The 2010 Art Market Review – artmarkeblog.com

The 2010 Art Market Review – artmarkeblog.com

2010 has been one of the most confusing, unpredictable and unexplainable years for me as an art market analyst. So many of the trends, events and fads that emerged during 2010 did not appear to be caused by the sort of conditions, have the same effects, or follow the same path of logic that one would expect they would given the way things have panned out in past years. This leaves me with no doubt that the art market is evolving at such a rapid pace that there is little point trying to justify or explain the events of today using logic that is based on the progression and events of previous years. In fact, more of the art market events that took place during 2010 appeared to defy logic than ever before. I do, however, strongly believe that one of the reasons that it has become even more difficult to determine what is going on with the art market is that the art market (auction houses in particular) has become adept at making the situation appear much better than it really is. Whether it be by skewing figures or manipulating the way results are perceived – galleries, fairs and auction houses have become the plastic surgeons of the art world.

What has also made 2010 such a hard year to analyse was the contraction, and slow regeneration, of the market for the work of trendy emerging artists and recent works by top contemporary artists – both of which are usually the most global, visible and publicised sectors of the market. As the market moves towards the work of artists with a proven track record, collectors and investors have shifted their focus from the usually dominant and globally relevant contemporary art market to the work of artists from a wide of variety of styles, mediums and movements that cannot appear to have very little in common. This has resulted in a situation where there is not one dominant global trend that art market analysts such as myself can focus on, but a number of smaller and disjointed trends that make reading the market particularly difficult.

A few months ago I wrote a series of posts on what I believed was a move towards a more sentimental art market, which appears to be exactly the direction that the market has headed. General disillusionment with the contemporary art market has sent many collectors and investors take a more sentimental approach to fine art that is characterised by a focus on the safety of more established artists and the familiarity of artists that they can relate to. When art collectors or investors seek safety and familiarity they are most likely to gravitate towards works by artists from the era and culture that they have the greatest connection to. This would explain the large number of seemingly unrelated trends that emerged during 2010 many of which involved previously unfashionable styles and movements that are distinctly associated with a particular era or culture.

There is no doubt that the art market has recovered far quicker than many people thought possible. Again, the unexpectedly rapid recovery has thrown a spanner in the works when it comes to analysing the art market and trying to make sense of what is going on. Some journalists and analysts have gone as far as to admit that they cannot explain how a market that seemed to be at breaking point could make such a rapid recovery. To give you an idea of how quickly the art market has recovered, in March of this year (2010) Walter Robinson, editor of Artnet Magazine, said that “Art Market Watch has been on something of a hiatus during the last few months. What with the recession, reporting on auction results just isn’t as compelling as it was during the boom years”. Six weeks later a painting by Picasso become the most expensive work of art ever sold at auction when it fetched a staggering $106.5 million. A week after that an Andy Warhol self portrait sold at Sotheby’s for $32.6 million (more than twice the estimate) setting a new record for a Warhol self portrait at auction. Compelling enough?

When it comes to rationalising art market events there is much to be gained from knowing who has money to spend and how much they have to spend. The top end of the market is fuelled by super wealthy collectors whose level of wealth would not have been affected enough by the financial crisis to deter them from buying art. Therefore at the high end of the art market things have been pretty solid as is evident from the number of record auction prices set in 2010. The lower end of the market is fuelled by collectors who focus on edgy and trendy contemporary art by emerging and newly established artists, and who will usually have a high level of interest in the cultural and artistic side of fine art. Collectors at the lower end of the market are a very determined group who are always going to be around even if they appear a little less active at times. Things at the lower end have improved but have done so at a less than rapid pace which makes it difficult to judge where this sector of the market is heading. Without a doubt the sector of the art market that has suffered for the longest period of time due to the effects of the global financial crisis and the art market downturn is the middle market. The middle market includes lesser works by big name artists, and the more expensive (less justifiable) works by the trendy contemporary artists, which makes the middle market a sort of currently un-necessary compromise for the super rich, and a stretch too far for the modestly well off. Middle market works are, however, perfect for the financial advisor and hedge fund manager types who are more interested in art as a status symbol than the quality or art historical importance of the works they are buying. With the pay packets of hedge fund managers and financial advisors taking a massive hit due to the financial crisis, there is little interest in the middle market works. The super rich are still rich enough to not have to compromise and settle for middle market works and the modestly well off continue to fuel the lower end of the market.
My next post will be the top ten art market 2010 so stay tuned……..

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

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Art Market Correction Survival Tactics – artmarketblog.com

Art Market Correction Survival Tactics – artmarketblog.com

survivalLet’s face it, art auctions are mainly about two things – money and excitement. Best suited to those buyers who don’t care what they buy as long as it is a potentially profitable bargain, art auctions are far more beneficial to the investor than to the collector. Auctions are not really suited to collectors at all because a collector usually looking for specific works which means that they don’t have the option of bidding on a different work or a work by another artist if the one they are after goes beyond their budget. Although a bargain may be picked up by a collector, the likelihood of the next work they want to purchase exceeding the estimate is just as likely. What this means is that if the collector is willing to pay what ever it takes to acquire a work for their collection, the bargains that they may have acquired at other auctions could effectively be canceled out. In the end it would probably have been far better for the collector to have purchased from a gallery where the prices are relatively stable and the pressure involved in making a purchase is far less.

