this balance right is crucial to the future of funding within these organisations.

 

Data, particularly the challenges associated with it, both in philanthropy, and more significantly, in assessing the impact of art on society, stands out as one of the most urgent takeaways from Philanthropy in the Arts. This issue can be broken down into three key parts. The first is that the data itself is often scarce, incomplete, and inconsistent across organisations, let alone globally. Analysing the role philanthropy plays, the culture of giving in any particular context, and the funding mechanism itself is complex – conclusive results are rare, if not impossible to achieve. While Ramos goes well beyond speculation, she is right to supplement her research with extensive interviews from key philanthropists and arts organisations working in the space. The second and third data ideas are interrelated. Ramos describes a new wave of philanthropy, driven by tech innovation, trying to rationalise philanthropy. Art, and its benefit on society, is not simply measurable by some data metric. Ramos reminds us that one role of art is to make us uncomfortable, to challenge us, not merely to entertain. The benefits of a flourishing arts eco-system is impossible to capture in the same concrete, numeric way as education, or health, or poverty. As long as purely tech and data-driven philanthropists seek to rationalise their giving, they will not look to art. This is not to undermine the importance of these other causes, but rather to raise the point that art organisations are necessary to a flourishing society, yet their impact and cultural importance cannot be neatly captured in a spreadsheet – but they must not be forgotten.

 

An offshoot of this data problem leads to perhaps the one omission from Philanthropy in the Arts. Ramos sets a stringent moral standard on what makes philanthropy something distinct from art-washing, or simply a social status based transactional behaviour – it has to be about the love of the art, and support for the mission of the organisation. Arguably, according to these terms, those people who actually staff art organisations and their contributions need to be included in any comprehensive overview. Arts organisations, and jobs across the arts industry more generally, are notoriously poorly paid relative to their counterparts outside the industry, for the very reasons Ramos outlines. It is those same dedicated individuals across the arts industry who are truly making large financial sacrifice because of their belief in the cause and mission of arts organisations that allow any arts organisations to exist in the first place. If we could somehow calculate what they are ‘giving’ in terms of low pay, understaffing, volunteer hours, purely because of their love of art, then it would surely be clear that industry workers themselves are true philanthropists.

 

On the whole, Ramos provides clear strategies to better use and maximise philanthropy in arts organisations, and they are an excellent call to arms for Development teams and Culture departments across the globe. In the meantime, for the average reader – continue to buy your post exhibition coffee in the organisations own café, spend your money in the gift shop, and really use your local organisations, so they can continue their ineffable but critical contribution to making ours a richer world to thrive in, rather than simply exist.

 

Stay up to date with the latest philanthropic insights as the art market continues to evolve in 2024 by joining our newsletter and learn more about philanthropy in the art market by downloading some our existing reports:

Philanthropy in the Arts: A Game of Give and Take by Lesile Ramos is currently available for sale as part of their Hot Topics in the Art World Series on the Lund Humphries’ website.

 

Check out the February 2024 episode of the ArtTactic Podcast when Adam Green was joined by Leslie Ramos, author of the new book Philanthropy in the Arts: A Game of Give and Take.

 

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Resisting the Art Academy

Installation view of “Outsider Art: The Collection of Victor F. Keen” at Intuit: The Center for Intuitive and Outsider Art in Chicago, Illinois, 2020. Photo by Cheri Eisenberg.

 

Self-Taught Artists Rise in Price and Popularity in 2023

 

Self-taught artists, commonly referred to as “Outsider Artists”, which is among the more considerate labels given to artists whose work do not adhere to traditional institutional frameworks, have seen a historic price surge within the art market in 2023. This increase in popularity, visibility, and prices of artworks by artists who do not have formal arts academic training or gallery representation is notable.

 

In January 2023, Christie’s Outsider and Vernacular Art auction brought in a sale total of $1.6 million (hammer price) within the pre-sale estimates of $1,244,800 to $2,039,700 USD, giving a performance of 31.6% above the pre-sale low estimate.

 

In Christie’s 2023 auction, Minnie Evans’s Voice of the Third Angel (1963), a work estimated at $7,000 to $10,000 USD, was eventually purchased for $34,000 – 385.7% above the low estimate. Similar works by Evans such as Asian garden (1947) sold in 2013 for $1,500 at Slotin Folk Art, a platform dedicated specifically to self-taught artwork auctions, reflecting a significantly more niche interest in self-taught artwork just a decade prior.

 

This trend continued for popular self-taught artists such as Thornton Dial, routinely pulling in prices exceeding expectations by large margins, such as Dials’s Untitled, a mixed media on canvas piece made in 1991 selling from Jane Fonda’s collection for $85,000. Dial’s work saw sales in the January 2020 “Outsider” auction at Christie’s as well, with The Beginning of the World (1988-1989) selling for triple the pre-sale low estimate price, achieving a final hammer price of $60,000.

 

A shift in cultural attitudes and increase in exhibitions featuring self-taught artists are evident in these auction numbers. In 2022, the Smithsonian American Art Museum opened “We Are Made of Stories: Self-Taught Artists in the Robson Family Collection”, and in 2023 “Creating Connections: Self-Taught Artists in the Rosenthal Collection” was exhibited at the Cincinnati Art Museum. The institutional and market acceptance of self-taught artists coincides with a significant shift in the dialogue surrounding these artists. Lisa Slominski has been one of the pioneers in suggesting an alternative anthology for artists tied to a legacy that confines them within a rigid framework, limiting their creative movement. In Nonconformers, a 2022 book by Slominski, she seeks to replace “outsider”, “primitive”, “folk”,  and “naïve” with “self-taught”, a term she sees as better acknowledging the unique set of circumstances each artist faced in creating their work without the backing of a traditional art institution, while still giving them agency and artistic merit in their own rite.

 

Alongside an increasing focus on artist diversity within auctions, the meaningful difference between the pre-sale auction estimate and final purchase price of works by self-taught artists in 2023 generates reasonable cause to believe that 2024 auctions focusing on self-taught art will continue to command an increase in sale prices, though not without the economic impact of the geopolitical tensions on the art market as a whole. This prediction for self-taught art in 2024 will be tested at the Outsider Art Fair in New York (29th February to 3rd March) and Christie’s Outsider Art auction (1st March 2024).

