The Art World is Being Reshaped. What Will It Look Like?

Dr. Clare McAndrew, founder of Arts Economics. Image courtesy of Arts Economics.
A man wears a mask as he walks along the streets of Paris when the city went under lockdown on 17 March, 2020. Photo by Fran Boloni on Unsplash.
Share of Expenditure by the Global Art Trade on Ancillary Services in 2019. Chart extracted from The Art Market 2020. © Arts Economics (2020)
Frequency of Use of Online Sales Platforms and Instagram by HNW Collectors. Chart extracted from The Art Market 2020. © Arts Economics (2020)
Hauser & Wirth’s online viewing room, featuring artwork: Jenny Holzer, XX 8, 2015. Palladium leaf and oil on linen, 203.2 x 157.5 x 3.8 cm. Listed and sold at US$350,000. Image courtesy of Art Basel.
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K11 HONG HONG'S SILICON VALLEY OF CULTURE

As the coronavirus COVID-19 pandemic plummets the world into unchartered territory, CoBo Social Managing Editor Denise Tsui spoke to Dr. Clare McAndrew, founder of Arts Economics and the woman behind The Art Market 2020, about findings on the 2019 art market and what they possibly indicate for these uncertain times.

 

TEXT: Denise Tsui
IMAGES: Courtesy of Arts Economics unless otherwise stated

 

It has barely been six weeks since we were abuzz about the cancellation of Art Basel Hong Kong and now the world is experiencing a public health crisis that has set off a chain of emergency responses from every major government in a scale that is unprecedented in our contemporary era.

I experienced firsthand in Hong Kong, the chaos and mass anxiety of the outbreak in a society already largely distrusting of its government’s ability to lead 7.5 million people. Just a few weeks ago, while the city had begun to find patterns of a new normalcy under the conditions of an ongoing epidemic, I flew down to Australia, at a time when the country—with a land mass nearly 7000 times that of Hong Kong—had less than 30 confirmed cases. In a state of déjà vu, I watched Australia grapple with its increasing cases as Europe quickly erupted into the latest epicentre of coronavirus COVID-19, Iran, South Korea and Japan were seized by outbreaks, and the US and UK discovered they were not immune to the clutches of the virus. In this moment, it became obvious that, at least this year, the art world is not going to be like it was before. More importantly, perhaps the art world is on the verge of a permanent reshape as it begins to evolve and adapt to this time of flux.

 

Dr. Clare McAndrew, founder of Arts Economics. Image courtesy of Arts Economics.

 

The Economics Of A Globally Diverse Trade

“I don’t think that there’s any way that this won’t have a big effect on the sales this year,” Dr. Clare McAndrew, founder of Arts Economics, said. “I mean the world has completely been turned upside down. In such a short period of time, things have altered so substantially that it’s hard to get a grip on it.”

The Art Market 2020, published earlier this month with Art Basel and UBS, reported that overall sales of art and antiques globally reached an estimated US$64.1 billion in 2019, down 5 per cent year-on-year. All three major art hubs—the US, UK and China—declined. A ray of hope was found in France, the only market to advance, by 7 per cent. After a rough and patchy year, nearly half of the dealers and gallerists surveyed by Arts Economics were optimistic towards a positive turnover for 2020.

“What has really saved the art market and protected it from really protracted recessions is the fact that it’s very globally diverse, and that it engages in a lot of cross-border trade,” said McAndrew. “It’s not just reliant on one country or a couple of countries. The fact is that it bounced back in 2010 after the global financial crisis because China was doing well, while the US started to pick up. So, there’s always kind of somebody doing well, when somebody isn’t.”

 

A man wears a mask as he walks along the streets of Paris when the city went under lockdown on 17 March, 2020. Photo by Fran Boloni on Unsplash.

 

However, as countries enforce nationwide lockdowns and complete travel bans, the art world has quickly become immobilized. With inevitable cancellations and postponements, temporary closures and contingency measures announced every other day, the superfluously crammed art world is at an unparalleled standstill. For art fairs—the commercial trade show of the art world—this has been disastrous. And the domino effect on galleries is perhaps even more severe. The Art Market surveyed countless participating galleries and estimated that on average, 15 per cent of sales are made before the fair, 64 per cent during the fair, and 21 per cent after, as a direct result of exhibiting at the fair. Such loss is a hefty hit on those who are under pressure and lack the capital to ride out this difficult time such as medium to small galleries.

“So it’s going to be a really tough year,” said McAndrew. “If this had happened in 2017, even in 2014 or something, we probably would be okay. But it’s just not coming at a great time, to be honest, after kind of a pretty flat year in the market.” Furthermore, she adds, galleries have a tough time facing the obstacles of selling to collectors. “This (COVID-19) is just completely a distraction that is so pervasive and so all encompassing that people can’t think about certain cultural things when they’re worried about safety and their health, and employment and things like that.”

