Art Market

The Industries That Drive the Art Market

Anna Louie Sussman
Aug 22, 2017 8:20PM

Money makes the world go round, and the art world is no exception. But where that money comes from has evolved over the past 20 years.

Artsy analyzed two sample cohorts of the world’s top collectors to see how the industry make-up behind the most elite collectors has changed over the last two decades.

The big takeaways? Finance is in, really in. “Other”—a designation we used for lawyers, doctors, architects, and individuals who didn’t fit into the most highly represented categories—is out. (See below for a full explanation of our methodology, which relied on ARTNews’s annual Top 200 Collectors list.)

Today’s art market is heavily concentrated in a handful of industries. In 2016, finance, real estate and construction, and retail accounted for nearly two-thirds of the industries behind these mega-collectors. Twenty years ago, finance, real estate, and the then-next-largest industry, media, accounted for just over half of the collectors’ wealth.

Finance was already the highest-represented industry in the list at 21% back in 1996, but it grew to nearly one-third of the total by 2016. That’s not simply because the financial sector has grown as a share of the U.S. economy. In fact, the sector grew only modestly in the U.S. during the past two decades, to 7.4% of total GDP, up from 6.8% in 1997, according to the Commerce Department.


Rather, notes Doug Woodham, former president of the Americas for Christie’s, the financial sector’s growth in its share of the top art collectors today is because the sector is what’s been described as a “winner-take-all” economy, in which a small share of the players reap the bulk of the profits, often because they operate globally. Those huge earnings by a handful of firms are channeled to a small coterie of hedge-fund managers, venture capitalists, and private equity titans whose earnings dwarf those of traditional investment bankers. (To be sure, this dynamic affects other industries, too.)

Luckily for the art industry, he said, at least a handful of these fabulously wealthy men—and they are largely men—like art.

“The art world has benefited enormously from the tremendous wealth that’s been created” in the financial services sector, Woodham said. The art market had global sales of roughly $14 billion in 1996, according to research published by Arts Economics, a consultancy founded by the economist Clare McAndrew. Twenty years on, that’s grown four-fold to $56.6 billion, McAndrew estimated in a report she prepared for UBS and Art Basel this past March.

“Luckily for the art industry, these fabulously wealthy men like art.”

McAndrew noted that these financiers also come to the art market with a pragmatic lens, viewing art not just as a potential high-reward investment but as an important risk diversification strategy to offset their investments in other asset classes. It’s possible that goal allows them to more comfortably splash out mind-boggling sums for artworks, too. Steven Cohen, the former hedge fund manager who now invests his own money after settling fraud charges with the U.S. government, has spent upwards of $100 million for a single work on multiple occasions.

Real estate and construction, the second-most common category among the top 200 collectors, grew slightly over the past two decades, to 18% from 16%. The next two most highly represented categories in 1996, “media, advertising and entertainment,” and “other,” both fell substantially by 2016. In particular, the number of entries in the “other” category dropped by 64%, to just 10 in 2016, down from 28 two decades prior.

The gradual retreat of more workaday rich people in favor of the unimaginably rich mirrors larger trends in the global economy. Consider Dorothy and Herbert Vogel, a librarian and postal clerk, respectively, who appeared on the list in 1996. They amassed a collection filled with works by Chuck Close, Richard Tuttle, Sol LeWitt, and Christo and Jeanne-Claude, by purchasing early and directly from the artists. Or Nelson Blitz, Jr., another 1996 entry, described in a profile as an “air conditioning contractor” who collected mostly prints by masters such as Edvard Munch, Pablo Picasso, and Jasper Johns because their paintings were above his pay grade. While it’s possible that a middle-class family could collect works by emerging artists today, it’s hard to imagine a public servant being named to a list of even the top 200,000 collectors.

Not only are people of the Vogels’ economic class disappearing from the ranks of top collectors, but their approach to collecting is diminishing in its prominence, too. The Vogels were wholly immersed in the downtown art world, made friends with artists, and were agnostic as to an artist’s reputation. Instead, they simply bought what they liked, with two other requirements: “The work had to be affordable; it had to fit in their apartment; and it had be transportable via taxi or subway,” according to a 2013 profile of the couple.

The gradual retreat of more workaday rich people in favor of the unimaginably rich mirrors larger trends in the global economy.

Today’s collectors, especially the newly wealthy, tend to rely more heavily on artists’ reputations and are less likely to go with their gut, said McAndrew. They typically look at how others collect when making their early forays into the market, a herding instinct that has concentrated value around a smaller number of artists, creating a winner-take-all effect in the art market, too. In 2016, for example, dealers with turnover above $50 million saw their sales advance by 19%, according to UBS and Art Basel’s report The Art Market | 2017, while dealers with turnover of under $250,000 annually experienced a drop of 11%.

“It’s kind of a self-conscious purchase because it’s such an obvious display of your cultural status,” McAndrew said. “One way to reduce that risk is if you know that this particular artist has done well or been bought by other famous collectors. It’s easy to follow the herd a little bit.”

