In this episode: Another new report on the art market, this one from Art Basel and UBS, explains how wealthy people buy art now
Full episode transcript
Hey everybody Keith Dotson here. Welcome back to another episode of the Fine Art Photography Podcast.
Right now the art world with a capital A — the A-lister art world — is trying to understand how the art business will look as we move into the post-pandemic future. A few weeks ago I talked about how big art galleries sold art during the pandemic. The goal with that episode was to see if there was anything useful that we independent photographers and artists could learn from the report. One thing we learned about in that episode is that special events — like online viewing rooms or OVRs — were a successful strategy for art galleries in 2020.
Now we have another brand new report to look at. This one, called The Art Market 2021, has just been released and it focuses on the state of the art market. This report was written by Dr. Clare McAndrew, an economist who specializes in the economics of the art market, based on a survey commissioned by Art Basel — the global art fair company and UBS — the wealth advising company that helps people called “high net worth individuals” manage their abundant and growing incomes. This report is very fresh, published in March 2021 based on the survey which was conducted in December 2020.
The Art Market 2021 report compares the state of the art market before, during, and what it’s expected to be after the pandemic, with sections on Dealer Sales, Auction Sales, Art Fairs and Exhibitions, Online Sales, and Global Wealth and Art Buyers.
First let me say, if you’re interested in digging into this report, I’ll include links in the description to the full super-detailed report and also the summary report that covers just the highlights. Kudos to the owners of this report for making it fully accessible for no charge.
First, let’s understand the details of the survey — 2,569 high net worth individuals were surveyed. These are people with at least $1 million in investable assets who had spent $10,000 or more on art and/or antiques in both 2019 and 2020. The global sample was split across 10 markets: the UK, the US, Mainland China, Singapore, Taiwan, Hong Kong, France, Italy and Germany and Mexico.
According to the report, the US commands 42% of the art market with China and the UK tied for second, at 20% each.
The overall theme of the report is that of course, art sales were down in 2020, but many art galleries managed to remain profitable because they were able to cut expenses — especially the costs of traveling to major global art fairs.
Out of necessity, art galleries pivoted to more emphasis in online art sales, so their IT costs went up. Whereas in 2019 their top business priority was art fairs, in 2020 and in 2021, they are re-prioritizing relationships with existing clients. Their second highest ranking priority is now online art exhibitions, which was way down the list of priorities in 2019. Along with that, galleries are prioritizing increasing their geographic reach.
In spite of the pandemic, wealthy people still had a high level of interest in art and still bought art. Gallery client lists were reduced last year — and this is surprising — the number of clients for a big art gallery is only about 55 people. 55 people with very deep pockets.
The report confirms the importance of online viewing rooms, stating that 90% of high net worth individuals surveyed attended an online viewing room and 72% thought it was essential to show prices of art in those viewing rooms.
Millennials are the biggest spenders of those surveyed. Boomers entering retirement age are falling lower on the list of spenders. Perhaps they’re less comfortable with online art purchases.
As I said, galleries reported that while they were focused on solidifying relationships with existing clients, they found it extremely difficult to build new client relationships without the ability to meet face-to-face. They said that online competition made it very hard to stand out with potential clients. I feel that pain!
Sales of art to interior designers was only 2% of their overall pie — perhaps lower due to the pandemic, but my experience has been that designers like to buy direct from artists. I can say that interior designers have historically been a major customer for me — although last year that source of business for me was certainly curtailed.
The most successful online channels for selling art to high new worth individuals in 2020 were online auctions (used by 49%), art gallery online viewing rooms or OVRs (47%), and art fair OVRs (45%).
Breakdown of online sales in 2020 were like this: 25% were made through the gallery’s website or platform, social media channels, OVRs, or email (but not inside the gallery itself); 9% were through art fair OVRs; 5% were through third party platforms — (elsewhere in the report they list third party platforms as being sites like Amazon, eBay, liveauctioneers, etsy, 1stdips, artfinder, and go antiques.)
Their most helpful online strategies included emails, followed by social media activities, and online viewing rooms. Other strategies like enhanced online content fell further down the list.
Share of collectors buying art online in the US broke out like this: Online auctions 58%, gallery OVRs 55%, art fair OVRs 55%, third party platforms 49%, and here’s a biggie — Instagram 46%. That’s right . . . 46% of wealthy persons surveyed bought art over Instagram.
So what’s the conclusion for independent photographers and artists? Just as with the other report from a few weeks ago, Instagram is a serious and growing contender for selling art. I guess we all understand the power of Instagram by now, but I had no idea just how much a player it was in the high end art market.
In a different report that I read last year — I think published by Artsy — they found that collectors are motivated to buy art because they want to support artists and they want to experience beautiful art in their homes, more than for its investment potential. That report said collectors buy art from artists they can relate to. So, be sure to use your social media well. Let collectors understand your vision and your story. Give them something to believe in.
Well that’s all I’ve got for this episode. Thanks for listening.
I’ll talk to you again real soon.
The Art Market 2021
Read the full report here (Opens a PDF): https://www.artbasel.com/about/initiatives/theartmarket2021pdf
Read the highlights here: https://theartmarket.foleon.com/artbasel/2021/start/