Cause for optimism?

Tobias_Meyer__Sothebys.jpgSothebys latest Market Review, issued last night, strikes a slightly defensive but none-the-less optimistic tone, using two key arguments to support their optimism.

The first is their contention that the market of today is unlikely to suffer a crash and sustained down period similar to that of the 1990s. They base this view on the not unreasonable statement that there are more sources of buyers than was the case when Japan was the source of new money bidding up markets in the 1980s. At that time, the argument goes, there was no-one to take their place when the Japanese retreated from the market in the 90s; things are different now. Well, certainly this time we have seen new buyers from Eastern Europe, Russia, China and India entering the fray, in addition to all the new money in the US and the UK. But, as we have seen with the recent US sub-prime driven hiccup, all markets can catch a cold at the same time in today’s globally interlinked financial markets. In addition, that greater diversity of buyers is buying a greater diversity of Art, including contemporary and traditional works from their own regions (China and India being prime examples). They are not just focussed on traditional Western Art markets. So I am not sure there is the greater depth of buyer support for the traditional European and US modern and contemporary markets that Sothebys believes is there.

Their second argument for optimism is that there is a rise in the average price of lots sold over recent months.

From those price increases, however, we can infer a larger market of potential buyers.

Well, from their own figures we can see that over the same period: total sale value has actually fallen steadily since May 2007, and number of lots per sale have also fallen steadily from November 2006. With number of lots sold falling, average price per lot rising, but overall sales value falling, that actualy tells us that a few buyers are paying more money for (presumably) top works, but that fewer people overall are buying, less money overall is being spent and fewer works are being sold. Perhaps there is a larger market of potential buyers. But at the moment it looks like, aside from those at the top end of the market who are generally immune to financial market troubles, there are fewer buyers actually buying, not more.

Still, if it means a return to auctions being about quality of works, rather than quantity, it might make them interesting to attend again…

2 thoughts on “Cause for optimism?”

  1. From Franklin Boyd:

    Regarding your desire for more quality less quantity:

    It strikes me that this is emblematic of the current confusion regarding the proper role of the auction houses, both among the people who run them and the public at large. In a not so distant past, auction houses served as clearing houses and sold mostly to the trade, who needed no more than the basic facts on the lots being offered. As the houses have increasingly moved away from merely connecting sellers to buyers they are increasingly accused of any number of evils including dumbing down the art market (the catalogue essays, while improving, are hardly works of scholarship) and playing both sides of the field (even Lisa Dennison has admitted that she isn’t quite sure how they can provide advice to buyers while also representing sellers).

    In their defense, auction houses do provide liquidity, (nearly) transparent sales, and the opportunity for new collectors to compete equally against more established ones. But then again, they have always done this–what they should not do is serve as proxies for curators, critics, academics and gallerists who are better enabled to select the few quality pieces from the vast quantities of art available. Asking the auction house to do so only feeds the monster.

    I for one will praise them for what they do well, but try to discourage any sentiments which encourage the building of the “big box store” that can do it all.

  2. At the recent Art Table annual luncheon, Lisa Dennison was campaigning for the permeability of the walls between the market and the museum, using herself as an example of its success. She is speaking on the behalf of her new/old industry. It is in this context that new markets for art are emerging, markets that may not have a history of trust in curators, critics, academics and gallerists. These auction houses have the capacity to think very big, they’ve completely changed there shape in a very short period of time and will continue to do so. It’s just not a matter of “discouraging any sentiments” any more, it’s going to take strategic, aggressive, creative, witty, systematic rhizomatic action.

    One thing that she did mention, though, which illustrates your more positive point about the democratic accessibility of the auction house, is that there is a 28 year old collector who is really making a mark, and that this was about to be big news. Is it out yet?

    This is all very bracing, I don’t think there is a trickle down theory where smaller gallerists, for example, will naturally benefit, and I thank Ian for laying this out while still holding onto his optimism.

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