ART WORLD

‘The Intellect is the cause of beauty. The Intellect that imposes the forms onto passive matter thus producing beauty. The actual forms are purely intellectual, ‘seen’ with mind’s eye. The intelligible, intellectual beauty of reason is a much greater and also truer beauty.’

Plotinus

The importance and influence of art galleries and museums in the global art landscape is undeniable. The quality of artworks displayed and the shows curated rival or even surpass institutional exhibitions, often being recognized not only locally but also on an international art level, especially in the field of contemporary art. The number of visitors attending private museums often equals public institutions. Private galleries are running, in a number of cases, full-fledged academic programs, launching publications, and offering artist-in-residencies.

The impressive appearance of these spaces, in combination with their wide-ranging activities, certainly impacts a founder’s visibility in the art world.

Unlike art museums, art galleries do not receive state subsidies – they are a business, as much a commercial entity as any small retail shop, with a clear business focus and a revenue model that lives or dies with sales. And, of course, they are subject to all the same market fluctuations, limitations, and opportunities as other entrepreneurs.

Art galleries are defined as permanent exhibition spaces that organize regularly exhibitions with varying artists and follow commercial interest by selling the art they exhibit. Art spaces and galleries have the same business model as any other business, but surprisingly marketing strategies, diversification and outsourcing are not usually used in galleries. In general, only about 4,6% of galleries in Europe work internationally, not locally and 3,7% work with different disciplines. And more than 34% of negative profit is concentrated only on paintings and contemporary art and only relies on art buyers which are less than 5% of the public.

Galleries tend to focus only on this sector, eliminating the idea of a product mix by offering one product only. An incredible 85% of deals are solely in contemporary art and around 89% of galleries focus only on contemporary art, although it was proven that a product mix (i.e. selling across at least two categories) has a positive impact on the profit margin.

Possible explanations might be that the market for contemporary art is highly deceptive: while the value of this segment is immense, it is concentrated in a minuscule group of key names, hyped up by the rare pieces that make stunning prices. In other words, the volume - the number of artworks – is fairly high, but the value is created by a tiny number of dominant artists, while the remainder jostle for space in a crowded market. The vast majority of galleries, selling artists from outside the magic circle of big names that sell for big money, face steep competition; hence, their labours are less profitable; no other segment has as many competitors as contemporary art.

TOP 10 COUNTRIES OF PRIVATE ART GLOBALLY

Source: Larry’s List Ltd. and AMMA Private Art Museum Report, 2016

Focusing uniquely on the country level, the study made by Larry's List reveals that South Korea, Germany, and the United States are equal rivals holding the top three positions for the most private museums—totaling fourty-five, fourty-three, and fourty-two respectively—with China in fourth place with twenty-six private art museums.

The top 4 countries combined are home to nearly half of all private museums in the world. European countries still occupy the remaining places. Both Germany and the United States have a long art-collecting tradition and museum heritage. Museums in Germany or the US, however, were mostly built before 2000, suggesting that China’s position could potentially move up the ranking in the near future. Surprisingly, the United Kingdom is not part of the top 10.

South Korea’s capital, Seoul, also leads the city ranking with the highest total of private art museums. Seoul is followed by the art-collector hubs Beijing and Berlin, both sharing second place. The German capital is home to acclaimed venues rendering Berlin as an attractive city for artists to move to and a stellar place for collectors from other parts of Germany to build their private museums. Miami is ranked fourth, followed by Greece’s capital, Athens. Guangzhou and Moscow share the sixth position. Notably, the Korean island of Jeju is also represented in the top 10 ranking with four museums in total, all founded by self-made Korean billionaire and collector Kim Chang-Il. Despite being established by the same founder at different periods of time, each museum is independently run with individual programs. The mega art hubs of New York and London hold lower ranks, in positions 8 and 9 respectively. Five Asian cities and two cities in the United States have made it into the top 10 list, while the remaining three are spread out over Europe. The presence of two cities from the United States in the top 10 shows that the American private museum landscape is extensively distributed across the country. Many American metropolises are frequently home to only one or two private museums. The remaining exhibition spaces are found in smaller cities or the countryside. The lower ranking of New York and London is assumedly due to the high rent and the chronic lack of available spaces in these
cities. Collectors seem to prefer alternative cities to build their exhibition spaces. Interestingly, Los Angeles, which plays an important role in the art world, has just recently become home to one private museum. Moreover, Hong Kong is also missing from the list as an art hub. The reason for its low ranking is probably again due to the city’s expensive rent cost in combination with a collecting tradition that focuses more on modern art and antiques. Nonetheless, the overall ranking will most likely change vastly in the near future, for example five new private museum projects are in the pipeline for Beirut over the next five years.