 

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Are you a student or recent graduate eager to contribute your voice to ArtTactic’s Editorial vision? We’d love to hear from you!

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Navigating the Art Market in 2024

Insights from Key Art Market Experts & Our 2024 Global Art Market Outlook Survey

 

As part of our investigation for the 2024 Global Art Market Outlook Report, launched earlier this month, we reached out to three highly regarded authorities in the art market; Melanie Gerlis, the Art Market Editor-at-large for The Art Newspaper and weekly art market columnist for the Financial Times, Robert Read, Head of Art and Private Clients at Hiscox, and Linda Selvin, Executive Director of the Appraisers Association of America – to hear their takeaways from 2023 and insights on what to expect for 2024.

 

2023 Takeaways

 

ArtTactic’s 2024 outlook survey calls attention to the fact that major global auction houses, including Christie’s, Sotheby’s and Phillips, had a significant combined year-on-year decline in sales (17.5%) in 2023, the downturn likely attributed to the impact of external economic and geopolitical pressures that have been mounting throughout 2022 and 2023.

 

“Buyers and sellers are gradually letting go of the notion that art always goes up in price. There’s been a lot of talk of buyers being more “discerning” in recent years, but in 2023, this seemed too much of a euphemism. Buyers are sitting on their hands and so sellers are waiting.” Melanie Gerlis

 

All our surveyed experts highlighted a shift in both buyer and seller behaviours as their main takeaway from last year. Linda Selvin further noted the clear impact of interest rates, geopolitical unrest, and the post-pandemic recovery on market corrections, while Robert Read expressed surprise (especially in the first half of 2023) at the market’s resilience amidst these global challenges.

 

Despite the macroeconomic forces at play, ArtTactic found that the auction market remained active throughout 2023, with the total number of auctions held up 3.0% and the total number of lots sold up 5.6% from 2022. As experts indicate, the buyer and seller attention seems to have shifted away from the top-end of the market in favour of lower-ticket, high-volume collecting segments, such as prints, limited editions, jewellery, and watches.

 

2024 Outlook

 

Our 2024 survey further mentioned that 68% of experts expect a soft landing for the art market this year (up from 47% in 2023), foreseeing sales to hover around last year’s levels. Meanwhile, 12% believe the downward trend may continue (down from 16% in 2022), and 20% think the market could rebound from last year’s decline (down from 37% in 2023).Experts are also divided about their outlook for the low-end market, with 38% agreeing with positive market development in 2024 and 41% saying they anticipate interest in the lower-ticket items to decline.

 

“I think there is a collective nervousness about 2024 – market sentiment dipped in the second half of 2023 and it feels as though that sentiment will harden in 2024.  On the bright side, interest rates are expected to fall in 2024 and that may well stimulate both economies and the art market.” Robert Read

 

Gerlis agrees with Read, foreseeing a cautious environment with patient sellers and buyers that could potentially be affected by distractions, such as the upcoming US elections. Selvin anticipates that strong sales by those less affected by global events and suggests a stable market may attract new collectors while further theorizing that recognition and acquisition of artist’s works that may not have previously had institutional or market success will continue throughout 2024.

 

2024 Challenges

 

Experts identify two key factors that could impact their outlook, according to the survey. The majority (79%) highlight geo-political uncertainty—specifically, concerns about wars and the escalation of conflicts in Ukraine and the Middle East—as the primary challenge facing the art market this year. Additionally, 77% of experts cite concerns about high interest rates, the risk of persistent inflation, and sluggish economic growth, noting that these factors could potentially undermine the art market’s recovery efforts.

 

“Collectors and art professionals will be more in line with their own expectations regarding prices, whether it be buying or selling. Having a greater diversity of works [on offer] in the primary and secondary markets will be of paramount importance.” Linda Selvin

 

In light of the ambiguity mentioned above, Gerlis emphasizes the possible allure of concentrating on short-term taste categories, such as fashion and/or celebrity-based items, and advocates for the market’s conscientious effort to address educational gaps in the realms of art and art history. Read further points to additional economic challenges amid a global recession and the geopolitical risk of China’s potential invasion of Taiwan as obstacles reverberating across all markets, the art market being no exception.

2024 Opportunities

Focusing heavily on lower-end market growth driven by the entrance of new buyers, our 2024 survey revealed a 65% increase in new Gen Z buyers, mainly active in collectible market segments such as handbags, watches, and prints. This mass-market entry proves to be an important force behind the upward trend, yet some experts still express concerns that the top-end market softening will trickle down to the lower segments. Gerlis aligns with 38% of experts surveyed who believe there to be positive market development in the coming year, expecting a shift toward a multi-channel market with higher volumes at lower prices.

 

“We are moving into a very multi-channel market of higher volumes at lower prices. So within the realms of fine art, prints and editions, including photography and sculpture, seem great areas to focus on in order to grow a new generation of collecting.” Melanie Gerlis

 

In addition to the spotlight on the ascending lower end of the market, which experienced a 10% surge in 2023, our 2024 survey investigates four other major trends shaping the art landscape: auction guarantees, the Chinese economy, NextGen artists, and Women artists. Anticipated softening in the auction guarantee market this year does not diminish its significance in attracting premium inventory and single-owner collections. While some guarantors may exit due to diminishing returns, auction houses could explore a shift from heavily backed sales, if the appetite exists. On another note, Read highlights the potential dominance of art fairs for dealers and the continued prosperity of private sales for auction houses as we embark on 2024.

 

As Chinese buying continues to decline, bidding activity may shift away from Chinese and other Asian art buyers in 2024, potentially opening up opportunities for new or previously unsuccessful bidders. However, this shift could also contribute to weakened global demand for art, particularly in the $1m+ segment where Chinese and other Asian buyers accounted for 30% of bidding activity in H1 2023.

 

On a positive note, the NextGen artist and female artist markets present promising opportunities in 2024. Adjusting price expectations for younger artists in response to lower demand could lead to a market correction, appealing to a growing demographic of younger art collectors. Selvin further emphasizes aligning collector expectations with market realities and promoting diversity in primary and secondary markets as a key opportunity in 2024. Meanwhile, women artists continue to make strides in narrowing the gender gap in the auction market, emerging as a robust opportunity area. The prevalence of high-profile women artist museum shows in 2023 further underscores the strength of this segment.

