Like any market, the art market is a system that ensures the interaction of the seller and the buyer. In this case, the creator of a work of art with its consumer.
But this scheme describes the connections between art subjects in the most general way. In fact, everything is more complicated, and the path of work from the artist’s studio to the collector’s home, gallery or museum is much more intricate. And over time, the significance of the various elements of this market mechanism changes.
Geography of art
First of all, depending on who is the seller of a work of art, it is important to divide the art market into primary and secondary.
In the primary market – where works are offered for sale for the first time – the main seller is considered to be an art dealer. Sometimes (much less often) the artist himself or the collector who once received the work from the author and decided to part with it, sells his works. There are many famous people among the collectors: Elton John, Jack Nicholson, Barack Obama, Steve Martin. However, the largest collectors are usually in the shadows – their names will not say anything to a person who does not deal with art professionally. Most of them are people aged 50-75 (although in recent years, thanks in particular to the rapid growth of startups and the rapid achievement of financial success by their founders, more and more young collectors have appeared, but their share is still small). 9% of the largest art collectors live in China, the same number – in Germany, 7% – in the UK, but the bulk – more than 25% – in the US. This is not surprising: the United States is the largest art market in the world, accounting for 44% of the turnover of the entire art market.
If the primary market is responsible for introducing new works of art into circulation, then the secondary market ensures the transfer of works from one owner to another. It is this segment that is the main one for the art market – its turnover exceeds the volume of the primary market by several orders of magnitude. And it is entirely dominated by professional intermediaries – people (dealers, marshans) or institutions (auctions and galleries).
Galleries vs. auctions
World art sales are divided between the main players in the art market – dealers (including institutional ones – galleries) and auctions – almost parity: last year, the public sector (auctions, including online) accounted for 42% of the total turnover of the art market, non-public (dealers and galleries) – 58%. However, it is worth noting that the gap between the public and private segments has widened over the year: in 2018, auctions accounted for 46%, galleries and dealers for 54%. Demand for non-public deals today is growing faster: in 2019, the volume of transactions in the sector of galleries and private dealers reached $36.8 billion, which is 2% more than in 2018, while the total sales at public auctions for the year fell 17% to $24.2 billion.
This is already a trend forcing auction house owners to pay more attention to private sales. For example, private sales at Christie’s, which became the market leader among auction houses in 2019, rose 24% year-over-year to $811 million, while public sector sales declined 19% to $4.9 billion. Sotheby’s is doing the same: while public sales show a negative trend ($4.8 billion in 2019 – 9% less than in 2018), private sales are at least not falling (about $1 billion ). In 2019, Sotheby’s private sales accounted for 17% of the company’s total revenue, the highest since 2013. China’s Poly Auction and China Guardian, ranked 3rd and 4th in terms of sales worldwide, data on private deals were not granted, and their public sales, like those of competitors, fell to $1.1 billion (-8%) and $952 million (-9%), respectively. And Philips, which closes the top five auctions, shows the non-public sector in a particularly favorable light – a steady increase in private sales by 34% (to $172 million) against a fall in public sales by 8% (to $736 million) looks very convincing. Although in absolute terms, public auction sales still seriously outnumber private ones, the trend towards increased demand for non-public transactions is clear.
As for galleries, large-scale network projects such as Opera Gallery, David Zwirner, Gagosian Gallery, Hauser & Wirth, Pace, White Cube, Acquavella Galleries operating in the USA, Great Britain, Hong Kong, Switzerland and several other countries have an advantage in the market today. . All of them show rapid growth, and the annual turnover of some of them reaches $1 billion.
Museums at the forefront
It is believed that since galleries and auctions are the main players in the art market, it is they who influence the prices of works of art and their dynamics. This is true, but museums are no less important in this sense, and often (especially recently) their influence on prices is decisive. Passing through a variety of instances (auctions, galleries, collectors), many art objects end up in museum collections, which makes museums the largest buyers in the art market. This status allows them to dictate their own rules – for example, not to accept a gift from a collector, considering its cultural value insufficient. So if this or that work of art is expensive, it is not least due to the fact that it was the museums that highly appreciated its artistic significance. And despite the fact that the art market is changing over time, museums are unlikely to lose their dominant position on it.