Source: Larry’s List Ltd. and AMMA Private Art Museum Report, 2016

TARGET MARKET

Visitors are separated into five groups:

ART ENTHUSIASTS - Frequently visit galleries but have no intention of buying

OPENING CROWD - Interested in the event

COLLECTORS - Buy artworks

WALK-INS - Do not set out to go to a gallery, just enter on impulse

ART PROFESSIONALS - Artists, dealers, critics, museum directors etc.

The most frequent visitors to the gallery are the Art Enthusiast and the Opening Crowd. Neither has any interest in buying art, coming either to see the art or socialize. These visitors are certainly part of the life of a gallery that needs to sell, but they have no impact on revenue.

The most valuable group of visitors to a gallery, Collectors with the potential to buy, come third. Ranked fourth are Walk-ins. Given the passing footfall in the central locations where most galleries are found, the persistently low numbers of Walk-ins is remarkable, and it suggests that in the public’s mind there are still strong psychological barriers to entering a gallery. Art professionals are the least frequent visitors; as a group they include artists who would like to introduce their work to the gallery.

By city, Berlin appears to be the leading social hub, ranking the Opening Crowd in first position and Collectors only in fourth place. In New York and London, visitors are more serious. The Opening Crowd drops to third, with Collectors in second place.

Buyers can be divided into six categories, each with different motivations:

ART LOVERS - Buy for the love of art, to extend their collection, or as a source of inspiration

ONE-TIME BUYERS - Buy to signal (or to aspire to) social status, or for decorative purposes

DEALERS/PROFESSIONALS - Buy to resell or in the name of a client

INVESTORS/SPECULATORS - Consider art as an alternative investment, are art flippers

MUSEUMS/FOUNDATIONS - Public museums and institutions

CORPORATE COLLECTORS - Corporations such as ubs, Deutsche Bank, jp Morgan Chase etc.

The most frequent buyer at an art gallery is the Art Lover, who represents the old-school type of collector. Art Lovers are keenly interested in the development of artists and usually have a strong, lasting relationship with the gallery owner. The Art Lover is the cornerstone of any gallery’s success. The second group in the list is One-Time Buyers. They usually do not establish a lasting relationship with the gallery, and disappear as quickly as they emerged. However, they are ranked in second place and are a valuable source of revenue. Ranked third are Dealers/Professionals, followed by Investors/Speculators. Naturally, there is a degree of overlap between those who love art and those who see profit in a purchase. Investors/Speculators rise to third in importance, explaining the prominent media coverage of 'art flippers' and Wall Street icons who treat art as an asset (and are willing to resell, fast). The remaining institutional buyers occupy the fifth and sixth positions: Museums and, finally, Corporate Collectors. Despite their position as the least frequent buyers, the budgets that major firms are now allocating for their art foundations are not without significance. Deutsche Bank, jp Morgan Chase and Bank of America are only some examples of companies with heavyweight art collections.

VISITORS' MOTIVATIONS

Most of the visitors of the visual art institution wait for exhibitions openings (55%). A new educational programme interests 7% of the visitors. Meetings with artists and curators attract a higher number of visitors (18% of the respondents). 4% of the respondents visit the gallery when they come to have dinner in the café or shopping (14% of the respondents). “When I want to”, “While participating in and visiting the exhibitions”, “During my time off work”, “When something that interests me is happening”, “When I want to show something interesting to pupils, students, friends from other cities, countries or just to spend cultivated free time, meet friends in a spiritual, educating environment” and others.

Visual art experts notice this distribution tendency as well. The highest number of visitors come during openings or on weekends of an opening.

Educational events and other events that come with the main exposition are visited less frequently; however, these activities are important for the aspect of audience development and the image of the organisation. The most visited are openings, especially if they come with certain additional entertainment, a concert, etc. Openings are visited the most due to curiosity, artists’ names and free accessibility.

An opening is always a big event that attracts many people. Such events aim at creating a network, sharing contacts and social communication.

It is important to note that when asked whether the main exhibition that comes with an extensive programme of complementing events has an impact on the popularity of the event, the experts fell into two groups. Some of them claimed that of course. Different events and educational programmes enable reaching different audiences. Of course, when there is a comprehensive programme, it is a way to get to know the main tendencies. Others claim that the content of an exhibition is more important: The popularity of the event is impacted by the artist, but not the number of events revolving around the exhibition. It does not depend on the number of events but on what is displayed and on the content as well.