 

Reflecting on the valuable perspectives shared by the seasoned experts above in addition to our 2024 Global Outlook survey findings, it becomes evident that experts foresee a cautious market environment shaped by external distractions. However, the opportunities that lie ahead are diverse and the coming year promises to be a nuanced and ever-evolving chapter shaped largely by the interplay of global events, macro-economic forces, and the resilience of the global art community.

 

Learn even more by downloading our 2024 Global Art Market Outlook Report now available online.

 

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Are you a student or recent graduate eager to contribute your voice to ArtTactic’s Editorial vision? We’d love to hear from you!

Reach out to Brooke Reese (brooke@arttactic.com) for more information. 

2024 Global Art Market Outlook: Looking Beyond 2023 Challenges to What’s Next?

Following what most may characterize as a tumultuous 2023, the Global Art Market faced the dual challenge of both economic headwinds and geopolitical tensions last year. Global auction sales for Old Masters, Impressionist, Modern, Post-War, and Contemporary Art at prestigious houses such as Sotheby’s, Christie’s, and Phillips dipped significantly, marking a 27.2% decrease from 2022 and a 12.4% drop compared to 2021. Despite these lower sale results, a record-breaking number of lots, nearly 17,000 artworks, changed hands – showcasing the resilience and adaptability of the art market moving into 2024.

 

2024 Global Art Market Outlook: Looking Beyond 2023 Challenges to What’s Next? ArtTactic

 

The year 2023 witnessed a stark contrast in performance between different segments of the market. While the high-end sector, featuring lots valued at $10 million and above, experienced a notable 30% decline, the lower end flourished. Artworks priced below $50,000 saw a remarkable 7.4% increase in sales value, accompanied by an 18.0% increase in the number of lots sold. This shift indicates a growing interest in more accessible and affordable pieces and perhaps illuminates the effects of younger collectors joining the collecting base. Looking to 2024, we predict this area of the market will continue to grow in size and sales value.

 

The geographical landscape of art sales also witnessed significant shifts. New York, historically a dominant force, faced a 33.3% decline in auction sales, dropping from $5.38 billion in 2022 to $3.58 billion in 2023. In contrast, Paris and Milan experienced growth, with Milan being the sole location boasting positive sales growth at 1.1%. Despite these variations, New York retained its position as the primary sales hub for the global art market, albeit with a reduced market share, followed by London, Hong Kong, Paris, and Milan. As we move into 2024, New York is set to retain its status as the dominant market; however, close attention must be paid toward developing markets, such as Paris and Milan, now experiencing a resurgence of growth following the United Kingdom’s exit from the European Union.

 

Influenced by these geographical shifts amongst other factors, specific genres within the Global Art Market also faced significant challenges in 2023. The Contemporary market faced a 12.8% decline in auction sales, with notable decreases in the Young Contemporary segment. Artists that achieved record-breaking results in 2022, including Shara Hughes, Flora Yukhnovich, and María Berrío, experienced substantial declines in the sales ranging from 80.5% to 91.8% respectively. Nonetheless, the new generation of Young Contemporary artists, such as Nicolas Party, Matthew Wong, and Jadé Fadojutimi, set new records in 2023, hinting at evolving tastes and trends. The Post-War art sales experienced a dip to a three-year low, with a 31.6% decrease in 2023. Notable artists like Andy Warhol, Cy Twombly, and Lucien Freud contributed to this decline. Post-War art maintained a significant share of total sales despite this, emphasizing the genre’s enduring appeal.

 

In the Modern art market, sales decreased by 20.4% in 2023. However, the market received a boost from Single Owner Collections, accounting for 32.4% of total auction sales. Artists such as Pablo Picasso, René Magritte, and Mark Rothko remained influential in this segment. Impressionist art sales witnessed a substantial 53.4% drop in 2023, following the record-setting year of 2022. Despite facing challenges elsewhere, the Old Masters market remained resilient, generating a substantial $363.4 million in sales, marking only a marginal 5.3% decline from 2022.

 

2024 Global Art Market Outlook: Looking Beyond 2023 Challenges to What’s Next? ArtTactic

Despite challenges faced geographically and within each genre, the year 2023 marked a continuation of the positive sales trend for women artists. Auction sales by women artists reached $780.4 million, representing an 8.1% increase from 2022 and a substantial 39.1% surge compared to 2021. Women artists accounted for 13.6% of total sales in 2023, reflecting a growing recognition of their contributions to the art world. Unsurprisingly given their significant auction records, woman artists such as Yayoi Kusama, Joan Mitchell, and Georgia O’Keeffe emerged as top performers amongst both their male and female counterparts. This trend should serve as yet another testament to the resilient and thriving presence of women artists in the global art market.

 

Another notable highlight in 2023 was the cooling of Asian demand for younger artists, particularly in Hong Kong, where auction sales for this generation dropped from $108.1 million in 2022 to $78.2 million in 2023. This shift suggests a potential recalibration of preferences among Asian buyers in the Contemporary art scene.

 

As the art world steps into 2024, these highlights from 2023 paint a nuanced picture of an industry navigating considerable international challenges while also showcasing resilience, adaptability, and attractive pockets of growth. The convergence of technological advancements and a more inclusive approach to art creation and consumption will play a critical role in shaping the trajectory of the art market in the coming year.

 

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Q3 Auction Review 2023: Is confidence returning to the market ahead of the big Autumn season?

Detail of Alice Baber, Wind Divided Mist the Darker (1972)

Sold for $550,000 at Sotheby’s Contemporary Curated sale in September 2023

 

Q3 Auction Review 2023: Is confidence returning to the market ahead of the big Autumn season? ArtTactic

The third quarter of the auction sales calendar typically accounts for only 4-5% of the total annual sales value. However, after a more challenging first half this year (auction sales by Christie’s, Sotheby’s and Phillips were down 18.2%), we have taken a closer look at Q3 to see if there were any interesting emerging trends and what they might tell us about the season ahead.

