Online sales of art doubled last year but could not make up for the market’s overall 22 per cent slide, according to this year’s industry-leading Art Basel and UBS Report. The fall in value, to $50.1bn, is its biggest since the 2009 recession and accelerates the 5 per cent decline recorded in 2019, before the Covid-19 pandemic struck. Only an embrace of the digital to sustain sales and cut costs, together with global growth in billionaire wealth, propped up what could otherwise have been a terrible year.
The sudden halt of the traditional market money-spinners, including art fairs, live auctions and gallery exhibitions, forced a move to digital. Online sales doubled to a record $12.4bn in 2020, or 25 per cent of all art sales, up from a share of 9 per cent the previous year. It marked the first time that the art market, previously reluctant to venture online, exceeded the general retail industry, where ecommerce accounted for 18 per cent globally last year.
As digital innovations disrupt the status quo and boundaries blur between sources of sales, it has become even more complicated to map the opaque art market, says the report’s author, Clare McAndrew of Arts Economics.
“There is activity happening outside the traditional structures too. Collectors are trading privately with artists and each other, and look at all these new digital trading platforms,” she says. Last week, a blockchain-backed, non-fungible token by the digital artist Beeple sold for $69.3m — though McAndrew notes that this sale would be included in her figures as it went through an auction house (Christie’s).
For now, the art market feels a long way from its 2014 peak of $68.2bn. Sales fell across all regions last year, in both the public, auction market (down 30 per cent) and the private dealer business (down 20 per cent). At auction, found to account for 42 per cent of the market, a stricken US market lost its position to China as global leader. The report also finds that 28 per cent of 920 galleries surveyed made job cuts last year while employment at the top-tier auction houses is estimated to have fallen by 13 per cent.
A dearth of art fairs remains the biggest change to the market’s ecosystem. The report records that there were 365 in-person art fairs scheduled to take place in 2020 — a sign of just how big this industry had become — and that 218 were subsequently cancelled. The fact that any happened at all might come as a surprise, though about 70 went ahead before the impact of the pandemic was really felt in mid-March, McAndrew confirms. Galleries were found to have made an average 45 per cent of their profits at in-person fairs in 2019; in 2020 this fell to 13 per cent.
Overall, 54 per cent of the surveyed dealers said they were less profitable in 2020 than the previous year. The silver lining was that 28 per cent reported a better year, largely on the back of fewer art fairs and their associated costs.
Millennials proved the most active buyers of art in 2020, with a median expenditure of $228,000
More than a third of the planned fairs offered an alternative digital version, or online viewing room (OVR), which the report found on average attracted 100,000 viewers each. A survey of 2,569 high net worth collectors found that nearly half (45 per cent) had bought via an art fair OVR and just over a third (34 per cent) had bought directly over Instagram in 2020.
Collectors were highly supportive of the price transparency that has been a side-product of the digital art market — 72 per cent felt it was “important or essential” to post a price. Another survey of 138 art fair organisers found that works with a price attached generated 92 per cent of inquiries to their sites. Millennials (aged 23-38) proved the most active buyers of art in 2020, with a median expenditure of $228,000. If offered a choice, though, 75 per cent of collectors, at all ages and stages, said they prefer viewing art for sale in real life rather than online.
For dealers, fair OVRs accounted for 9 per cent of sales while their own websites brought in 25 per cent of sales, up from 8 per cent in 2019. They found the OVRs “useful but incomplete” alternatives but are also reassessing the number of real-life fairs they would do should normality resume. A gradual reduction of such events was already happening — in 2016 and 2017 dealers averaged five fairs per year while they plan on three for 2021. McAndrew notes the logical conclusion that fairs “may see a continuing decline in attendance and ultimately the number of events in future”. It’s a brave position to put forward in a report backed by an art fair, though McAndrew believes that among the international fairs such as Art Basel, “Only those with a very strong foothold may be viable.”
For the market as a whole, the biggest sales decline was in the United States, the trade’s dominant centre with a 42 per cent share, which fell 24 per cent. The US is facing one of its worst recessions of the past 50 years, the report notes, with GDP down 3.4 per cent last year, but still has the world’s largest share of millionaires (40 per cent) and billionaires (28 per cent), whose wealth globally rose by 32 per cent in 2020. “Although not all billionaires collect art, the preservation and enhancement of wealth in this segment globally is very likely to have been one factor that stopped the art market from having a worse recession than it may have done,” McAndrew writes.
Sales in Greater China (defined as Mainland China, Hong Kong and Taiwan) fell 12 per cent, the region’s third year of declining sales, but fared relatively better than elsewhere. Greater China accounted for 20 per cent of the overall market, sharing the second spot with the UK, where sales fell 22 per cent to their lowest level for a decade ($9.9bn) but still 10 per cent above 2009. At auction, China overtook the US to lead the market, with a 36 per cent market share. The report highlights the multimillion dollar lots sold in Hong Kong and Beijing in 2020, including a Ming Dynasty handscroll painting by Wu Bin — “Ten Views of Lingbi Rock” (1610) — which went for $76.6m at Poly Auction in October, the second highest price of the year.
While there has been a lot of noise about Paris, where new galleries seem to open every week, McAndrew finds that sales in France fell “considerably” last year (by 33 per cent to $3.1bn, a 6 per cent market share). For those worried about the impact of Brexit on the London trade, McAndrew notes that while the pandemic reduced imports of art and antiques by a third in 2020, 87 per cent were from outside the European Union.
Optimism has improved in general for the market’s year ahead, or at least it had when the surveys were conducted in December. McAndrew believes that some of the impact of the pandemic is still to come through, including more gallery closures, while the longer-term effects of job losses have yet to bite. “You still need people. Online doesn’t sell itself,” she says.