This pandemic has shaken the global art market quite a bit, as if to find out if it can withstand a test of strength. The coronavirus forced the conservative and closed art market – (which is a far cry from the digital world and accessible only to a limited audience) to take a leap of faith and begin a massive search for new directions.
Looking back today, we can conclude that that worked out. People who were locked up at home sought alternative ways to visit art galleries and auctions, which eventually led to a boom in the market. In addition, some habits that were barely addressed before the pandemic could not have come at a better time and gained significant traction. Let us see what happened.
After the panic caused by the first wave of COVID-19 when museums closed their doors to visitors, major art fairs were canceled and the auction market was suspended, we are seeing the global art market recover.
The March 2020 hysteria triggered by the Coronavirus led to a complete closure of traditional auctions and a 34% drop in global contemporary art market sales in 2019/2020. Fortunately, the subsequent transition to online trading has compensated for this disruption and enabled a revival.
Today, the art market has reached a new record high – both in terms of sales volume and the number of transactions.
The concept of offering many works of art at affordable prices has enabled the market to withstand the crisis and perform better than the other sectors. Photographs and prints have been in high demand. We also recognized the flowering of the NFT in 2021. Unusually high prices for works by young artists have also shaken the scene.
Digitization is anything but a new phenomenon, but it was actively used during the pandemic. The essence of digitization lies in the translation of any data from material to digital: the recording of a physical sound or the scanning of a painting. This technology has led to the emergence of large online catalogues of digitized art and has driven the global market.
Today, the world’s most important collections are accessible to the internet public. International fairs such as the prestigious Art Basel and FIAC publish lists of galleries where admirers can visit viewing rooms online and participate in live conversations. A fundamental advance in the collaboration of art and digital technology is the development of new techniques on the market – VR/AR/3D/AI art, net art, interactive and immersive art and much more.
Moreover, digitalisation has helped us to reinterpret familiar art objects, for example the Mona Lisa, the most famous and mystical painting on the market. It seemed as if we had seen her numerous replicas, viewed her from different angles and perspectives, so that nothing remained hidden from this canvas. Until in 2019 its VR version surfaced. Now you can put on a VR helmet and literally enter and interact directly with this image.
A major change in the art market is associated with its expansion eastwards. By 2021, Hong Kong will be the second largest city in the world in the contemporary art market after New York. This is the result of a series of initiatives by auction houses Christie’s, Sotheby’s and Phillips. Hong Kong now serves as a catalyst for the successful promotion of the most outstanding young Western artists.
After a difficult start to 2020, China, Hong Kong and Taiwan performed well in the second half of 2020 and moved into 2021. Their total contribution to the contemporary artworks market was $1 billion, or 40% of the global art market volume.
In 2020/2021, Hong Kong’s auction results are described as exceptional in the market, with only 10% of artworks unsold; the global average is 30%. Hong Kong also became the champion of the premium segment, with 129 lots exceeding the $1 million value threshold. In America, this figure is 123 lots. This success is due to the efforts of Christie’s, Sotheby’s and Phillips, along with the corresponding posh live sales on the internet, which inspired collectors around the world to join in.
Size of auction sales from their world’s total in Hong Kong:
Another major achievement of the art market in Hong Kong – hitherto more common in London and New York – is the recognition of young Western artists. In recent months, new auction records have been set in Hong Kong by such notable artists as Nicolas Parti, Salman Toor, Amoako Boafo and Avery Singer. Currently, Hong Kong is a hub for the world’s most important auction houses, which are looking to strengthen their position here in the coming period.
Last year, the American contemporary art market reached an impressive net value of $889 million, trailing only China. After Christie’s auction on 11 May 2021, when Basquiat’s painting “In this Case” (1983) sold for $93.1 million, New York saw an upward trend again. The American market remained attractive and ambitious, skilfully balancing between art objects by famous artists and works at reasonable prices of less than $5,000.
Size of auction sales by Western countries:
The art market report shows that New York still dominates Western business; Paris and other French centres cannot boast the same number of international collectors. However, some young French artists, such as Claire Tabouret, whose works are exhibited in the Almine Rech and Perrotin galleries, have made a name for themselves worldwide.
France shows impressive dynamics: its business has increased by 44% and now accounts for 4% of the global contemporary art auction market. 82% of the works sold do not exceed $5,000. Only three artworks fetched more than $1 million: sculptures by Francois-Xavier and Claude Lalanne and a painting by Günther Föerg. By comparison, 123 and 57 artworks were sold in the US and UK, respectively.
