Sales of contemporary art have increased exponentially since the global economic downturn around 2009. Recent professional art market research shows that post-war and contemporary art sales account for roughly half the global spend on all types of art and antiquities. Reasons for such unprecedented high levels of activity in buying contemporary art not yet clear, but a consensus is emerging among art market professionals that several new factors are now affecting contemporary art sales performance.
There continue to be buyers who acquire contemporary work primarily to add cultural value to their collections (although some are also mindful of potential profit from future re-sale, but only as a secondary consideration). Now an increasing number of buyers of contemporary work do so purely as a capital asset investment to generate financial gain from future re-sale.
One particular new activity is contributing significantly to overall art market growth: online sales. In 2016 online art sales reached a record high of $5bn (10% of the global total of around $50bn). This business growth reflects recent successful development and introduction of many different social media platforms by traditional auction houses and gallery dealers, and by new online entrants to the art market place such as Arteby’s and Art and Only.
It is astonishing that nearly 60% of online art sales by gallery dealers in 2016 were made to new clients who had never been to the gallery or been met in person. The same art market research also shows that increasing numbers of people are buying art for the first time – often from a demographic of young career professionals with modest disposable incomes and no substantial personal expenditure commitments (such as children). These ‘virgin collectors’ are also likely to be conversant and comfortable with – or perhaps wedded to – using social media as an integral part of their lifestyles, especially for online surfing/shopping and buying. These new young collectors were probably responsible for 75% of art being bought for between $5,000 and $50,000 in 2016.
These inter-related factors suggest that the global art ecosystem now offers a wider range of opportunities for exhibiting and selling than were available in earlier non-digital eras, and is attracting many more new kinds of buyer. Digital technology itself is also supporting greater knowledge and analysis of all aspects of the art market, providing new insights and opportunities. It seems that there is a new zeitgeist in and around the art ecosystem: interest and excitement about contemporary art. But will it endure?
Customer satisfaction is key to sustaining and advancing business. In the art world customer satisfaction is not only a matter of customer taste for the work itself, but is also a legal and business matter, because sellers – including artists selling work directly from their studios – are art business traders. Business stands or falls on its reputation for trading in its chosen market place; and the most serious damage to reputation comes from unsatisfactory customer relations.
When dealing with online art sales, key customer satisfaction considerations include effective and efficient systems for: secure online payment; timely delivery/collection; secure packaging; insurance for delivery/transit; protection of customer’s personal data; dissatisfied customer returns and refund of payment; fair and reasonable T&Cs written in plain language; written documentation of the sale itself.
Perhaps the most important satisfaction consideration is how best to authenticate sold work, ideally by supplying customers with some additional ‘thing’ that can be passed on with the work if it subsequently leaves the customer’s possession (say by subsequent re-sale, loan, gift, or bequest).
Throughout modern art history work was traditionally authenticated by the artist’s personal signature on the face and/or reverse of a two-dimensional work. In recent decades an artist’s ‘wet’ signature on finished work has become less common, especially if work is made using non-traditional materials such as multi- and mixed-media. For these reasons it has become normal practice for purchasers to require an authenticity certificate to be ‘wet’ signed personally by the artist, and provided by the seller together with the physical work. Art market professionals representing artists as agent/dealer and making primary/first sales typically provide customers with such an artist-signed certificate.
When the artist is no longer alive and never signed an authentic certificate, or is alive but refuses to sign one, some art market professionals sign the customer’s certificate themselves. The value of such a second-hand certificate to a customer is substantially less than one signed first-hand by the artist. However a second-hand certificate may have some value as evidence of the art market professional’s contractual promise to the customer that the sold work is an authentic original; and may be used by a dissatisfied customer to re-claim purchase price and compensation from the seller. In other words, such a certificate has little or no value in the wider art market to prove to subsequent purchasers (on re-sales) that the work is authentic. Similar credibility problems surround authenticity certificates signed and issued by executors or trustees of a deceased artist’s estate.
Furthermore, there is no global art industry standard or generally accepted model for the form and content of an authenticity certificate. And there are no internationally enforceable legal or regulatory requirements for use of authenticity certificates, which are purely voluntary devices. For these reasons it is unsurprising that the fitness for purpose of authenticity certificates and their use is now being questioned along the lines of: many post-war and contemporary artists died before certificates were developed and used as a trading tool; many living artists refuse to sign, or demand a significant fee for doing so; there are no art industry global standards of form and content of certificates, and no global monitoring and enforcement mechanisms; use is purely voluntary and inconsistent; fake and forged certificates have begun to emerge in the art market place. And the arrival of digital technology appears to offer more effective and efficient alternative solutions to authenticity problems.
Digital technological innovations are likely to drive a changed and improved future of the art ecosystem. For example, business ideas are currently being developed to create unique and reliable and tamper-proof ways of tracking contemporary work from the artist’s original hands throughout its physical relocations and new ownerships into posterity. Such innovative digital technology would not only offer solutions to authentication problems, but also offer benefits including: simplifying collection management; improving security systems; and comprehensive and accurate recording of ownership provenance. Other researchers and developers believe that technology using radio-frequency identification (RFID) could offer the art ecosystem improved solutions: electromagnetic fields automatically identify and track tags or chips attached to objects; and tags contain electronically stored information about the object/artwork.
As a result artists now are uniquely equipped to ensure work leaves their possession carrying some enduring ‘thing’ equivalent to their personal ‘wet’ signature. Mechanisms for how this is might be done in future are currently being developed and will surely soon be available. Whether artists embrace these innovations is unlikely to depend on their willingness to take responsibility for publishing the truth about their works to the art ecosystem and into posterity; but will most likely be determined by the financial cost of doing so. And it is a melancholy truth that the majority of artists are poor.
© Henry Lydiate 2017