Slawomir Elsner, Artist in his Studio, Coloured Pencil on Paper, 2020 (after Rembrandt, Museum of Fine Arts, Boston). Courtesy Lullin+Ferrari Zurich.
If only we could find a crystal ball to tell us exactly what the future post Covid-19 holds, or indeed, when we can reasonably expect to wake up from what seems like a nightmare, writes Agata Becker.
Instead, with not much more at our disposal than powers of clairvoyance and lots of speculation, these past few weeks the world has been operating in a quasi-panic mode. The economy has been in induced coma and the general sentiment seems to be all about short-term survival. One sector which is certainly not high on the agenda at this moment, but one that historically appears to have been resilient to times of doom, is the art market.
Remember the $200m Damien Hirst’s auction ‘Beautiful Inside My Head Forever’ the day after Lehman Brothers collapsed? Is art the highest form of hope, as Gerard Richter once suggested? Indeed, so far, the art world has demonstrated nothing but strong adaptation instincts. The art trade is supported by an intricate web of individuals and businesses, starting with the artist himself/herself, the dealer, the collector, the auction house, the provenance researcher, the art-related financier, the art academic, to name a few.
All these different players seem to have responded quickly, creatively and with a fair dose of composure to what is, after World War 2 perhaps, an unprecedented set of circumstances. But some opinions as to how it feels now, and what will be, differ, depending on who you ask. “The art world is a unique ecosystem, it will be interesting to see what happens at the same time next year”, says Gareth Fletcher, programme director, MA in Art Logistics at the Sotheby’s Institute of Art. “The art market operates so well because of its social nature; close personal relationships feature strongly in all of its parts. It is questionable how this appetite to mingle with people in the same room is going to re-emerge post-Covid,” adds Fletcher.
‘Close personal relationships feature strongly’
Until recently, glamorous clientele would gather in a room with champagne flowing freely, where networking opportunities were aplenty and collectors would outbid one another in a frenzy. “The most obvious consequence on the auction world has been the move from physical auctions to online auctions,” says Martin Wilson, chief legal counsel, Phillips and author of Art Law and the Business of Art. “In the space of just few weeks, auction houses have directed the focus to accelerate digital capabilities and create an operational business model for online sales. Such process might otherwise have taken months or years to fully develop.”The move to the online space is already seen to severely hamper the volume of auction deals and it remains to be seen how quickly it can recover to its former glory. Nobody can tell right now whether it can be the same again.
The human experience of art – and of buying and selling it – is fundamentally a sensory and social experience, and it is difficult (and some would say impossible) to fully replicate in the online world. This is why the physical display of art, the social events surrounding sales, the glamour and the drama of the saleroom will always be a cornerstone of the auction business. The real challenge for the commercial art world, both now and in the post-lockdown world, is to reinvent itself to ensure that this powerful physical experience continues to thrive alongside the exciting developments in online auction sales. “I feel confident that it will rise to that challenge,” optimistically predicts Wilson. But the social nature of the art trade extends beyond the auction room.
Galleries and art fairs, of course, are the other two platforms with a strong personal interaction element in their business operations. “One of the benefits of the art fair as an institution is the cluster effect where booths are adjacent to one another, collectors are time-poor and want to observe and interact and engage with as much art as possible under the kind of umbrella of being a VIP client.
‘Collectors are timed-poor’
“But the idea of the word cluster now seems like the least tasteful phrase in our language and yet it was always seen as the advantage of the art phenomenon,” says Fletcher. Art fairs pre-Covid for instance were hyper retail hubs for primary market dealers who were able to generate as much as 40% of their annual transactions in the number of art fairs they would attend. Inevitably, not being able to interact with collectors the same way is likely to have a serious impact on their balance sheets.
But even when the marquee fairs eventually re-open, they are likely to be bound by strict social distancing measures. So, naturally the pre-Covid cluster frenzy and high demand to be there and to buy may be diminished. There is always a chance that if the art businesses learn new ways to generate sales and save costs on buying a booth spot, the whole concept of an art fair may become a thing of the past. The pioneer of the concept of an online art fair was Noah Horowitz, having launched a VIP Art Fair, an entirely online feature, which was frustrated, unfortunately, on day three post-launch by servers going awry. Is there hope that with the current level of technological advancement, creating a successful art fair exclusively online would be a ‘walk in the park?’