From summer 2020 to 2021, the contemporary art market generated a staggering $2.7 billion in sales with more than 100 thousand transactions, notwithstanding the ongoing global health crisis, with New York and Hong Kong accounting for 60% of these sales. Moreover, supply and demand were maximally balanced for the first time, and 70% of works on the art market have been added to the collections of loyal clients.
The lion’s share of all sales – 73% of the art objects – is accounted for by painting, today’s world market leader. In addition, painting accounts for 42% of auction sales and 82% of transactions over $1 million. By comparison, graphics and sculpture each account for 6% of the art trade.
In the first half of 2021, the net auction value of contemporary artworks exceeded the total market value of 2020, reaching $1.58 billion. This shows the tremendous stability of the art market and reflects the growth it is experiencing due to the development of the digital market and the entry of new art collectors. This was particularly pronounced in the United States ($592 million), Hong Kong ($435 million) and Germany ($21.7 million).
In the early summer of 2021, according to a market report, modern art reached its highest level: its economic growth skyrocketed to about 400%, making it the most robust and profitable art market sector. On the other hand, calculations and research show that the market in post-war art increased by 178%.
According to the Art Market Report, the world champion in the sale of modern art, dominating the market in both Eastern and Western countries is the public auction house Christie’s. Its core business took place in New York, with 48% of sales in modern art, 33% in the Asian market and 17% in London.
Analysis of the art market shows that 80% of global sales are accounted for by just 6% of artists, with Pablo Picasso ($352.1m), Jean-Michel Basquiat ($303.5m) and Andy Warhol ($149.9m) making up the global top 3.
Top 3 artists on Asian art market:
Top 3 artists on Western art market (contemporary art):
When 2021 began, only a small group of crypto enthusiasts had heard of NFT or non-fungible tokens. By the end of the year, however, the digital art and collectibles market had reached nearly $41 billion, approaching the global art market.
The analysis shows a sharp rise in the NFT market since March 2021, when a digital artwork by Beeple was auctioned at Christie’s for an incredible $69.3 million. After that, many artists, musicians, athletes and other celebrities showed interest in non-fungibles and tried to offer their own digital art objects on the crypto market.
Tokenization is based on the exchange of data for a token – a unique digital certificate. In this way, the information is encrypted and stored in a blockchain. The core value of an NFT is its uniqueness and the ownership of an artwork once it hits the market. Currently, it is mainly a status symbol for the special privileges that private collectors receive.
According to the Art Market Report, smaller transactions of less than $10,000 account for more than 75% of the total volume of NFT transfers. In parallel with the cryptocurrency market, the NFT sector is evolving towards some major players collecting art for investment. It is estimated that from February to November 2021, around 360 thousand digital art owners held approximately 2.7 million NFT tokens.
The researchers of the Nature journal announce that 10% of traders handle more than 85% of NFT transactions. Moreover, 10% of customer-trader pairs generate the same amount of money as the other 90%. Besides, NFTs have been negatively affected by the over-activity of pop stars who at some point issued their tokens en masse. For example, Grimes sold an NFT for $5.8 million, but her fans still could not use them, causing her fortune to plummet by 84%. Shawn Mendes’ and A$AP Rocky’s tokens fell by 50%.
For a time, graphic designers created their work solely for self-fulfillment, until their skills became necessary for cinema and advertising. At this crossroads, graphic designers transform into NFT artists. And this transformation supports a return to the starting point, where art exists for art, not for market purposes or impressive report data.
Moreover, the NFT market allows art creators to be their own gallerists, curators and experts, who in offline life tend to select works and determine their value by relying mainly on their tastes and preferences. The blockchain, on the other hand, frees them from any intermediary.
NFTs provide artists with an environment in which they can create their works and gain recognition in the digital public sphere, which also helps to promote technologies and decentralization. Researchers of the digital art market assume that NFTs are merely a reflection of current trends and that mass culture is simply aiming for the virtual space in order to find a large audience there.
The art market has experienced a rollercoaster of emotions since its downslide in the height of Covid-19, gradual growth during its shift to digital and an upsurge with NFTs headlining all news.
The least enthusiastic analysis predicts the total extinction of material art, which is to be steamrolled by the digital market. Optimists believe that these domains will seamlessly coexist by combining the best of both worlds.
As this report shows, today we witness the uplift of sales through online channels; on top of that, a drive towards crypto art is growing. The major step for you as an entrepreneur is to specify your goal and define what you want to achieve: to start a new business or to upscale the existing one, defining its direction.
Then, it merely remains to choose the mode of implementation. It takes a touch of a button to launch a sophisticated NFT marketplace website.