 

Confidence returning as auction sales rise 8% in Q3 2023: Christie’s, Sotheby’s and Phillips generated $642 million in total auction sales (incl. buyer’s premium) in Q3 this year, up 8% from $595 million in Q3 in 2022. This is the highest Q3 sales figure since 2020, when the majority of Q2 sales were moved into Q3. The number of lots also saw a 9% year-on-year increase in sales in the last quarter. The downward slide in Q1 and Q2 seems to have halted, and a majority of collecting segments are either up or have consolidated around last year’s level. Two notable exceptions were Watches and Jewellery (a 30% fall in auction sales Q3) and Design and Decorative Arts & Furniture (down 47%).

 

Q3 Auction Review 2023: Is confidence returning to the market ahead of the big Autumn season? ArtTactic

Old Masters market drove sales growth: After robust auction sales growth in 2022 (+14%), the Old Masters market continued to grow in Q3, with sales ending up at $140m, more than double that of Q3 in 2022 ($64 million).  If the trend continues, the Old Masters market is on track to exceed last year’s sales result. Notable top lots from this season were the unpublished and previously unknown painting by Michael Sweerts, The Artist’s Studio with a Seamstress, which achieved a hammer price of £10.7 million surpassing the pre-sale estimate of £2 million to £3 million, as well as the guaranteed painting Pentecost by the Master of the Baroncelli Portraits, which sold for £7 million.

 

Q3 Auction Review 2023: Is confidence returning to the market ahead of the big Autumn season? ArtTactic

Post-war and Contemporary sales unchanged from 2022: The overall sales of Post-War and Contemporary art came in at $142 million in Q3 2023, the same level as in 2022. However, we have seen a 11% decline in sales at the lower end of the contemporary market based on Phillips New Now, Sotheby’s Contemporary Curated and Christie’s First Open sales. This could signal that buyers are gravitating towards blue-chip artists in the higher price segments.  

 

Growth across all the three auction houses: Sotheby’s gained the largest market share in Q3 2023, with $331 million in auction sales (+13% from Q3 2022), followed by Christie’s with 46% market share and $277 million in sales (+1.3% from Q3 2022). Phillips accounted for 5% of total sales, and registered a 19% increase from the same period last year.

 

Q3 Auction Review 2023: Is confidence returning to the market ahead of the big Autumn season? ArtTactic

London sales bounces back: Auction sales in London jumped 40% in Q3 2023 compared to the same period last year. Total sales ended up $294 million, up from $210 million in 2022. The results were driven by strong Old Masters sales in July and Sotheby’s Freddie Mercury: A World of His Own auctions in September that generated $39 million (well above its high estimate of $11.3 million). The renewed energy in the London market bodes well for the upcoming October auctions during Frieze week.

 

Christie’s 10th anniversary auction in Shanghai: Between 23 -28th September, Christie’s celebrated its 10thyear in Shanghai with four auction sales (3 evening sales and 1 online sale) that raised $181 million (incl. buyer’s premium), and came in at the higher end of the estimate range. The results are a sign that demand among Chinese mainland buyers remains robust and could signal that confidence is returning ahead of Hong Kong season starting this week. Hong Kong auction sales saw a 12% year-on-year decline in first half of this year.

 

Top 10 Auction Sales in Q3 2023

 

Sale Auction House Date Premium Total
Old Masters Part I Christie’s London 6 July 2023 $68,604,053
Old Master & 19th Century Paintings Evening Auction Sotheby’s London 5 July 2023 $49,598,600
Post-War to Present Christie’s New York 29 September 2023 $28,244,412
Contemporary Curated Sotheby’s New York 28 September 2023 $25,060,769
10th Shanghai Auction Anniversary: 20th/21st Century Art Evening Sale Christie’s Shanghai 23 September 2023 $17,049,305
Freddie Mercury: A World of His Own | The Evening Sale Sotheby’s London 6 September 2023 $15,214,984
The Exceptional Sale Christie’s London 6 July 2023 $14,262,845
Important Chinese Art Sotheby’s New York 19 September 2023 $14,062,205
Latin American Art Christie’s New York 28 September 2023 $13,200,030
Important Jewels Sotheby’s New York 12 September 2023 $13,131,800

ArtTactic Review – Henry Little “Commercial Galleries; Bricks Clicks and The Digital Future”

White Cube New York.

 

The latest addition to Hot Topics in the Art World, Henry Little’s Commercial Galleries is taut, punchy, and full of insider knowledge. Each chapter could have its own review and analysis, raising wide ranging questions on the way the current gallery eco-system emerged, and how it can continue.

 

For the ArtTactic audience the most striking feature of Commercial Galleries is one of Little’s central themes –a lack of hard data. Almost everything is hearsay, estimated, best guesses. Little frequently returns to this distinction between auction houses and galleries – auction houses are based on open data, a willing buyer and a willing seller making a transaction. Galleries, on the other hand, though they are (rarefied and highly specialist) shops, are shrouded in mystery and opacity. Even in the midst of the digital revolution in the art market, there is rarely openly available pricing; simply having the money and wanting to buy a piece will not even admit you to the waiting list to be told the pricing, and there is a real sense of gatekeeping ownership and ability to build a collection. While the narrow range of artists reaching auction at the top houses obscures data on the art market, so too does this intentional withholding of financial information from galleries.

 

This bolsters the second distinction Little highlights between galleries on the one hand, and auction houses and the luxury industry on the other – barriers to entry. While access to the funds to participate in any of these commercial arenas is an obvious barrier, if we assume that potential buyers do have this access, the gallery eco-system is not necessarily open to them. Little describes how known collectors get better prices – thus allowing them to solidify their reputation, and preventing new comers from doing so. While the move toward Online Viewing Rooms, pioneered in large part by David Zwirner, appears to rectify this, in fact galleries largely use this tool to gather data on their clients, what’s hot, and who is selling – pressing ‘enquire now’ in an OVR simply enters you into the tangled web of galleries deciding who is allowed to be told the price of the work, let alone who is allowed to actually purchase it.

 

It’s a shame that an overview so focused on how the business commercial galleries work, and the barriers to entry to the eco-system for buyers, did not speak at all about those who staff these galleries outside of their big-name dealer owners. Living in commutable distance to any of these galleries is an expensive endeavour, especially compared to the actual pay those who do the work of the galleries will earn – before even considering the other barriers to entry prospective arts professionals face.

