Thursday, October 16, 2008

What happens to artists in a recession?

What are the questions that artists are asking about the impact of the changes on the economy? These are the search queries that are referring people to my new information site Art and the Economy - Resources for Artists
  • art marketing in a bad economy
  • articles on artists and recession
  • being an artist in today's economy
  • fine art and the economy
  • how do artists survive recession
  • how economy affects art business
  • how does the economy affect the arts
  • how does art benefit the economy?
  • is the economy affecting visual artists
  • selling art affected recession
  • selling art during recession
  • selling art in a recession
  • selling art in this economy
  • visual artists, what to do in a recession
You get the gist?

St Paul's from Tate Modern 02.10.08. 6pm
coloured pencils on Arches HP

copyright Katherine Tyrrell

What is a recession?

Equity markets in London and Europe endured further heavy selling on Thursday following the biggest falls on Wall Street since 1987 and more losses in Asia as worries about a prolonged global recession gathered momentum
The Financial Times 16.10.08.
First a quick reminder of what a recession is. A recession is when growth in the economy falls for two quarters in sucession. There is more or less common agreement now that major economies are heading for a recession and some are already in one. Warnings are being issued that the recession is likely to be prolonged.

The major fear now is whether it deepens into a depression - a sustained downturn in the economy which equates to a 10% reduction in gross domestic product. The difference between a recession and a depression is pretty big.

What happens to the art economy and artists in a recession?

It's confusing sometimes when you read articles about art and the recession - because they're often written from one perspective or another - and that might not be yours.

Here's a summary of thoughts collected from various sources from published articles to discussions with artists and gallery directors. Lots of people are saying the same sort of things hence the lack of accreditations.

I've summarised them under different perspectives starting with the collector, moving on to the galleries and finishing up with the artist. It's a complete mix of the dead pan factual and the more upbeat and positive beliefs.

The Collector's point of view
  • People with a secure income and a taste for art will continue to buy.
  • Fine art has a reputation as a safe haven at times when the stock and money markets are stressed and falling. "Big name" art will always continue to be attractive to collectors who can afford it
  • Contemporary art appears impervious to market meltdown. Many collectors continue to feel the art market is a safe place for their investments. (That doesn't make them right!)
Has not the incredible rise in contemporary art prices mirrored the financial hay-making all around that has brought us to the brink of a depression? In the world of the irrationally exuberant, was there anywhere less rational and more exuberant than the contemporary art world?
Financial Times - Can art save the world?
  • Highly valued art (art with credentials) will always be an attractive purchase.
  • Emerging market billionaires have been channelling some of their money into art - but these are people who have hundreds of thousands if not millions to spend. There is no ripple down effect.
  • People whose wealth comes from owning shares and property will feel less wealthy during a recession if the values of their portfolio and property values take a battering.
  • People with 3 properties may trade down to 2, those with 2 may trade down to 1. If they stopped spending money altogether they would really feel poor and that simply will not do!
  • Art may hold its value better as an investment than other commodities. On the other hand art may turn out to have been overpriced. It's debateable whether art has become the new gold - unless it's paintings by old masters.
  • Young professionals and people who need to invest in increasing their cash reserves, save for a 25% deposit on a house or have rising debt repayments will have much less money available to spend on art.
  • People who can't afford to move house may well look at other ways of making themselves feel good - such as redecoration. So they may need new art!
  • Astute collectors know that this is a good time to discover new artists and to be able to buy before they become too expensive.
  • If you can afford to do so, it's also an ideal time to start collecting art that you enjoy.
The gallery and auction rooms perspective
  • In time of economic difficulty, the traditional view of galleries is that the middling art world struggles while the high and low ends thrive. Auction houses agree that uncertainty prevails in the middle of the contemporary art market.
  • Some believe the top of the cycle in terms of prices may well have been reached - the issue is how fast and far the slide will be. (Gold fell in value yesterday)
  • Galleries know that there are still a lot of people around a secure income and/or money to spend who don't want to invest in stocks and shares. This ranges from the very rich to those on a secure pension.
  • Dead artists keep prices high due to the constraints on supply - there will be no new art!
  • Emerging artists without a track record or credentials may be a very risky proposition for galleries
  • Galleries are more likely to survive if they've been established a long time and/or have the experience of how to manage the business during a recession and/or have a strong client list of people who are still buying.
  • Some galleries with a presence at gallery only art fairs (such as Frieze which opened yesterday) continue to do good business, while others will now find them uneconomic
  • Interest in buying has already fallen away at the lower end of the market. Galleries targeting the entry level and mid-market investors face a major challenge and for some the prospects are very bleak. (Artists are recommended to assess their galleries from the perspective of whether or not a gallery has a strategy for surviving the recession. Otherwise they may find their art behind locked doors which won't be opening for business again.)
  • Newish galleries are very vulnerable. They probably carry a large amount of debt and will not yet have a strong track record with a large number of buyers.
  • Galleries without a strong client list may fail (if they haven't already)
  • Galleries that will survive will be those who think of ways of continuing to interest (rather than irritate) their clientele in visiting the gallery and seeing new works
  • Very successful galleries which know what they're doing expand during a recession - into places others can't afford to be or go. They create a market in the face of challenges.
The artist's perspective
  • Quality work will always sell. There are always going to be enough people unaffected by a recession who will continue to buy art. Now is the time to focus on making your art the very best you can make it.
  • Companies go bust but artists don't - they can continue to produce, so long as they produce good quality work, keep their costs under control and don't overprice their work
  • Artists with extensive client lists will be in a stronger position to ride out the recession - while those without a client list won't be getting any repeat purchases.
  • Well established artists with long established galleries that have survived previous recessions are more likely to continue to sell
  • Smart artists have already weeded out their weaker galleries and moved on to other selling opportunities
  • Sales of artwork are helped if you live in towns which are less vulnerable to a recession (Check out this Forbes article on America's most and least vulnerable towns)
  • Less well known artists are bound to feel the pinch
  • Artists who can't afford to stay in the market will leave it. In other words people who rely on their art for their bread and butter income will have to find other work if their work is not selling
  • Artists who need to clear their debt or make their payments will need to be certain of where their income is coming from - and it won't be from the day job in that gallery that has just folded. Their art may need to become part-time while they focus on keeping a roof over their head by working in another field
  • Hobby artists may be able to continue to sell for hobby prices - but selling fees may take a chunk of that market out for good.
The most interesting perspective is that the recession will change the nature of the art that is made - that great art always comes out of confronting difficulty.
Autumn 2008 already feels like a dramatic watershed moment in world history - could it mark also the beginning of a shift away from the view of art as little more than a desirable commodity, and back towards its ancient role as a crucible for mankind's most progressive ideas?
Financial Times - Can art save the world?
Do share your thoughts by using the comments function.

