On March 22, Art BAsel Hong Kong with release the new art market report developed by economist Clare McAndrew. McAndrew developed the TEFAF art market report, now being authored by Rachel Pownall. It will be interesting to compare the two reports.
The Financial Times reports on the upcoming art market report
Source: The Financial TimesHow big is the art market? One answer comes this week as Clare McAndrew, the cultural economist who changed allegiance from the Tefaf fair to Art Basel in June, launches her number-crunching report during Art Basel Hong Kong.
Since 2008, McAndrew’s annual tome has fed a hungry audience with a total value for the art market, as well as comprehensive supporting data, a much-cited source of industry intelligence in an otherwise opaque field.
Since McAndrew’s move, however, Tefaf, which launched its first independent study on the size and structure of Europe’s art and antiques market in 2000, has taken on the academic Rachel Pownall to conduct its research. Earlier this month, Pownall presented her findings, which came in much lower than McAndrew’s estimates — revaluing the market down by nearly a third — largely on the back of a much narrower definition of art dealers and galleries. Pownall’s new data measure the total value of the art market at $45bn in 2016, up from $44bn on the previous year. McAndrew had estimated the 2015 market at $63.8bn.
Both McAndrew and Pownall underplay the discrepancies, while acknowledging that assessing the largely invisible art market is a challenge. “Economic analyses often make around 10 assumptions; for art there are at least 25,” says McAndrew.
Nonetheless, compiling and interpreting art market data has grown alongside an increasingly financialised art world. “Since around 2006 there has been an increasing influx of more professional services built around the art industry,” says Anders Petterson, who founded market analysis firm ArtTactic in 2001. He cites interest from sectors including insurance and banking.
It’s an increasingly competitive field as other businesses get in on the act. In 2016, Sotheby’s bought the Mei Moses Art Indices, a database that tracks the prices of works that have sold more than once. Artnet, which records auction prices since 1985, bought the analytics firm, Tutela. Christie’s bought Collectrium, a collections management system, in 2015, while the insurance group Hiscox produces an annual survey of the online trade, in conjunction with ArtTactic. Aggregate art businesses such as Barnaby’s now produce regular reports based on their sales activity; while the e-commerce sales facilitator Invaluable has provided its data to Tefaf and Pownall for a separate report on this area, to be published in May.
All face one overriding problem: the only data points that are publicly available and verifiable are auction prices. These, until recently, accounted for an estimated 50 per cent of the market (though even that was something of an educated guess). Now, however, having 50 per cent of the information is looking like a luxury. As well as dealer and auction sales, channels now include the growing private transactions by the auction houses.
Private sales are an even trickier area from which to build a convincing set of statistics. Price transparency is in its infancy, although crowdsourcing tools such as the Magnus app are beginning to break down the barriers. Even so, the level at which something is priced and what it sells for are rarely the same. Higher-level information on the sales and profitability of galleries can be gleaned from other data sources (Pownall uses Orbis, for example) but defining galleries below a certain level is not an easy task.
Hence the increasing focus on proprietary private intelligence. McAndrew’s report will include additional research areas such as the findings of a survey of some 800 US collectors.
The might of UBS, Art Basel’s lead sponsor and the co-backer of McAndrew’s report, has been significant in making such data meaningful, she says, promising data about collectors’ spending, motivations and funding habits that have not been collated as rigorously before.
Survey data are also something of a minefield. In the hands of reputable economists, these incorporate checks and controls to minimise misinformation, but it can never be ruled out. “Everyone has a vested interest in the marketplace and they answer accordingly,” says Petterson, who has been conducting a confidence survey based on experts (including dealers, collectors and advisers) since 2005. However, he says, “If you can get a consensus opinion, then that is typically what the market will do. Value is shaped by a few tastemakers.”
Response rates, from an already small pool of people, are also low in the art market. McAndrew is pleased that for her dealer survey this is improving: last year her response rate from about 6,500 dealers was 14 per cent; this year it is 17 per cent. “In other industries I guess that would be shocking, but at least it is more than ever [for the art market].” And in a lopsided arena — in which a small number of dealers and auction houses are responsible for a very high percentage of sales volumes — getting meaningful answers from the big boys is arguably what counts.
Everyone has a vested interest in the marketplace and they answer accordingly
There are many in the market who yet feel such reports should be taken with a pinch of salt, or even that they are irresponsible in their pronouncements.
“The reality is that reliable information does not exist outside of auction results. It is therefore easy for a so-called expert to come out with any kind of figures that commentators will repeat, without mentioning that they are no better than wet fingers in the wind,” says the collector and art market observer Alain Servais.
McAndrew counters the critics. She points out that the art market “really punches above its weight in terms of the number and quality of jobs it generates. Unless there is some idea of the size of the market and how it is faring overall, it would be impossible to show its important economic impact.”
Given so many assumptions, ranges of definitions and varied data sources, it is perhaps not so surprising that no two surveys will produce the same numbers. Having more information out there is no bad thing, Pownall believes.
“People will compare the numbers between reports but at least everyone is looking at the data; the debate is refreshing,” she says.
The Art Basel and UBS Global Art Market report is published on March 22; free download at artbasel.com/theartmarket
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