Art Dealers and Galleries

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 4,600 art dealers, galleries, and auction houses in the US generate revenue by selling artwork or earning commissions from consignments. With a consignment sale, the dealer earns a commission based on a percentage of the purchase price. Auction houses earn commissions based on the hammer (sale) price. Primary-market dealers develop relationships with promising new artists and help establish a market for their work. Secondary-market dealers specialize in art for resale on behalf of collectors, institutions and estates.

Long Sales Cycle, Slow Moving Inventory

Art dealers and galleries often have significant investments in inventory, with no indications of a quick return.

Vulnerability to the Economy

Demand for art is sensitive to economic conditions, and drops during periods of uncertainty.

Industry size & Structure

The average art dealer operates out of a single location, employs 4 workers, and generates over $2 million annually.

    • The art dealer, gallery, and auction industry consists of about 4,600 companies that employ about 18,000 workers and generate about $10 billion annually.
    • The industry is concentrated; the top 20 firms account for 49% of sales.
    • Large companies, which include the Gagosian Gallery, David Zwirner Gallery, and The Pace Gallery, generally have a limited number of locations (ten or less) and often have international operations. The industry includes auction houses, such as Sotheby's.
    • Contemporary and modern art (art produced after 1875) accounts for 51% of global art trade, according to The European Fine Art Foundation.
                                Industry Forecast
                                Art Dealers and Galleries Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Nov 13, 2022 - AI Art Generator Improvement Continues
                                • Several of the artificial intelligence (AI) text-to-image programs that have become available over the past year are learning to make increasingly coherent, high-quality images. Debate within artist communities around AI-generated art has intensified since Théâtre D’opéra Spatial by Jason M. Allen won the digital art category at 2022 Colorado State Fair Fine Art Show. His winning work had been made using the Midjourney AI program. One of the main criticisms is that the AI models have been trained on datasets containing copyrighted artworks pulled from the internet without permission. There is also concern that the software could spit out pieces in the style of an artist used to train the AI system without the artist's consent. Art dealers and galleries may be negatively impacted if AI-generated art the is made available through other tractions wins a significant audience.
                                • Art galleries and museums are on alert due to a series of climate protests that have targeted works around the world. Protesters recently entered the National Gallery in London, flung tomato soup onto one of Vincent van Gogh’s most famous paintings: “Sunflowers,” then glued their hands to the wall. Others glued themselves to John Constable’s “The Hay Wain,” also in London’s National Gallery, after pasting their own “apocalyptic” vision of the future over the painting’s surface. Members of an Italian climate group known as Ultima Generazione glued themselves to a painting by Sandro Botticelli at the Uffizi Museum in Florence. Similar actions have also taken place in Australia. Experts say that the actions align with a growing number of climate protests in recent years that have disrupted normal life in increasingly unexpected ways.
                                • The US House of Representatives passed legislation that would regulate professional services firms, art dealers, trust companies, and other market intermediaries as “financial institutions” under the Bank Secrecy Act (BSA) and would require them to report client information to the US government. Experts say that the so-called the ENABLERS Act would be the most significant update to US anti-money laundering regulations since the PATRIOT Act was passed in 2001. The Act would change the BSA’s definition of “financial institution” to include trust companies, art dealers, lawyers, and other non-bank market participants. It also proposes implementation of additional regulations subjecting these people and service providers to extensive suspicious activity reporting, anti-money laundering, due diligence, account identification, and client verification requirements.
                                • The government of Italy has asked art institutions in the country to halt agreements with nonfungible token (NFT) providers. The request follows the recent 240,000€ sale of an NFT of a Michelangelo work from which Florence-based art gallery Uffizi received only 70,000€. The sale was directed by the Milan-based tech company Cinello, as part of a five-year contract to digitalize artworks from the museum’s collection. The Gallery agreed on a 50% share but Cinello’s fees resulted in the museum getting only 70,000€. Buyers of digital copies from Uffizi’s collection can theoretically exhibit and control the artworks in augmented and virtual realities. Some experts say that this could harm institutions that lose control over the works they sell from their own collection. The Uffizi’s director, Eike Schmidt, said that the museum had not done adequate due diligence when it came to structuring the deal around the NFT.
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