Links to previous posts on Making A Mark about artists and the art economy


mongoose1 said...

Phenomenal post Katherine.

JoAnn Sanborn said...

Just the subject for my once-a-month artist tabletalk luncheon today! Thanks, Katherine

janabouc said...

Since many artists supplement their income from sales with teaching, it would be interesting to hear your perspective on how teaching art privately or in public institutions will fare in these difficult times. I so appreciate the combination of your wisdom as someone coming from both a financial and art background.

Katherine Tyrrell said...

Cindy and Joann - thanks

Jana - Good question. Having a portfolio of income sources has always been one of the ways professional artists have stayed in business.

At the moment there's quite a few frightened people out there - not least the traders in the stockmarkets who haven't been through anything like this before in their lifetimes.

In a way once we all adjust to the fact that a recession is on its was and that unemployment is going to rise and demand and spending will drop it stops being quite so frightening. That then makes it easier to see what to do.

For example, prospective workshop students will get sensible about their spending (if they aren't already), they'll try and make sure that their spending is sensible rather than frivolous. They might even start saving up for things again rather than just putting them on a credit card!

In my view take-up on workshops is likely to drop in the short term while people are feeling scared - nobody's spending right now!

However demand will start to come back when people start to feel more certain about what's happening, how bad things are going to get and how it's likely to impact on them. Then people will start to spend again - but probably in a more careful way. I guess demand for all non-essential areas of spend is unlikely to run at the same level of demand for a quite a while - unless you're living in an area where people's incomes are less affected.

In terms of public institutions I can say with some certainty that there will be a lot of scrutiny of how money is being spent. It's very likely that we'll see cutbacks on areas of discretionary spend in order to bolster funds for aspects rated to have a higher priority.

I'd expect that how it all pans out in relation to teaching will depend to a very large degree on the characteristics of your local area and the nature of the local population.

One of the good things about art is that it's something that gives a feel good factor. It's nice to have something which makes you feel good when other things make you worried. So demand might still hold up.

I'd expect that looking at different ways you can package art instruction could be very productive. For example:
- How can you make it more affordable for people?
- How can you help people avoid big lump sum payments?

tracywall said...

What an excellent post, Katherine. Thank you for the education, reassurance and coaching all at the same time.

I think you're right-on about income diversification. I've been trying to put my finger on it and find the right words for what I've been experiencing in my work the last 6 months. Both my art and my other biz (massage therapy) ride the line between "frivolous expense" and something that offers a "feel good factor". I've taken a hit, but as bad as I might have expected. And I know the ride's not over.

And thank you for pointing out how this can be a catalyst about the nature of the art to be produced. It's got me thinking about my next series.......

Tracy said...

Excellent post, Katherine!

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