 

Commercial Galleries is illuminating and provocative, even if it can only shine a light on the opaque nature of the galley eco system – an excellent addition to an excellent series.

Five Takeaways from the Hiscox Online Art Trade Report 2023

Detail of Celeste Rapone, Interior with Egyptian Curtain and Kale (after Matisse) (2021)

 

The 10th edition of the Hiscox Online Art Trade Report provides new insights into current online art buyer behaviour, and explores some of the new trends emerging. Here are five key trends that could shape the market over the coming 12 months…

 

Trend #1 – Industry consolidation on the cards as online sales slow down:

Significant investments were made during 2020 and 2021 to meet the increasing online demand for art and collectibles, and this has left online art marketplaces with an enlarged cost base in what now looks to be a slowing market. With limited access to financing options going forward and investors wanting to liquidate their assets, one could expect an increasing level of M&A activity this year. 71% of the online platforms surveyed said they anticipated more consolidation taking place in the next 12 months, compared to 64% who said the same in 2021.

 

Trend #2 – The economy starts to bite

Whilst the $1m+ market continues to see strong demand among the ultra-wealthy, art buyers at the lower end of the market, are likely to scale down their buying activity this year. Slower growth, rising inflation and higher interest rates are likely to have an impact on online buying this year. With 30% of art buyers saying they will buy less, as they have less disposable income to spend on art. This was higher among younger art buyers (32%) and new art buyers (35%).

 

Trend #3 – Climate concerns are likely to affect buying behaviour in the future:

Although, the majority (54%) of art buyers express little or no concern regarding the environmental impact of buying art online, the remaining 44% said that they were likely to change their future online art buying behaviour as a result of the environmental impact. The younger generation worries predominantly about shipping, with 64% saying that air freight was their main concern followed by 60% mentioning packaging as a key issue. Half (51%) of online art buyers said they would change their online art buying behaviour due to environmental impact, with a third of young buyers saying they would buy art locally, and another third said they would only buy art online, if sea-freight was being used or zero-emmission vehicles. Almost a third (32%) of all art buyers said they would be prepared to pay more for a more sustainable option of buying art online (and even higher share (35%) of young buyers said the same.

 

Trend #4 – Fractional ownership attracts interest

Over the last 12 months, fractional ownership in art has gained popularity.  So far the adoption in the art world has been low, but could this change this year? Although, only 9% of the art buyers surveyed said they had invested in a fractional ownership in art or collectible over the last 12 months, 61% of art buyers said they were likely to invest in fractional ownership in artworks in the coming 12 months (78%, of younger art buyers said the same). This suggest that the perception of fractional ownership as a viable ownership and investment model is on the increase, and we could anticipate more demand and wider adoption this year. With the global economic outlook remaining uncertain, investors are increasingly looking for portfolio diversification, and 86% of those art buyers that are considering investing in fractional ownership over the next 12 months, are looking at their investment from this perspective. Despite its promises, almost three quarters (74%) of potential investors in fractional ownership of art said that lack of liquidity was the main challenge, followed by 41% who said lack of transparency and prohibitively high costs were key risks in this market.

 

Trend #5 – NFT collectibles lose their shine, but have paved the way for wider adoption

A year ago, many had still large hopes about the potential of NFTs. However, only 12% of art buyers surveyed said they are likely to buy an NFT in the coming 12 months (down from 27% in January 2022), with both younger and older buyers showing similar level of caution about this year’s outlook. Whilst the value potential was still the highest ranked motivation (66%, but down from 82% in 2022) among NFT art buyers in 2023, the expectations seem to have become more muted, as NFT prices and sales have dropped significantly. Motivations linked to social impact and patronage have increased from 39% in 2022 to 54% this year. More people are also seeing the community benefits as a strong motivator, with 44% saying that the network and being part of a community of like-minded people was a key reason for buying NFTs, up from 38% in 2022. The art market is starting to take a more mature look at the technology, and rather than looking at NFTs as collectibles and speculative investments, is now pursuing strategies for how the technology can develop new models and help build a better infrastructure for its stakeholders.

Enthusiasm Abounds as Post-Pandemic Crowds Flock to Frieze LA Robustly Embracing NextGen Artists

Narsiso Martinez “Sin Bandana” (2022)

 

At Frieze LA the message was clear: buyers were scooping up pieces by NextGen artists particularly those whose art reflects thought and an authentic connection to the artist who created it. From preview day, entire offerings were sold out, and in some cases that very morning.

 

Many of these artists are either based in LA, or have a significant LA/Mexico connection, and their work reflects the artistic aesthetic of the sophistication and cultural awareness emblematic of the West Coast. Robust sales left little doubt: these artists resonated deeply with the LA buyers. Maysha Mohamedi, an LA-based artist affiliated with Pace Gallery is one such artist whose abstract, patterned artworks sold out on preview day. Amelia Redgrift the Chief Communications and Marketing Officer at Pace Gallery told ArtTactic that Mohamedi’s small canvases cost around $50,000 and prices rise from there.  She noted that some of Mohamedi’s most enthusiastic collectors are other artists themselves, and that Mohamedi was generating museum interest. Her work is already in the collection of The Metropolitan Museum of Art in New York. Finally, Redgrift pointed out that her following has grown to include international collectors drawn to Mohamedi’s precise, abstract work informed in some ways by her previous career as a scientist.  “Even though Mohamedi’s works are abstract there is a real precision and pattern behind them which makes them so unique,” explained Redgrift.

 

Buyer enthusiasm crossed all oeuvres whether abstraction in the case of Mohamedi, the figurative paintings of Hilda Palafox, the migrant field workers depicted by Narsiso Martinez, or a combination of abstraction and figurative representation shown by next generation artist Doron Langberg. Will Davis, Director of Sales at the Victoria Miro Gallery in Los Angeles noted that Langberg is known for large, expressive paintings that have captured the world around him. The gallery sold eighteen of Langberg’s paintings at prices ranging between $18,000 and $80,000. Davis noted museum interest was high. Langberg is currently having a solo exhibition at the Rubell Museum in Miami until November 2023.

