Skate’s Art Market Notes for July highlight that ultra-high net-worth individuals (UHNWIs) are purchasing more art and the trend is likely to continue.  According to high-level estimates of Skate’s (based on its extensive data mining), only about 11% of global UHNWIs with assets in excess of $100 million are currently invested in art.  These figures demonstrate that there is significant growth in the art ownership penetration ratio among global UHNWIs and a significant growth upside potential remains.

Skate’s hints that with the release of its Global Art Lending Report scheduled for next month, the impressive growth of the art lending business over the past few years will be revealed and a “perfect stage” for significant growth in global art lending will be portrayed based on the following factors:

(1) very low share of art assets leveraged today; (2) historically low interest-rate environment; (3) unparalleled growth in high-end art market liquidity; and (4) quickly expanding availability of stand-alone art lenders.”

Skate’s observes that with the above four factors working in synergy together, the art market is on the brink of a “leverage boom” that should drive further high-end art sales, supporting both supply (e.g., forced liquidation of art collateral) and demand (e.g., availability of leverage for key art purchases) sides.  Skate’s points out that the United States, which is the predominant art market globally (see Exhibit 1), offers the world’s preeminent infrastructure for art lending in view of simple and efficient liens registrations for art assets via a Uniform Commercial Code filing procedure that is “increasingly used in the global art trade to secure pledge over art as loans collateral.”

To access Skate’s latest Art Market Notes for July, including the World’s Largest Art Markets by High-End Art Auction Volumes for 2014 (Exhibit 1), click here.

This week Skate’s issued its much anticipated Art E-Commerce and Media Report for Summer 2015.  A key finding of Skate’s latest report is that the listing platforms of auction houses and galleries are under growing competitive pressure from eBay as well as the independent digital strategies of their own clients.

As a result of significant efforts made by a number of auction houses on digital marketing, there is a shift in the power balance away from listing platforms to the auctions.

With eBay coming off a strong marketing campaign during this auction season, eBay is poised to gain more traction with the development of its Live Auctions as a sound alternative to listing platforms.  While generously funded by venture capital firms in 2013-2014, listing platforms will be forced to respond quickly or else see their business model become obsolete.

In view of these recent dynamics happening in the art e-commerce and media space, Skate’s expects the following developments summarized below:

  1. Consolidation across all the segments – a series of mergers and acquisitions in art-media and art-listing platforms already this year immediately followed by consolidation in the online art-trading space.
  1. Continued investment by major auction houses in their digital marketing with Sotheby’s just behind Christie’s in terms of digital audience size in Q3 2015.
  1. Response by major galleries to the digital challenge in the same way as major auction houses already did by investing in their own digital strategies.
  1. With eBay pushing into the art-auction listing space and gaining traction, eBay will increase its market share and listing-space dominance further this year in the United States.

It will be interesting to see how these expected developments evolve in the near future.

To access Skate’s  Summer 2015 Art E-Commerce and Media Report, click here.

 

As recently reported in the International New York Times, art financiers are among the latest specialists in recent years hoping to carve out a niche and not only survive, but thrive, on the backs of some of the world’s most affluent art collectors.   In recent years, art collectors are increasingly using their art as collateral and then reinvesting the funds in either additional art or other assets.

From the mega banks and the specialist lenders to the boutique lenders, it seems that everyone is active in art finance these days.  And for good reason.  Art finance is regarded as a wise way to use one’s capital such that by leveraging one’s art, the work can stay on the wall, while creating greater liquidity among collectors.  In particular, it has been observed by some art financiers that ultra-high-net-worth individuals are using their art to generate liquidity and often they are not using the loan to acquire additional art.

Indeed, art collecting has become increasingly financialized these past several years – a 2014 “Art & Finance Report” by Deloitte and ArtTactic revealed that 76% of surveyed art collectors acquired art and collectibles as an investment strategy in 2013, up nearly 25% from 2012.

With a rapidly expanding art market, one may ask then what is the issue?

When the primary reason for acquiring art is adding value to one’s investment portfolio, buyers seem to focus on a narrow range of established artists.  Buyers and values can significantly drop for less proven artist names.  As recently observed, the more the art market becomes financialized, the greater the risk that demand will become narrowly concentrated on a few expensive group of names, namely, Andy Warhol, Jean-Michel Basquiat, and Gerhard Richter.  Of course, artists will always “fall in and out of fashion” as driven by collectors’ specific tastes at the time.

