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SOROCHAIKINA Anna Andreevna
MODERN TRENDS IN THE DEVELOPMENT ..
Azimuth of Scientific Research: Economics and Administration. 2022. T. 11. № 4(41) e-ISSN: 2712-8482
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" MODERN TRENDS IN THE DEVELOPMENT OF INTERNATIONAL ART TRADE
© Автор(ы) 2022
SOROCHAIKINA Anna Andreevna, Master's Degree Student
National Research University Higher School of Economics Russia, Moscow, anna.sarachai@gmail.com
Abstract. The article considers not fully studied features of the art market in terms of international trade of art objects. No less relevant is the issue of regulation of the art trade, which has becomepopular in today's digital economy. The goal of the paper cycle on this topic is to identify the main directions of regulation of the international art trade within the process of digitalization of the economy. This is achieved through a number of research objectives. This paper considers the main factors of changing approaches to international trade in art objects at the present stage. The work involved such general scientific methods as historical and logical ones, in addition, methods of comparative analysis, induction and deduction, as well as the method of collection, systematization and analysis of literary and statistical sources, Internet resources. The conclusion is made that the modern art market, actively developing and reforming through the introduction of modern digital technologies, remains reliable for investment.
Keywords: art-market; international trade; international economic relations; market of art objects; art object; digitalization; work of art; culture.
СОВРЕМЕННЫЕ ТЕНДЕНЦИИ РАЗВИТИЯ МЕЖДУНАРОДНОЙ ТОРГОВЛИ ПРЕДМЕТАМИ ИСКУССТВА
© The Author(s) 2022
СОРОЧАЙКИНА Анна Андреевна, магистрант
Национальный исследовательский университет «Высшая школа экономики» Россия, Москва, anna.sarachai@gmail.com
Аннотация. В статье исследуются не до конца изученные особенности арт-рынка в части международной торговли предметами искусства. Не менее актуален вопрос регулирования торговли предметами искусства, который стал востребованным в современных условиях цифровизации экономики. Цель цикла работ по указанной теме -выявить основные направления регулирования международной торговли предметами искусства в рамках процесса цифровизации экономики. Достижение этой цели осуществляется путем решения ряда исследовательских задач. В данной работе рассмотрены основные факторы изменения подходов к международной торговле предметами искусства на современном этапе. В работе были задействованы такие общенаучные методы как исторический и логический, кроме того, использовались методы сравнительного анализа, индукции и дедукции, а также метод сбора, систематизации и анализа литературных и статистических источников, ресурсов Интернета. Сделан вывод: современный арт-рынок, активно развиваясь и реформируясь за счет внедрения современных цифровых технологий, остается надежным для инвестирования.
Ключевые слова: арт-рынок; международная торговля; международные экономические отношения; рынок предметов искусства; предмет искусства; цифровизация; произведение искусства; культура.
INTRODUCTION
The art market is explained as a socio-economic phenomenon that creates a system of mutually beneficial relationships between art creators, intermediaries and consumers, realized through commodity-money relations.
The art market represents a cultural and economic relationship in the form of an equivalent exchange of various art objects for money between economic agents, among whom are art creators, buyers and intermediaries [see 1].
The goal of this work is to identify the main directions of regulation of the international art trade within the process of digitalization of the economy.
This is achieved through a number of research objectives, the main ones are identifying current trends in the development of the international art trade and assessing the corona-virus pandemic as a factor of the accelerated development of online art trade.
The chronological boundaries of the study include the late 1930s, the beginning of the development of international trade in art, until 2022.
Hypothesis: the art and antiques market is considered completely unregulated. However, in this paper, we are going to prove the opposite and analyze all specifics of the art market regulation, showing how the market has changed due to digitalization and globalization of the economy.
The work involved such general scientific methods as historical and logical, which allowed to analyze the development of art trade regulation, to discover contradictions and essential properties. The authors additionally used methods of comparative analysis, induction and deduction, as well as the method of collection, systematization and analysis of literary and statistical information, resources of the Internet.
Official data and reports of major international organizations have formed the theoretical and empirical base of the
study.
The Russian authors are making their contribution to the study of this problem, considering the earlier conducted research, we think it is. necessary to highlight the work of M.A. Zakharova [2] with co-authors S. Matvienko [3], K.E. Popkova [4], A.G. and I.M. Antonovs [5], M.P. Yakushina [6].
The work "Guide to investment in the art market" [7] is interesting, containing the results of an analysis of the world's masterpieces of fine art as objects for investment.
The investment component of the art market is a subject of exploring in various papers. In this direction, it is common to highlight the work of Mei and Moses [8], which confirmed the hypothesis of positive dynamics of return investment in art objects. This allows us to consider investment in art as a tool of financial diversification.