 

Moving more squarely into the figurative space were two artists of Mexican descent. Hilda Palafox who is affiliated exclusively with Proyectos Monclova, a Mexico City art gallery, generated incredible enthusiasm from collectors for her muralist style of paintings reminiscent of artwork by the great Diego Rivera, and yet unique to her and her identity. These paintings tell a story that, according to Isabella Aballi, the Director of Sales for Proyectos Monclova, is “extremely feminist focused where you can see that in her work, she always references the female body as the vessel of emotion and the female psyche.” Both Think Space and Hashimoto in Los Angeles have both exhibited her work, Thinkspace in 2021, and Hashimoto in 2020. According to Aballi, Palafox’s smaller works cost around $5,000, going as high as $15,000. She asserted that museums are interested in Palafox’s paintings and plans to show her work at Art Basel Miami. Palafox will also undertake a residency in Japan this summer, and her murals, which tend to lend themselves to a larger scale format, can be found in various locations in Mexico and the United States.

 

Serious art collectors offered insight into what constitutes sound collecting strategy. One high-profile collector who chose to remain anonymous asserted that the primary market for these NextGen artists is robust whereas the secondary market is more neutral: “This is excellent for the artists,” he pointed out, explaining that this market dampens temptation for flipping contemporary artwork, and indicates emotional engagement by the collectors into what they are purchasing. With less certainty surrounding resale value, he opined that a primary market purchase should be less about financial investment, and more based on what a buyer likes.

 

According to ArtTactic’s recent Art Market Outlook 2023, auction market sales for young artists increased by 3.1% to $346 million in 2022, setting a new record for this market segment. However, the rate of growth seems to be cooling as collectors shift their attention to more established collecting segments. The slowdown of the NextGen art market in 2022, raised concerns among experts surveyed by ArtTactic in January 2023, where 45% see further downside in the auction market in 2023 (up from 11% who said the same in 2022). However, the majority of respondents continue to take a positive-to-neutral view (30% are positive and 25% are neutral), which could signal that the interest in younger generations of artists will continue, albeit at a less frenzied pace seen over the last years.

 

In terms of selecting which artists to collect, Nicole Reber, a native Los Angeleno and avid collector, shared with me that she collects work by artists whose passion for making art isn’t transient: “I want to know that when I collect works by an artist, they are going to have a long, healthy career, and that they are going to continue to want to work. I don’t want somebody that decides in three years that they don’t want to make art anymore.” Reber pointed out an artist she really enjoys collecting is New York-based Anthony Cudahy, who is represented by GRIMM in collaboration with Hales Gallery and Semiose Gallery. Cudahy’s figurative paintings and drawings weaves imagery taken from photo archives, art history, film stills, hagiographic icons and personal photographs to explore themes around queer identity. His work can be found in both private and public collections, such as The Hort Family Collection, Institute of Contemporary Art, Miami, Kunstmuseum, The Hague; Les Arts au Mur Artothèque de Pessac, Pessac (FR); and Xiao Museum of Contemporary Art, Rizhao.

 

Another NextGen artist to watch out for is Narsiso Martinez, who spoke with ArtTactic about his figurative works of migrant field workers and his juxtaposition of their lives as portrayed in simple charcoal against gold on commercial produce boxes.  Listen to the interview here.

 

These artworks depict the dichotomy of life of the worker versus the agricultural companies that sell the fruits of their labor. Martinez himself comes from Oaxaca, Mexico, descended from a family of farm laborers, of which he was one himself.  Martinez won the coveted Frieze Impact Prize, and his gallery Charlie James confirmed that all of his art sold out on the first day of Frieze LA, and there is now a lengthy wait list for his art. Prices ranged from $8,000 to up to $40,000 for a large series of individual migrant workers each depicted on the inside of a produce box and displayed all together as one artwork. His museum exhibition history is already building and his work has most recently been exhibited at the Smithsonian’s Donald W. Reynolds Center for American Art and Portraiture, National Portrait Gallery in an exhibit entitled “The Outwin 2022: American Portraiture.” Other museum exhibits and collections include the permanent collections of the Hammer Museum, Amon Carter Museum of American Art, University of Arizona Museum of Art, Long Beach Museum of Art, Crocker Art Museum, Jordan Schnitzer Museum of Art at the University of Oregon, Orange County Museum of Art, and the Santa Barbara Museum of Art.

 

In short, Frieze LA demonstrated that art collectors are engaged and continue to buy art by next generation artists. Recent auctions at Sotheby’s, Christie’s, and Phillips (see our auction analysis) in London of NextGen artists confirm this trend: sales continue to be strong and signify ongoing interest in young talent.

Has the NextGen Artist boom come to an end? Not yet…

Detail of Emily Mae Smith, Paint While Screaming (2017), Oil on Linen.

 

In 2018 we launched the inaugural NextGen Artists Global Report in partnership with JLT (now Marsh & McLennan). The report took a closer look at the career trajectories of more than 1,300 young contemporary artists (aged 40 and below). Since then, we have a followed this market closely and published a series of NextGen Artist Monitor reports that cover the market for these young artists.

Over the last three years, we have seen a significant jump in demand for artworks by younger artists. Auction sales in 2021, generated a record $396 million, up from $131 million during the 2020 pandemic and $195 million in 2019. However, auction sales of NextGen artists declined by 23% last year, and many are questioning whether this is the end of the market’s fascination with young artists.

 

To try answer this question, I have outlined five trends that I think are relevant to what might be in store for 2023:

 

Trend #1 – Economic uncertainty hurting global sales in 2nd half of 2022, but not unique to the young artist market.

 

Higher inflation and slower economic growth is likely to have impacted sales in the 2nd half of last year. Auction sales by younger artists fell 58% in 2nd half in 2022, compared to the first six months of the year. However, this trend was not unique to the young artist segment, as the overall contemporary art market was also down 24% from first half. This suggests that the performance of the young artist market was far from an outlier last year, and was instead tied closely to the more established end of the Contemporary market.

 

Despite a more sombre economic outlook for this year, the market is yet to turn overly pessimistic about the young artist market, and almost half (47%) of experts surveyed by ArtTactic in December 2022, stated they believed that the prices for NextGen contemporary artists were likely to rise over the next 12-months. Only 24% expressed a negative outlook for prices, whilst 29% said they believed the market and prices would plateau in the coming year.