It has not been easy for the galleries either. “The art market is primarily built on relationships,” says Linda Benrimon, director of David Benrimon Fine Art, a New York gallery. “Social distancing and restrictions pertaining to in-person meetings have hindered our ability to connect with clients and other art professionals. This inevitably causes major disruption and limited our overall sales and acquisitions.” But dealers had to, and did, adapt fast and developed existing skillsets to drive business by hosting online exhibitions, online viewing rooms and virtual consignments. The interesting aspect of all this, of course, is the fact that artworks cannot be viewed or inspected in person now and for as long as the world is in lockdown.
Physical inspection of an artwork is an extremely important part of the pre-purchase checks by the buyers; for galleries dealing with higher price-bracket art, this is hampering: “whereas in recent years an increasing proportion of art sales have been done online, we must now rely exclusively on digital resources”, says Benrimon. “This is particularly tricky for our company as we deal with blue-chip art in the six to eight digits; while collectors might be willing to spend tens of thousands on an artwork, sight unseen, their confidence lessens at these higher values.” At the same time, because art is a business largely oscillating within a close circle of well-established long-term relationships, the loyalty, reputation and most importantly, trust, seem to be the driving forces behind overcoming this particular challenge brought about by the Covid outbreak. “We are fortunate enough to serve great collectors worldwide and have access to quality works, and have therefore been able to generate sales,” says Benrimon.
‘Spend tens of thousands on an artwork, sight unseen’
Somewhat similarly to the real estate market which also deals with ‘hard assets’, the art world adapted to overcoming the impossibility of in-person viewings by offering virtual inspections of artworks. “We will see continued investment in technology in order to allow detailed virtual inspections by buyers of artworks,” says Wilson. “And we may see independent restorers and condition experts who are able to inspect the condition of artworks and relay information to potential buyers.” From a legal perspective, a buyer acquiring a work of art sight-free will wonder what rights he/she will have in case of issues down the line, such as the work turning out to be inauthentic or in a bad condition.
Wilson predicts: “We may see some sellers being more flexible about giving online buyers more extensive rights once the work has been bought.” There are suggestions that the art market pre-COVID was heading in the direction of online becoming more mainstream anyway, in particular at the higher price points. “As the online experience continues to advance and improve, I predict that we will see a further increase in art buyers purchasing online without having viewed the work in person. That is a natural progression which we have already witnessed – but one which will be greatly accelerated by recent developments,” says Wilson.
If it is the case that the art market post-Covid stays so firmly in the online universe, are we not at risk of an influx of rogue dealers who may pose a threat to less astute collectors?
Despite a fair dose of optimism in some sectors of the art trade, the accelerated move to operating exclusively online does not work as well for others involved. Provenance research firms for instance, concerned with artwork due diligence, are faced with unprecedented challenges since their profession relies heavily on access to hard copy archival material and library access. “It hasn’t been easy,” says Angelina Giovani of Flynn & Giovani, an art provenance research firm. “When lockdown began, we had active cases we were working on and most of them have been put on hold. It is paramount for the due diligence that certain materials in archives and libraries are consulted before finalising the projects”, adds Giovani. In such a scenario, provenance research firms are compelled to offer a due-diligence-light work product, i.e. limited to basic checks only of online databases and any other material that is available and accessible online, as well as liaising with the relevant scholars and experts.
“If you are unable to access libraries which happen to have catalogue raisonnés in them, and the majority of relevant catalogue raisonnés tend to be in hard copy, then it might be a bit of an issue,” says Fletcher. He is referring to the fact that if you can’t corroborate that an artwork is in a catalogue raisonné, it might provide a challenge when you try to demonstrate the authenticity of it, which naturally comes with risks going forward when purchasing such an artwork for example.
