Art and Antiques from the Marketing Viewpoint - Essay Example

Art and antiques The aim of the work is to see art from the marketing viewpoint; it is no secret, that marketing at present relates to all spheres of human life and art is no exception. This is why it will be interesting to look at modern art as the object of sales, the situation with modern art marketing in the UK and in the world and to conclude whether modern art can be supposed to be a profitable means of investment. It should be admitted that the UK is the second leading art market in the world; according to the approximate estimates, the amount of the revenues in the year 2005 for the sales of the fine art of various kind was equal to 4,245 million, out of which modern art constituted 722 million, and the number of employees in the art industry was 37,000 in 1999. (MTI, 2005) The modern art market in the UK equals to 26% of the world market, and 50% of the European markets. Modern art includes the works dating since the middle of the 2oth century until the present time. It is notable, that with the changes of the surrounding in which we live, with changing quality and inner style of art, it is also becoming more marketing and some critics even state that modern artists work depending on the marketing conjuncture and the needs and demand at the market; moreover, with the development of media the popularity of selling art through Internet and online auctions acquires new meaning and can soon become the principal means of selling modern art all over the world. The demand for modern art, as well as the prices and revenues tend to go along with the economic cycles; moreover, through the periods of economic recession art appears to be one of the most vulnerable areas and is seriously damaged by financial losses and low demand. As it has been said, the main aim of the work is to conclude, whether the modern art in the market is an attractive object of investment; this is why it should be noted that art was always viewed as the means of investing finances, its profitability is much similar to that of the stock market. (Moore, 2004) Since much art and antiques are viewed as an investment, the art market index correlates approximately with that of the stock market; however, a healthy stock market and higher interest rates also attract capital away from alternative investments. This is because stocks and cash savings produce dividends and returns that are more attractive, when the stock market is buoyant and interest rates high, than the capital exchange value of art and antiques.' (Moore, 2004) It is notable, that recent years have become a landmark in the demand for modern British art - it was constantly growing. The works of art produced through the period of 1920 to 1980 (the period which is supposed to be contemporary) are selling well, and all styles of modern art from conservative realism to post-war abstraction are equally demanded. In order to understand the reason for the positive changes in the UK modern art market and to discuss the principal distribution channels about it, it is worth looking into the depth of the modern art market in the country. International art movements were traditionally much more popular than modern British art, making it come back to the background of the European art market and thus losing its popularity. 'The British have always been peculiarly apologetic about their hometown talents, preferring instead to extort the virtues of their European and American counterparts.' (Woolmer, 2004) Only the recent ten years have become the note of the shift towards the attitudes in the British modern art and the Cork street is now becoming the principal distribution channel, earning serious profits on promoting British art, though only now the British masterpieces start to catch up with the European works of the same level in financial estimates. British art has always been noted to be 'underpriced' and only now the prices for the works of British modern art start to reach the level of their quality. For example, the gentle oil of Sennen Cove by Laura Knight was the real stir at Sothby's this year and was sold for 95,200. (Woolmer, 2004) The weak performance of the British inner art used to be linked to the diversity of this area. Modern art is the complex field which cannot be described by one single characteristic, which also determines its position on the market. It is so diversified and so various, that it is difficult to direct it to the strictly limited audience; it can be viewed as both the advantage and the disadvantage when the works are put into the art market. On the one hand, having more diversified audience, the chances to find the understanding good client for purchase may seem easier; simultaneously modern art is a very peculiar sphere and needs special approach. Modern British art cannot be divided into separate artists' groups; there is no single line through which British art has been developing through the previous century. Modernism used to be the prevailing feature of the painting art in Britain through the 20th century, which is actually responsible for the British modern art being lop-sided in this period and acquiring additional importance displayed by its stable marketing position now. 'Historians traditionally look for a tangible evolutionary development, but, as such a thing does not exist, much that could not be interpreted within the terms of a dominant avant-garde ideology was overlooked or rejected. British artists of the period were inherently individual, largely isolated from the fashions and movements that took hold of the continent and the us, thanks in no small part to two world wars. They pursued individual areas of personal interest unrestrained by any overt ideology.' (Moore, 2004) From the marketing viewpoint, the examples of good quality painting are very well sold. It may even be stated, that the demand for a certain category of painters has already formed; moreover, modernism is one of the trends which is the most popular and highly estimated among other British painting trends. Only two years ago British modern painting was able to break the line of costing 50,000 pounds and go beyond it. Post-war and abstract British works are now highly popular in Europe and all over the world, and take about 37% of the general art market of the UK. (MTI, 2005) It is also implied, that British art market in modern trends is yet to mature; many modern artists have not yet achieved the level of creating masterpieces, thus there is a large growing potential in this relation. 