Will the coronavirus change the art market for the better? – Financial Times

There has been nothing like this in the art trade. Auction houses, galleries, exhibitions and art fairs have shut down worldwide as the coronavirus paralyses this event-driven and relentlessly international market. But could the pandemic also prove a necessary catalyst for an industry that desperately needs to modernise?

Cancellation and closure emails have been coming in thick and fast. On March 12, the day that President Trump announced a travel ban on 26 European countries, an Artnet News log recorded some 80 shutdowns. Many of these were US museum shows but disappearances from the calendar also included art fairs in São Paulo, Cologne and Dallas, all due to run in April. Prestigious galleries such as Pace, David Zwirner and Hauser & Wirth have also closed their doors in New York, epicentre of the global art market, as well as elsewhere in the world.

The first major event to cancel its real-life version was Art Basel Hong Kong, a fair that normally occupies two enormous floors of a waterside convention centre and attracted a record 88,000 visitors last year. This week, the fair is instead happening entirely online. Early signs are that its 231 exhibitors are taking the opportunity seriously. Works that will be offered virtually include Antony Gormley’s “Breathing Room II” (2010, Galleria Continua), Philippe Parreno’s “My Room is Another Fishbowl” (2016, Pilar Corrias) and “Life Shines On” (2019), an infinity room with a much-needed positive vibe by Yayoi Kusama (Ota Fine Arts).

Galleries at other events have been kick-started into a similar strategy already. When the Tefaf Maastricht fair was cut short last week after a gallerist tested positive for the virus, several exhibitors, including Omer Tiroche and Robilant + Voena, immediately offered virtual viewing rooms to clients.

“I’d been looking at private viewing room options for a while, and we quickly had to adapt during Tefaf, as did many of the other dealers. The feedback from clients and others has been very positive,” says Ben Tomlinson, gallery director at Robilant + Voena. Unlike a public website, online viewing rooms require a user’s data to enter, another possible silver lining for the galleries.

Other coronavirus-prompted initiatives include a performance by the artist Marijke De Roover that was held over Instagram Live and promoted via WhatsApp through London’s Arcade gallery. Founder Christian Mooney says he is now looking into independent subscription services so that people can watch short artist videos at home.

At the moment, such efforts are mostly making the best of a bad situation. But there is a sense that the effects of the virus have accelerated what needed to happen anyway. Art Basel’s organisers stress that its virtual initiatives complement rather than replace their art fairs — probably a wise line to take for a business whose owner, MCH Group, also runs convention centres. But while the big-brand art fairs may emerge relatively as they were, the situation could hasten a survival-of-the-fittest process further down the food chain. “I feel more confident about getting new clients online than at most art fairs,” says heavyweight dealer David Zwirner. “If there were fewer regional art fairs, but stronger online offerings, it could do everyone a favour — and the environment.”

It’s a tough-love approach, but he has a point. For the past few years, galleries operating below the stratospheric levels have been struggling to keep pace with the financial pressures of showing at fairs all over the world. Added to the exhibiting fees that already average five-figures a fair are flights, shipping, hotels, client dinners and the opportunity cost of paying rent on empty, high-spec gallery spaces. Meanwhile, visitors — including the all-important collectors — complain of “fairtigue” as the experience of looking at booth after booth of art that has often already been sold over email anyway has lost much of its charm.

This is not to say there won’t be some immediate financial hits. The number of international art fairs has grown dramatically since the economic crisis of 2008-09 — from about 140 to 300 in 2019. Galleries report an average 45 per cent of sales through fairs, according to the latest Art Basel/UBS report. At this year’s Armory Show in New York, which snuck in before the US travel restrictions took effect but still reported a drop in attendance of 28 per cent, there was a sense of impending doom.

Rakeb Sile, co-founder of Ethiopia’s Addis Fine Art, had just been hit with the cancellation of Art Dubai and was pessimistic about her planned showings at Art Cologne in April and Frieze New York in May (both since postponed). “For us and our artists it is devastating, but we remain optimistic that the gallery will come out of this stronger,” she said.

She is, however, operating in a market that has proved pretty resistant to online solutions. It hasn’t helped that the VIP Art Fair, the first (and so far only) online-only event which came to our screens in 2011, fell at the first hurdle. The technology wasn’t up to it, which fed into the sceptical instincts of an industry that has always favoured real-life visual interaction. The demands of ecommerce are also potentially revolutionary for the opaque art market. “Internet users expect a one-stop-shop and price transparency as well as a highly secure and personalised platform,” says Mike Steib, chief executive of Artsy, which hosts more than 3,200 galleries on its site.

It’s certainly debatable whether the art market can become as “click-and-buy” friendly as other industries. The trade is increasingly comfortable with putting content online, such as background information on an artist or informative videos, and the potential of virtual reality generates some excitement. But galleries still want to protect their artists and keep tabs on buyers, who still like to see what they are getting. Those who have already invested say they are reaping the rewards. David Zwirner was the first gallery to launch an online viewing room in 2017 and has run 54 such exhibitions this way. It has reported year-on-year sales growth of 400 per cent and this week its Art Basel Hong Kong offerings include a Jeff Koons Gazing Ball work for $3m and a 2012 oil by Marlene Dumas for $2.5m.

Not all galleries have the same heft as Zwirner, however, and it is far easier to make virtual sales with artists who are already known than those who are emerging and haven’t been seen in the traditional way. But traditions are changing fast outside the art world. The online retail sector is expected to continue to grow more than 85 per cent in the next four years, increasing its total market share from 14 per cent to 22 per cent, according to statistics from research group eMarketer in the Art Basel/UBS report. This also finds that online sales within the art market lag behind — at 9 per cent of market share — but 61 per cent of high net worth collectors say they have used Instagram as a starting point to buy art.

Businesses in the auction sector have already seen the light. Recent data from the online marketplace Invaluable, which aggregates 20,000 auction sales a year, finds that the share of transactions made online has grown from 3.5 per cent in 2009 to 11.8 per cent in 2019. “It is extraordinary to me, as an auctioneer, that the means of participation that seemed to be draining the drama and excitement from the saleroom may now prove to be our saviour,” says Giles Peppiatt, director at Bonhams.

Developing a new sales avenue doesn’t come cheap, but investing online is arguably a more sustainable strategy than intermittent art fair booths. Artlogic, a business that helps galleries create their online presence, offers a viewing room function from £95 a month — and its phones have been ringing nonstop. “It’s been utterly bonkers. We’ve had more inquiries about this specific feature in the past few days than we have ever experienced before,” says Joe Elliott, its head of sales. Steib says that purchases on Artsy were up more than 100 per cent for The Armory Show in early March.

Might the current disruption also be a buying opportunity? The art advisers Beaumont Nathan have looked back to the previous financial crisis and found that, for what they call A+ material, “There are no examples of collectors who were brave enough to buy in those turbulent times regretting what they bought, especially given the speed at which the market rebounded.” From where we are sitting now, this seems as optimistic as it gets, but as in any economic crises, there are bound to be some winners too.

In the mean time, there is no virtual champagne, and the prospect of VR headsets and closed-door events is likely to seem a miserable one for much of the convivial art world brigade. A forced break could prove to be more than a breather, though: after years of kicking and screaming against the technological tide, there might emerge from this crisis a more business-ready and sustainable art market. Gallerists and fair organisers have long said they feel the need to innovate but that this has proved difficult when they are so busy haring around the world. Suddenly, the opportunity is here.

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