Annual Report of Online Art Sales
By Tom Pazderka
Recently Hiscox published its annual report on the state finances within the art world. Though it focuses on the UK, it nonetheless does give a glimpse into the overall market as it stands, if not globally, then at least in the West. The key points in the report concern the consolidation of the market and the state of online buying. Nothing in this report is actually surprising, except perhaps that the online market has captured less, not more, of the money flowing through the art world.
As the art world reels from Covid and lockdowns, what was true since the infamous Scull auction of the 1970s, is a hundred-fold true today, namely that the art world tied itself and doubled down on its relationship to ‘the market.’ Art, seen as an investment rather than a method by which to interpret the world, has shifted in the past five decades from producing ideas to capturing capital. It has done so in spectacular fashion and as such it follows the ups and downs of the market, driven primarily by speculation over investment opportunities and rising prices of the market’s favorite artists.
This leads to very interesting phenomena. During the pandemic, the art world’s favorite artist George Condo’s online-only Hauser and Wirth exhibition sold out. It was comprised of six drawings of socially distanced figures made in the first month of the lockdown—at the same time, museums and galleries around the US were shutting down and firing their workers and artists and musicians had exhibitions and gigs cancelled.
George Condo, Up Against the Wall, 2020. Acrylic, pigment stick and metallic paint on linen. Photo Genevieve Hanson / hauserwirth.com
An ad-hoc internet campaign #artistsupportpledge was set up by artist Matthew Burrows to mitigate the vast damage to the art economy, one would assume mostly unsuccessfully, though it did generate 70,000+ Instagram posts and $20 million in small sales. The report is fairly certain that in the next five years the art world will see a massive consolidation of the biggest, most visible and powerful galleries, who will have the resources to shift their business model online to capture both the brick and mortar and internet markets in big numbers. For example, Gagosian LA announced that it will be opening up two new LA locations, one of which will be housed in the now permanently closed Marciano Foundation, a former Masonic Temple building.
A recent NPR survey of museums reported that about 1/3 of art institutions will not survive beyond a year of the pandemic. This on the back of reports that the early victims of bankruptcy are Paddle8 and artists like Takashi Murakami and Annie Liebowitz. The consolidation is apparent even from the standpoint of the report on the distribution of PPP loans by the federal government. Huge commercial galleries like Hauser and Wirth, Gagosian, David Zwirner and David Kordansky received loans, while small and medium sized galleries did not.
Since the Hiscox report is geared entirely toward online sales, it reads a little bit like a sales pitch, hyping good news and successful gallery/artist transitions to online spaces around the world, and downplaying any signs of bad news. Some of the hurdles the report attempts to highlight are sentiments like “the art market is still seeking one thing: a cost-effective, simple and reliable shipping solution;” that “having prices visible was among the most important factors of building trust” between art sellers and art buyers; and that the majority of online platforms (63%) do not plan on opening up a physical, brick-and-mortar space. Currently, there are no cheap alternatives to shipping art, which can be an expensive venture once art handling insurance is in the mix, while pricing typically is seen as adding a sense of exclusivity to a transaction, especially for highly expensive items.
COVER ART: George Condo, Machine Bugs, 2020. Acrylic and pigment stick on linen. Photo Genevieve Hanson / hauserwirth.com
Talk of consolidation is still on the table, though according to the report it is down to 67% from last year’s 71%. It is unclear what accounts for the lowered sentiments among those surveyed, but could this mean that a lot of the consolidation has already occurred? Mergers and acquisitions have been steadily occurring over the past seven years according to the Hiscox chart and currently the trend is favoring large galleries like Houser and Gagosian establish a much larger online presence and to capture or cornering the blue-chip contemporary art market.
The online auction world continues to be dominated by the main three auction houses Heritage, Christie’s and Sotheby’s with online sales increasing steadily year-over-year, though it is again unclear whether this rise in total sales is due to increased traffic or higher price points for individual art works. One tends toward a combination of both factors.
It certainly seems that the pandemic has simply accelerated what was already happening in the art world, an increase in online traffic as younger generations raised behind screens enter the market. Speed, access, convenience, ease of use and a highly curated experience are some of the factors that are set to attract these new potential clients. Galleries, museums and online platforms have scrambled to set up virtual galleries and viewing rooms, even virtual artist studios where potential clients can experience a version of a private studio tour. Though there is nothing inherently wrong or terrible about this turn toward the online space, it does establish yet another barrier to entry for many artists who cannot afford paying fees to be listed on websites. More money seems to be flowing to the top, specifically to sites like Patreon and other aggregate art sites that charge commission fees on every transaction. Patreon alone added 30,000+ new artists as the pandemic took off and artists found themselves without work and cancelled events.
The Hiscox data is somewhat correlative to data presented in articles like WolfStreet’s “Fired up by Stimulus Money & Debt Deferrals, Americans Went Shopping. But Where?” The pandemic spending habits of Americans is analyzed in twelve charts and the results are interesting to say the least. In all but one scenario, spending is at an all-time high after the Ides of March stock market crash. Online spending has a lot to do with this turn of events. While brick-and-mortar businesses were shut down, online sales picked up and so far have not tapered. There are several factors playing into this scenario—a stock market propped up by Fed money printing, student debt forbearance, rent and mortgage moratoriums, work and study from home, stimulus payments and additional unemployment insurance—that have all contributed in some way to Americans’ tendency to spend rather than save money.
COVER ART: George Condo, Hysteria, 2020. Acrylic, pigment stick and metallic paint on linen. Photo Genevieve Hanson / hauserwirth.com