'Signed silk-screens by Bridget Riley can still be found for around 1,000 [pounds sterling], for example, but two years ago the price would have been as little as 300 [pounds sterling]. Rawlin puts the surge of interest in post war avant-garde art down to the fact that for twenty-first-century consumers the 1950s and 60s are seductively nostalgic. This nostalgia is perpetuated by the current pervasive fashion for all things retro--from interior design to objets d'art. Huge, impasto abstract canvases adorning cavernous, white-walled loft-conversions are, for the moment, the epitomy of hip' (Woolmer, 2004) The British art market, especially in terms of modern art, has always been London centered, but the growing tendency is that it will attract more American connoisseurs, and the number of American collectors is increasing; thus America can become one of the distribution channels of the British modern art, though this channel is yet to be developed. The Royal Academy of Arts, holding annual Art fair has become another distribution channel for the modern arts and thus a chance for the modern artists to sell their works at competitive prices. The Art Fair has existed for more than 15 years and has become the valuable instrument of promoting the works of art, gathering professionals and amateurs willing to buy modern paintings. The fair is stated to acquire strength with every new year and displays healthy potential for the development of the British art market in general, and not only in the sphere of modern paintings. During the last years of the twentieth century the explanation of the growing success of the modern British art has become the subject of several articles (Woolmer 2004, Moore 2004). However, it should not be concealed, that Internet and online auctions have made art international, and have eliminated the borders for its promotion; but it should not be forgotten that new galleries opening in the UK are also a certain kind of distribution channels especially for the modern art. Of course, the pushing factor for the development of the British market of modern art was the organization of various auctions and shows; these shows have served as the means of increasing salaries for artists, which ultimately led to the growing number of art works on the market, giving broader choice to both amateurs and connoisseurs as well as creating competition and making artists strive for better quality. In relation to incomes, which are the integral parts of the British art market, a number of initiatives have been implemented. The latest one was called a Proposal from the European Commission to harmonize the right of artists for resale. This right entitles the artist during his right and during 70 years after his death to pay certain amount (percentage) of the reselling price to the owner or to his successors in title. This percentage is paid whenever the resale is performed through an art market professional (dealer or auctioneer). The harmonization of this right could allow increasing the salaries of the artists, but there are certain arguments against its implementation, the principal of which is that only a few living artists would benefit from this right, but it will cause auctioneers to switch on to other markets outside the EU, where this right does not exist and thus it will work against the already formed British marker of modern art. On the other hand, the absence of the resale right in the British art market can both work without distorting the European market of art, as well as becoming the moving factor in British painters producing larger amounts of works, rather than relying on the resale's percentages. The evidence that London and New York have become the centers for the active growth of the artist' communities, is another proof for the fact that artists are able to exist and survive and work without the proposed financial stimulation. (MTI, 2005) British market of modern art consists of the large amount of sole agents, auction houses and small enterprises; they appear to serve as a part of the distribution system in the art market. There are also dealers who operate on the local level, as well as regionally and internationally. The development of the modern art market in Britain is rather rapid at present which can be seen through the following facts: 1. Galleries magazine, which serves as the guide for both amateurs and connoisseurs of modern art (and not only modern) increases the number of new galleries with each new issue; 2. Another printed edition, the Merlin Scott Associates Industry Report is one more proof for the developing modern art market in the UK - its pages list all galleries of the UK, with thorough analysis of the art industry; it is clear with if the market was not developing, these magazines would not exist at all; 3. The principal representations of the modern artists and their art can be viewed through the Young British Artists organization; it is presented at the international level and is known world-wide. 4. The galleries like White Cube represent modern artists and their works, becoming the promotion factor for them and for their development. 5. The British Council has also become the instrument of representation of the British modern artists at the international scene. (Moore, 2004) The British modern art market not only provides certain amount of revenues for some industries, but is also supported by other sectors. The number of visitors to the UK, the primary aim of whom is art, spent more than 2,000 million pounds on the works of modern art in the UK. The market shows great potential for growth; the basis for this statement is in the fact that art market (especially modern art market, as it is mostly presented by modern living artists) greatly depends on the general economic prosperity of the UK. 