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A special report on the art market

Suspended animation

Nov 26th 2009 From The Economist print edition

The art market has suffered from the recession, but globalisation should help it recover, say Fiammetta Rocco (interviewed here) and Sarah Thornton

Sothebys

THE longest bull run in a century of art-market history ended on a dramatic note with a sale of 56 works by Damien Hirst, “Beautiful Inside My Head Forever”, at Sotheby’s in London on September 15th 2008 (see picture). All but two pieces sold, fetching more than £70m, a record for a sale by a single artist. It was a last hurrah. As the auctioneer called out bids, in New York one of the oldest banks on Wall Street, Lehman Brothers, filed for bankruptcy.

The world art market had already been losing momentum for a while after rising vertiginously since 2003. At its peak in 2007 it was worth some $65 billion, reckons Clare McAndrew, founder of Arts Economics, a research firm—double the figure five years earlier. Since then it may have come down to $50 billion. But the market generates interest far beyond its size because it brings together great wealth, enormous egos, greed, passion and controversy in a way matched by few other industries.

In the weeks and months that followed Mr Hirst’s sale, spending of any sort became deeply unfashionable, especially in New York, where the bail-out of the banks coincided with the loss of thousands of jobs and the financial demise of many art-buying investors. In the art world that meant collectors stayed away from galleries and salerooms. Sales of contemporary art fell by two-thirds, and in the most overheated sector—for Chinese contemporary art—they were down by nearly 90% in the year to November 2008. Within weeks the world’s two biggest auction houses, Sotheby’s and Christie’s, had to pay out nearly $200m in guarantees to clients who had placed works for sale with them.

The current downturn in the art market is the worst since the Japanese stopped buying Impressionists at the end of 1989, a move that started the most serious contraction in the market since the second world war. This time experts reckon that prices are about 40% down on their peak on average, though some have been far more volatile. But Edward Dolman, Christie’s chief executive, says: “I’m pretty confident we’re at the bottom.”

What makes this slump different from the last, he says, is that there are still buyers in the market, whereas in the early 1990s, when interest rates were high, there was no demand even though many collectors wanted to sell. Christie’s revenues in the first half of 2009 were still higher than in the first half of 2006. Almost everyone who was interviewed for this special report said that the biggest problem at the moment is not a lack of demand but a lack of good work to sell. The three Ds—death, debt and divorce—still deliver works of art to the market. But anyone who does not have to sell is keeping away, waiting for confidence to return.

The best that can be said about the market at the moment is that it is holding its breath. But this special report will argue that it will bounce back, and that the key to its recovery lies in globalisation. The supply of the best works of art will always be limited, but in the longer run demand is bound to rise as wealth is spreading ever more widely across the globe.

The World Wealth Report, published by Capgemini and Merrill Lynch, charts the spending habits of the rich the world over. It includes art as one of a range of luxury items they like to buy. According to the report, in 2007 there were over 10m people with investible assets of $1m or more. Last year that number dropped to 8.6m and many rich people scaled back their “investments of passion”—yachts, jets, cars, jewellery and so on. But the proportion of all luxury spending that went on art increased as investors looked for assets that would hold their value in the longer term.

The regional spread of buyers also changed significantly as some parts of the world became relatively richer. During the boom the number of wealthy people in Russia, India, China and the Middle East rose rapidly. In 2003 Sotheby’s biggest buyers—those who purchased lots costing at least $500,000—came from 36 countries. By 2007 they were spread over 58 countries and their total number had tripled.