What can and should be done immediately to alleviate such obstacles? “Now, more than ever, resources need to be allocated for scanning and digitisation of materials,” adds Giovani. “This would allow small businesses, such as provenance research firms, to keep having access to crucial material. We need to adapt to new ways of co-operation through which productivity would suffer less.” When it comes to working together in challenging times, unprecedented synergies are already being explored in the secondary art market. Most recently, Sotheby’s created an online platform for blue-chip contemporary art galleries, for a commission from sales. Such unlikely partnerships might become a bare necessity when businesses are confronted with gravely challenging times.
“We must help and support one another,” says Benrimon, and particularly now, when the secondary art market resembles the workings of the financial markets more than ever. “Those collectors who have less disposable income, will not buy as their own assets are at jeopardy,” adds Benrimon. Additionally, collectors faced with financial pressures are compelled to liquidate their collections. Some galleries package collections as investment opportunities of house-hold names, i.e. artists that historically have retained value, even during the monetary recessions like in 2008. “In a downturn even more so, investors will seek tangible assets such as art,” says Benrimon. On the other end of the scale, we have those with cash to spend waiting for discounted deals. Indeed, some galleries already take on consignment blue-chip collections and offer them as so-called fire sales.
Spend cash now on the ‘steals’
Those lucky few who can spend cash now on the ‘steals’ will happily wait for the market rebound and price correction to recoup what could be a significant margin/appreciation. Additionally, an opportunity presents itself potentially for public sector institutions backed by huge endowments. “In times of adversity, there is opportunity, and if certain dealers are happy to lose a significant portion of margin on a work because they need to sell as soon as possible, such sales could be opportunities for institutions to amass and to develop their existing collections,” adds Fletcher.
Thinking about the commercial art market, we must not forget about the artists whose output continues to add to the trade in contemporary art. “It will certainly leave a trace, which can be expressed in art and art narration,” says Slawomir Elsner, a Berlin-based artist draughtsman and painter. A lot of new work could be inspired by the current reality; in fact, artists’ initiatives applauding key health workers through portraiture are already happening. White Cube, for example, raised £1.25m with its limited edition signed print Who Cares Wins, an initiative to support frontline health workers.
Are we to expect a whole new genre of Covid-art? But a more pressing question is that of artist representation – how many artists will have to fight for their existence and what will happen to their careers post-Covid? “Everyone in the art worlds is affected in a domino effect,” says Elsner. “The outbreak slows down my life. By looking after the children who would normally be in school and day-care, I have fewer working hours. I rarely have direct contact with buyers, that is the task of the gallery. There, of course, cancelled exhibitions, postponed sales, which is then directly noticeable among the artists who now have no income but the costs continue to run.”
With running business costs, capital reserves lasting beyond six months are probably quite unlikely, which makes sustaining an existing portfolio of artists very difficult for galleries. The biggest hit in the domino effect is therefore likely to be on artists themselves.
“I cannot see artists coming out of this particularly well at all,” says Fletcher. The situation is comparable to the situation of artists previously represented by the Haunch of Venison, prior to being acquired by Christie’s. “If you look at their careers after unfortunately Christie’s decided to disband the gallery for various reasons, very few of those artists exist anymore and at the time they were represented by a very well-established and respected gallery space,” Fletcher points out. What could be the best life support for those artists whose careers are on thin ice right now? Most probably, as with other sectors of the market, multijurisdictional collaboration will have to increase to mitigate the impact.
With the art market as we know it having to change considerably, will its transformation manifest itself in simple rejuvenation, or a full-blown resurrection of the status quo ante? This, and all other uncertainties can only be resolved with the passage of time. But, one thing is for certain, “necessity is the mother of invention”, as Wilson poignantly points out. While we may all be currently playing the role of Robinson Crusoe in real-time, we are bound to come out stronger, more resilient and with an arsenal of creative solutions that we did not have to urgently think about until now.
“We will find, as we re-emerge from this experience, that we have discovered new and better ways to interact and do business,” says Wilson. The art of survival can be a beautiful thing.
About the author
Agata Becker is a UK qualified solicitor with experience in corporate finance and art law. She consults for a boutique art law firm based in Zurich and runs her own UK-based independent art advisory and art education business, Agart Ltd.