Contemporary art market, still traditional?

Contemporary Art Market Theory

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Manhattan Art Auctions:

Contemporary art market intensified over 1370% for the past 16 years. This powerful market benefits of new technologic selling mediums as online sell, accessible information about art, speculation and the increase of worldwide museums and art collectors. In recent years, the market has seen some contemporary artists beat auction records as Christopher Wool, Jeff Koons, Peter Doig and Jean-Michel Basquiat. However, the rising influence of contemporary art divided the market between great signatures and unknown artists under a 5.000$ rating. In an increasingly reputable and standardized market, where is the leeway of innovation and freedom intrinsic to contemporary art?

A market that is getting back up

In contrast to banking system, contemporary art market presents a great health since the beginning of 21st century. While worldwide banks are suffering since 2007 of subprime mortgage crisis, contemporary art market increased more than ever in parallel of that bank emergency. After a falloff in sales in 2009 due to the crisis beginning, the market was valued at $580M, against $1.55Bn over the previous year. Thanks to an inevitable year of consolidation, the market has interested many people disappointed by the traditional financial system. Face to interest bank rates less and less advantageous for consumers, contemporary art market is 5.6% annual yield (above global art market at 2.3%). More precisely, annual yield is 5.5% for a work of art at least $20.000 and 10% to 15% with one from $100.000. As a result of these very interesting rates, this market got reached its best score with a continued increase. In 2014, $2.1bn of contemporary art has changed hands.

Sotheby’s New York – Contemporary Evening Sale on 18 May.

After 4 years of increasing market, the first half of 2015 indicates a change of sales flow with low results of -24%. This trend continued in the second half of 2015, down -39% from the previous year. Contemporary art market can appear as very sensitive to economic fluctuations, but its growth restart quickly with a great vitality. Indeed, the first half of 2016 presents a -14% decrease (10% better than previous year). Sole one consolidation year was necessary to rise again the market. During 2017 NYC Spring Auctions, contemporary art has become again as a safe bet as Impressionism and Modern Arts. At Christie’s NYC, two contemporary artists were sold above $50M, Cy Twombly with Leda and the Swan (1962), and a triptych of Bacon Three studies for a Portrait of George Dyer (1963). On the same week of May, Sotheby’s sold a Jean-Michel Basquiat’s canvas Untitled (1982) for $110.5M, which is an absolutely new record for the New York artist and a key moment of the sale week. According to Thierry Ehrmann, founder and CEO of Artprice “Basquiat is the first contemporary artist to exceed $100M. It breaks the taboo of contemporary art. Now, old and modern art are exhausted and art market considers contemporary art as the major sector.”. Indeed, Impressionism and Modern Art Evening sales raised $289M and $174M at Christie’s and Sotheby’s, against $450M and $319M for Post-war and Contemporary Evening sales. After two years of market correction, contemporary art reboots with best results and takes the first place in global art market. This is the brand of its new institutional dimension.

A growing demand for a strong market

Excellent results of art market on 21st century, and especially contemporary art, are due to a new global demand out of proportion with last decades. Firstly, the number of art collector has moved from 500000 after the World War II to 70M in 2015. More recently, internet coming has brought to buyers a new auction medium with 95% of them connected to internet. Nowadays, auction houses are skillfully sharing their activities between online and physical sales. Alongside art collectors, museums industry participates to art market growth. Each year, more than 700 new museums emerged worldwide. Our young 21st century has seen more inaugurated museums than throughout two last centuries. This new industry is extremely greedy in works of art and contemporary art production needs to follow the global demand. Sometimes, a close relationship links contemporary art collectors and museums. For example, Japanese billionaire and art collector Yusaku Maezawa that made speak about him through two last Jean-Michel Basquiat’s canvas auction records. He declared that these impressive purchases have been made in order to exhibit its own art collection into his new contemporary Art Museum at Tokyo. Currently, French billionaire and art collector François Pinault, who is also the Christie’s owner, is directing the build of the new museum Fondation Pinault into the former Bourse du commerce at Paris. Museum inauguration is expected by the end of the 2018 year and will host the personal François Pinault’s contemporary art collection. At last, the very attractive interest rates, as mention before, have increased speculation and participate in the growth of the value of contemporary art.

Fondation Pinault at Paris – Indoor work at the former Bourse du Commerce.

Over the year 2016, 55000 works of contemporary art got sold though world market, which represents a 4.7% sales increase since 2000.  Even more impressive, the global income increased of 1370% over the past 17 years. In 1998, Jean-Michel Basquiat was the first contemporary artist sold above $1M, with an auction at $3.3M. Today, he is the first one to get into the very restricted club for artists above $100M. While most famous signatures are increasingly reaching high records sale, 69% of contemporary art transaction are made under $5000. So, it is a mature market that benefit from a large global demand and also remains affordable by introducing new artists with a small art rating.

A heterogeneous market

Although market appears to be diverse and strong, the growing gap between some artists soon lead to separation. One factor in this could be the behavior of art market institutions that increasingly choose contemporary artists according to selective criteria. Indeed, in 1997, Artprice counted 212 creative techniques against 862 in 2017. About artistic movements, they going from 177 in 1997 to 325 in 2017. In the midst of this immense artistic production, the criterion of contemporaneity became more defined. For example, this market took 20 years long to consider acrylic painting as fine art. Henceforth, contemporary art is beginning to have a too prestigious past to allow any new artist to enter its movement.

Considering with this, Artprice published an important release on 30 June 2017 called « Artprice appropriated the OTC art market that generates a transaction volume 7 or 9 times higher than traditional art market. ». Thierry Ehrmann starts with a semantic revolution. Indeed, he puts finishing touches to contemporary art by naming for the first time “traditional art”. This name results from an important observation. According to him, “Every year, there are millions of artistic transactions around the world, while we should have tens of millions of transactions.”. The increase of artistic movements and creation technics have created a new market called OTC (Out the Counter). With new technological creations, artists can produce faster and easier a quality art under 5000$. For example, a 3D print art producer can send 3D model of its art to galleries worldwide. Then, these ones are using their own 3D print to obtain the work of art. Because of low prices under 5000$ and creations out of contemporaneity criterion, the 1.2M of OTC artist are not borne by traditional art market and stay away from secondary market. However, realized sales between OTC artists and new art collectors are 7 or 9 times higher than traditional art market. Thereby, Artprice is currently organizing a new space on dedicated to this very large OTC market.

Contemporary art meteoric rise has two consequences. In one hand, contemporary artists are considered as the equal of old great signatures by reaching high sales in auctions. The whole movement benefits of a worldwide interest. On the other hand, art institutions and museums are expecting that new artistic productions respect contemporary art standards. For that reason, more and more new artists are out of this new borders. Contemporary art market came to a pivotal moment of its history, where its new great reputation outlines movement artistic limits.

Jimmy Arens-Reuther

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