The past several years have seen incredible growth within the art market, with year-to-year sales at Christie’s, Sotheby’s, and Phillips doubling to $5.9 billion in quarter one of 2021. But all of that growth has left many in the industry wondering, “Are we doing enough to ensure the long-term sustainability of the industry?”
What’s driving the growth of the art industry?
The rise of NFTs, virtual reality-enabled galleries, and online auction houses have spurred much of that growth. But technological advances haven’t been the only thing driving the increase in value within the art industry. The industry has also seen a large influx of new, younger collectors. And on top of all that, there’s the sense that artwork may be a solid investment.
According to a recent report, art sales were up 28.2% on average between December 2019 and June 2021. Compare that to increases of 31.4% in developed market stocks, 28.4% in emerging market stocks, and 3.1% in investment-grade bonds. Based on those numbers alone, artwork may be just the thing to round out an investment portfolio. And it becomes even more desirable when you realize that art tends to be more independent than other investments, not closely following any other asset class.
Artwork isn’t just an investment, even if many people today are treating it as such. In fact, this is one of the biggest changes going on within the art world today. People are treating art more and more like a mere asset class, along the same lines as stocks or bonds. But these things are fundamentally different from one another.
Ethical concerns in the art industry
Treating artwork purely as an investment raised important ethical concerns. Unfortunately, the speculative market we find ourselves in doesn’t lend itself to thoughtfulness or nuance. But that doesn’t mean that no one is doing the hard work of developing ethical guidelines for collecting and investing in art.
In 2020, several collectors around the world teamed up to form The Ethics of Collecting, a think tank dedicated to developing ethical practices for collecting artwork. Their goal has been to generate “ways to promote transparency in a field in whose ethics had, until then, remained unwritten.” After collaborating, they developed a document that lays out some of the most important things to keep in mind and do when purchasing artwork, from how to interact with artists to the best ways to support art-focused institutions.
In addition, they warn about treating artwork as if it’s nothing more than a commodity to be bought and sold. Their goal is to create a sustainable living for artists while giving them the freedom to create artwork which reflects their vision.
The need for transparency
Many of the issues addressed by the work of The Ethics of Collecting comes down to a single, simple issue: transparency. For years, the art world has been far less than transparent. It’s been a problem that’s plagued art galleries, auction houses, and others. The desire to make as much money as possible off of every piece of artwork has led people at every stage of the sales process to obfuscate.
This doesn’t just hurt naïve buyers either. It hurts artists. And it ultimately hurts industry as a whole.
Fortunately, recent advances in blockchain technology are poised to bring big changes to the art industry. The blockchain isn’t just making NFTs possible. It’s opening the door to a host of incredible innovations, including some which will address the issue of transparency.
Collecting and investing in artwork is rapidly changing. That’s why it’s never been more important to think through the implications of our practices and how to make them more ethical.
