Global market for contemporary art
- Véronique Chagnon-Burke
Although the art market has been a major force in the development of contemporary art, it has also introduced some unique challenges (see Art market in the 21st century). Contemporary art―ranging from works executed in the 1960s to those created by current living artists―is increasingly defined by varied and unconventional media. It often challenges traditions rather than unifying aesthetics or philosophies. Fame and artist name recognition have come to play increasingly larger roles in measuring success, complicating efforts to assess quality among the plurality of styles and media. Art historians have historically found it difficult to talk about contemporary art and the market; trying to put a monetary value on art seems to cheapen its aura, while the definition of contemporary art is itself a contested territory. A robust critical literature is still developing, in tandem with resources to provide market data to researchers and market professionals. With only auction results and scarce hard information on the primary market, one’s insights, knowledge, and access to undisclosed information remain paramount to evaluating the success of financial participants, analysts, and commentators. Finally, the market for contemporary art operates in connection with the global economy and is subject to economic fluctuations as well as shifts in taste and investment security which influence the behavior of institutions and private collectors alike.
1. History of the contemporary art market.
Since the advent of the modern art market system in the mid-19th century, the same cast of characters has populated the market for contemporary art, including artists, dealers, critics, and art journalists, as well as art historians, collectors, and curators. However, significant changes in sales strategies, the organization of dealers and auction houses, and access to works and artists in our increasingly global culture have altered the way in which contemporary art is marketed and sold. In the 1960s, dealer Leo Castelli revived the tradition of partnerships that had existed between galleries in Paris, New York, London, and Berlin before World War I. Data collected from sales invoices shows that Castelli worked with a network of galleries in Europe and in the United States, and that he actually conducted more transactions with other art dealers than with collectors. This system of global cooperation between galleries encouraged the international proliferation of commercial enterprises devoted to contemporary art. More recently this setup has been replaced by a new model of “mega-galleries” which maintain their own network of galleries throughout the world. From New York, Los Angeles, Paris, London, Hong Kong, and Beijing, galleries like Gagosian, Hauser & Wirth, Pace, or David Zwirner support a small number of established artists on a global scale.
Cultural tourism and the global calendar of art fairs, biennials, and international exhibitions have made contemporary art part of a lifestyle experience (see Biennials and art fairs). This extended art infrastructure has means that contemporary art is shown and sold to an increasingly global audience. It is worth noting that postwar and contemporary art has also remained the most exhibited category of art worldwide, representing 92% of exhibitions in 2016, a trend that has remained constant for ten years.
Though interest in contemporary art had been growing since the end of World War II, the 1970s signaled an interesting shift in the market. As inflation plagued most of the Western economies, art came to be regarded as a good investment and contemporary art an attractive alternative to Old Masters and other established artists. The auction sale of the Robert and Ethel Scull Collection at Sotheby’s in 1973 marked a paradigm shift in the market for living artists. The records achieved that night, especially for the works of Jasper Johns and Robert Rauschenberg, revealed the potential for high financial return for the works of living artists. Christie’s held its first Contemporary Art Sale in 1974. The general rise in the art market of the 1980s benefited contemporary art. Sales of respected collectors such as Emily and Burton Tremaine, in 1988, or Victor and Sally Ganz, in 1997, further legitimized the market value of contemporary art.
The sale of Jeff Koons’s Balloon Dog (Orange) (1994–2000) for $58 million in 2013 signaled that contemporary art was no longer a marginal category. It became the highest price paid for a work of art by a living artist on the secondary market. But the trickle-down effect of activity from the top of the market affected several young artists (under the age of 35) who saw their auction prices rise significantly, creating a speculating effect that was not sustainable. The collectors went back to more tested collecting categories, such as modern art, prompting a healthy correction in 2015–2016. By 2017, contemporary art generated a global auction turnover of $1.58 billion, with a smaller number of lots, which indicated that the price of individual art works was rising. What happened from 2013 to 2017 illustrates one of the main challenges of the market for contemporary art: the tension between a small number of top artists and their established market and the emerging artists whose market is untested and highly speculative.