That upward trend is still continuing, and many of the new buyers take a particular interest in the art of their own place and time. Last year China overtook France as the world’s third-biggest art market after America and Britain (see chart 1), and some 25% by value of the 100,000-plus works of art sold by Christie’s went to buyers from Russia, Asia and the Middle East.
Click to enlarge

Auction records remain dominated by Impressionist and modern works (see table 2), but the biggest expansion in recent years has been in contemporary art. Prices of older works keep going up as more people have money to spend, but few such works become available because both collectors and museums tend to hold on to what they have. Old Master paintings, for example, have stuck at around 5% of both Sotheby’s and Christie’s sales for many years. By contrast, contemporary art, which in the early 1990s accounted for less than 10% of Sotheby’s revenues, grew to nearly 30% of greatly increased revenues by last year. Dealers and auction houses now sell more post-war and contemporary art than anything else. This report will concentrate on that part of the market, which accounts for about half the world’s art trade and most of the excitement.

Part of the extra demand has come from a large increase in the number of museums. Over the past 25 years more than 100 have been built, not only in America and Europe but also in the sheikhdoms of the Persian Gulf and the fast-growing cities in Asia; sometimes in partnership with Western institutions, such as the Guggenheim or the Louvre, sometimes on their own. Many of these institutions have made their mark by buying contemporary art.

Over the same period the number of wealthy private collectors has also increased many times over, and so has their diversity. The record price for one of Andy Warhol’s giant faces of Chairman Mao was $17.4m, paid by Joseph Lau, a Hong Kong property developer. It was the first major Warhol to go to the Far East. A month later the Qatar royal family bought a Hirst pill cabinet, entitled “Lullaby Spring”, for £9.7m, the first major Hirst bound for the Middle East. Everyone wants an iconic work, which helps explain the global demand for artists such as Warhol, Jeff Koons and Mr Hirst—and the eye-watering prices such work can command.
Masters of the art universe

Straddling all areas of the art market is a handful of individuals who have emerged as the key figures in the art world in recent years. Chief among them is François Pinault, a luxury-goods billionaire who is also a noted collector of contemporary art and the owner of Christie’s. Philippe Ségalot, his French-born adviser, was behind one of the biggest deals involving a single work of art, the private sale of Warhol’s 1963 painting, “Eight Elvises”, to an anonymous buyer for over $100m.

Mr Ségalot is also believed to be advising the royal family of Qatar, which in the past two years has spent large sums buying modern art at auction, including record-breaking works by Mark Rothko and Mr Hirst. Steven Cohen, an American hedge-fund billionaire, also owns works by Warhol, Mr Hirst and Mr Koons. Mr Cohen used to be a sizeable shareholder of Sotheby’s and is still an important provider of liquidity to art buyers.

The popularity of blockbuster art exhibitions and the emergence of buyers with a different cultural history have helped change tastes. Artists such as Edvard Munch and Vasily Kandinsky rose sharply after solo shows in London and New York. Alexei von Jawlensky and Emil Nolde were regarded as specialist interests until Russian collectors began seeking them out. Zhao Wuji used to be just another Chinese painter-in-exile; now he is recognised as an Abstract Expressionist master influenced by Paul Klee and praised by both Joan Miró and Pablo Picasso.
How to sell it

One of the biggest changes since the market last peaked in 1989 has been the expansion of the auction houses and the change in the nature of the dealer business. Twenty years ago auction houses sold to dealers, and dealers sold to private customers. Today many collectors are advised by auctioneers, both at sales and privately.

Rising costs brought trouble to many old-fashioned fine-art dealer emporiums. In London Christopher Gibbs has sold his stock and Partridge is in administration. In Paris Galerie Segoura has closed, as has Salvatore Romano in Florence. Many dealers now prefer to take art works on consignment, matching sellers to buyers for a commission rather than investing in stocks of art.

About half the market’s business, reckons Ms McAndrew of Arts Economics, is conducted at public auctions, with Christie’s and Sotheby’s taking the lion’s share. Smaller houses include Drouot in Paris, Bonhams, which is based in London but has several offices abroad, and Doyle in New York. The other half is generated by private dealers and galleries that are notoriously secretive. One of the biggest private deals in recent years came to light only because the details were disclosed in an American court following the Bernard Madoff scandal. Last July ten paintings by Rothko and two sculptures by Alberto Giacometti were sold by a New York financier to help repay Mr Madoff’s investors. A mystery buyer spent $310m on the works. Two dealers earned $37.5m in fees.