One of the most important aspects in the studies of visitors is their motivations to visit a gallery. As the theoretical part of the paper shows, visitors’ motives are widely studies by researchers and institutions themselves from different perspectives. Experts in visual art sector claim to have thought about visitors’ motivations and needs; however, a big part of them emphasises that in order for these aspects to open up, more attention should be paid. Visitors seek intellectual perfection, leisure, entertainment in a museum. Visits to the museum are also determined by recommendations, and interest in relatives’ creations.

The main visitors’ motivations are to spend quality time, to get to know something new, to spend time with friends or family. People are cloyed with various things more and more often and they seek something new and unexplored. I believe that for a human being who is not related to art, this means leisure. There are such exhibitions that inspire to do something after a visit. It inspires and promotes creativity. Students often come once because teachers bring them. Older women are motivated to come by their interest in art. They want to spend time with their female friends, Students are motivated by curiosity in what takes place in the field of art. Everyone has different motivations.

A niche audience [participants of the art field] need to see a new exhibition. Others need to rest from their daily routines. To learn, invest into oneself, to find out something new. A part of the visitors come to take pictures [the category of “I have been there I have done that”], seniors prefer being among people and spend time. Participants of excursions and educational events are motivated by the desire to know more, improve, learn rather than play.

Every single private art museum that has participated in survey provides additional offerings, services, programs, and projects in addition to the “pure” exhibition visiting experience. Many of these activities can be linked to collectors’ key motivation for founding a private museum. Private museum founders often have the mission to offer education to the public and also to support the artists in their collections beyond purely collecting their works. Guided tours and public talks are “standard” offerings since 60% of museums provide them. Moreover, 20% offer an artist-in-residency program and 10% have established their own awards and grants for artists or art critics. Many museums also mentioned that they host performances and concerts in their venue. These figures clearly demonstrate that the mission of most private museums is not only to provide a venue for showing their collection but also to demonstrate their philanthropic mission so as to support and enhance the art landscape and artistic development.

Curating worthy, notable exhibitions is one aspect that is crucial to attracting visitors and attention, while communicating them to the art circle and to the broader public. This is particularly the case in the more competitive surroundings of the private, but also rivalling public museum landscape. This requires strategic marketing along with skilful PR and communication. In addition to traditional advertising, various private museums use alternative modes of communication to promote their establishment. With the rapid advancement of technology, social media’s role is gaining much importance, becoming a key marketing tool in the art world, especially to attract younger visitors.

Gallery visitors come to exhibitions when motivated by their general interest in art and culture. Therefore, they want to be a part of the community. Visitors are interested in specific relevant topics. Curiosity. Wish to improve as a personality and find out something new. Also, emotional relations. Motivations are very general and more sensory. Some people see one topic more interesting, others – another topic. Sometimes it is quite complex to evaluate this; thus, the regard is relative.

The main motivations of visitors are socialisation, aesthetic experience, informal knowledge, and getting to know other cultures. The results of a previous survey show that gallery visitors are mostly motivated by the opportunity to spend weekends purposefully (21%) and intellectual improvement (20%). Visitors find positive emotions experienced in the context of the museum important (16%). 12% of the respondents seek for aesthetic satisfaction in a the visual art organisation, while 10% of the respondents are motivated to visit the gallery by social inclusion and communication with people. 9% of the visitors relate the gallery environment with the idea of life-long learning. 4% of the visitors are interested in the activities of the gallery because of children or grandchildren’s cultural education. A spiritual experience as a motivation to visit gallery interests 3% of the respondents.

Only 3% of visitors see the gallery as a place for self-expression. When asked how they found out about the galleries, 20% of the respondents claimed not to have the recollection. 26% of the respondents chose another option adding: “I live nearby" or "I look for art spaces and institutions in the city”, “I have been aware of it”, “I live in here and have been visiting it since it opened”, “I have always known”. The remaining 56% separated into various small segments: from parents – 6%, from friends – 11%, from teachers – 7%, from colleagues – 4%, through social networks – 12%, from media – 10%, heard about it in public spaces – 4%.