There is also a question of the sustainability of the art world itself. At a time when globally, society is bracing itself for impending job cuts and redundancies, the impact on those working in the art world is also very significant. The Art Market noted an estimated 310,810 businesses operating in the global art and antiques market in 2019, employing some 3 million people worldwide. Of this, more than 2.7 million were people employed in the galleries and dealers sector. Additionally, it further reported that the global art trade spent an estimated US$19.9 billion on a range of ancillary and external support services, contributing to 368,860 jobs—much of this pertaining to art fairs and temporary exhibitions. Thus, all these temporary closures, shuttered doors and pauses in the cultural sector have another major side to its collateral damage.

Share of Expenditure by the Global Art Trade on Ancillary Services in 2019. Chart extracted from The Art Market 2020. © Arts Economics (2020)

 

Revisiting The Glocal

The question we find ourselves facing right now is what happens when the global art world is no longer global, when flights are slashed, borders are closed and people across the world are grounded?

There are early indications that for some markets, it may be time to reassess its reliance on global sales and increase the focus on the domestic. By no means will this be successful for every market, but we have already seen that, thinking glocal provides one answer to riding out this difficult period, at least in the short term. The Armory Show, which continued with its planned dates earlier this month, showed positive signs of a regional American market. Meanwhile parts of Southeast Asia, such as Indonesia, have long thrived on its regional strength. Additionally, with the global climate crisis reaching a peak of critical urgency, the art world had also come under heavier scrutiny in recent years to reflect on its heavy carbon footprint.

“I think even before (COVID-19) happened, there were so many negative headwinds against developing international movement, a kind of protectionist stance taken by various governments such as tariffs, which we broached a little bit in the report about the art market’s sustainability and its impact on the environment,” said McAndrew, “It’s possibly a time where we’re reassessing with all those factors about sustainability, and reassign this constant mass movement of people and art taking place all year round.”

 

Frequency of Use of Online Sales Platforms and Instagram by HNW Collectors. Chart extracted from The Art Market 2020. © Arts Economics (2020)

 

Is A Digital Marketplace The Answer?

The Art Market highlighted that high net worth millennial collectors—who, for the sake of the report, are classified as millennials with personal wealth over US$1 million and have spent more than US$10,000 in the last two years on art and antiques—were the most frequent users of online sales channels; with 92 per cent making purchases online, among them, 36 per cent paying over US$50,000, including 9 per cent who paid more than US$1 million for a work of art or object. Millennials are seen to be buying across nearly all channels and actively cross-collecting, but as McAndrew explained, “They’re kind of a little small microcosm of what’s happening, and I don’t know that they’re that representative of all of society at large.”

“It’s just these are the very high end of the millennial segment, so it’s getting more mass interest. But the high net worth segment is such a small fraction of the potential buying public,” she adds.

At the time of our phone interview, Art Basel’s Online Viewing Room had just launched its VIP preview; and while we spoke, I watched as the server crashed and the digital platform went offline for nearly 25 minutes. “This is a kind of trial period for things like the online viewing rooms and how they work on the more mass level. I don’t think this will move all of the market online or anything like that, but I think the things that work, people will use again,” McAndrew commented.

 

Hauser & Wirth’s online viewing room, featuring artwork: Jenny Holzer, XX 8, 2015. Palladium leaf and oil on linen, 203.2 x 157.5 x 3.8 cm. Listed and sold at US$350,000. Image courtesy of Art Basel.

 

Reshaping The Art World

It would be a foolish notion to think the art world—or any sector for that matter—would come out of this unscathed. As McAndrew said, “I think that things will slowly evolve from these kinds of external catalytic exogenous events that don’t necessarily have anything to do with the market itself, but will often cause pretty major changes.”

In a poignant article written for Financial Times, Yuval Noah Harari, historian and author of Sapiens, remarked strongly that, “Given the global nature of the economy and of supply chains, if each government does its own thing in complete disregard of the others, the result will be chaos and a deepening crisis.”

Does the art world grasp this reality and if so, will it do anything about these developments as a global collective?

Perhaps one of the worst paths we could go down is what English writer and public speaker David Icke calls a “Hunger Games society,” which is “designed to have no small business, not even medium-sized business, globally, just gigantic corporations that produce and control everything.”

As the pandemic of coronavirus COVID-19 and the drastic government countermeasures are, in Icke’s words, causing a “dismantle [of] the world economic system,” it is clear to most of us that change is imminent but what that change will look like depends on our actions or inaction.

 

 

 

 

 
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