As the global economy continues to contract, the art industry is not immune. Yet because the industry is so globalized, with artists, auction houses, buyers, and galleries in most countries around the world, many hope to pass through this global economic storm without too much harm.
The globalization of art is certainly not a new phenomenon. From Asian silk paintings to European impressionist works to tribal sculptures and masks, museums worldwide have always displayed artwork from different cultures. Galleries and auctions have always sold a wide range of artwork to a wide range of buyers worldwide. Museums around the world have collaborated for a long time, loaning and sharing their most well-known pieces with other museums for special exhibits and shows.
This analysis will examine the impact of the global economic crisis on the art world, the role of emerging markets, and some cultural challenges facing the art world.
Impact of the Global Economic Crisis
The art industry is no doubt taking a hit. Sotheby’s, Christie’s and Phillips De Pury & Co, the three biggest art auction houses, have seen bids for Modern and Contemporary art drop by a 30-50 percent. Sotheby’s stock (the only one that is publicly traded) lost 83 percent of its value in the last year.1 Christie International’s 2008 sales totaled $5.1 billion dollars, down 19 percent since 2007.2
The global economic crisis though has not impacted the buying and selling of the most famous artists and their works, which do not go on sale very often. For example, in 2008, Monet’s water lily painting, Le Bassin aux Nymphéas, sold for a historic $41.1 million dollars. Once-in-a-lifetime deals are still highly valued!
This economic down is viewed by many as less severe (so far) then the last downturn for the art-world that took place in the early 1990’s. The first reason is that there are more art buyers; some estimate that there are now 20 times more buyers than in the 1990s. The buyers who have retreated from the current market are mainly speculators; the industry views this withdrawal as a positive step.3
The second reason is that the bust of the early 1990s was mainly due to withdrawal of Japanese buyers, who used art in their business dealings, as a way to avoid paying taxes. Once these efforts were uncovered, the art industry suffered immensely since this group was connected to the previous art boom.4 The art buyers are more diverse than before, hence this type of problem is not expected to occur again.
The third reason is that the art world is now more fully globalized, hence, conglomerates, like Christie’s and Sotheby’s can make up for losses in the U.S. through sales in other countries that have not been as hard hit.5
Art and Emerging Markets
Just as emerging markets are a hot spot for investors and speculators, the art industry has also grown tremendously in emerging markets, such as India, China, Russia, and the UAE. Europe and the United States are no longer the only hubs of the art industry.
Jussi Pylkkänen, president of Christie’s Europe, notes that the top-end buyers have increased threefold over the past five years, mainly due to increased buyers in emerging economies, such as Russia and China and increased number of art fairs in cities worldwide, such as those found in Dubai.6
China is viewed as one of the fastest growing art markets. 2007 was a peak year for contemporary Chinese artists. In 2007, five of the ten best-selling living artists worldwide were Chinese (up from only 1 in 2004). One of the leading Chinese Artists, Zhang Xiaogang, made $56 million in auction sales.7 Many international galleries opened up offices in China; some of which have had to close in the current economic slump. Well-known Chinese artists, such as Zeng Fanzhi, have managed to do well because his work has gained international acclaim, allowing him to exhibit his works in New York.8
India has seen a growth in online art auctions, as the population is used to the technology. There have been more bidders (in number and quality) and more auctions as well. The Indian art sold in auction houses has grown from $1 million in 2003 to $51 million in 2005. Much of this growth is due to Indian expats in the U.S. and elsewhere buying the art online from abroad.9
Impact of the Technology
A search for online art auctions on Google yields more than 10 million results. All of the major art auction houses have website and online sales. For example, on Christie’s website you can bid on items and track the bids for upcoming auctions around the world, view prices in your own currency, create a personalized auction calendar, watch auctions in real-time, and participate in Christie’s LIVE auctions. Thus Christie’s allows for virtual participation from anywhere around the world in its live auctions. Christie’s is not alone; the other major houses offer similar services as well.