Holding between one to three exhibitions per year is a dominant model among private museums, followed by 19% of museums holding four to six exhibitions and 16% of museums with only permanent exhibitions. The tendency to stick to fewer exhibitions for a long period of time predominantly occurs in Western countries such as Germany, Greece, and the United Kingdom. In contrast, more than half of the institutions in China and Korea have ten exhibitions or more annually. With a venue setup frequently comprising more than one gallery space in the museum, they are often able to present various exhibitions simultaneously, combined with the nature of their significantly larger spaces as compared to those in Europe. One of two private museums only shows artworks from their own collection, signifying that the other half also uses externally lent artworks from other parties. The reason for this interchange is to thoroughly cover the theme of the exhibition offered, as an art collection is rarely complete and possesses certain gaps that other art institutions can fill. It is also another way to keep their exhibition program varied and exciting for the public.

Since the opening of the museum, its intention was to also invite other collectors to show their collections. Consequently, private museums are engaged in a similar operational system as public institutions, where they do not solely rely on their own collection but rather work together for the benefit of the art landscape.

Undoubtedly, creating an art space can be a financially massive undertaking. Nonetheless, the process of running and managing it, is just as important to consider, having to cover salaries, utilities and storage. It is estimated that, on average, operating one square meter of a museum costs on average 400 euro worth of expenses per year. Consequently, a gallery or art space should not only plan until the opening but also prepare a three- or five-year (or even longer) business and operation plan.

Many countries offer subsidies and tax benefits to non-profit organizations. As the legal situation varies from country to country, private museum founders will have to deal with their regional legislation. The definition of public benefit can always be subject to interpretation. Nonetheless, being a foundation that offers educational programs and hosts lecture series counts as charitable activity and supports the goal of gaining tax relief and financial support from the state. Fundraising can be an option for generating another income stream. Many large enterprises want to be associated with the art scene as it improves their public image. Looking at the sponsors from Art Basel or the Venice Biennale validates this assertion.

However, even if different forms of revenue generation are applied, an art space focused on a specific collection will rarely turn into a profit center and will thus still remain dependent on the founder’s funding.

Private museums’ source of income can be categorized into four key clusters: founder’s resources, self-generated income, contributions from donors and direct government subsidies. 89% of museum founders claim that their own resources are their primary source of funding. The remaining sources are mainly generated by earned income such as entrance fees, shop and F&B outlets, or subleasing, which is a source for roughly 45% of museums. Income from donors and patrons is a source of income for 28% of the museums. In contrast, a slim 22% of museums named government subsidies as a source of income.

Generally, private art museums and galleries can be set up either under one or more individuals known as the private collectors or under a foundation. A foundation refers to a legal entity that qualifies for various legal advantages depending on the country it is situated in. As a whole organization, the foundation is still connected to the private individual, considering that it is under the founder’s name and is injected with the collector’s initial funding. In many cases, certain collectors will consider transforming their private art museum into a foundation. This can help them to establish a museum as an independent institution as well as setting it up as a long-term setting. Additionally, the foundation can, in return, receive tax benefits in various countries. Another reason that collectors might prefer their institution to be a non-profit organization is that they want to clearly differentiate themselves from galleries and other commercial organizations.

Statistics from surveys reveal that half of the museums identify themselves as a foundation. The inclination to favour the foundation setup is more evident in Western countries, especially in the United States and the United Kingdom. In contrast, only 10% of private art museums in China are opened as a foundation.