Quantitative indicators from 2007 to 2021 (picture 1) can help to describe the current situation in the art market, allowing to follow the dynamics and form certain forecasts for the next years.
Total sales of art and antiques reached $65.1 billion in 2021, 29 % above last year's level. The highest value for this indicator was in 2014, i.e. $68.2 billion.
In 2020, the art market experienced the deepest drop in sales since the global financial crisis of 2008. The number of transactions decreased by 22.5 %, while the decrease in cash sales was 21.8 %.
The graph above includes turnover figures for both public and non-public artmarkets.
Public market turnover includes auctions, private auction houses and online auction house sales. In price terms, it stood at 47 % of the total turnover of the art market.
The turnover of the non-public market, which includes art dealers, galleries and specialized online platforms, to-
Азимут научных исследований: экономика и управление.
2022. Т. 11. № 4(41) e-ISSN: 2712-8482
СОРОЧАИКИНА Анна Андреевна СОВРЕМЕННЫЕ ТЕНДЕНЦИИ РАЗВИТИЯ МЕЖДУНАРОДНОЙ ...
taled 53 % of the market turnover.
Art Basel & UBS [9] in its report stresses that the distance between the public and non-public markets has become less clear and varies by region and market segment.
changes: the number of artists on the auction market has increased from 5,400 to 32,000, and the number of works from 12,000 to 123,000. The geographical boundaries have also been expanded from 39 to 64 auction countries. The rapid growth was also supported by the spread of remote transactions, which made the contemporary art segment the most dynamic and profitable in the art market [10].
Picture 1 - Sales in the world art market (2007-2021) in bln. dollars. [9, p. 25]
In 2021, dealers and galleries became the most popular channels for purchase, 82 % of respondents made their purchases withthe help of dealers. Given the choice of purchasing art through a dealer or online marketplace, 80 % of collectors preferred dealers because of a more objective assessment of the quality of the work and the artists they offered. Other arguments for dealers were credibility, reliability, competence and experience [10].
Among the galleries are large-scale network projects such as Opera Gallery, David Zwirner, Gagosian Gallery, Hauser & Wirth, Pace, White Cube, Acquavella Galleries, operating in the USA, UK, Hong Kong, Switzerland and a number of other countries. All of them show rapid growth, and the annual turnover of some of them reaches $1 billion.
Detailing sales dynamics (picture 2), the first thing to note, we want to note, is a significant decrease in sales in all market segments. And the second thing is that the biggest drop is observed in the art segment of the old masters (39 % by 2021).
The structure of sales by the main segments of the art market is presented below, it follows that the main segments of the market are the works of post-war and modern artists (55 %). The interest of collectors and investors in these segments has been maintained for the last 20 years.
Picture 2 - Sales in the world art market in 2021 by art sectors, in % [9, p. 159]
So modern art today is the main engine of growth of the world art market- its growth reached 2100 % over the past 20 years. In recent decades, there have been major structural
Picture 3 - Share of countries in the world art market in 2012-2021 [9, p. 29]
A fundamental growth factor of the modern art market has been the entry of Chinese buyers, driven by the rapid growth of the Chinese economy in particular over the past decade. These processes have increased investment activity in the art business sector.
Looking at the art markets of the chosen countries, developing markets have shown growth in art sales in recent years.
However, the United States of America, the United Kingdom and China have been world leaders for 20 years. These countries also ensured the majority of sales in price terms in 2021. At the same time the share of these 3 countries decreased by 2 % compared to 2020 figures.
In Artprice and Artron Art Groupjoint report, it is said that despite the rather unfavorable economic environment, the Chinese auction market has come out as a global giant in less than a decade, and now it challenges western countries [11]. China's market is showing significant results, ranking second in the world in 2021 with a 20 % share of the world market.
As for the Russian art market, it is in the initial stage of development. It is characterized by information asymmetries and the opacity of many processes due to gaps in legislation and law contradiction sthat make access to information difficult. In addition, due to a number of restrictions on the import and export of art objects, the investment attractiveness of the Russian art market is significantly reduced. According to the report of ARTinvestment.RU [12], total annual sales in the domestic auction market of Russia reached $11.65 million, a slight decrease comparing to 2019 ($11.8 million) but a significant increase comparing to 2020 ($9.87 million). At the same time, the volume of auction sales of Russian art worldwide amounted to $350 million (in 2019 it reached $409 million).
The Art Market in Russia report notes that the most successful and stable on the Russian art market are three auction houses: "SOVCOM", VLADEY and AI Auction, which provided 70 % of the auction turnover in 2021 [see 12].
In general, it can be said that today the Russian art market remains small but with significant development potential. It needs serious state support, which can be expressed in the publication of certain laws that eliminate "white spots" in regulation, as well as in the creation of information base of art objects.
