Art has its Feet Firmly Planted in Two Worlds
January 19, 2017
For many, art is treated as a commodity and a financial asset. In fact for the past 35 years, much of the growth in the global art market has been the result of the ‘financialization’ of art – art being used as a store of value.
And yet if art is a commodity, it is unlike almost any other commodity in the world. Specifically, it cannot be mass-produced. The closest thing to mass production of art would be a lithograph or a print, which they themselves are often limited in their runs. Furthermore the volume of great art is limited by the ability and time that it takes for great artists to produce it. And even the number of great artists to emerge on the global scene is limited by a variety of factors. This is the other world that art occupies. It’s a world that’s so different from other industries, which makes predicting the growth of the art market quite difficult.
Like any market, art is susceptible to cycles. At its recent peak in 2015, the global contemporary art market was estimated to be around $65 billion. By the end of 2016, the market contracted by several billion with an estimated value between $62 and $60 billion. Michael Phillips Moskowitz, an Entrepreneurship Fellow at Harvard’s Kennedy School of Government, breaks these numbers down for us. According to Moskowitz, just over 200 influential families control half of the global art market, while roughly 3,000 deep-pocketed collectors control and influence the other half. Other than these two groups, there are approximately 30,000 people who, as Moskowitz puts it, “display outwardly and demonstrable inquisitive intent.”
However the $60 billion figure does not include the entire art market. Thomas Galbraith, Partner at The Petraeus Group, consults with start-ups and companies in the luxury and art markets. Galbraith sees great appetite for art among what we might call “more casual collectors”. He believes we’ll see increasing inclusion of this segment into the greater global art market. Galbraith highlights Etsy, Exhibition a, and art.com as sources of market activity that is not included in the $60 billion global art market figure.
Another promising trend in the art world involves transparency. Today’s collectors are increasingly becoming more educated and informed on work prior to buying or selling art.
This results from a growing trend of art services providing market data and analysis for collectors. Companies like Auction Club, Artnet and others are making it easier for collectors to explore, learn, buy, and sell art.
Thankfully, the increasing prevalence and access of information is helping casual art collectors keep both feet planted in reality.
For more insight into contemporary art market trends, watch this discussion on Looking ahead. The Contemporary art market in 2017. Watch Now!