KEY POINTS

CLOSE TO 80% of the people interested in the art world support the not-for-profit art sector. A large majority of the art world donates time, expertise or financial resources to not-for-profit art initiatives: Based on a survey of 541 individuals within the broader art market, 78% of the respondents said they regularly supported charitable and non-commercial arts organisations and initiatives. There is little difference between age groups below 55 years, where both 77% of millennials (under 35 years) and 78% of Generation X (between 35 and 55 years) said they supported the arts, whilst a higher percentage, 85% of baby boomers said they regularly supported the arts, which is likely to be a combination of more time and greater financial means to support their passion.
ONE THIRD of art patrons provide in-kind or monetary support to the arts on a monthly and weekly basis. Just over half (51%) of the respondents support art-related causes on an annual basis, whilst 28% said they supported the arts on a monthly basis and 5% said they provided support on a weekly basis.
VOLUNTEERING is a significant class of patronage, particularly for the younger generation. Although art patronage is often associated with monetary giving, it is easy to overlook the amount of individual volunteering that supports the art world. 67% of patrons surveyed said they regularly offer their time, expertise and advice to not-for-profit initiatives and to artists themselves, with 70% of the millennial patrons surveyed said they regularly offered help in kind.
NOT-FOR-PROFIT ARTS ORGANIZATIONS are the most common recipients of support from patrons, although direct support to artists also ranks high. 88% of art patrons said they regularly support public art museums, followed by 82% who said they offered regular support to not-for-profit arts organisations. 78% of art patrons said they regularly offered support to individual artists. This was followed by 69% who said they regularly offered donations to charity events or acquired artworks at charity events (auctions or exhibitions). Under half, 41% said they regularly support art schools.
PASSION AND PERSONAL INTEREST remain the key motivations for supporting the arts. 94% of art patrons are primarily driven by their passion for art, followed by 91% who said they ‘believe that art and culture impacts the way we perceive the world around us’ and 85% who said they were motivated by the ‘mission of the arts organisation’. It is worthwhile noting the strong emotional (passion) gratification that art patrons derive from supporting the arts, and although this might appear superficial in the perspective of the broader societal impact of art and culture, the association between art and individual well-being should not be ignored.
MAKING A DIFFERENCE Individual giving is driven by a strong belief that support can make a positive difference. 80% of art patrons surveyed said they predominantly supported an art-related initiative because they believed that their donation can make a positive difference. A further 70% of art patrons surveyed (and 72% of Millennial art patrons) said that their primary motivation for supporting art was that it made them feel a sense of social engagement and purpose.
CONNECTIVITY AND SOCIAL NETWORKING are key motivations among millennial patrons. 73% of millennials surveyed, said that their primary motivation for giving was that ‘it makes them feel connected to other people and builds their social network’. This is significantly higher than Generation X, where 62% said this was a key motivation, and just over half (54%) of baby boomers saw connectivity or networking as an important part of supporting the visual arts.
ETHICAL CONCERNS put art patronage in the limelight. In light of recent pressure from art activists and broader social movements, public art institutions are increasingly having to scrutinise and reject donations and support from private individuals and companies, based on ethical questions that the support might raise. Can private funding or support ever be ethically ‘pure’? Where do we draw the line? The renewed pressure on arts organisations to scrutinise private support could mean a further squeeze on an already challenging funding situation. In the longer term, however, it could potentially generate new funding streams from companies and individuals that want to be associated with a sector that takes these ethical concerns seriously, and encourage new innovation and models around private and corporate patronage to develop.
TECHNOLOGY Over the last 10 years, technological innovation has radically changed the surface and dynamics of most industries and sectors and is likely to also have a significant bearing on the landscape for art patronage in years to come. Whilst art patronage has traditionally been associated with wealthy individuals and their support for artists and art institutions, art patronage is now moving rapidly downstream. For as little as a fiver, you can now support art projects, arts organisations and artists, a trend that has been greatly enhanced by the advent of technology, and with the rapid growth of online crowdfunding platforms, such as Kickstarter, Indiegogo and Patreon. Blockchain technology also presents new opportunities with regard to increased transparency, accountability and trust when it comes to donations and giving.

IN BERLIN

(WITHOUT DATA OF COVID INFLUENCE ON ART SCENE)

CONCLUSION:

To gain profit and work successfully, in my opinion, these main principles should be addressed:

Ideas, stories and knowledge are the forms of art and core cultural values, so co-creation with the visitors and various types of collaborations should be considered
Art should not be just placed on a wall of a white box without any labels or identification marks for visitors to feel uncomfortable, inferior for not understanding it and isolated from a tiny group of art dealers and collectors, so the space and art itself should be interactive and approachable
Galleries should not be particularly mono-focused and deal solely with contemporary art, any interaction with other disciplines makes art richer and more interesting for the visitor
Different disciplines do not compete but complement and enhance each other making narrative more accessible
Exhibitions should balance ideas, education and engagement, art can create sensory experiences and embed meaning in materials evoking emotions
Projects should be interactive, curiosity-inspiring and entertaining, art should be about meaning, expressing ideas and expanding possibilities

NEXT STEPS:

Constructive critical appraisal of the artistic programme and gallery strategy
Sharing knowledge/expertise/ and suggesting connections with individuals, institutions and organisations
Identifying new artistic and fundraising possibilities
Exploring opportunities for joint/co-commissioning working with other galleries and arts organisations

SOURCES

Magnus Resch Global Art Gallery report 2016

Larry’s List Art Collector Report 2014

Capgemini and rbc Wealth Management World Wealth Reports

Arts Space: Demand and Needs Analysis 2011

Tefaf Art Market Report (various years)

Wealth-x and ubs 2013 World Ultra Wealth Repor

Art Gallery Visitors’ Motivations Virginija Jurėnienė, Dovilė Peseckienė 2020

Patricia Cohen Writing Off the Warhol Next Door: Art Collectors Gain Tax Benefits From Private Museums 2015

Private Art Museum report Larry's List AMMA 2016

05.2023