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Arts economics study_prague_2010_97-2003_version
• Study commissioned by CINOA to investigate changing roles and
business models of art and antique dealers: historical, current and
future perspectives
• Context: void of dealer research
• Method: qualitative, largely interview and survey based
• Progress to date:
⇒ Dealer interviews complete
⇒ Collector survey launched (ATG, Brandt, Art Newspaper)
⇒ For publication September/ October 2010
A.BACKGROUND
B.BUSINESS MODELS
C.The MARKET and COMPETITION
D.BUYERS
E. ETHICS
F. ROLE of the ASSOCIATIONS
• Dealers are old
• Family businesses are important but diminishing
• Dealers are well-educated, but not always in art
• Scholarship and academia are becoming more
important, especially with growth of dealer services
• Small businesses and tight cost control
Arts economics study_prague_2010_97-2003_version
Time
Case by
Case Mix
Case by
Case Mix
The traditional, shop front retail gallery is in decline:
• High fixed costs
• Low foot traffic
• Event-driven market place
• Moving online
• Shift to services and away from stock
Gallery survivors:
• International brands
• Small one man shops with low rates and/or high traffic
• Multi-service, one-stop, general cost-effective stores
• Fairs are integral part of dealer businesses
• High expense but important for sales, marketing,
new clients
• Important for collaboration and competition
• Bell curve growth in popularity and quality over
time
• Commercial fairs - undersubscribed versus dealer-
run fairs - oversubscribed
• Nearly all dealers have website and “conduct
business” online
• Online channel has been critical in:
 Searching for stock
Allowing buyer access
Communication and marketing
Low cost imaging and distribution
Sales to existing clients or trade
 Increased transparency (good and bad)
Arts economics study_prague_2010_97-2003_version
• Poor business planning
• Difficulty accessing financing and credit
• Regulatory issues
- Export and import regulation
- Droit de suite
- Paperwork
- Taxes
- Employment related costs
• Two main areas of competition- supply and auctions
• SUPPLY- Difficulties in sourcing have grown since
1970s and more competition in sourcing than selling
• Dealers do collaborate to source and purchase works
• Artists are also new competitive force
• Shift in market power in 1980s
• Auctions moved into retail and actively wooed clients
• Auction houses in the money business and dealers in
the art business
• Head to head competition has intensified over last 20
years but symbiotic relationship remains
• Need for dealers to show recognizable value added
and differentiation of services
• Recourse and
guarantees
• Specialist knowledge
and expertise
• Discretion
• Access and sourcing
• Higher quality stock
• More choice
• Better value (lower
prices)
• Better/more services
• Longevity
• Advice, education, taste
• Less stressful PoP
• Trustworthy/ ethics
• Privacy for sellers
Art Buyers have changed over time:
• Geographically broader base
• More varied motives – including investment
• Wealth has become polarized
• Some sectors aging out, others getting younger
• Tastes changing
• Corporates have dropped out, trade still important
• Recession and buyer caution - especially middle market
Arts economics study_prague_2010_97-2003_version
Why and how they buy has changed:
• From class to fun, nostalgia, heritage, buying green
• Personal contact and online channels are key
• Paradox of more information but less knowledge
• Increasingly strict on condition
• Require greater consumer protection in Europe
Unregulated market + large sums of money
exchanged = ethical issues
• Lack of knowledge and professionalism
• Lack of standards, qualifications, ethical enforcement
• Authentification and valuation is not an exact science
• Public criticism of colleagues – is collegiality dead in fight
for profit?
• Association watch dogs but “anything goes” online
• Ethics of auction peers can be even more questionable
Key roles are:
1. Lobbying government
2. Running fairs
3. Industry accreditation/ prestige
PLUS - legal assistance, networking, websites, education,
media coverage, making art more accessible...
