How Big is the Art Market?

POST BY PADDY JOHNSON

Marion Maniker at The Art Market Monitor tells us some guy at the price database website Artnet figured out that auction sales represent 20-25% of all art revenue. “That means you can take the annual auction turnover and multiply it—by 4 if you're being somewhat aggressive or 5 if you're being aggressive—to come up with the overall size of the art market,” Maniker writes. According to Maniker’s calculations, the market in 2008 was worth $40 billion, down $10 billion from the year before. Coincidentally, the author also compares these numbers to the revenue of the Internet advertising industry, which was at $30 billion last year. Given the small size of the art world, this mostly made me think that there’s likely a lot of room for growth in the Internet advertising industry.

In any event, Moniker tells us, 2009 will likely not look particularly good.

Both 2007 and 2008 were abnormal years for the art market. The problem with using 2008 is the very odd nature of that year. One half of it was record breaking, the other half was a huge drop.

Since then, we've seen sales activity slow even more. That lends credence to the idea that you pay for art with last year's money. Many buyers were still flush in the 12 months following last Summer when financial markets really started to contract. Now that buyers are paying with money acquired since the Lehman failure, we see much lower auction volumes. Obviously, we're also seeing much less offered.

So where does that leave us? Artprice conveniently breaks their numbers down into first half and second half numbers. For 2009, we know that Christie's and Sotheby's sold $2.5 billion worth of art in the first half of the year. That's somewhere in between 2005 and 2006 when the size of the art market could be around $16-20 billion or $25-32 billion.

Anecdotally, we see prices at levels closer to 2004. If we revert to that year's auction volume, the worldwide art market is $14-$17.5b. And even that year was quite strong compared to either the 2001-2003 art recession or even 1998 when the current art boom began. So the long answer is to Paddy's question—which we take to be “what's a healthy level for the art market, especially in these difficult times?”—is probably around $15 billion worldwide.