Every year, the publication of theA�Tefaf Art Market ReportA�by Arts Economics expert Dr. Clare McAndrew sets the standard for data used within presentations about the art market for the next 12 months. The statistics on art sales, regional divides and trends in commerce are very interesting, yet the art market has many facets, including the cultural sector. Looking at the statistics published in the report, Vastaria��s team has pulled out some important questions about the data, to analyse the impact on museums, collectors and temporary exhibitions worldwide.

The Triumph of the High End: is it about the Quality, or is it a a�?Superstar Phenomenona�??

Vastaria��s own research spotted a trend for exhibitions in well-known artists, whose names are a brand even in countries with emerging interests in art like China, Brazil, Mexico and Eastern Europe. The Tefaf Art Market Report also acknowledges this pigeon-holing, giving it a term: the a�?superstar phenomenona��. Works priced over $10 million performed best in 2015, increasing more than 1000% over the past 10 years, (CAGR of 23%) and accounting for 28% of the share of the art market. Works over $1 million account for a clear majority of the market (57%) now, where in previous years the middle market ($50,000 to $1M) would have represented the largest share.

a�?Most auction houses have found it too risky to promote new sectors and have simply catered for the prevailing public taste, which has caused a shortage of supply of the best quality works, and hence limited volumes for salea�? (Mc Andrew C., (2016), Tefaf Art Market Report 2016, Helvoirt: The European Fine Art Foundation (TEFAF), p.34). This public taste and the propagation of it means that museums organising exhibitions with a a�?superstara�� artist name will sell more tickets than equally strong thematic shows that are available. The a�?superstara�� phenomenon described by Dr McAndrew in the report correlates closely to the a�?blockbustera�� phenomenon in museum programmes. Is this strategy, both with auction houses and museums, mitigating risk or just avoiding the more difficult job of education?

Moreover, the report indicates that many of the most important works are indeed at museums. a�?Particularly in some of the older sectors of the art market, many high-quality works were sold to museums and serious private collectors in the period up to 2011, and are therefore unlikely to reappear on the market in the near future which could further prevent growtha�? (Mc Andrew, 2016, 36).

It is very positive to think that many of the most important works that were sold up to 2011 are within public collections or within serious private collections, meaning they will be visible to larger audiences. However, it is dangerous that the remaining star lots would be resold in an inflated market, with the sellers, listening to bad advice and/or succumbing to anxiety within a fluctuantA�market, deciding to flip a profit within a short period of time.

These flipped works will be adversely affected by these repeat sales, with overexposure to the market, despite falling into the high-end bracket. In our opinion it would be more beneficial for them to be given a a�?cooling downa�� period either hanging on display at an institution and/or having researchers focus on the work and add value with more references and insight.

What about Provenance?

The fact that a limited amount of works are on the market means that a�?a��many collectors [are] considering that there has been a lack of top quality works with well-established provenance coming onto the market in the last few yearsa�? (Mc Andrew:34) The best thing for the market to do, in reaction to this phenomenon, is to focus on research to add actual value to the works by placing them into context and having independent researchers who can find out more about the worka��s history to really demonstrate its importance in the market.

Too many works are appearing on the market with a a�?copy-pastea�� mentality to the supplementary material, while there is a plethora of knowledge hidden in academia that could help works on the market be seen in a different light.

How the Online Art Market can help?

After a round-up of the online art sales, which has grown to account for 2.7% of the overall sales, the report is a bit reluctant about the actual disruptive impact of these technologies.

a�?One might be led to wonder whether the frenzy of activity of the past few years surrounding the online art space might not have subsided or reached a plateau of maturity, without much disruption having occurred, as anticipated to the traditional sectors. a�?Disruptiona�� and a�?democratisationa�� were the two most promised outcomes in the art market by many of the newly emerging online companies. However, for the most part, the majority of online players are just doing the same thing online that is already being done offline, with the new online channel complementing traditional offline channelsa�? (Andrew:55)

A counter-argument to this feeling of deflation with the promises of the online art sector is to consider the potential for disruption in other ways. As mentioned in the report, the market spends an estimated $17.8 billion on a range of external support services directly linked to their businesses, with spending increasing 3% year-on-year despite the decline in sales in the art market. This supported a further 330,353 jobs (Mc Andrew:17) – and how could the art worlda��s ancillary services be disrupted by technology? Companies likeA�Artbinder,A�Collector Systems,A�Collectrium,A�Trov,A�Articheck,A�Artlogic,A�ArtrunnersA�and even ourselves are disrupting the status quo on the ancillary services to the art world, and there are many ways this could keep growing in the coming years. One of the major data sources for this report,A�ArtnetA�(whose CEO Jacob Pabst will also be speaking at the symposium) has built a reputed publicly listed company on servicing the art world.

China as a transparent global powerhouse

China is a huge market for our company and generalisations never work well. Read the data about China carefully, as the headlines can be deceiving and more information is available in the more detailed descriptions later in the reports.

The Chinese market is reportedly down by 23% in value (Mc Andrew:23, Mc Andrew:31), but this is deceiving with strength of the market in the UK and US largely being supported by the Chinese (and Russian) buyers. A�There is indeed an issue with non-payment in China, with many lots not paid for, but major auction houses outside China have reported a�?increases in Chinese buyersa�� expenditure of 50% or morea�? (Mc Andrew:36). The decline this year is also partly to do with Chinaa��s anti-graft campaign, which might cause a temporary slowdown but will help the market be stronger in the long run.

Another reality check to the Western-centric art world is that there are many a�?superstara�� Chinese artists that are attracting a lot of attention and China is eager to start having more bilateral collaborations and see their artists shine within and outside the country. So museums, as you work to bring your Warhol or Constable exhibitions to China, think about bringing over exhibitions of Dong QiChang or Qi Baishi over to the US and Europe.

Mass versus Master

There are some very poignant statements in this yeara��s report about the shrinking middle class. Though it is a common theme in all economic reports the last few years, it is particularly pronounced in this yeara��s statistics.

a�?The top 10% owned 88% of the worlda��s wealth in 2015, leaving 12% distributed across the remaining 90%. Some of the greatest levels of wealth inequality are currently found in countries such as the US, Switzerland, Sweden, Russia, India, Brazil and Indonesia, where the share of wealth owned by the top 10% was greater than 70% of the total.a�? p. 189

The shrinking middle class can have A�repercussions on the museums and exhibitions sector, meaning that the stellar content is reserved within a small circle. Sales to museums and other public institutions were 9% of dealers sales (1% down on 2014), while corporate sales were again the smallest portion. (Mc Andrew:216) This means that works are being taken away into hidden treasure troves, and museums will have to really work hard to get the works onto their walls. And the ones who ultimately suffer most, are the general public. We must work hard to incentivise owners of these important heirlooms of our worlda��s history to make them accessible to the general public.

As highlighted during last yeara��s symposium a�?Private Going Publica�� – if you read between the lines, it seems like the public sector has a major role to play in the art market going forward. A�Both the art market and the museum sector can benefit from the mutual collaborations, by working together to strengthen each othera��s industries. The market is cooling, and a collapse can only be averted by adding actual value to the market.

Vastari Art Market Report

Read the full report on VastariA�here