Even though the herd is expanding, with a new billionaire being created every three days in Asia, according to a survey by UBS and PWC, it’s still a small enough group at the very top that art world professionals can keep careful tabs on each collector—or potential collector. As Woodham observed in his recent book Art Collecting Today, the bar to enter the Forbes list of the richest people in the U.S. had risen to a minimum of $1.7 billion by 2015, nearly twice the minimum a decade prior. That left 145 billionaires off the list that year, he noted.

“There are about 140 people in the world who have the discretionary income to buy works for $50 million,” Woodham said, and around a thousand for $5 million and above, he estimates. “Each one has a bullseye on them. The art world massively over-serves them.”

Regardless of which industry these collectors are in, chances are they have benefited from the growing concentration of market power across the economy, in industries ranging from pharmaceuticals to financial services to auto manufacturing. Why is that? The collectors on the list today are far more likely to be the owners, founders, or inheritors of firms, and market concentration has in recent years benefited investors and owners of the firms far more than the average worker.

And as their own individual wealth grows, this handful of collectors and those in their orbit wield outsize power, said McAndrew, distorting values for that limited group of sought-after artists. The list of top-selling artists at auction—almost entirely white and almost entirely male—has not evolved much in years. Artists affiliated with a handful of global mega-galleries garner a disproportionate share of museum shows, and the auction market has shifted towards contemporary art in line with the tastes of the newly wealthy. The most powerful collectors are also more likely to dictate terms to museums jostling for their donations and auction houses vying for their inventory.

“Those collectors that have the monopoly around those artists, they do have more and more power,” she said. “Those that have access to them also become more powerful, the dealers and the advisors.”

“There are about 140 people in the world who have the discretionary income to buy works for $50 million.…The art world massively over-serves them.”

Shifts in concentration and industry composition have been accompanied by geographic changes. Although the bulk of collectors still come from the U.S. and Europe, China’s breathtaking economic growth has been accompanied by the growing prominence of its collectors: their numbers among the top 200 have risen to 10 in 2016 from three two decades ago. Japanese collectors have been less prominent of late than they were 20 years ago, dropping from seven to three, although the splashy purchases by Yusaku Maezawa, proud owner of the $110.5 million Jean-Michel Basquiat painting sold at Sotheby’s in May, may signal a coming resurgence for his country’s importance.

But in an industry as tradition-bound and relationship-heavy as art, there’s still a high degree of continuity over the past 20 years. Roughly two dozen names (or about 10% of the total), give or take a spouse or two, appear on both lists, although the average age of those collectors neared 80 in 2016.

Some of them have lined up their children to take their place, including retail magnates such as Doris and Donald Fisher, founders of The Gap. Their son Robert Fisher appears on the list in 2016 with his wife Randi. Likewise Mitzi and Warren Eisenberg; Warren co-founded Bed Bath & Beyond, and their son Martin and his wife Rebecca inherited the passion for collecting along with the means to do it. The kids’ presence in the 2016 list helped boost the retail category’s share to 14% of the top 200, up from 10% in 1996.

And, of course, inherited wealth more broadly still makes up an important core of the resources that flow toward art: Around two dozen collectors on each list have inherited significant fortunes or business interests, some of it several generations old.

What about the highest-profile industry of our time, technology? That industry’s share of top art collectors grew to 5% from 2% over the past two decades, but that still seems low for an industry with so many new billionaires. That could change in the future, as they grow into their thirties, forties, and fifties, ages when people tend to start collecting, said McAndrew. Woodham noted that art did not appear to be “a turn-on” for them at the moment, possibly, he suggested, because “artistic innovation doesn’t seem profound enough vis a vis what a lot of the works cost, and relative to the forms of innovation they see in their fields.”

But that could change as the expanding cultural scene in the Bay Area spurs more exposure. Entrepreneurs are “clever, resourceful individuals who…are open to new ideas,” Woodham said. “Artists are a source of creativity.”

Interestingly, researching the collectors across both the 1996 and 2016 lists—those who have made their wealth recently or come by it through their families—turns up results mostly related to their art collecting activities. Like the the Vanderbilts, Carnegies, Rockefellers, and Gettys of the Gilded Age whose names adorn museum buildings and exhibition halls, this current generation of art collectors is creating new legacies through their arts patronage, while information about the sources of their wealth fades into distant pages of search results or lies buried in trade publications.


Artsy used ARTNews’s Top 200 Collector lists from 1996 and 2016. We researched collectors both online and in the Nexis database, which includes trade publications and news coverage in other languages besides English. We used our judgment in formulating categories. Owners of sports teams and casinos were categorized as “media, advertising, and entertainment.” Consumer goods refers to a company that manufactures consumer goods such as appliances or cosmetics, while firms with multiple consumer-facing retail outlets (including holding companies of luxury brands) were categorized as retail. Technology included e-commerce and makers of hardware such as semiconductors. The “other” category included a range of industries, from medicine and law to shipping and healthcare. Some collectors had significant holdings in more than one industry, which is why the percentages add up to more than 100%. The exercise is intended to be directional and not exhaustive, as many collectors may have further sources of income and wealth that we were not able to discern.

Header image by Wenjie Li via Getty Images.

Anna Louie Sussman