'On average, firms within the industry are exercising tight financial control of their debtors and creditors. This being the case, working capital requirements have decreased. This indicates that overall expansion within the industry is a possibility' (MTI, 2005) The productivity of the modern art industry within the UK was declining through the period between 1997 and 1999. This was connected with the general employee productivity across Europe at the same period of time. By the end of 1999 the country has displayed the decreasing debt ratio trend, which was the evidence of the firms working with higher profits and thus being able to pay off the debts. (MTI, 2005) The same situation was observed at the art market, where art enterprises started to more actively work with modern artists and with the paintings which can be related to the period of post-war and modernism. The market of modern British art as becoming the means of gaining additional profits; however the threat exists that these profits will be minimized with the harmonization of the European and British legislation, which has been mentioned in this paper. Efficiency of the British art market (including modern artists) has been made more efficient with implementation of the 5% VAT on the imported works of art. (Woolmer, 2004) On the other hand, this has put additional taxation burden on the professional dealers, and it should still be admitted, that the American market of modern art grows faster than that of the UK, and though European art market was always ahead and its volumes were the biggest world-wide, it is not predicted that the US market of modern art may become the leading market for the first time in history. Between 1994 and 1999 the decline in importing the works of modern and modernism artists within the UK has declined 25%, the reason for this decline was that dealers were preparing themselves to the legislation harmonization, which has also caused the 2% decline of the UK market share in the European modern art sector. (MTI, 2005) It is worth considering Internet, e-commerce and computer technologies as the integral part of the British modern art market; actually, it is possible to admit that Internet is becoming the major distribution channel for this type of works. In 1999 the percentage of the online sales in British modern art market was not higher than 0.3% (MTI, 2005). In 2007 the total percentage of the online sales in the British modern art market will be equal to 10.3% as predicted. The reason for this is explained through the fact that the UK is the fourth world country by the number of people who have Internet access (after the US, Germany and Japan). 27% of adults within the UK have access to Internet and many auction houses, as well as companies use Internet for selling and buying works of art, as well as for bidding on them. 'The Internet also provides a medium to potentially liquefy the market. Commercial galleries in the UK are increasingly using the Internet to promote themselves and their artists'. (Moore, 2004) The search engines have become a valuable means of searching through the online auctions and websites of the action houses, which are used both as the advertising and as the means of contacting them directly through giving all contact details for those who have additional questions after surfing through the website. The online auctions acquire additional meaning in the world of global communications, making art market of modern paintings and related products international. The search of the necessary or desired product has become much easier with the implementation of Internet technologies and the working auction houses and enterprises dealing with modern British art recognize the need in expanding their business, which is impossible without using online appliances. Moreover, the number of online offers in the sphere of modern British art is constantly growing which can be traced through any search engine, as it has already been noted. The core of the art market success in Britain lies in the fact that the buyers are given wide range of choices in what they want to buy; however it is still necessary to investigate source markets, and to make the British market of modern art expanded and 'more international' if it is possible to use such expression. The speculative demand should not dominate the market, and this will ensure that consumers and investors into the works of modern British art will be confident in the quality of services provided by the art market auctioneers and enterprises. As far as the principal auctions have already gained enough popularity, to develop the market and to give it enough stability and potential for growth, other market players (participants) with smaller sizes and smaller turnovers will need to concentrate their attention on going deeper into the marker research in terms of modern art, as this share of art market in Britain is very promising, and should be addressed with more attention and understanding. Conclusion Works of art were always a profitable means of investing money, and many people understand the value of paintings as potential assets. Moreover, it is becoming popular to invest into the works of modern artists. It has been shown, hat the modern British art is at the stage of its active development at present, with specialists and connoisseurs understanding its profitability and giving it special place on the market. The prices for the works of modern British artists grow, giving them opportunity to work and to increase their productivity; the works of modernism and of the post-war period are mostly demanded at present. With the threat of harmonization of the UK and the British legislation then sales of modern works of art may decrease, and this is why there should be developed state policies aimed at supporting the young artists. The UK now displays the rates of the art market growth, which are lower than those in the US, which is a notable factor and must be addressed as well. Modern art in Britain is developing, which is seen through the number of galleries representing the works of modern art, as well as with the number of the artists' communities (especially in London, with YBA being the most prominent of all). The recommendations which should be taken into account for the better modern art market development are those which concern illegal trade (it should be eliminated at the state level) and tax policies - it is more beneficial to set a number of regulations for the direct dealer-seller contracts, than putting additional tax burden on those who sell modern works of art; correct regulations will support enterprises and promote their legal development for the benefit of the market as a whole. References Market Tracking International 2005, The Art and Internet report. MTI. Moore, S 2004, Record auction sales at astonishing prices reinforce the growing strength of the contemporary and modern art market, but buyers will not compromise on quality and condition. Apollo, June. Woolmer, S 2004, Modern British painting: after decades in which twentieth century British art was seriously undervalued, prices for paintings are finally beginning to reflect the quality of the works. Apollo, September. 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