By comparison with that private world, Sotheby’s and Christie’s auction business looks like a model of transparency. Although buyers and sellers are rarely named, the auction price is public. Yet even here there are dark corners. The leading auctioneers offer inducements such as guaranteed prices to persuade sellers to part with their treasures, and generous terms of payment for buyers.

One thing that differentiates the two auction houses is their ownership structure. Sotheby’s is a quoted company whereas Christie’s, once listed, was taken private in 1999 by its current owner, Mr Pinault. Christie’s business has since expanded hugely, partly thanks to Mr Pinault’s pivotal position in the international art world. Even though the company can pick and choose what information it wants to reveal, it has in fact become more open over the past ten years.

Sotheby’s, for its part, is still smarting from the public beating it received in America nearly a decade ago when its chairman, Alfred Taubman, and its chief executive, Diana Brooks, were found guilty of conspiring with Christie’s to fix commissions. Mr Taubman served ten months of a one-year prison sentence; Mrs Brooks was given six months’ house arrest, a $350,000 fine and 1,000 hours of community service. No one was charged at Christie’s, which had blown the whistle on the commission-fixing. Sotheby’s lives in fear of the regulators and discloses only as much financial information as it has to.

In the decade since the scandal both auction houses have concentrated on expansion. Sotheby’s was the first auctioneer to become interested in Russia and remains bigger there than its rival. Christie’s, which has long been especially strong in the Far East, has put a lot of effort into China. Foreigners are not allowed to own auction houses there, but Christie’s has got around that by signing a licensing agreement with a leading Chinese auctioneer. Both houses have their eye on the Middle East. Christie’s holds regular auctions in Dubai, of which its art and jewellery sales are the most successful. Sotheby’s has opened an office in Qatar which is important for its relationship with the Qatar royal family, one of its biggest clients.

The response of both auction houses to the current slump has been broadly similar: staff cuts, unpaid leave, a squeeze on salaries, slashed marketing and travel budgets, and an edict that the glossy auction catalogues, which in the boom cost each of them £25m a year to produce, were no longer to be handed out like chocolate drops.

With a hugely expanded international client base, it was only a matter of time before both auctioneers started to muscle in on areas that had previously been the preserve of private dealers, matching buyers and sellers and selling new art rather than items that had already been in the market. Sotheby’s proved to be much the more ruthless of the two. All the lots in Mr Hirst’s September 2008 sale, for example, had been consigned to Sotheby’s directly from the artist’s workshop, which shocked dealers who had not previously thought of the auction houses as direct competitors.

In 2006 Sotheby’s paid $56.5m for Noortman Master Paintings, a leading dealer in Old Masters. Less than a year later Christie’s bought Haunch of Venison, another high-profile dealer set up in 2002, whose founders included a former director of Christie’s contemporary-art department. Noortman gave Sotheby’s an entry into the Maastricht Art Fair, the pre-eminent dealers’ fest, and Haunch of Venison helped make Christie’s Mr Pinault the biggest art trader in the market. Both galleries operate independently of the auction houses, but the relationships are close.
All things to all men

Both auction houses have also put a lot of effort into advising buyers on how to improve their collections. As Jussi Pylkkanen, Christie’s European president, says, “We’re much more than an auction house now.” The recession has made many collectors nervous about offering their treasures at auction, so they are selling them privately. In 2007 Christie’s chalked up private sales of $542m and Sotheby’s of $730m, which means the two auction houses are now among the world’s biggest private dealers. Both often get calls like the one Sotheby’s recently took from a Moscow collector with $2m to spend on an “optimistic” Chagall oil, “not too feminine” and no more than a metre in height. “We put out the word and immediately received several offers from our offices in London, Geneva and New York,” says Mikhail Kamensky, the firm’s head of CIS business.