Only time will tell if this will actually happen as the art market continues its financialization trend.

 

As recently reported by Skate’s earlier this week, four art auction houses with online art trading platforms, namely, Auctionata, Paddle8, Christie’s, and artnet.com AG, generated a combined $144 million in gross merchandise volume (“GMV”) in 2014, which represents on average a doubling of the volume of global online trade compared to 2013.

Berlin-based Auctionata came out on top with 2014 results that provided for an increase in online auction trade volume over that originally anticipated.  Auctionata captured $41 million in GMV sold, which represents a 148% increase in dollar terms to 2013.  These results catapult Auctionata into the top position as the leading global online art trading platform followed by Paddle8, Christie’s, and artnet.com AG.

Paddle8 and artnet.com AG have yet to publish their results, however, Skate’s closely tracks each firm’s online auctions and expects Paddle8 to report about $37-40 million GMV and notes that artnet.com AG is unlikely to exceed $30 million GMV for 2014.

Christie’s experienced a 60% growth compared to 2013 for its online-only sales in 2014 generating $35.1 million GMV.  For further information on Christie’s results, click here.

It will be interesting to see if these top four players for 2014 remain in their respective positions for 2015.  Indeed, the online art trading platform is quickly establishing itself as the way to collect and sell art in the 21st century.

 

 

I came across this article in ARTnews earlier today in which it was reported that a new survey introduced by the nearly 100-year-old Association of Art Museum Directors (“AAMD”) revealed that over 61 million visitors attended art museums in the United States, Canada, and Mexico in 2014.  The AAMD survey indicates that on the whole the AAMD members’ institutions are “stable in the wake of the global financial meltdown of 2008[.]”

The new survey is said to be the most comprehensive of its kind conducted by AAMD in that it covers nearly all of the 234 total membership (220 AAMD museums across the United States, Canada, and Mexico participated in the survey).

AAMD Executive Director Chris Anagnos found it reassuring that there was not a significant change in the figures for admissions (seven percent of revenue and support) and endowment (21 percent) since a less comprehensive survey was conducted by AAMD back in 2002.

Strikingly, the survey showed that although each visitor brings an average of around $8 in revenue to museums (i.e., between admission tickets and other miscellaneous purchases at stores and restaurants), museums spend an average of about $53 per visitor.  Portland Art Museum Director Brian Ferriso (the past director of AAMD’s public affairs committee when the association initiated the survey many years ago) succinctly responds that “[Museums] rely on donations.  A museum needs to be underwritten by the community.  That needs to be told.  The fear and challenge for many of us is we are seen to play more of an entertainment function versus [being] an essential part of a community and an essential part of a city and state.  We need to be seen as more like libraries rather than movie theaters.”

I was encouraged by the results of the survey (surprised, however, that corporate memberships are so low) and look forward to viewing future surveys, which the AAMD intends to conduct on an annual basis.  The collection of the same data each year will indeed enable the AAMD to identify trends, tell a story, and provide “greater transparency” in the art field.

Click here to access the AAMD survey results.

On the heels of Skate’s inaugural issue of Skate’s E-Commerce and Media Report published this past September, this week Skate’s has released its E-Commerce and Media Report for Winter 2014.  I have yet to fully digest it myself and look forward to doing so over the upcoming holidays.

From a brief review of Skate’s website under “Art Market Reports”, the Winter issue promises coverage of a wide spectrum of e-commerce and digital media appropriate topics ranging from “The World’s Top 5 Listing Models by Digital Audience”, “Art Industry Growth Leaders” (Quarterly Audience Growth), “Online Art Trading”, and  “Art Media”, to “Top Artists Online” and “The World’s Seven Biggest Living Artists by Digital Audience as of October 31, 2014”.

As noted in an excerpt from the Executive Summary of the Winter issue, “digital audience growth in the last three months has been driven mostly by e-commerce, online auctions and art auction listing platforms, demonstrating a surge of interest in online art trading.”  The excerpt continues that this digital trading art audience growth is of a global nature as it is “spread across English, French, German, and Swedish language websites[.]”

Interestingly, it was shown by Skate’s research on the digital audience of the world’s most valuable artists that “all big brands have no digital strategy to speak of; Jeff Koons is the highest rated among peers.”

To access Skate’s E-Commerce and Media Report for Winter 2014, click here (if not already registered as a Skate’s member, you can do so for free in order to access the report).

Skate’s is widely recognized as the global leader in art business intelligence since 2004.