A discussion on Artworld Salon’s blog10 notes that the increase of artwork being sold online may impact the big art auction houses. The Internet allows for more access to buyers and more transparency: “This may start at the bottom end of the market but, as with so many other sectors, quality of products offered rises with reach of market. I think we are witnessing the first steps of a paradigm shift in the Art World market place.” He further states that this shift will also affect galleries, as people will tend to go online to see artwork, rather than visit the physical galleries.
Of course the Internet does not only host art auctions for real works, one can also visit a virtual auction in an online world, such as Second Life, for virtual artwork. With life imitating art, imitating life, virtual worlds offer a new medium for promoting both real and virtual art.
In some cases globalization trends, such as online auctions reinforce cultural stereotypes. An interesting study comparing 200 French and American online art auctions in 200311 revealed that the patterns of buying and selling art online were consistent with cultural stereotypes. American auctions on EbayUSA were shorter and had ten times more winning” bids, compared to the French auctions on the version French e-bay. The French avoided reserve auctions (in which the item is not sold unless reaching a certain minimum bid) and preferred to buy lithographs online (instead of oil paintings – which were preferred by Americans.)
The author concluded that these results meant that Americans view the online world as an extension of the real world and their behavior (buying bigger purchases and using reserve auctions) reflects this point. Americans felt more comfortable with big online purchases (cost of an oil painting vs. a lithograph). French prefer face-to-face transactions; hence fewer bids in online auctions and for smaller ticket items.
Culture can also become a flashpoint of disagreement. South Africa has witnessed an increased interest in its art from non-South Africans. However, not all South Africans are pleased with the art market heating up, as they see their art treasures leaving the countries and the prices becoming too high for the domestic audience.12 In this case, globalization of art has had a negative result on local culture, as the products of this culture are “exported” and thus not enjoyed locally.
Other counties have expressed similar fears; China recently protested the sale of a pair of ancient bronze Chinese fountainheads, which were stolen by British and French troops more than 150 years ago from the imperial Summer Palace. The French collector claims that he offered to return the relics in return for a Chinese pledge to improve human rights; the Chinese government noted the offer was ridiculous.13 In the end, the fountainheads were not returned to China.
In a globalized world, art is becoming like any other commodity or product exported and imported worldwide. Small artists benefit from a larger platform to sell their works and if successful they can reach anyone, anywhere in the world. Larger corporations that deal in the buying and selling of artwork are weathering the economic storm innovating through the use of the Internet to expand their marketplace. The Internet is equalizing the art world allowing anyone anywhere to buy and view pieces; no longer is the art world constrained by location.
Not all of the impacts are positive, as local cultures suffer when their art treasures leave their borders and the local people are not able to see these pieces in accessible, local museums and galleries. Others benefit as they learn about other cultures and societies through seeing the artwork. One thing is certain, artwork of high quality is still a good investment.
1 Bischoff, Dan. “Art auctions reflect economic collapse.” The Star-Ledger. November 29, 2008.
2 “Christie’s 2008 Global Art Sales Total $5.1 Billion.” ArtDaily. February 14, 2009.
3 “Global Art Market Avoids Crash.” ArtMarketBlog. January 8, 2009.
6 “Monet avoids the crunch.” The Guardian. June 26, 2008.
7 Barboza, David. “Chinese art waits out the market plunge.” International Herald Tribune. March 11, 2009.
9 “Online art auction takes off in India.”
10 Stewart, Ian Charles. “Online art auctions.” Artworld Salon. February 23, 2008.
11 Robinson, Laura. “Online Art Auctions à la française and à l’américaine: Comparing eBay France and eBay USA.”
12 Cohen, Adam. “South African Art Goes Global.” Wall Street Journal. January 26, 2009. 13 “Chinese relics fetch millions at YSL art auction.” AFP Global Edition. February 24, 2009.