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Effects of the pandemic on the art market.

By Catalina Restrepo para Forbes México


Art went from being an object of desire to almost a necessity.



Foto: Cortesía de Zona Maco


The art market is peculiar; it's like the free-spirited and disobedient sibling of all markets. It does what it wants, follows its own rules, and when all the others are in crisis, art maintains or even increases its value by breaking historical records. Of course, artworks have a strong allure as they provide a sense of security; owning a Picasso, for instance, allows one to transport it to a place in better conditions and sell it there, regardless of the country's crisis. This isn't possible with a house or real estate development. Moreover, works categorized as "grand masters" will always find clients, as they go beyond what's seen in the painting or the mastery of its creation – they are historical objects with both tangible and intangible value; historical and cultural heritage.


But what about contemporary art? That is, art produced from the late 1960s to the present day. It's always surprising because one might think that in times of crisis, the last thing people would consider is buying art, and thus, it would be the first market to crash. However, the opposite happens. There's a highly recommended documentary that delves into this question: "The Great Contemporary Art Bubble" (2009) by Ben Lewis for BBC Four. In the midst of the global financial crisis of 2008, Lewis shows how the artist Damien Hirst – bypassing all protocols – breaks the record for a living artist, concluding the day with £111 million sold directly through the auction house Sotheby's. And not just any day, but precisely on September 15, 2008, the same day Lehman Brothers declared bankruptcy, marking one of the darkest moments in financial history.


Art Market During the Pandemic


Many wonder: How was it possible that in 2020 the art market not only didn't decline but was actually on the rise? From my perspective, the pandemic signaled a significant crisis, one we couldn't fully comprehend, primarily a humanitarian crisis but also an economic one. Many could take advantage, others not so much. However, what I dare say in a generalized manner is that it compelled all of us to reconsider priorities. Being confined led us to analyze our relationships under pressure, to see how strong the ties were that bound us to our families; to try working from home, to appreciate the time spent in pajamas while cooking something new, to invent new businesses; to take a break from social pressure, etc. We had time to – both literally and figuratively – closely examine the walls of our homes. Thus, art transformed from an object of desire to almost a necessity.


However, in the realm of art, it's important to make a distinction. There's decorative art and professional art. The former (which can be found in department and design stores, bazaars, tourist areas, etc.) derives its value from aesthetics and trends. Its value decreases over time, like furniture or objects that can be resold but at a lower price. Then there's the latter, which holds historical value and significantly appreciates in price over time. Professional art (that which is integrated into the legitimacy circuits of the art world, such as museums, biennials, fairs, universities, institutions, collections, etc.) involves conceptual exploration; it encompasses themes and discussions that reflect the era in which they were created, becoming capsules of time.


Practically explained, the tangible value of artworks – their price – is supported by the artist's curriculum. It shows how many specialists reviewed, awarded, recognized, exhibited, cataloged, and/or collected their work. Not because it sold a lot or was trendy, but because it was considered representative of its era.

So, from a transcendent angle, every piece of art that occupies a space stops being merely beautiful and becomes a conversation point; it's an object that represents, questions, stimulates thought, and simultaneously marks a moment in the collector's life. And in terms of investment, it has the advantage of increasing its value exponentially.


Digital Tools and Selling as JPG


Undeniably, until very recently (some still consider it the case), art had this intimidating aura. Like any investment, understanding the nuances of art requires a lot of information. However, in 2020, many people had time to educate themselves and get closer to art. Just like many other industries, art found digital channels and tools to reach both its regular audience and entirely new ones – there was no other way.


The pandemic undoubtedly cultivated new investors eager to collect art, and after the reactivation, they continued acquiring works with even more enthusiasm. This wasn't the case, for instance, with technology industries that skyrocketed during the pandemic but are now declining, resulting in significant layoffs.


The recent "The Art Market 2022" report by Art Basel and UBS analyzes how, while online sales and auctions increased by 78% in 2020, they stabilized at 48% in the first half of 2022. This situation isn't bad at all, as it's still double what was reported during the same period in 2019, before the pandemic.


The quarantine didn't catch us entirely unprepared (in the art field), as until just less than twenty years ago, there was still a debate about whether buying art through a photograph on a screen was even possible, given the romantic notion that valuing art required seeing it, feeling it, breathing it; and, of course, the experience is always better, but time has shown that people were willing to pay before seeing a piece in person.


Carlos Rivera – one of the youngest art market analysts to exist and also quite controversial for being the first to use algorithms and data to generate financial projections for emerging artists through his ArtRank page (which may not function as it used to, but made a mark in the art market) – in an interview, mentioned that in 2008, after the real estate crisis, he proposed a deal to the owners of a space in one of the best areas of West Hollywood, Los Angeles. The place was vacant, and he thought of setting up a gallery there. Everything was fine, but he quickly realized that sales were primarily being generated through photos in JPG files, so he gave up. This trend would only increase over the years. Galleries generally state that the majority of their sales are made through photos, even mock-ups and renders (digital simulations of how pieces would look in specific spaces). Not just photographic or digital pieces, but paintings, installations, sculptures, and even performances and videos.


NFTs and Blockchain


Furthermore, things have changed so much that there are even those willing to not possess the physical piece at all, ever! They find it fascinating to only keep their pieces in digital files. Of course, I'm referring to cryptoart.

According to a Research and Markets report published on December 9th, it's estimated that the NFT industry in Mexico will grow by an annual rate of 46.3% to reach $1.1237 billion in 2022. While astronomical prices have been reached, I agree with specialists who assert that it's still in its infancy. Although we now see images, animations, memes, and odd things turned into non-fungible tokens, the implications of this format for producing art give us hints of something much larger.


Blockchain, the technology behind NFTs, also solidifies the creation of Smart Contracts, i.e., decentralized contracts stored in a distributed database. This is extremely novel and impressive. For art, this represents a huge evolutionary leap. In the past, artists signed

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