In the first weeks of the pandemic, the notoriously traditional gallery world had no choice but to embrace new ways to sell art. Its preferred avenue of business—a private conversation at a crowded fair or opening—was not possible. So the industry tried to sell its precious pieces online, bringing the art world's mysterious selling process into the open.
But now gallery owners are feverishly trying to return to the way things used to be. In fact, at a time when most industries are reinventing their business practices, gallerists are not persuaded by the benefits of online selling.
Crain's spoke to nearly a dozen players in the art world, and most hoped to return to their old sales practices as soon as possible. While they briefly embraced online viewing rooms as the future, they found that those efforts produced a small number of lucrative deals for galleries, which depend on a few ultra-valuable sales a year.
Dealers "are anxious to get back to their physical spaces and to be a part of the arts community in the way that we were before," said Maureen Bray, executive director of the Art Dealers Association of America, which represents more than 100 galleries in New York City, including blue-chip names such as Pace and David Zwirner.
But while the pandemic persuaded many dealers to return to their old business methods, they realize some changes are unavoidable. They inevitably will work in a smaller industry, multiple sources told Crain's, because all but the biggest galleries will struggle to overcome the financial hurdles created by the Covid-19 pandemic. Those remaining galleries may reevaluate renting costly gallery space. Because dealers are going to have less money in their pockets, they will be less likely to take part in what used to be costly must-attend events and fairs.
Michael Nevlin, co-owner of The Journal Gallery, predicted that everything is about to change. "We're in for a major shakeup in the art world," he said, which will mean fewer galleries and fewer fairs.
Gallery owners became far more transparent about pricing and provenance for online sales early in the crisis. But nearly all of them told Crain's they do not plan to continue that transparency when normalcy returns. Making sales transparent online did not bring in sales anywhere near the size dealers are used to, they said.
"Sales have been way below normal business," said Steve Sacks, owner of Bitforms gallery in Nolita. Despite opening multiple online viewing rooms, he's seen revenue fall 75% during the pandemic.
That's typical. An Art Dealers Association of America survey of 168 galleries in the U.S. found the entire industry was getting crushed. Galleries expected their second-quarter revenue to be down by 73%; sales already have fallen by one-third since the start of the year.
That's even though online marketplaces are giving collectors more information upfront than ever before, a move many thought would make the art world more accessible for new buyers.
But the flood of new clients never came.
Art dealers found that online sales confirmed what they knew before: Art is simply not meant to be bought online.
"In the art world, sales is about people being moved," art dealer Andrea Rosen said. "How could that not be in person?"
The parts of the art world that seem superfluous to outsiders—wine-filled openings, unapologetically selective fairs and rarefied conversations on the quality of a brushstroke—are essential elements of doing business, multiple dealers told Crain's. These elements cultivate an aura of excitement and intrigue that coaxes collectors to buy.
"The conversation around a physical object, a work of art, has been the conventional way to transact in the gallery," said Valerie Carberry, director at Gray, a blue-chip gallery with a location on the Upper East Side. "And it's not just having those conversations; it's having them with the right person, at the right moment"
While it's a far cry from the simplicity of posting a painting online with a price, it's how Carberry made the most memorable sale of her career. She sold a Josef Albers work from the 1950s at Art Basel Miami when a buyer walked the wrong way out of the VIP collectors lounge. The two had never met before. But he spotted the painting in Carberry's booth, walked over, negotiated the $225,000 asking price and bought the work on the spot.
"It's the kind of chance encounter that only happens in person," she said.
Gallerists are partly to blame for the situation; they never tried that hard in the past few months to sell their most valuable works online. In fact, they kept their most expensive works shrouded in secrecy.
"Even though I was very excited about the transparency of seeing all of these online prices in viewing rooms, there's still a lot of action going on over and above that that we'll never see online, and we'll never see a price tag on it," Clare McAndrew, founder of research and consulting firm Arts Economics, said during a May panel discussion.
For the pieces they did list, gallery owners still put buyers through the same rigorous process for purchasing a work of art that they always have. Gallerists can reject collectors if they do not think they are the right buyers for the pieces.
"There is this game the art world plays that is essentially 'Let me check you out and see if the work is available for you or not,' " said Julia Dipplehoffer, co-owner of The Journal Gallery.
Part of that is because dealers have a fiduciary responsibility to the artists they represent, ADAA's Bray said. But they cannot just sell a piece for a high price, she added. They want to place works with collectors who have the right intentions for them.
Whether the collector plans to flip the work, donate it to a museum or hold it for themselves are all things a dealer would consider, Bray said.
But gallery owners aren't entirely returning to their old ways. They frankly don't have as much money to splurge on pricey rent and art fairs.
Aside from steep income losses, the ADAA survey found that more than half of galleries struggled to pay their rent during the pandemic. A number of galleries will not survive and will have to shutter permanently, Bitform's Sacks said. Those galleries that remain open may reconsider the worth of renting costly space in Manhattan, multiple dealers told Crain's.
"The physical gallery was sort of under siege beforehand," said Adam Shopkorn, owner of the Fort Gansevoort Gallery in the Meatpacking District. "I don't think the pandemic is going to completely put physical galleries out of business. I just think when you're a big gallery and you have seven locations or 11 locations, it's challenging."
Covering sky-high monthly rent in New York City is also a burden for small galleries, because the unpredictability of sales leaves them illiquid during certain months, Carberry said.
The financial crunch galleries face makes it unlikely dealers will be able to afford jet-setting to multiple elite art fairs every year. Although they can lead to sales and provide opportunities to network with new collectors, the biggest fairs are highly selective and prohibitively expensive, Sacks said. Attending Art Basel a few years ago cost him $50,000, with no guarantees of making a sale.
Those realities are playing out in public for even the most prestigious events. Art Basel, the top fair in the art world, canceled its September event, after twice pushing back its deadline for applications.
"We know that many of our galleries are facing unprecedented challenges during this difficult time," said Yun Lee, a spokeswoman for Art Basel, "and in the short run there may be less demand for art fairs from galleries who must carefully choose which fairs they participate in as they rebound from the current crisis."
But Rosen said the fair culture had gotten out of hand in recent years. Gallerists were constantly traveling. Although there was an impression that fairs led to big sales, that was not always true, Rosen said, adding that for some they became financial burdens.
"The art fair phenomenon just became about a kind of obligation to participate in art fairs," Rosen said. "Because if you weren't there, you missed out, or you were seen as lesser, and what did it mean if you weren't part of that?"
Now that art fairs may no longer work as a model, Rosen said, "I think there's a huge relief."
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