art market: as clear as mud

More a market, than a world: a few definitions

The art market is a multi-billion dollar industry. Its financial dimensions are estimates at best. The pandemic has taken a significant toll, with closed galleries, dramatically fewer fairs, and cooler auctions. Statistica suggests the global art market was $50.06 billion in 2020, about half of the size of the US $99 billion pet industry. The number of participants who spend more than $50,000 annually is probably fewer than 250,000. Plus, neither the art market nor art world is global. Both are dominated by North American and European market makers. New entrants—whatever their identity or nationality—remain outside of the market and the discourse. Change is slow.

The artworld is different. It’s populated by all manner of beings—earthly and otherworldly—who participate less in the nuts-and-bolts art business and more in the dizzying whirl of vernissages, air kisses, fairs, and galas. Invariably, what gets our attention is a heady elixir of money, celebrity, and power, flavored with fad and fashion. Few other industries catapult their stars so quickly and then let them fail so hard.

Getting down to business

The art market is complicated. The infographic below suggests the more recognizable market players, their labyrinthine relationships, and the most familiar market channels. As a prominent Swiss collector-client of ours’ says, “Art is not a real business.” He means the art market defies the rules and behaviors of conventional sectors and enterprises.

The early retail art market was rather staid, from its beginnings in the 15th century at biannual markets that often lasted for six weeks to the emergence of auction houses in the late 1700s. The economic distance between sellers and buyers was short with few middlemen. By the late 18th century, a new class of entrepreneurs emerged, women and men who were artists’ agents, private dealers, early speculators, and gallerists. In Post-War Europe, the market expanded gradually, cautiously. The United States—specifically New York—replaced Paris and London as the epicenter of art commerce.

Following the 1973 auction of works from the Robert C. Scull Collection at Sotheby Park Bernet, the market changed, encouraging financial speculation and upward social mobility. The art market was no longer “ordinary” retail. It was a tight, cozy commercial sector—with injections of glamor, celebrity, scandal, and exceptional wealth unleashed by Ronald Reagan’s tax cuts—until the introduction of the Internet and technology in the 1990s. These game-changers thickened the mud. Collectors became consumers, often anonymous ones. Buyers could simultaneously have 3, 4, or more roles in the market web, which was made easier by a lack of regulation. Collecting and connoisseurship were shaped by commercial and sociological factors: fad, fashion, celebrity, social standing, and wealth.