Since 2000, the contemporary art market has multiplied in value almost fourteen times. Contemporary art has remained the highest grossing sale category for both Christie’s and Sotheby’s auction houses since 2007. In 2014, in their annual assessment of the top 200 collectors, ArtNews counted 166 collectors who focused solely on contemporary art against 90 on modern art. In 2016, the largest sector of the fine art market was postwar and contemporary art, which claimed 52% of the overall market value (of this sector, 43% of the art passed through auction houses and 57% through dealers).
2. The mechanics of the contemporary market.
The market for contemporary art is not monolithic but is made up of several circuits of commerce with one spectacular top circuit that attracts a small number of elite collectors. Although transactions for more than one million dollars make less than 1% of all the transactions (most realized prices are under $50,000), this group receives the most attention, and is by far the most visible to the public. For many who make up a new category of high-spending collectors, buying contemporary art affords access to certain social and life experiences. The top collectors primarily buy art at fairs and at auctions, often with the help of an art adviser. They came of age in the 1990s and practice the most aggressive type of collecting.
The auction houses have adapted and continue to think about new strategies to capitalize on the dominant market position of contemporary art. In recent years, they have tested various initiatives, such as creating new sales categories to accommodate for a tightly choreographed evening sale made of fewer lots. They have experimented with the idea of curated auctions and reshuffled the sales calendar to align with the international contemporary art calendar of fairs. They have also taken advantage of online venues to create thematic sales and attract new buyers.
The medium of painting continues to lead the market for contemporary art, with artists like Jean-Michel Basquiat, Peter Doig, Christopher Wool, and Mark Grotjahn (b 1968) at the top of the secondary market. German artists are still a strong presence in the market although Gerhard Ritcher’s dominance in the 2010s yielded to demand for the artists Anselm Kiefer and Albert Oehlen, whose strong market was helped by important retrospectives in major museums. This demonstrates, once more, the interconnectivity between the market and public institutions.
Increased diversity is another major characteristic of the current market for contemporary art, with Street Art and contemporary African art (see Africa, §IX) becoming important sub-segments of the market. But there is still little gender parity for women artists in a market still dominated by men. However, there are two encouraging trends: the resurgence of interest for the works of older women artists and the fact that among younger artists (born after 1980), women artists make up 31% of the top 500 artists by auction turnover.
Financialization is another visible and widely broadcast aspect of the top of the contemporary art market. After real estate and the stock market, art has become another leading way to diversify one’s investments. The multiplication of buyers with large amounts of capital have driven prices up and brought on a speculative approach to collecting. This approach has created disconnections, for many, between prices and artistic value and the speed of acquisitions is often felt to be contrarian to the more measured connoisseurship of traditional collecting.
Art collectors who collect for investment have to deal with specific challenges. It is difficult to predict the longevity of a contemporary artist or style; the markets for emerging artists and for the global superstars, like Damien Hirst, Yayoi Kusama, or Jeff Koons, are radically different. Enshrined in celebrity culture, contemporary art is more fickle and susceptible to fashion and trends. In the 1984, super-collector Charles Saatchi is said to have negatively affected Italian artist Sandro Chia’s market by selling six of his paintings and signaling to many a lack of confidence in and favor for his work. This event has since become one of the classic examples of the power of the collector in the contemporary art ecosystem.
Contemporary artworks also come in a wider variety of media―video, digital, performance, large installations, and mixed-media pieces―making storage and display difficult. The Physical Impossibility of Death in the Mind of Someone Living (1991) by Damien Hirst exemplifies perfectly the challenges posed by contemporary art; its cost was prohibitive and required the support of a patron. The project, a formaldehyde-preserved tiger shark encased in a glass vitrine, was driven by a conceptual idea but little attention was initially paid to conservation issues, so that, by 2004, the work was physically deteriorating, forcing the new owner, Steve Cohen, to have the shark replaced. This conservation initiative raised questions about value and authenticity.
