- Overview of the global art industry
- Dominance of the US, UK and China in the art industry by the numbers
- Emerging new trends in the industry and the road ahead
The global art industry which consists of a set of diverse strata of paintings, sculpture, art prints and also antique in multi forms grew by 5.8% to an estimated $67.4 billion in 2018, making it the second biggest year for the global art market over the past decade, with only 2014 accounting for a higher sales value at $68.2 billion. The growth in the industry were driven by the sales in the top end of the market. Purchases in the ultra-expensive artwork soared. Art dealers in the lower brackets, with annual turnover between $250,000 and below and $250,000 to $500,000, saw their sales decline by 18% and 4%, respectively, while the dealers in the higher brackets of $10 million to $50 million and $50 million++, saw their sales increase by 17% and 7%, respectively. The industry marked decent growth in 2018 and the year before after two back-to-back years of decline in 2015 and 2016 respectively. The uneven trend in growth and mercurial movement in sales in different segments of the industry is a result of the uncertainty about the global macro-economic environment and the fundamental change in the traditional business model of the art industry (as highlighted in the report The Art Market 2019, released by Art Basel and UBS).
The three largest markets for the industry (US, UK and China) took lion share of the global art market, collectively accounting for approximately 84% of the global sales value, up 4% from 2017. The US market held the pole position again in 2018, accounting for 44% of the global art market sales (highest level to date), followed by the UK at 21% and China at 19%. While the share increased for the US and the UK by 2% and 1% respectively, the share for China fell by 1% in 2018. This downfall in China was due to Chinese collectors sidelining during the country’s drawn-out negotiations with the US to avoid a trade war, also there was a contraction in the supply of high-quality works during this period. As per experts this behavior that the Chinese art market is experiencing is similar to that of the broader economy, as opposed to being immune to the downturns in previous cycles.
Dealers and gallery sales dominated the sales in 2018 reaching an estimated sale of $35.9 billion, increasing by 7% from 2017. This was followed by auctions which registered a sale of $29.1 billion, increasing by 3% from 2017, where Christie’s and Sotheby’s accounted for more than 40% of the auction sales value. The five prominent art houses – Christie’s, Sotheby’s, Ply Auction, Phillips and China Guardian, made up for more than 50% of the global auction sales value in 2018. While dealers and auction sales still dominate the art industry despite the recent slowdown, new avenues like the online sales and the emergence of millennial buyers are shaping the industry as well. Online sales continued to grow in 2018 by ~9.8%, totaling to $4.64 billion, however, the growth was a little lower than recorded in 2017 when it registered a 12% increase in sales. This slowdown in growth has been a trend since the past few years for the online art market. There are many reasons for this declining trend: from lack of transparency especially in terms of the pricing, reluctancy of transactions for a huge amount for an art which has not been physical examined, fear of fake and forgeries, but most importantly establishing trust by sellers selling has been the biggest issue for the online art market space. Whilst there has been some bottleneck with the transition of the art industry from offline to online, experts and their studies are still giving a positive review for the future of the online art market, expecting a consolidation with a few trusted names dominating this space.
As per survey conducted by UBS and Art Basel, millennials (individuals aged between 22 and 37 years) are the new breed of art buyers who are buying art more actively and frequently. Millennials made up approximately half of the art buyers who on a regular basis spent over $1 million on an artwork over the past two years. As per the study, between 2016 and 2018, 93% of the millennials purchased art online, spending an average of $106,930, while the generation X (aged between 38 and 52 years) spend an average of about $500,000 online, but with less frequency. With the increasing participation of millennials in the overall sales, their spending habit of making purchases online could provide a significant possibility for the online sales of art to catch up in the years to come.
Separately, another trend gradually gaining traction is the association between the art world and the blockchain ecosystem which was noticed at many instances during 2018 sales. In July of 2018, Maecenas, a blockchain platform partnered with an art gallery in London to offer to sell a fraction of the stake for an Andy Warhol’s 1980, 14 Small Electric Chairs in cryptocurrencies. Another major transaction was the $318 million sale of the Barney A. Ebsworth collection by Christie’s New York, which was done entirely through blockchain. The initial foundations for future, in terms of synergy between the art world and the adoption of blockchain, has been laid and looks promising.
The endgame for the global art industry is still open and the industry is divided on how it will evolve with the new set of art buyers in the form of millennials and also on how the online art market will develop in the next few years. However, the need of the hour for the global art industry to sustain is to cultivate and reach out to new regional smaller markets via new models and platforms to get fresh buyers and increase their buyer pool.