The Art Law Review: Editors' Preface
We are thrilled to present the second edition of The Art Law Review. The response from around the world to the first edition was extremely positive, for which we are very grateful. We have again invited leading practitioners in the art law field from around the world to update the key developments in their respective countries and the most significant issues in this important area of law. We trust that you will find them equally informative, instructive and interesting.
We thought that it would be appropriate in this edition to begin with a review of the effect of covid-19 on the art world during this past year and a half. The pandemic of course upended every aspect of life, and the art market was no exception. But there were some surprising developments in the midst of the difficult period we all experienced.
First some numbers. In 2020, global online sales reached a record high, but overall sales experienced a decline.1 Online sales of art and antiquities accounted for 25 per cent of the market's value.2 Overall ancillary spending was down, due mainly to the lack of art fairs, while funding went instead to IT resources of new online platforms. Of the various art sectors, auctions were most successful during this period, while galleries were hardest hit.3
In human terms, many galleries had to furlough or permanently lay off staff in 2020. Support came mostly from virtual programming and assistance from the federal government.4 For example, Hauser & Wirth never held online shows before 2020 but quickly developed a platform with its own virtual reality technology.5
Similarly, Sotheby's, Christie's and Phillips all enacted an accelerated digital shift, adding hundreds of online-only sales. They still suffered, however, with Sotheby's US$5 billion in sales representing a 12 per cent drop from 2019. Sales at Christie's fell 22 per cent to US$4.5 billion and at Phillips they were down 11 per cent to $646 million.6
But prospects are vastly improving this year. Global sales in the first six months of 2021 have more than rebounded and exceeded pre-pandemic levels at all three auction houses. For example, Sotheby's and Phillips' 2021 sales have so far exceeded those in 2019 by 13 per cent and 8 per cent, respectively.7
From a global perspective, the pandemic effected a significant change in the prevalence of Asian collectors. For the first time in Christie's history, Asian collectors outspent US collectors in 2020. Similarly, Asian collectors accounted for more than a third of the buyers at Sotheby's worldwide auctions last year.8
Now let's dig down a little deeper to discover some interesting trends during the pandemic and a few far-reaching effects for the art market's future.
I Auction houses
The prevalence of online buying during the pandemic caused many collectors to spend large sums on works they had not seen in person, relying on condition reports, provenance and high-resolution photographs. Asian collectors seemed particularly interested in online purchases, sight unseen, and their interest in Western art grew accordingly.9 Indeed, due largely to a shift to online sales brought on by pandemic lockdowns, the contemporary art market surged from June 2020 to June 2021, recording US$2.7 billion in sales.10 A portion of this increase was also due to the popularity of non-fungible tokens (NFTs) resulting from the surge of young crypto-millionaires suddenly eager to invest in art. The new generation of millennial collectors purchased art on an average of US$378,000 per item, much higher than other generations.11
II Art fairs
The attendance at recently renewed art fairs during the pandemic has become smaller, younger and more local. The number of exhibitors was one-third less than pre-pandemic, but the presence of local contemporary art galleries increased.12 For example, sales at Art Basel in September 2021 were strong despite the absence of the usual US clientele.13 As another example, at the Contemporary African Art Fair in London in October 2021, a record number of galleries from Africa – 20 out of a total of 47 – participated.14 And the pace of sales at Basel in general demonstrated that the pandemic has done little to dissuade wealthy art collectors.
For some galleries, the increase in online viewing rooms is an exciting development and may offer an alternative to time-consuming art fairs. Others are concerned that digitalisation may be undercutting the sheer physical power of art. While some attribute the recent resurgence of the market to super wealthy collectors, others contend that technology is saving the market. In any event, gallery sales are up 10 per cent globally in the first half of this year compared to last. While 23 per cent of galleries were forced to cut staff in 2020, 25 per cent hired new employees in the first half of this year and 50 per cent said sales had improved this year over last. On the other hand, this improvement is mostly due to larger galleries, while smaller and mid-size galleries suffered a slight dip in sales. And NFTs apparently adversely affected the profits of many brick-and-mortar galleries, with European galleries experiencing a sales reduction of 7 per cent.15
In sum, while the pandemic has been devastating to all, the art market has demonstrated its resilience, as collectors, mostly young wealthy ones, have become accustomed to online purchases of artworks and new digital works, such as NFTs. Whether traditional modes of doing business will return in a significant way as the pandemic hopefully recedes remains to be seen. Perhaps the subject of an entry in the next edition!
