Thursday, June 19, 2008

Reproduction: The Secret is Out

Key financial fundamentals of the U.S. art market are remarkably little known. Intellectual property is the future of the American economy: imagination made real, creations of the mind, design and invention. This form of property, protected by patents, trademarks and copyrights, is one of our largest and fastest growing economic assets, contributing more than a trillion dollars to the domestic economy, and leading U.S. exports.[1] Arts and entertainment are at the core of this financial powerhouse, generating a third of all domestic and foreign intellectual property sales.[2] Visual art is the fastest growing sector of the international licensing industry, the key legal mechanism for marketing copyrighted materials.[3] Reproduction dominates art sales, yielding two-thirds of the $30-billion domestic art market, and increasing shares relative to original art and all home furnishings.[4] Framed reproductions are the largest and fastest-growing sector of the visual art market, with $16 billion in domestic sales, rising by 15% per year—double the growth of total art sales, and three times the sales growth for original art.[5] Digital fine art printing is expanding the fastest, with the market for reproductions using the latest technology projected to double within three years at a 20% annual sales growth rate.[6] Digital prints are expected to replace lithography and serigraphy as the primary fine art technology in 2005.[7]

Such compelling bottom-line data are rarely encountered in literatures relating to the visual arts. The information is from remarkably disparate sources, ranging from arcane government tabulations to industry associations for printers and printing equipment, publishers, home furnishings, international licensing, and intellectual property concerns. The fact that these resources are far removed from traditional origins of art world authority—be they art history or conservation, appraisal or criticism, art curating or art making—does little to diminish the compelling economic indications imbedded therein: the future of art lies in reproduction.

Comparisons with more familiar sources are no less revealing. According to Americans for the Arts, the combined budgets of all non-profit arts organizations in the United States total more than $50 billion per year.[8] The National Endowment for the Arts estimates that half of this amount is raised by donations (40% private; 10% public) and half by earned income.[9] Roughly 10% of this total is generated by the non-profit visual arts, including museums, alternative spaces, etc., and the rest by non-profit organizations in all of the other art disciplines (theaters, orchestras, opera companies, art service organizations, etc.).[10] In comparison, the Art Publishers Association puts U.S. sales of wall art reproductions at $20 billion per year.[11] Taken together, these estimates suggest that art reproductions generate as much revenue as all foundation, corporate, and individual donations to all of the non-profit arts. Art reproductions yield four times the $5 billion economy of the entire non-profit visual arts sector, which has dominated the art world since W. McNeil Lowry of the Ford Foundation invented the leveraged arts grant in the 1950s.[12]

While the non-profit world plays a key role in establishing art-world reputations, for-profit fine-art galleries and auction houses set the sale and resale value of original works of art, the core of the fine-art appreciation economy. Aggregate economic comparisons with these profit-oriented pillars of the art world are similarly lopsided. Sales of art reproductions in the U.S. are three times the highest private estimates of U.S. art auction sales ($6B), six times government figures for U.S. art gallery sales ($3B), eight times the entire U.S. market for contemporary art ($2.5B), twenty times the Census figures for U.S. auction sales of fine art ($1.1B), and fifty times the international auction market for contemporary art ($384M).[13] In sum, sales of art reproductions are double the sales of all original art in America according to market research commissioned by the Art Publishers Association.[14]

Alarming trends in traditional arts funding makes the case for reproduction stronger still, even if the art publishers' market estimates overstate the static relative shares. Average U.S. art auction prices have fallen by about 25% since their peak in the year 2000.[15] There are longer-term, secular trends forcing prices down: for nearly two decades prior to the recent market peak, the real value of average sales per art dealer in the U.S. fell by 30%.[16] Federal funding for the arts declined even faster, by 70% since its real-dollar peak 25 years ago.[17] State funding has declined for three straight years, by 24% in the last year alone in real dollars.[18] Federal per-capita spending on the arts is the lowest in the industrialized world, and the press barely reports when much ballyhooed (though pitiful) increases get axed by Congress.[19] Private charitable funding is declining even faster than government spending, according to museums finances, falling by a third during the late 1990s even as the art market surged (with museum shop sales of reproductions and other art-related products picking up the slack).[20] Foundation grants to the visual arts now make up just one-half of one-percent of all foundation giving.[21] No wonder the Ford Foundation, and dozens of other major arts funders have recently invested in the most intensive study of the failure of the non-profit support structures for U.S. artists.[22] As the most visible component of the visual art industry, the non-profit model holds a major responsibility for creating the overwhelming supply of discounted labor among artists, as well as arts administrators, who are disproportionately female and poorly paid even by non-profit standards.

The trends for art reproduction are the polar opposite, with ubiquitous indications of market growth, from the rapidly falling price of wide-format printers, to the explosion of online art vendors, to a host of surveys showing double-digit increases in the sales of wall art and décor and related equipment and supplies.[23] The vast market opportunity is literally all around us. There are more than two billion walls in American homes, and all need art.[24] Wall space is increasing, with homeownership, home sales, the size of new housing, and remodeling expenditures (especially for bathrooms) all representing rapidly growing sectors of the economy—along with the rapidly expanding square-footage of offices and other commercial real estate.[25] Surveys show American households are as likely to buy wall art as electronics.[26] The only question is: whose creativity will be on the walls and minds of Americans? More specifically: will the work of living visual artists have a place alongside flat panel TVs, mirrors, Van Gogh posters, and family photos? This is a challenge that cannot be met without fully exploiting the latest technologies of reproduction. It is also the central challenge to the livelihoods of working visual artists.

[1] Howkins 2001; Florida 2002; Siwek 2004.
[2] U.S. Census Bureau 2001; Chartrand 1992; Siwek 2004, p. 15.
[3] License! 2004 and LIMA 2004.
[4] Unity Marketing 2003, p. 3 and Home Accents Today 2000.
[5] Unity Marketing 2003, p. 3.
[6] CAP Ventures 2004 and Chaker 2004.
[7] IT Strategies 2002.
[8] Americans for the Arts 2003.
[9] National Endowment for the Arts, October 2004.
[10] Goldman 2005.
[11] Unity Marketing 2003.
[12] Kreidler 1996.
[13] Kusin 2002; U.S. Census 2001; Goldman 2005, Table 8; Hislop 2005b (respectively by statistic).
[14] Unity Marketing 2003.
[15] Hislop 2005a.
[16] Derived from National Endowment for the Arts 2004 and U.S. Census Bureau 2001.
[17] Derived from National Endowment for the Arts 2003.
[18] National Association of State Art Agencies 2004.
[19] National Endowment for the Arts 2000; Papatola 2004.
[20] Derived from Heilbrun and Gray 2001, p. 211.
[21] Derived from Grantmakers in the Arts 2001, p. 1, figures 2 and 5.
[22] Jackson et al. 2003.
[23] Sher 2000; Unity Marketing 2001.
[24] U.S. Census Bureau 2000.
[25] Unity Marketing 2001.
[26] Southeastern Institute of Research 2001.

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