Collecting, fairs and markets in the digital age

It is the key week. These days, galleries close the most important sales of the season. Market specialist and head of Arte Global and Red Collectors, Elisa Hernando, reviews the figures of the last few years and notices a trend that has more and more presence: the online market. The conclusion? Buy art is profitable.

In February 2012, the American collectors Dan and Mera Rubell were in Madrid on the occasion of the presentation of their collection at the Fundación Banco Santander. The couple heads the Rubell Museum in Miami, which brings together a collection of more than 7,000 works by some 1,000 artists, including names such as Anselm Kiefer and Richard Prince. Much of their prestige lies in their ability to detect talent in artists long before they become famous, something that happened to them with Jeff Koons. In the same way, the Rubells discovered the work of Secundino Hernández at ARCO and acquired several of his paintings. It was the talk of the town that day in the aisles of the fair and the artist was one of the most sought after by other buyers.

Spain accounted for just 1% of total global art and antiques sales in 2018: €680 million

From that moment on, Secundino Hernández would begin his international projection, being represented by the prestigious Victoria Miró Gallery in London along with Heinrich Ehrhardt in Madrid and Krizinger in Vienna. In addition to the Rubell Museum, other centers such as the KunstHalle in Helsinki, the Royal Academy in London and the YUZ Museum in Shanghai have shown his works in exhibitions. In the years following the Rubell's purchase in Madrid, the economic value of the artist would progressively increase. If in 2014 a 200 x 180 cm canvas was sold at auction for 14,000 euros, five years later, a similar painting was auctioned at Sothebys London for the amount of 76,000 euros. From the quantitative point of view according to the Artfacts.net ranking, which analyzes the positioning of artists according to their trajectory both in prestigious exhibitions and by their presence in important collections, Secundino Hernández has moved in the last decade from the 22,000th position to the 3,249th position.

Speech quality

In today's globalized art market,the interaction of different agents or influencers in the sector determine, in many cases, the promotion, dissemination and internationalization of artists. The responsibility of this support must be related to the quality of the discourse, since its artistic value lies in factors such as language, capacity for innovation and influence on other creators.

In this framework of the international art market, fairs play a fundamental role: they are the main sales and information exchange channel for galleries and a dynamizing element of the economy for the city that hosts them. These events attract a large volume of visitors, as in the case of ARCO which in 2018 was 100,000 people; Art Basel, 95,000, and FIAC, 75,000, according to Arts Economics.

The volume of worldwide sales of art and antiques made during 2018 was $68 billion. Of this 54 % (36.72 billion) was through art galleries and 46 % (31.28 billion) in auction sales. Of these figures, 84% of the total transactions were made in three specific geographical areas: the United States (44%), the United Kingdom (21%) and China (19%). This is no coincidence, since the most important fairs in the world (Art Basel, Frieze) are held in cities such as Miami, New York, London or Hong Kong, as are the most important auctions of Christie's, Sotheby's or Phillips de Pury (ArtsEconomics).

With respect to our country, Spain accounted for just 1% of total art and antiques sales in 2018, or 680 million euros, which represents an 11% increase in year-on-year value since 2008. Fairs such as ARCO are key for galleries: in 2016 they accounted for 41 % of their sales, a figure that has increased by 35 % since 2013. From the perspective of Spanish auction houses, in 2016 they reached around 74.9 million euros between public auctions, online and private sales, however, this figure represented a decrease of 10 % in the period comprising 2008 to 2016 (Fundación Arte y Mecenazgo).

If 100 euros had been invested in a work of art in 2000, in 2018 it would be worth 190, an increase of 90 %.

The peculiarities of the art market make it difficult to analyze the investment and profitability of art objects with the same parameters as in the financial or real estate sector. It must be taken into account what collectors value and that the acquisition of works of art is not done with the intention of selling, a sine qua non condition if we think of investment. In art, enjoyment and possession are the priority, but collectors especially value the revaluation of artists and works of art as a legacy.

Can we then analyze art from the prism of investment? According to the Artprice website, which analyzes exclusively the sale prices at auctions around the world, if in 2000 100 euros had been invested in a work of art, in 2018 it would have a value of 190 euros, i.e. an increase of 90%. Artprice publishes its index in comparison with the SP500 (New York Stock Exchange index where the 500 most important companies are listed) where the better performance of art in terms of volatility and profitability is clearly seen.

Buy online art

In recent years, the proliferation of online art platforms is becoming a new sales channel for galleries and auctions. As published in the Hiscox report on the online art market, $4.636 billion worth of art was sold online in 2018, a remarkable increase from $1.507 billion in 2013.

In 2018, Professor Claire McAndrew conducted a survey of HNWI (high net worth individuals) collectors to determine what the average value per piece purchased online was. According to the results obtained, in the UK 74% responded that the average amount was $10,000, however, in Germany the highest percentage of collectors had bought pieces with an average value between $10,000 and $50,000 and, even 5% confirmed that they had bought online above $1 million, similar behavior to collectors in the city of Hong Kong.

The proliferation of digital platforms responds to new generations more digital natives who do everything online, watch Netflix, shop on Amazon, flirt on Tinder and why not, buy art. Some platforms like Artnet give access to the sale to art galleries, others offer both gallery works and auctions, as is the case of the most famous Artsy. There are those exclusively specialized in auctions such as Paddle8, without forgetting the pioneer, the one launched by the Saatchi gallery that directly sells works by artists from all over the world.

Technology is here to stay and will increasingly become a sales engine for galleries, fairs and auctions. Little by little, new technological developments are being incorporated into the market, such as the use of Blockchain, which makes it possible to verify operations and will eliminate problems of provenance or forgery of works of art, althoughdigital technology will never be able to compete with the physical experience of seeing and feeling the works, will it?