From the creation of The Physical Impossibility of Death in the Mind of Someone Living to his 2017 exhibition in Venice, Damien Hirst typified the quintessential artist-entrepreneur, developing and controlling his market and his brand. One of his strategies was to seek support for the production of his works not from an art dealer, but from a collector―first from Charles Saatchi and then François Pinault. By organizing the exhibitions Freeze in 1988 and Sensation in 1997–1999, which launched the Young British Artists, Hirst gave legitimacy to a kind contemporary art which uses shock and spectacular effects as its main ways to engage the viewer. Beginning in the 1980s, Hirst dominated the segment of the market where art and celebrity merge. From organizing his own auction with Sotheby’s in 2008 to his 2017 extravaganza in Venice at the Palazzo Grassi and the Custom House―a show called The Treasure from the Wreck of the Unbelievable―Hirst re-energized his career through highly mediatized events that resist the exhibition model of the white-cube gallery.
3. The global, expanding market for contemporary art.
The growing correlation between financial and art markets, combined with a massive increase in the number of fine art buyers (from 500,000 after World War II to around 70 million in 2015), has increased the attractiveness of contemporary art. Contemporary art provides the collector a window into the present and satisfies a demand for “newness.” The geographic expansion of the art market to Asia, South Africa, the Middle East, and Latin America has also greatly supported the expansion of that segment of the art market. Another driving force in the growth of the contemporary art market has been the global museum industry: between 2016 and 2017, over 1200 new museums opened across the world. These new museums scour the markets for museum-quality works and thus contribute to the overall growth of the art market. Because of the limited supply of historic works, contemporary art will undoubtedly play an increasingly important role in their future collections development.
China has certainly become one of the major players in the rise of the market for contemporary art. Hong Kong, with its art fair and its growing network of international galleries, is now a major hub, together with London, and lags just behind New York in the contemporary art trade. Among the ten top auction houses, five are Chinese. In 2017, China was second only after the United States in contemporary art auction revenue. Chinese Contemporary artists occupied 162 places in the Top 500 artists in 2016, alongside 139 European and 97 American artists (Artprice 2017).
Art fairs and auction houses have benefited from the growing and diverse global collector pool. While they had to initially adapt their business models to the demands of their new clients, art fairs have become an essential part of the art dealer’s work, and dealers are no longer conducting most of their business in their galleries. Fairs fit the practice of contemporary art dealing in today’s market by providing an international stage for artists’ works in an era when media and celebrity are key drivers in valuation. A dealer can also use the fair to take advantage of impulsive buyers in the unique atmosphere of the event. On the other hand, fairs do require large initial budgets and put pressure on artists who must continually produce new works, sometimes for more than four occasions per year. The auction house, like the fair, provides easier access to contemporary art, especially to works by top artists whose work may not be available on the primary market. The powerful auction houses with multiple locations throughout the world can provide private sales with a high level of client advising, a new space for themselves in the art market ecosystem that had been traditionally occupied by private galleries and dealers.
Finally, contemporary art has benefited greatly from the growth of e-commerce (see E-commerce and the art market). Some of this growth has been driven by the ease of access to the market and the dematerialization of sales, with the Internet becoming a primary medium of discovery and exchange. Digitization has increased market efficiency and has partly offset a declining collector base, especially near the bottom of the market, where younger buyers concentrate. As the acceptability of buying contemporary art online has increased, the Internet has provided access to a set of new tools to find information and to engage in transactions with a wider and more diverse global audience. New platforms and the growing importance of social media, such as Instagram, will have a transformative and disrupting effect on the way the market for contemporary art functions.
If the financialization and focus on investment in the market for contemporary art continue to be dominant trends, auction houses with the capacity to adapt their business strategy will continue to play dominant role in the ecosystem. These entities are the best positioned to cater to the new global field of collectors. But the market for contemporary art is multilayered. In order to sustain it, the primary market must also continue to thrive, from the galleries acting as gatekeepers to emerging artists to the middle market “bricks-and-mortar” galleries struggling to re-invent their business model and stay competitive in a market increasingly dominated by global mega galleries.
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