 

Has the NextGen Artist boom come to an end? Not yet… ArtTactic

 

Trend #2 – Asian buying has been cooling, but could it bounce back this year as Covid restrictions are lifted?

 

Over the last three years, Hong Kong became an important hub for younger artists, and a significant portion, (37%), of auction sales between 2019 and 2021 was generated in Hong Kong, on the back of strong demand from Asian buyers. A number of top prices by young artists were set in Hong Kong during these years (9 out of top 25 prices), with artists such as KAWS, Adrien Ghenie and Dana Schutz seeing strong demand among Asian buyers.

 

However, last year, the Hong Kong auction market took a sharp turn for the worse. Auction sales of young artists were down 55% from 2021, however, the number of artworks offered in Hong Kong auction rose from 380 lots in 2021 to 430 lots in 2022. Overall contemporary sales in Hong Kong fell 66% in terms of sales in 2022 and 24% of lots sold. Severe Covid restrictions in Hong Kong and China’s zero-Covid policy is likely to have weighed in on consumer and buyer confidence during 2022. However, Beijing’s recent U-turn away from of its draconian zero-COVID policy, could reignite the market this year.

 

Has the NextGen Artist boom come to an end? Not yet… ArtTactic

 

 

Trend #3 – More young artists are using the auction market as a natural part of their career development.

 

Although, last year’s auction sales fell year-on-year, the market still saw an all-time high of 670 NextGen artists featuring in auctions across Christie’s, Sotheby’s and Phillips, up from 476 in 2022. The auction market has become an important tastemaker and influencer in its own right, and artists and their galleries are working more pro-actively with the auction houses in developing a healthy auction market in parallel to the primary market for these artists. We expect the blurring of the lines between the gallery market and auction market to continue, as the two historically separated markets are finding new ways of working more closely together. An example of this  was Sotheby’s hiring of Noah Horowitz in 2021 as head of gallery and private dealer services (he has since become the director of Art Basel).

 

Has the NextGen Artist boom come to an end? Not yet… ArtTactic

 

Trend #4 –  A young generation of women artists will continue to drive demand

 

The Young Contemporary generation of women artists have seen auction sales rising steadily in the years from 2015 to 2020, but experienced a jump from $27 million to $112 million between 2020 and 2021 according to a report published by ArtTactic in September. Last year’s auction sales came in 15% higher than 2021 at a record $129 million. This represented 42% of total sales for this generation of artists (compared to 58% by male artists).

 

The representation of Young Contemporary women artists  in the auction market has been rising since 2015. So far 2022 has been a record year for the number of Young Contemporary women artists sold at auction, with 218 featuring in sales this year, up from 153 in 2021 and 108 in 2020. We believe the success of this young generation of women artists will continue to drive demand among collectors worldwide, particularly as many are looking to address the lack of women artist in their collections.

Has the NextGen Artist boom come to an end? Not yet… ArtTactic

 

 

Trend #5 – Young artists bring in young collectors

 

Although we have seen many young, promising artists coming and going in the auction market over the last two decades, the young artist category is here to stay as it plays a strategic role for the auction houses. Auction sales such as New Now (Phillips), Contemporary Curated (Sotheby’s) and First Open (Christie’s) have  provided young artists with a dedicated channel into the global auction market, with unique access to a global collector base. Although these auction ‘incubator’ sales only account for about 10% of the overall contemporary auction market at Christie’s, Sotheby’s and Phillips last year, they do play a strategic role in engaging and cultivating younger buyers, an important objective for most auction houses, as generational wealth is being passed on from baby boomers to millennials and Gen Z.

Has the NextGen Artist boom come to an end? Not yet… ArtTactic

Fractional Ownership of Art

 

Could economic uncertainty fuel further interest in art investment this year? Or are we reaching the tail-end of the post-covid art sales boom?

 

With inflation in many developed countries running the risk of entering into double digits, and with the post-Covid economic recovery stalling, turbulence has been felt in financial markets in recent months. S&P 500 is down 23% from the beginning of the year, and the more tech-heavy NASDAQ index has dropped 32% in the same period. Even the crypto market has failed to provide a safe haven for investors in recent months, as Bitcoin prices have dropped from more than $61,000 from its peak in October 2021 to around $20,000 today, a fall of 67%. The Economist reported last week that the overall crypto market had plummeted from its peak of $3.2 trillion in November 2021 to less than $1 trillion today.

 

So how has the art market reacted to the bad news this year? Surprisingly well so far. Q1 public auction figures from Christie’s, Sotheby’s and Phillips were up 32% year-on-year from 2021, and Q2 is also set to come in above last year (with sales figures up 28.3% so far, not counting London’s Marquee auction week later this month). But can the art market withstand the reality of the deteriorating economic situation, and if so for how long?

 

Fractional Ownership of Art ArtTactic

Source: ArtTactic

 

Why fractional ownership in art?

New models of regulated investments in art are emerging, with the concept of ‘democratising’ art investment becoming increasingly popular over the last two years.

 

Access has always been a big hurdle in the art market. Firstly, the price inflation in the art market over the last 20 years has moved investment-grade art out of reach for most collectors and investors alike. Secondly, unless you are an insider and well-connected in the art world, the art market can often feel impenetrable and intimidating to those on the outside. Asymmetric information and lack of transparency are frequently mentioned as key challenges. Thirdly, the unregulated nature of the art market also scares many potential investors, and although the recent introduction of anti-money laundering regulations in the EU and US are likely to help professionalize and modernize parts of the art market in coming years, there is still a long way to go.

 

In this editorial on Fractional Ownership of Art, I will explore this phenomenon in more details, and hopefully shed some light on the past, present and future of this evolving investment practice.

 

Fractional Ownership — An old idea whose time has come?

 

The concept of investing in art for purely financial purposes isn’t new. The early generation of art investment funds, from the British Rail Pension Fund in 1974 to the Fine Art Fund in 2001, have attracted interest among investors looking for higher yields and diversification benefits from alternative assets such as art and collectables. The fractional ownership model we see today is simply an extension of the same desire to democratise access to the art market, and the opportunity for the art market to tap into a new type of client base.