Turning back to this Review, we again open the volume with substantive chapters that present an overview of current and significant issues in several important areas of art law:
- recent developments in the art market;
- art authentication;
- art and technology;
- international copyright issues;
- moral rights;
- recent trends in art arbitration and mediation; and
- cultural property disputes.
We then present chapters on recent art law developments in 20 key countries. Each country's chapter gives a review of hot topics, trends and noteworthy cases and transactions during the past year, then examines in greater depth specific developments in the following areas: art disputes, fakes, forgeries and authentication, art transactions, artist rights, and trusts and foundations, and finally offers insights for the future.
We hope that you enjoy reading all of these excellent contributions.
Lawrence M Kaye and Howard N Spiegler
Kaye Spiegler PLLC
1 Clare McAndrew, The Art Market 2020, Art Basel & UBS Report, at 28, available for download at https://d2u3kfwd92fzu7.cloudfront.net/The-Art-Market_2021.pdf.
2 id. at 331.
3 id. at 240–245.
4 Daniel Cassidy, 'US galleries survive: despite a stark decline in revenue in 2020, many galleries have a positive post-pandemic outlook, report says', The Art Newspaper (20 July 2020), www.theartnewspaper.com/2021/07/20/us-galleries-survive-despite-a-stark-decline-in-revenue-in-2020-many-galleries-have-a-positive-post-pandemic-outlook-report-says.
5 Justin Kamo, 'Hauser & Wirth will launch a virtual-reality exhibition platform', Artsy (9 April 2020), www.artsy.net/news/artsy-editorial-hauser-wirth-will-launch-virtual-reality-exhibition-platform.
6 Kelly Crow, 'Millennial Buyers Help Global Art Market Survive the Covid Pandemic', Wall Street Journal (4 January 2021), www.wsj.com/articles/millennial-buyers-help-global-art-market-survive-the-covid-pandemic-11609779511.
7 Lindsay Dewar, 'The Art Market 2020 – A Year in Review', ArtTactic, available for download at https://int.nyt.com/data/documenttools/20solowpdf2/5d9d84ff385ca83b/full.pdf.
8 See Kelly Crow, footnote 6.
9 Naomi Rea, 'Art-Market Dynamos Amy Cappellazzo, Yuki Terase, and Adam Chinn Are Betting on Asia With a New Advisory Venture', Artnet (14 October 2021), https://news.artnet.com/market/art-intelligence-global-2020377.
10 'The Contemporary Art Market report in 2021', artprice.com, available for download at https://imgpublic.artprice.com/pdf/the-contemporary-art-market-report-2021.pdf.
11 Ollie A Williams, 'Art Market Goes Into Overdrive As Wealthy Up Their Spending By 42%', Forbes (9 September 2021), www.forbes.com/sites/oliverwilliams1/2021/09/09/art-market-goes-into-overdrive-as-wealthy-up-theirspending-by-42/?sh=55adf4ea694c.
12 Vivienne Chow, 'Fine Art Asia, Hong Kong's Homegrown Art Fair, Returns—a Third Smaller, More Local, and With NFTs', Artnet (7 October 2021), https://news.artnet.com/market/fine-art-asia-opening-hong-kong-2018293.
13 Eileen Kinsella and Naomi Rea, '“Now It's Just the Real People”: Art Basel Opens Its First Fair in 18 Months With an Among-Friends Vibe (and Steady Sales, Too)', Artnet (21 September 2021), https://news.artnet.com/market/art-baselsales-report-2021-2011301.
14 Gareth Harris, 'Strong sales at 1-54 fair—with more African dealers than ever', The Art Newspaper (14 October 2021), www.theartnewspaper.com/2021/10/14/1-54-fair-london-2021.
15 Clare McAndrew, 'Resilience in the Dealer Sector: A Mid-Year Review 2021', Art Basel & UBS Report at 10, 12, 54, 113, available for download at https://d2u3kfwd92fzu7.cloudfront.net/The_Art_Market_Mid_Year_Review_2021.pdf.