The world art market is a huge economic space with a large number of promising investment opportunities. The dynamics of this market show that, despite some setbacks, sales of art objects have grown steadily since the beginning
SOROCHAIKINA Anna Andreevna
MODERN TRENDS IN THE DEVELOPMENT ..
Azimuth of Scientific Research: Economics and Administration. 2022. T. 11. № 4(41) e-ISSN: 2712-8482
of the 21st century.
Based on the collected and analyzed information [9-19] on the state of the art auction market during the last 20 years, the following changes can be highlighted:
• Auction turnover increased by 2100 %;
• The share of modern art is 15 % of the world art market (in 2000 it was 3 %);
• China and the USA have 68 % of the world auction turnover of the modern art market;
• In 2000-2020, contemporary art made $22.7 billion.
Experts expected 2021 to be a year of recovery, not of
rapid growth. However, the market surprised everyone with impressive figures. In the first half of 2021, auction sales increased by 230 % compared to the first half of 2020. Sales at Sotheby's, Christie's, and Phillips auctions were $5.9 billion by June 30, 2021, compared to $1.75 billion in the same period a year ago [19]. One of the most energetic factors behind this positive development in the art market was undoubtedly the digital innovation and growth of the younger generation of collectors.
In 2020, due to the spread of coronavirus infection, there were also some changes in the art market. For example, online projects such as online exhibitions and galleries have become very popular.
According to the Art Basel & UBS fair report [14], sales from offline galleries decreased by 36 %, while online sales doubled. The graph 4 below shows the volumes of online sales in the art market from 2013 to 2021.
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Picture 4 - The volume of online sales in the world art market (2013-2021) in billion. dollars [14]
According to Bank of America [20], the following four macroeconomic trends contributed to the recovery of the art market in 2021:
1. The impact of global wealth (this economic growth is driven by the Federal Reserve adaptive policies, historical investment in digital innovation, surprisingly sustainable consumer spending, and the softening of the trade war rhetoric in Europe and Asia. Expected that this combination will take the art market to new heights in 2022);
2. Remaining low interest rates (the art market is heavily dependent on interest rates: as rates fall, the lost value of art ownership and the cost of obtaining capital from art through the credit line also decline, but it is worth noting that in early 2022 the FRS said that it will not continue this flexible position and raise interest rates);
3. Re-opening after vaccination (the biggest obstacle for the art market in 2020 were the logistical problems: travel restrictions, closed galleries, digital art fairs and hybrid auctions but this year there is a return to the traditional calendar of auctions and full-time art fairs);
4. The new digital option (the introduction of digital technology during the pandemic has changed all human industries. Digitization has had equal impact on the art market: digital viewing rooms, virtual reality and online auctions became a critical temporary measure and provided collectors with a new shopping channel in the foreseeable future).
Highlight the most significant changes in the art market under the influence of digital technologies and accelerated
effects of the pandemic [21]:
• Information about auctions and dealer sales, including the advertising component, is publicly available and freely available on the Internet, which attracts a large number of new buyers;
• Digitalization of all stages of communication between participants (communication via email, payment of the transaction itself and associated costs, etc.);
• The artists (artists, sculptors, etc.) actively promote their products through social media accounts and official websites;
• The art market is significantly democratized in terms of both its members and the range of items it offers.
Due to the rapid growth of the market and the increase in the number of participants, digital technologies should address the key problems of the art market - issues of trust and transparency of transactions, which create the greatest obstacles to the further growth of artindustry [6].
Application of information and digital technologies in the art market will lower the business costs for those who have a scale (auction houses), and will raise the cost of doing business for those who do not have a scale (small and medium-sized gallery) [21].
The study makes it possible to determine the following trends in the development of international art trade at the current stage of development:
• Increase the level of informatization of the market, the distribution of the system of electronic databases and catalogues;
• Stable demand for popular authors, formation of a "pool" of artists, whose works are advantageous for investment, with the simultaneous intensification of competition among novice artists;
• "Polarization" of the art market due to differentiation of market participants by purchasing power;
• The introduction of integrated services in the market structure (online sales and auctions, e-content purchases) and the development of creative industries in the virtual space with an increase in their share in the total market;
• More prudent collector behavior due to the global instability in the next few years (unlikely to set new price records of the 2014-2015 level).
The world art market has entered an active phase of reform, in which the introduction of a new order (more strict state regulation and increased transparency) is accepted as an objective necessity.
Thus, despite the distorted international economic relations and the deterioration of the global situation in general, the art market in the age of digitalization has confidently transformed into a global system space that remains reliable for investment.
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СОРОЧАЙКИНА Анна Андреевна СОВРЕМЕННЫЕ ТЕНДЕНЦИИ РАЗВИТИЯ МЕЖДУНАРОДНОЙ ...
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Received date: 29.11.2022 Revised date: 22.12.2022 Accepted date: 26.12.2022