In 2007 private deals accounted for 8.7% of Christie’s business. Mr Pylkkanen expects that figure to go up to 20% of its revenue within three years. That should put the wind up private dealers.

http://www.economist.com/specialreports/displayStory.cfm?story_id=14941181

请问下大家：Sotheby’s is still smarting from the public beating it received in America nearly a decade ago断句怎么断啊？几个动词把我搞晕了，谢谢
rodgood 发表于 2009-12-19 19:53

13.A handful of individuals, like collectors or advisers, serve as the key figures in the art market.
14.Details in these individuals show how important they are.
15.Art tastes are changing as the emergence of important exhibitions and different buyers in culture history.

16.One of the biggest changes has been the expansion of the auction houses and the essential change of dealer business.
17.Rising costs hamper the business in stocks of art.
18.Instead, public auctions and private deals work as the prevailing form of art business. Some examples show the latter one is notoriously secretive.
19.Sotheby’s and Christie’s auction business is public and transparent, comparing with private deals.
20.Difference between S and C is their ownership structure. More details in C are shown especially about its owner Mr. Pinault.
21.Sotheby had some scandal.
22.Both auction houses focus on expansion in some regional market.
23.Both auction houses respond similar to the current slump.
24.Both auction houses would become direct competitors to the private dealers.
25.Continual examples to show how auction houses muscle in areas of private deal.

26.Both auction houses have also help buyers improve their collections in specific tastes.
27.Auction houses really upset private dealers.

(This sentence is Beautiful. However, I do not know how to imitate it. Maybe it is the series of words about human nature which makes the sentence glamorous.)

The bail-out of the banks coincided with the loss of thousands of jobs and the financial demise of many art-buying investors.

The loss of thousands of jobs coincided with the financial demise of foreign direct investment.

The abnormal raise in price of commodities coincides with the rumor of waging a war against Japan.

The immediate slump in stock market/valuta coincided with the loss of confidence to government and the demise of foreign investors.

This time experts reckon that prices are about 40% down on their peak on average, though some have been far more volatile.

The biggest problem at the moment is not a lack of demand but a lack of good work to sell.

The biggest problem at the moment is not a lack of export but a lack of domestic demand .

The terrible problem in our country is not a lack of proper law but a lack of law-excutor.

(This parallel can be use as a transition sentence when you need to deny the reason mentioned before. We can use that in Argument Task to illustrate alter explanation. )

But in the longer run demand is bound to rise as wealth is spreading ever more widely across the globe

With a hugely expanded international client base, it was only a matter of time before both auctioneers started to muscle in on areas that had previously been the preserve of private dealers, matching buyers and sellers and selling new art rather than items that had already been in the market.

THE longest bull run in a century of art-market history ended on a dramatic note with a sale of 56 works by Damien Hirst, “Beautiful Inside My Head Forever”, at Sotheby’s in London on September 15th 2008 (see picture). All but two pieces sold, fetching more than £70m, a record for a sale by a single artist. It was a last hurrah（最后的努力，尤指最后一次竞选活动）. As the auctioneer called out bids, in New York one of the oldest banks on Wall Street, Lehman Brothers, filed for bankruptcy.

Damien Hirst（达米安.霍斯特）: Damien Steven Hirst (born 7 June 1965) is an English artist and the most prominent member of the group known as "Young British Artists" (or YBAs), who dominated the art scene in Britain during the 1990s. He is internationally renowned, and is reputed to be the richest living artist to date. During the 1990s his career was closely linked with the collector Charles Saatchi, but increasing frictions came to a head in 2003 and the relationship ended. Death is a central theme in Hirst's works.