 

The term fractional ownership originally became popular for business jets. Richard Santulli of NetJets pioneered the concept in 1986, allowing businesses to purchase shares in a jet to reduce costs. This concept was later introduced to the property industry in the U.S in the early 1990s. These first fractional developments focused on real estate in the Rocky Mountains ski resorts, recognising that people did not want to buy whole homes, which they would use only for a few weeks a year.

 

Market Cycle #1

 

The emergence of fractional ownership in art started just after the financial crisis in 2008. Between 2009 and 2012, the rapidly growing Chinese art market, fuelled by government policies positioning the cultural industry as one of the key drivers for economic growth in China, created the ideal conditions for a new financial product built around the red-hot Chinese art market. These early fractional ownership models were known as Art and Cultural Exchanges and allowed investors to buy shares in artworks that could then be traded on these exchanges. Below is a table from Deloitte & ArtTactic Art & Finance Report 2011, which shows some of these exchanges that were active in the autumn of 2011. However, large price volatility and speculative behaviour led the Chinese authorities to impose restrictions on these exchanges in 2012, forcing most of these to close or transform themselves into something else.

 

Fractional Ownership of Art ArtTactic

 

However, similar fractional ownership platforms also emerged in Europe at the same time. With the entrepreneur Pierre Naquin setting up A&F Markets in Paris in 2011, and SplitArt announcing the same year that they were setting up an art exchange in Luxembourg, that would allow qualified investors to invest in shares of valuable artworks. For different reasons, both of these platforms failed to succeed.

 

Market Cycle #2

 

It would take another 6 years before the concept of fractional ownership in art started to re-emerge, this time on the back of the boom in crypto-currencies and ICOs (Initial Coin Offerings). The Singapore-based Maecenas raised $15.38m through an ICO in 2017 and the firm sold 31.5% of Warhol’s 14 Small Electric Chairs (1980) in 2018. A number of other platforms were set up around the same time – Feral Horses, ArtSquare, Malevich, and Look Lateral, but despite the excitement around fractional ownership as a concept,   the issue around regulation was always going to be a thorny issue.

 

In 2018, the regulatory issue finally seemed to have been resolved, when Masterworks launched its first SEC regulated fractional ownership product with Andy Warhol’s ‘1 Colored Marilyn (Reversal Series)’ from 1979. Although, it would take the company a further two years to gain traction, the company has now more than 120 artworks on their platform with an estimated value of more than $500 million, and is now the market leader in the fractional art investment space. The company raised a $110 million Series A round in October 2021, led by Left Lane Capital and joined by Galaxy Interactive and Tru Arrow Partners, valuing the company in excess of $1 billion.

 

The success so far has encouraged other companies to follow, and Mintus, a UK-based FCA regulated fractional ownership platform announced they were entering the market in April 2022. The company was founded by Tamer Ozmen, previously a senior executive at Microsoft, and is counting former Sotheby’s CEO Tad Smith and Brett Gorvy, Christie’s former Chairman and International Head of Post-War and Contemporary Art, on their advisory board.

 

Other regulated fractional ownership platforms have aimed to build their business on the back of the increasing interest in tokenization and the NFT market. Sygnum, a digital asset bank, and Artemundi, an art investment fund pioneer, partnered in July 2021 to tokenize Picasso’s ‘Fillette au béret’ painting. This marked the first time the ownership rights in a Picasso, or any artwork, were being registered onto the public blockchain by a regulated bank, enabling investors to purchase and trade shares in the artwork called Art Security Tokens (ASTs).

 

Fractionalization has also become increasingly popular in the NFT market as prices of many NFT collectables, such as Bored Ape Yacht Club and ArtBlocks have moved beyond the reach of most investors. Fractional.art is an example of one of these platforms.

 

Whilst Masterworks’ initial intention was to use blockchain-technology to record and track fractional ownership in artworks, in the end the company decided to go for a traditional off-chain approach, which was probably a good idea, as other companies that tried to introduce both blockchain and fractional ownership in physical art have not yet managed to achieve the same level of attention.

 

The Future

 

Based on a recent survey for the Deloitte & ArtTactic Art & Finance Report 2021, 21% of collectors said that they were interested in investing in art through a fractional ownership model, with a significantly higher, 43%, of collectors under 35 years old saying the same. The pandemic seems to have been a catalyst for changing attitudes towards art investment, and corresponds to the growth we have seen in both the art market and the fractional art investment industry over the last 18 months.

 

So will the boom in fractional art ownership continue?

 

As the emotional component of art ownership is largely stripped out when you invest in a share of an artwork, the investment behaviour is likely to mimic that of any traditional investment. Bull markets will attract more investors and bear markets will likely see investors running for the exit.

 

What does this mean for the fractional art investment market? The demand is likely to continue as long as the art market remains as robust as it is now. However, so far, the fractional ownership market has been in a honeymoon period, where the post-pandemic art market recovery has fuelled art sales and prices, and most fractional ownership investors are yet to experience the chill of a market downturn, where liquidity dries up and prices fall (yes, prices of art can go down!).

 

To make profit from art, the following ingredients are essential: expertise and knowledge, keeping costs to a minimum, good timing, access to inventory (preferably at below-market prices), access to buyers and the ability to take a long-term view and ride out any down-cycles. Those that were spooked by the financial crisis in 2008 and the pandemic in 2020, would have been better off sitting tight, as the art market showed strong resilience in both cases, and recovered within a 12–18 month period. Recent analysis by ArtTactic looking at artworks with repeat auction sales in recent New York Marquee auctions in May, shows a positive correlation between the amount of time the artwork was kept away from the public market and the return on the investment. Among the 50 lots kept away from the auction market between 10 and 30 years, 49 sold with a positive average annual return of 8.8% (not adjusted for inflation). However, artworks kept away from the market for less than 10 years showed a more volatile performance, with 5 out of 13 lots seeing a negative return (see graph below).

 

Fractional Ownership of Art ArtTactic

Source: ArtTactic

 

 

One of the main challenges for fractional investment platforms right now, is that they are acquiring art at price levels that are reaching a historic high, and if you add the transaction costs to this (i.e. buyer’s premium if bought at auction, fees for regulatory listings, management fees and share of profits, if any), art prices need to keep going up much further before investors can expect any profits. If this doesn’t happen, investors need to brace themselves for the long haul, and hope that history keeps repeating itself.