A brief look at the art market
Tuesday, 17 January 2023
Do you like going to the museum? I was at Neue Nationalgalerie over the weekend. It's a museum for modern art, with its primary focus on the early 20th century.
Among the Neue Nationalgalerie's most famous and iconic works are "Potsdamer Platz" by Ernst Ludwig Kirchner, "The Skat Players" by Otto Dix, and "Who's Afraid of Red, Yellow and Blue IV" by Barnett Newman.
I stood in amazement in front of the valuable masterpieces. And I wonder (since I am an economist) how valuable they are.
It's not that easy to find out. Because the value of a work of art only becomes apparent when it changes hands with the highest bidder.
A few facts about the art market.
Private sales represent about half of market transactions. But no one knows for sure. The art market is a special one. Mysterious at times. Sometimes weird. It’s a market where “a handful of big names get all the headlines and most of the dollars,” I’ve learnt while listening recently to a three episodes series "The Hidden Side of the Art Market" from my all-time favourite podcast Freakonomics.
If the number is roughly correct, then auctions represent the other half of the art market turnover.
These numbers are publicly available.
Global art auction turnover was about 17 billion US-Dollars in 2021. This was a 60 per cent increase compared to 2020 (check turnover chart from 2008 to 2021).
The top three national markets in the global art market (China, the USA, United Kingdom) accounted for 80 per cent of global art auction turnover. France is fourth and far behind, and Germany is fifth (check this chart by countries).
And the auction market is close to a duopoly. Sotheby's and Christie's hammer 49 per cent of the global art auction market.
It's a fortune – I thought as I strolled through the exhibition – that large parts of great art are accessible to everyone. That is because state museums participate in the private art market buying art. Also because private art collectors often exhibit their collections in public. I like that a lot.
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