COVID-19 is making its presence felt across the economy. But the art market is one sector that has seen changes beyond imagination. Gone are the prestigious bidding wars at high-brow auction houses in London; here to stay is e-commerce, online purchases and firesales. 

The Art Market Is At A Turning Point

According to experts, the market for second-hand art and antiques is at a turning point. Dirk Boll of Christie’s, for instance, says that the pandemic has had a “catalytic effect,” accelerating the digitisation of the industry that was already underway before the crisis hit. We’ve gone from progress at a snail’s pace, to wholesale change overnight.

The industry has gone through crises before. In the recession of 2008-2010, London auction houses struggled to shift many of their most valuable items, with prices dipping temporarily as credit instruments began to unwind. And there have been other times when disruption threatened the business. But nothing has had quite the same impact as COVID-19.

Unlike economic events, the public health emergency directly undermines how many of these houses do business. Social distancing means you can’t just assemble a bunch of people in a room for a bidding session. You need to either stop doing it, or move it online. 

Demand For Art Continues

What’s so strange about this recession is how demand for art continues. Although unemployment is higher than it was before the crisis, people still want to buy paintings. And that’s allowing outfits, like Christies, to move online. 

Art demand is, in some ways, benefiting from the crisis. Unused income reserves are rising because of the closure of the hospitality sector. And that means that buyers have more cash to plough into other things, such as beautiful paintings. For the dealers, this means higher commissions and more deals. 

The industry is also benefiting from increased support from other sectors. For instance, many dealers are protecting themselves against losses with Secursus insurance. The idea here is to order pieces online and then pay for cover on a parcel-by-parcel basis.

This keeps costs down, doesn’t eat into commission too much, and prevents catastrophic loss from theft. Art fairs, such as Art Basel and Art Cologne couldn’t open in person. But they did offer online experiences that attempted to recreate some of the magic digitally. 

The Move To Online Art

While the offline art world is struggling a little, those who saw the future of internet art distribution coming last decade are benefiting. Online sales of art are exploding. And many businesses are making a fortune out of the resurgence of interest in home improvements. 

Before the crisis hit, art websites were mainly just a showcase for the art on display at a particular gallery. But thanks to the crisis, that’s all changed. Now they are bone fide ecommerce businesses, devoting themselves to the sale of pieces by famous or well-known artists. 

The losers in this situation appear to be the smaller galleries who focused on up-and-coming talent. Their products aren’t so well-known globally. So their ability to attract interest online is weak. 

According to data from DW, the global art market is worth around $68 billion per year. In 2019, only around $6.8 billion of that was on online sales. Now, though, the figure is closer to $24 billion - a tremendous increase. 

In other words, digital sales are shaking off their “niche status.” Instead, they are becoming mainstream and represent a “new way of doing things in the industry.”

Whether art house owners will lament these changes or not seems debatable. On the one hand, there is nothing quite like the spectacle of a real-life auction with millions of pounds changing hands. But on the other, going online reduces overheads massively. There’s no need for Christies to rent an expensive building in the middle of London when it can simply carry out sales online. 

Art experts, such as Boll, expect that around half of all art trades will move online by the end of 2021. That means that the market will fundamentally shift how it does business, regardless of how the pandemic develops. It seems (just as in many other industries) that post-COVID-19 changes are locked in and here to stay. 

Raising Online Value Thresholds

Before the crisis, many auction houses refused to sell the most valuable items online. Most set a cap of a few thousand pounds, above which, you had to travel to the auction house in person or get an agent to do it for you. 

But in recent months, many auction houses relaxed their rules, allowing buyers to sometimes purchase objects worth hundreds of thousands of pounds via the internet. Whether this signals a necessary move to preserve their business or an intention to become more digital remains to be seen. But the trend is clear: everyone has a growing sense of confidence in digital art dales. 

Renewed lockdowns towards the end of 2021 could force auction houses to fundamentally rethink their business models. If the government is going to shut down the economy every time a disease comes along, then in-person events seem like they will become a thing of the past. Auction houses are going to have to flesh out their online services as a matter of necessity, not choice. 

Overall sales in the art market will probably still rise in line with increases in asset prices. Equities - the main source of wealth for art buyers - have been doing well over the last twelve months. So many will be feeling the “wealth” effect and looking to move back into the art market. 

Dealers will need to keep their wits about them, though. They may have to adopt an “internet-first” approach to their business model, looking for ways to make transactions securely online.

Galleries and auction houses aren’t having to close right now because of the pandemic. But if these measures continue, it will be hard to justify keeping them open. The government needs to set out a clear policy on what it plans to do in future situations like this. Only then can the art industry prepare.