When times are good and the art market is full of speculators and trophy hunters the art auction industry buzzes with excitement and anticipation as records are broken and money seems to be in endless supply.  When a financial crisis influences the market and causes buyers to be far more cautious the art auction industry looses much of it’s lustre.  When the art market no longer offers the same excitement or the same potential for making a quick buck and the acquisition of a trophy work doesn’t carry the same cachet, the factors that make the auction method of conducting a transaction attractive begin to subside.  It is at this point that the gallery and the art fair start looking like a much better option for buyers owing to the fact that fairs and galleries don’t require split second decisions and allow for time to engage with a work of art and time for making a decision.

One of the major benefits that galleries and art fairs have over the auction industry is the ability to educate clients and potential clients as well as allowing them to interact with artists. Education and interaction give clients and potential clients the opportunity to actually experience the artist and their work, the effects of which can be extremely positive. It is easy to underestimate the impact that education and interaction with an artist can have on a potential buyer but when you have worked in the art industry you quickly realise how powerful education and interaction can be. The financial crisis has meant that those galleries that could stick pictures on the wall then sit back and watch the money roll in can no longer do so and are having to work extra hard for their sales. Potential customers need to be convinced that they are making the right decision which is where the education and interaction with an artist come into play in a big way.

Evidence of how important the role of education and interaction can be for an art related business was evident at the 2008 SOFA expo (http://www.sofaexpo.com) in Chicago which was held this past November. The SOFA expo is an International Exposition of Sculptural Objects and Functional art or in other words, contemporary decorative arts and design. According to the post expo press release the expo was a major success with high attendance figures and reports of extremely strong sales which were driven in part by the educational component of the fair. Lectures, panels and artist conversations were a major part of the expo and undoubtedly played a major part in it’s success. “There’s a spill-over effect to sales when one of my artists speak,” said exhibitor Charon Kransen, who saw a bounce from Simon Cottrell’s lecture enjoyed by 115 attendees. “My loyal clientele keeps returning,” Kransen added.

Those galleries and dealers who are able to utilise the tools that they have at their disposal and use a bit of ingenuity stand the best chance of surviving the art market correction. Those galleries and dealers that refuse to adapt to the conditions and do not recognise the areas in which they can make improvements or adaptations to maximise sales will be the first casualties of the correction, and rightly so.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

Snobbery and the Art Market – artmarketblog.com

Snobbery and the Art Market – artmarketblog.com

Denied stamp used by Warhol Foundation

Denied stamp used by Warhol Foundation

A few posts ago I wrote about art and the Veblen Effect. The Veblen Effect suggests that the demand for certain goods, such as art, decreases as the price decreases because a more expensive object is associated with greater prestige and greater wealth. Another effect called the snob effect suggests that the demand for certain goods decreases as the number of people who own one of that particular good increases. In other words, the lower the number of people who own a particular good, the greater the desirability of that good. The reason that this is often the case is because people tend to associate an object of very limited availability with social and financial status, prestige and exclusivity. The fewer the people who own or can own a particular object the more exclusive and prestigious that object is perceived to be. Just like the Veblen Effect, the snob effect is especially relevant to art and the art market.

I could have used the work of Damien Hirst as an example of the snob effect but having used Hirst as an example of the Veblen Effect and not wanting to sound like a broken record I will use Warhol as an example instead. There have been several claims over the years that the Warhol Foundation have intentionally denied the authenticity of works submitted to them for authentication that were in fact genuine in order to reduce the number of Warhol works on the market thus increasing the desirability of those works that are available.  The Warhol Foundation ensured that the works they deemed to be fakes would not be passed off as genuine by stamping the word Denied on back of the works.  Although the claims of market manipulation have yet to be proven the fact that the claims have been made is proof that the snob effect is applicable to art and the art market.

Funnily enough, both Hirst and Warhol have harmed the market for particular series of their work by adding works to a particular series or producing further works very similar to those from a particular series after that series was seemingly finished. In some ways, this is like an artist producing a print with an unlimited print run. The desirability of that print would decrease as the number of people who purchase one of those prints increases. The moral of the story is be wary of prolific artists who produce large numbers of works that are very similar. Also be wary of artists who tend to re-use particular themes, ideas or series of works.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

New ArtCast: Art Collecting 101 – Art Market Trends – artmarkeblog.com

ArtCast: Art Collecting 101 – Art Market Trends – artmarkeblog.com

I was recently interviewed by Sharon Burton who is the founder and creative director of Authentic Contemporary Art (http://www.authenticartonline.com) for the Authentic Contemporary Art Blog Artcast (podcast) which was titled “Art Collecting 101 – Art Market Trends“.  Based in the Metropolitan Washington, DC area, Authentic Contemporary Art (ACA) provides emerging contemporary artists a unique opportunity to show their work in alternative site exhibitions and through a juried online art gallery. ACA also provides opportunities for individuals who are interested in visual art to learn more about collecting and conserving art through workshops, gallery visits and special events.  ACA partners with a variety of art and interior design professionals and organizations to present contemporary art that is accessible and affordable to the novice collector and attractive to established art connoisseurs.

You can listen see the whole post which includes some information on myself here:
http://authenticart.blogspot.com/2008/12/new-artcast-art-collecting-101-art.html

and you can listen to the Artcast through i-tunes ,the podcast home page here or Download MP3

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.