Art market

A crisis hits the art market once a decade. What is different this time? Christie's president Dirk Boll assesses the impact of the pandemic

As his new book is published, the auction house chief compares coronavirus fallout to previous economic disasters

Dirk Boll Photo: Michael Kindermann

Dirk Boll Photo: Michael Kindermann

It was while helping Christie’s adapt its business to the pandemic era that Dirk Boll started writing down his thoughts on the crisis in the evening.

Now Boll, the auction house's president for Europe, the Middle East and Africa, has amalgamated those thoughts into a new book, published in German with a title that translates into English as What’s Different This Time? Economic Crises and New Art Markets.

We asked him to explain what distinguishes the coronavirus crisis from the previous art market crises that have struck about once a decade over the past 30 years—in 1990, 2001, and after the financial crisis in 2009.

TAN: One of the differences from the last crisis in 2009 is that this time, underlying economic fundamentals are not to blame. Those who were wealthy before the pandemic are still wealthy. Does that mean we can expect a quick recovery?

DB: This time, the crisis hasn’t destroyed big fortunes, at least not so far. Every crisis has winners and losers, and the winners become the taste-makers who will define market developments over the next period. We don’t have the insecurity about finances we had last time round, where people would say: “I would love to buy that but I don’t know if I can afford it because I have no overview of my investments.” In 2009, collectors were quite insecure about their own financial situation, and that is not the case now.

But the crisis has been devastating for art galleries. Who is most affected?

The companies in danger are the mid-size galleries because they have a high cost base and the business is not profitable enough to have big financial reserves. People with high rents in city centres will be the most endangered. As far as small galleries are concerned, we will always have young energetic people who do it because they love it. They are incredibly important because we need them to find the art that is then collected by institutions and appears on the secondary market later. But the gap between big galleries and smaller ones we started seeing before the crisis has widened.

Just as the finance industry’s taste has defined buying since 2001, the technology sector will define the market post-2020

In your book you talk about a growing concentration of art market power in the hands of global players. At the same time, you see increasing regionalisation because of the pandemic. How do these two apparently contradictory trends coexist?

We see it in other industries too. If you want to buy luxury goods, you either go for the regional and local where you know the people, the workplace and the craftsmanship, or you go for the global brand. We have five or six mega galleries, and then an incredibly large number of small local businesses. People will spend more time in their home communities and will look around at what’s there; the local museums, galleries, artists.

The pandemic has also hit consumer confidence. Could that have a more lasting effect?

A lot of art-buying is feel-good behaviour. But people have been buying a lot of expensive stuff online because they couldn’t go anywhere. This is true for the art market, but also for kitchenware or jewellery.

Which brings us to digitisation. You say in your book that the art industry previously dramatically underestimated collectors’ willingness to buy online. Can you walk us through how the pandemic has exposed that misjudgment?

Before the crisis arrived, people would say “oh no, in my collecting field, people don’t want to buy online, they want to see the real thing.” That is an arrogance of the western metropolitan elite. But if you live, say in Wuhan, you are not going to fly somewhere for something costing $20,000. The cult of the original is something we all feel, but there are ways around it. It might be enough to look at the original once you have the piece. If you buy online, you have a warranty so you can return it.

The art market will see the same development as the luxury goods sector. Twenty years ago, people said you have to see a luxury handbag before you buy it. Now all these products sell twice as fast online as they do in stores.

We were forced to move online because no one knew how long the lockdown would last. Some consignors said they didn’t want to sell online, and decided to park their works and wait to see what happens next year. But others needed to sell, perhaps because they had to pay inheritance taxes. So more and more expensive things were offered online only, and they were picked up. And prices went up. So more consignors agreed to offer art online. There was an upward spiral.

How much will remain online permanently, and how much will return to the real world?

It depends on two things. One is the fear of missing out—a certain social part of the art world will come back, and in two, or three, or five years’ time, people will be very happy to go to a fair again. People love to look at art, and that’s what drives collecting. But if you think about discovering new artists, speed plays a role, and people might stick to online buying because it’s a competitive advantage.

It also has to do with who is the next generation of buyers. When I started at Christie’s a lot of people sent in bids by letter, there were only a few telephone bidders. When people who grew up with internet accessibility come to the market, they will change it. The art market still reflects the financial world – New York, London, Paris to a lesser extent. But people aren’t only in New York and London any more.

Which brings us to the question of the winners of this crisis. Technology companies have benefited enormously from lockdown conditions.

Just as the finance industry’s taste has defined buying since 2001, the technology sector will define the market post-2020, and we are already seeing this. When we see Dana Schutz and Andy Warhol at the same price as we did in Hong Kong recently, this is the start of it.

  • Dirk Boll’s book Was ist diesmal anders? Wirtschaftskrisen und die neuen Kunstmärkte is published by Hatje Cantz.