Tuesday, October 27, 2009

Fine Art Photography Confidence Index: October 2009

It seems like every time I get together with another collector, gallery owner, or auction house specialist, the conversation eventually turns to speculation on the future of the photography market: when will things change, will it get worse, will it get better, and the like. While total auction receipts are one quantitative measure of the overall activity of the market, they fail to capture the “feel” of the market, particularly in terms of its optimism or pessimism on a forward looking basis. Other indexes routinely track consumer confidence or the confidence of venture capitalists in Silicon Valley, so I wondered about whether it would be possible to use such a model to track the confidence of fine art photography market participants.

So several weeks ago I blasted out a short survey to a broad list of players with an economic interest in the photography market: collectors, gallery owners/staff, private dealers, and auction house specialists. In this email, I asked these folks to do the following: on a simple scale of 1 to 5 (with 1 being very low confidence and 5 being very high confidence), provide a rating of the environment (or “market”) for fine art photography in the next 12 months. I left this question purposely vague and open ended, to allow for varying interpretations of what it might actually mean. In addition to the numerical response, I offered the ability for the responder to anonymously provide any comments he/she might wish to add, in explanation or defense of his/her chosen rating. To create the Index numbers below, I took simple averages of the various data sets. My longer term plan is to capture this data on a quarterly basis, in line with the NY auction season (i.e. October, January, April, and July), and provide some trend lines (and graphs) for how these perceptions are changing over time.

So let’s discuss the data for October, 2009.


The overall Fine Art Photography Confidence Index score for October, 2009 is 3.05. I believe this represents a generally guarded/neutral view of the next 12 months.

But when we cut the data a little finer, and add in the commentary, the results get quite a bit more interesting. In the sections below, I’ve grouped the responses by type (and geography in one case), creating subsets of data that reflect the opinions of various groups of people.


The Confidence Index score for Collectors is 2.36. Not a single collector rated his/her confidence higher than 3.00.

There were several common threads to the explanatory remarks. The first concerns prices, in a couple of ways. Several collectors went down more quantitative thinking paths, most coming to the conclusion that prices will fall a further 10-20% overall, to perhaps 40-50% lower than the bubbly heights of a few years ago. Many went on to highlight their view that there are still quite a few gallery owners and dealers who continue to fail to understand this fundamental shift in the equilibrium prices of both the larger market and the specific markets for the artists they represent, creating stress and conflict between long time collector/gallery partners.

A second line of thinking centered on the quality of material in the market. The consensus view is that there is far less superior work out in the market at this time. Nearly all of the respondents touched on this point in one way or another, most sympathizing with consignors who are reluctant to test this uncertain market with top quality pieces. Fear was a surprisingly common sentiment.

The final area of commonality was a kind of silver lining. Many collectors touched on this period as an excellent buying opportunity (especially for the rare gems that do find their way to market), wishing they had more capital available to chase “bargains”. Several seemed to be looking on from the sidelines with a wistful air, knowing that when they look back at 2009 from a few years hence, this will have been a good time to buy. Predictions on sales volumes were resulting mixed, with some predicting an overall decline due to lack of good material, others seeing a likely uptick coming from an increase in lower priced buying.

Overall, this is a mostly pessimistic group. Their comments were full of the following indicative words: weak, hard, poor, soft, over-valued, correction, and recovery.

Gallery Owners/Private Dealers

The Confidence Index score for Gallery Owners/Private Dealers is 3.56.

Nearly every gallery owner and private dealer came back with some variation on the following sentiment: good quality material is still finding buyers. Many are seeing glimmers of hope in recent small improvements in sales, mostly from institutions and dedicated collectors; while things have clearly condensed since 2007, many feel some strength coming back.

As I looked at the data more closely, I decided to cut the Gallery Owners and Private Dealers into two separate groups. The results were quite intriguing. The Confidence Index score for Gallery Owners (Alone) is 3.06, while the Confidence Index score for Private Dealers (Alone) is 4.23. Most of the private dealers highlighted that they have low overhead, so they are avoiding the painful costs of additional staff, promotions, rent, and various exhibit costs in these trying times; as a result, they are much more optimistic (one even used the word “bullish”) than their counterparts saddled with huge spaces to fill in high rent districts. Many of the private dealers have not seen their prices/volumes fall as steeply as the gallery owners, and their opinion of the quality of their material is generally higher (not sure why this is the case exactly).

Lastly, across the board, there was meaningfully higher confidence in vintage material than contemporary material. Quite a few respondents had a very weak prognosis for contemporary color work in the short term.

Auction Houses

The Confidence Index score for Auction House staff is 3.00.

The auction house specialists were the most cagy and careful of our survey participants. If there is a pattern to their succinct remarks, it seems to follow the results of the recent sales: some see optimism in busier activity levels and total proceeds creeping back up, others see pessimism in continued softness in parts of the market.

London Respondents

As I scanned the data looking for other patterns of interest, the one that stuck out the most was the London scores, regardless of which group the response came from. The Confidence Index score for London Respondents (Alone) is 1.93. I think this points to a particular lack of confidence in the local British economy, evidenced by a weak set of recent photography auctions.

Overall, I found the data and the commentary to be slightly more negative than I might have predicted (we did not participate in the survey ourselves). It seems that all the players in the fine art photography market have received a stiff dose of reality in the past year, and are understandably conflicted as they look to the future. I look forward to seeing how these opinions evolve over time.

As we look to the next round of the Fine Art Photography Confidence Index next January, we’d certainly like to get more people involved – more responses means a more comprehensive and representative data set. So if you’re interested in participating, please email us (info@dlkcollection.com) your name, contact email, geographic location and group affiliation (i.e. collector, gallery owner/staff, auction house staff) so we can put you on the distribution list.


gphoto said...

This is great information. Thanks for all the work you've done putting it together.

Xavier said...

Very interesting market research. thanks for your clear analysis. There is one kind of dealer I'm missing in this survey: the online dealers.
There is big difference between the online sales and the direct sales by gallery and private dealers.
A lot of people (dealer and collectors) are investing in eBay. Others, like me and Alex Novak, are using their own e-commerce platform.
I think the profile of the online buyer is different than the auction or gallery customer.
Do you have any results about the online buyers and sellers?

dlkcollection said...


Your are right that this survey tilts a bit toward the higher end of the market and that there may indeed be confidence differences for those that are purely "online" collectors, especially if they are impulse buyers in the few hundred dollars range.

I will say that I think the term "online" may be tricky to define at this point, as virtually all galleries/dealers (and auction houses) are drawing in business from the Internet, even if they don't have their own online transactional platform.

This really raises the question of whether there is a bifurcated market or not; whether there is a sea of untapped low end collectors who think and act differently than the current higher end group. Many gallery owners, dealers, and artists certainly believe this is the case; how to tap into and understand that "market" is a more complicated question...

Xavier said...

I'm not sure that the online platforms are purely a lower end market.

Perhaps it was so years ago. In my experience, I'm selling online since 1997, is there a strong evolution towards the higher end.

You're right there is a mixture between the two of them. You have the impulse buyer who loves the low level of the internet beside the experienced collectors who is looking for new sources.

The impulse buyer is also a frequent buyer. You clearly see the 80/20 rule.

The impulse buyer also reacts different on the economical situation as the experienced collector and the investor.

The online buyer doesn't figure in the surveys of the photogaphy market. Sometimes the impulse buyer can evoluate towards an experienced collector. They can be our future.