“小时候，他被母亲看作是病态的古怪孩子；上学时，他的成绩常常是D；青年时期，他吸毒、酗酒。然而，这一切都不妨碍未到41岁的他成为当代最有名、最富有、最成功的艺术家。”

Sotheby’s：苏富比（Sotheby's），是一家拍卖行，以拍卖艺术品及文物而著称。首次举行的拍卖会在1744年 3月11日举行，由创办人山姆·贝克(Samuel Baker)为处理其数百本“稀少而贵重”的书籍而进行。

一直以来，苏富比与佳士得激烈地争夺世界最重要艺术品拍卖人的地位。这个主要地位透过多种方式取得，包括自然增长，收购及在过去一个世纪的艺术衰退里仍然妥善管理而得来。

Andy Warhol：安迪·沃霍尔，被誉为20世纪艺术界最有名的人物之一，是波普艺术的倡导者和领袖，也是对波普艺术影响最大的艺术家。沃霍尔除了是波普艺术的领袖人物，他还是电影制片人、作家、摇滚乐作曲者、出版商，是纽约社交界、艺术界大红大紫的明星式艺术家。沃霍尔的作品没有欧洲设计师那么观念化、哲学化、个人化，他的作品风格体现出了：实用主义、商业主义、多元化、幽默性。

Andrew Warhola (August 6, 1928 – February 22, 1987), more commonly known as Andy Warhol, was an American painter, printmaker, and filmmaker who was a leading figure in the visual art movement known as pop art. After a successful career as a commercial illustrator, Warhol became famous worldwide for his work as a painter, avant-garde filmmaker, record producer, author, and public figure known for his membership in wildly diverse social circles that included bohemian street people, distinguished intellectuals, Hollywood celebrities and wealthy aristocrats.Warhol has been the subject of numerous retrospective exhibitions, books, and feature and documentary films.

François Pinault：François Pinault（弗朗克斯.皮诺特） (born 21 August 1936) is a billionaire French businessman who runs the retail company PPR（Pinault-Printemps-Redoute）. He is a friend of former French President Jacques Chirac. According to Forbes List of billionaires (2008) he is ranked 39th in the world, with an estimated fortune of US$16.9 billion.

是佳士得拍卖行最大的股东。藏品涵盖了欧美主要的艺术流派，从现代主义到抽象表现、极简主义。他不仅是世界很多主要画廊、拍卖会的大主顾，也是多家知名博物馆的董事和赞助人。2006年，皮诺荣登西方权威艺术杂志《艺术评论》评选的“全球当代艺术界最有影响力100人”榜单第一名。

The popularity of blockbuster art exhibitions and the emergence of buyers with a different cultural history have helped change tastes.

Many dealers now prefer to take art works on consignment, matching sellers to buyers for a commission rather than investing in stocks of art.

In February 2000, A. Alfred Taubman and Diana (Dede) Brooks, the CEO of the company, stepped down amidst a price fixing scandal. The FBI had been investigating auction practices in which it was revealed that collusion involving commission fixing between Christie's and Sotheby's was occurring.

The speaker asserts that globalisation should help the art market recover, which has suffered from the recession. To confirm this, the speaker first made a description of the current situation of downturn in the art market, then pointed out, by comparing with the slump of art in the early 1990s, the biggest problem of this slump is “not a lack of demand but a lack of good work to sell.” As a result, the way how to sell the art became crucial in recovering the art market, the speaker suggests the key in its recovery lies in gobalisation, to illustrate this the speaker cited two examples, Sotheby’s and Christie’s, both of which are famous arts auction houses.

Though I am not familiar with this topic, I learned a lot through the article, such as some knowledge about Damien Hirst, Andy Warhol, Sotheby’s, Christie’s and so on.

Actually, this article is about an abstruse field for me. I really don’t know much more basic knowledge about art market.

Mr.Hirst’s September 2008 sale is a landmark of art works consigned to Sotheby’s directly from the artist’s workshop. The main point of this report is, the recession that the art market has gone through is under the influence of global economy. Another reason for this slump is lake of good art works to sell. To solve the financial crisis of auction companies, Sotheby’s and Christie’s have played exemplary roles. Apart form general method; they both put a lot of effort into advising buyers on how to improve their collections.

Unfortunately, it remains to be seen whether globalisation will help the art market recover.