NB. It is not all one way - dealers need to contribute to
associations to make them relevant
Key problems are:
1. Inadequate policing
2. No real teeth
3. Need stricter requirements on entry
4. Meet too infrequently
5. Relevance outside association and market
6. Need to collaborate more on research
www.artseconomics.com

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Arts economics study_prague_2010_97-2003_version

  • 2. • Study commissioned by CINOA to investigate changing roles and business models of art and antique dealers: historical, current and future perspectives • Context: void of dealer research • Method: qualitative, largely interview and survey based • Progress to date: ⇒ Dealer interviews complete ⇒ Collector survey launched (ATG, Brandt, Art Newspaper) ⇒ For publication September/ October 2010
  • 3. A.BACKGROUND B.BUSINESS MODELS C.The MARKET and COMPETITION D.BUYERS E. ETHICS F. ROLE of the ASSOCIATIONS
  • 4. • Dealers are old • Family businesses are important but diminishing • Dealers are well-educated, but not always in art • Scholarship and academia are becoming more important, especially with growth of dealer services • Small businesses and tight cost control
  • 7. Case by Case Mix Case by Case Mix
  • 8. The traditional, shop front retail gallery is in decline: • High fixed costs • Low foot traffic • Event-driven market place • Moving online • Shift to services and away from stock Gallery survivors: • International brands • Small one man shops with low rates and/or high traffic • Multi-service, one-stop, general cost-effective stores
  • 9. • Fairs are integral part of dealer businesses • High expense but important for sales, marketing, new clients • Important for collaboration and competition • Bell curve growth in popularity and quality over time • Commercial fairs - undersubscribed versus dealer- run fairs - oversubscribed
  • 10. • Nearly all dealers have website and “conduct business” online • Online channel has been critical in:  Searching for stock Allowing buyer access Communication and marketing Low cost imaging and distribution Sales to existing clients or trade  Increased transparency (good and bad)
  • 12. • Poor business planning • Difficulty accessing financing and credit • Regulatory issues - Export and import regulation - Droit de suite - Paperwork - Taxes - Employment related costs
  • 13. • Two main areas of competition- supply and auctions • SUPPLY- Difficulties in sourcing have grown since 1970s and more competition in sourcing than selling • Dealers do collaborate to source and purchase works • Artists are also new competitive force
  • 14. • Shift in market power in 1980s • Auctions moved into retail and actively wooed clients • Auction houses in the money business and dealers in the art business • Head to head competition has intensified over last 20 years but symbiotic relationship remains • Need for dealers to show recognizable value added and differentiation of services
  • 15. • Recourse and guarantees • Specialist knowledge and expertise • Discretion • Access and sourcing • Higher quality stock • More choice • Better value (lower prices) • Better/more services • Longevity • Advice, education, taste • Less stressful PoP • Trustworthy/ ethics • Privacy for sellers
  • 16. Art Buyers have changed over time: • Geographically broader base • More varied motives – including investment • Wealth has become polarized • Some sectors aging out, others getting younger • Tastes changing • Corporates have dropped out, trade still important • Recession and buyer caution - especially middle market
  • 18. Why and how they buy has changed: • From class to fun, nostalgia, heritage, buying green • Personal contact and online channels are key • Paradox of more information but less knowledge • Increasingly strict on condition • Require greater consumer protection in Europe
  • 19. Unregulated market + large sums of money exchanged = ethical issues • Lack of knowledge and professionalism • Lack of standards, qualifications, ethical enforcement • Authentification and valuation is not an exact science • Public criticism of colleagues – is collegiality dead in fight for profit? • Association watch dogs but “anything goes” online • Ethics of auction peers can be even more questionable
  • 20. Key roles are: 1. Lobbying government 2. Running fairs 3. Industry accreditation/ prestige PLUS - legal assistance, networking, websites, education, media coverage, making art more accessible... NB. It is not all one way - dealers need to contribute to associations to make them relevant
  • 21. Key problems are: 1. Inadequate policing 2. No real teeth 3. Need stricter requirements on entry 4. Meet too infrequently 5. Relevance outside association and market 6. Need to collaborate more on research