Hello dear readers and subscribers.
A new art market report is out and last year.
You might remember our video when we covered the art market report in last summer, when there was a 12 decline and the entire internet and social media were screaming that the art world was on fire and destined for an imminent crash.
In that video I simply cautioned to have a look at the bigger picture, which showed that yes, the market is indeed under pressure and there are a lot of reasons for that.
And within the broader picture of the art market, it wasn't as bad as it seems, or at least how it was perceived online and with the new market report, where there are where there is an increase, the big number is the four percent increase very likely that we'll see a lot of positive statements right now, although i believe the structural issues and challenges that were so problematic last year are simply still there.
So, after two years of declining and a rough decline, last year the market grew four percent.
So the total uh art market um to 596 billion us dollars.
I also want to add here that this is indeed growth of the market.
So the amount of sales, the turnover, but the operating costs across the entire art market have increased with five percent.
So that's a number that is greater than the growth of sales, which shows, of course, that it is still very much under pressure.
The main reasons for it, of course, geopolitical instability, economic instability.
Because of that, As you know, we live in very challenging times, which always reflect in the market.
And then, of course, also inflation, rising costs, and even more in the art world.
The costs rise faster than the inflation does, and if your market stays the same so in the last 15 to 20 years, it's around that 60 billion mark and we're still slightly below it then you can see why there is a problem, or why there is a structural problem with the art markets.
So what generated this increase?
Well, we see that dealers, there was an increase of two percent, which is a bit smaller than last year, but it's an increase, albeit an almost statistically insignificant one, considering the sample size.
The growth predominantly came because the auction segment kind of recovered at the higher end.
The bigger sales that were completely absent last year have now returned some important sales, including a new, second most expensive artwork ever sold, with public auction sales seeing a 9 increase.
Total auction sales 6 increase.
So that is definitely what gave this push to see this growth.
And among the dealers, so the galleries and art dealers.
Here, once more, we saw predominantly growth at the lower end and also a little bit at the very highest end, with the middle that is kind of being squeezed.
Last year there was also a lot of buzz when it comes to those big gallery closures.
That really fueled that debate, that the art world was crashing and people were rooting for it, which I think is very strange people who are into art rooting for the decline of the art world, of art galleries who offer opportunities to artists.
But there was no statistical proof here in terms of being more closures than there were openings.
I think on this front openings and closures it's part of running a gallery, which is despite their image of being money-grubbing entities that want to make money on behalf of the artist and do not care about the art.
If you want to make money, becoming a gallerist isn't your best option at all.
And the main motivation why people do it is because they love art or because they're misinformed one or the other.
Now, after all, these numbers have increased.
I already mentioned that the costs are rising faster than the growth fast last year.
And this is also reflected in the profitability of these calories.
We see that 29% reported as their profitability being the same.
And then, if we add up the significantly less with the less profitable, we have 38 that is less profitable, and on the other hand, 6 and 27 percent, so 33 percent that is more profitable.
So here the balance goes a bit more towards less profitable unfortunately, And some quotes that are very recognizable and that you hear all the time in the art market address exactly what is causing that.
While the prices for our artworks remain unchanged and we can't alter them or they wouldn't sell.
Rising overheads mean our profits are in decline, making gallery operations unsustainable.
Everything is going up except the prices I can charge for the art we sell.
Costs have gone up, sales have slagged off.
Art dealing feels more like gambling than doing business.
So here we see that the same challenges persist.
An interesting finding is that the online art sales have dropped to 9.2 billion.
So this is the lowest since 2020.
It still sits higher than before the COVID-19 pandemic.
And in terms of transactions, it's predominantly that we're still buying online, but at a lower end.
And the higher end transactions really have repositioned themselves once more offline, in the galleries.
Another key finding in the report is that the sales by contemporary art kind of were stagnant, meaning there was less growth in contemporary art than in other sectors, which is actually the exact opposite of how the market recovered after the pandemic.
So arguably there was a bit of over-recovering back then.
Here we see predominantly post-war artists doing well, old masters as well, post-war and modern.
There we see the growth, and this is simply because of, I would say, risk aversion, which is a natural tendency when times are tough or uncertain, that we prioritize safety and blue chip artists that has proven to work well and stable, such as post-war art and old masters, then investing in uncertain, more volatile artists, such as contemporary artists and ultra contemporary artists.
And then we come to a couple of graphs that discuss the representation and also the sales when it comes to male and female artists.
And I think here we see some very encouraging tendencies.
Kind of expected, but very happy to see that we're closing in on parity, especially we're reaching parity in terms of representation.
So if we have a look at last year, the primary market, there was a parity between female and male artists in terms of representations.
In the primary and secondary market this number is lower.
The reason for this difference is very easy to explain because on the secondary market there is a greater focus not only on contemporary and old contemporary, but especially also on post-war and modern art, and these are, of course, artists from a different generation where there was tremendous imbalance between male and female artists, the opportunities they gave, the cultural recognition they got, which reflects into the value of the artwork.
So less work is circulating because there is less demand for it.
So it unfortunately makes sense that this difference is still there.
If we have a look compared to the 2018 graphic, in a relatively short period we've done a tremendous correction.
So on the primary market, we went from 36 to parity in six years time.
However, an important side note, this is when it comes to representation, so opportunity.
When it comes to the market itself, the sales, here we still that there is some catching up to do.
44 of the share of sales in the primary markets were female and just 31 with primary and secondary artists.
So here we still see a big gap in the value that is attributed to female artworks.
On a positive note, we're also making fast progress here.
And I think, with now having equal representation, with almost equal representation and galleries, this will catch up because now female artists will also have the ability to build that cultural recognition which will boost the value, which will then also boost the share of sales.
And we'll see more equality there in the coming years as well.
However, this graphic is also an important nuance, i would say we see that with smaller galleries, so at the lower end of the market, galleries with a turnover of less than 250 000.
There they are actually representing more female artists than they are representing male artists, but simultaneously the share of sales is still significantly lower.
So here we still see a significant disparity, And if this would also be the case for ultra contemporary artists right now, I assume and hope that this disparity is predominantly caused by some older artists of a different generation that are their top selling artists.
But this isn't entirely clear from the data shown in the report.
But if it would be the case that the collecting behavior is still prioritizing male artists, also at the lower end of the spectrum, even though the representation is now in favor of female artists?
Then there is this lingering misogyny I would say So then, here there is also a shift to be made, and I think also time will catch up with this.
Then, when it comes to having to catch up with time.
If we then have a look at the percentages at the higher end of the market, to dealers with a turnover over 10 million yearly, then we see that they are only representing 35 female artists and that the value is just 27.
Very often.
This is also because here, when it comes to the big secondary markets or the galleries who are working with the estates, these are the big galleries and therefore they are focusing once more on an older generation.
To conclude, i also want to add that the sample of this report i wouldn't say it is not representative, but it is as good as it gets, but it isn't representative for the entire art market as well.
So with auction data they can be very thorough because it is publicly accessible, but then for the dealer segment, those transactions aren't publicly available and transparent.
So it's through survey with over 800 Art Basel galleries, also the galleries who are with the premium websites service of Art Logic and that are in the big art gallery associations.
But beyond that there are even more galleries who do not fit within those categories and are not included in this report.
Now i hope that i've informed you well and that you're now kind of weaponed to have the right frame of reference to analyze and interpret all the upcoming news flashes and social media posts about this art market report correctly.
Thank you so much for watching.
Feel free to watch our video where we discuss whether or not it is still possible to create great art today.
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