Current Economic Recession and Impact on Art Scene

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Table of Contents

Introduction
Negative impacts of the current recession on the art scene
Changing consumer behavior
Staff layoffs
Cancellation of art events
Reduced investment into the art business
Positive impacts
Zeitgeist in current art
Conclusion
Work cited

Introduction

Going by the most recent economic predictions, a majority of the economies in the world have already entered into what has been touted as ‘the most severe recession’ since the early 1930s (Madden 3). Economists have also predicted that by the end of 2009, the most advanced economies of the world shall have contracted by a factor of between three and four percent (Madden 3). On the other hand, it is anticipated that such emerging economies as China, India and Brazil, amongst others, will witness a slowdown in their individual economic growths. With most of the economies expected to start witnessing a recovery at the start of 2010, nevertheless this recovery is anticipated to be slow. That the recession has had far reaching negative economic ramifications is not in doubt. Most of the sectors of the economy have been hardest hit by the current economic recession, and the art scene is no different. Whereas there are those who are of the opinion that the impact that the current economic recession has had on the global art scene is somewhat ‘mildly negative’, others have pointed at a reduction in terms of philanthropic and sponsorship activities to various art organisations, in addition to negative impacts with respect to endowment income revenue.

Moreover, the economic recession is expected to contribute to an increased number of staff members who get laid off, in addition to diminishing commissions to artists for new work, as well as programming activities that are less adventurous (Madden 6). There are also expectations that the non-subsidised sector will be affected the most compared to the subsidised sector. Further, the community and the literary arts are anticipated to weather the economic recession storm better, compared with the visual and performing arts. There is also the issue of arts that have thus far been characterised by ‘discretionary’ spending being impacted the most by the economic recession. On the other hand, positive impacts are also expected to result from the economic recession within the context of the arts scene. This is due to the fact that arts are able to provide not just a timely and critical debate, but also an element of ‘feel god’ on the part of the clients and the artists alike. Accordingly, people shall usually resort to arts as a way of relieving their stress occasioned by the recession (Madden 6).

Secondly, the arts sector is characterised by a high level of flexibility, in addition to the fact that a number of artists have the potential to operate on limited budgets. These are but a few strengths of the art scene in the face of an economic recession that is looming large. Going by the foregoing arguments, it is the intention of this research paper to explore the correlation between the current economic recession and the impact it has had on the art scene. Accordingly, both the negative as well as the positive impacts of the current economic recession on this sector shall be examined, along with the learning experiences that may be drawn from this impact.

Negative impacts of the current recession on the art scene

Diminishing revenue sources

The main sources of revenue for the art scene include endowment income, acts of philanthropy by various foundations, as well as sponsorship. According to a research study that is yet to be published and which the Arts Council England undertook, the findings of this researcher indicated that by the close of 2008, art organisations in the UK had already been faced with huge reductions in terms of the revenues that they usually get from foundations and trusts (Madden 9). This research further indicates that individual giving as well as business sponsorship had however not reduced, even if it was proving quite difficult for organisations to maintain revenue sources. Further, a number of art organisations have already pointed out that it may still be too early to forecast the level to which the recession shall negatively influence their income.

There is a need to put in mind the fact that the significance of mechanisms could very well differ from one country to the other. For instance, philanthropy and sponsorship have been noted to be of less importance within the cultural sector in Spain. In this case, the arts sector in Spain may face their greatest risk at a time when sales and ticketing, along with public funding, experiences a downturn (Madden 9).

Moreover, government funding to the arts scene shall have an impact that is also country-specific. A good example here is the uncertain future that is faced by the art scene in Iceland. It is now over 10 months since the economy in Iceland collapsed and already, the art scene in the country has begun experiencing the pinch. At the moment, private sponsors have pulled out their funding to the art scene. The fast rate at which the Icelandic krona is depreciating in terms of value has also made it quite difficult for the local art scene to forge international cooperation, in a bid to sustain the art scene (Bomsdorf par. 1). As a result, artists have no choice but to struggle, if only to remain afloat, with the limited funds that they have. Both the private as well as the public sponsoring are already showing signs of drying up.

On the other hand, the museums in the country have been forced to operate on a tight budget owing to limited funds from the government. Private funding to the art scene has especially been influenced by the collapse of two leading banks in the country, in spite of the attempts by the government to inject a stimulus package that would ensure that they went on with their operations. This has meant that the annual income of such art scene as museums and galleries in Iceland have declined significantly. For example, Reykjavík Art Museum, which also happens to be the largest in Iceland, witnessed a reduction in terms of its annual income of between 15 and 20 percent, at the end of 2008. On the other hand, the National Gallery has indicated that its income has reduced by approximately 25 percent (Bomsdorf par. 4).

Changing consumer behavior

Prior to the start of the current recession, economies that are dependent on the creative sector such as the art scene had started to show signs of gaining momentum. Once the recession has set in though, there are now indications that these economies may be faltering (Madden 9). To start with, there has been a massive decline in terms of ticket sales. Another way in which consumer behaviour has changed with respect to the art scene is that consumers are now preferring to purchase less expensive arts, because their purchasing poser has drastically reduced. However, there are other consumers who have opted to shift to art scene, as opposed to pursuing other leisure activities that are now more expensive for them to afford. With respect to the decrease in terms of theater tickets spending, the purchases of the single tickets have been hit the most, compared with subscriptions. This is because there is a higher likelihood that those customers that subscribe for their tickets are loyal and so chances are that they will stick with theaters through thick and thin.

Nevertheless the purchase of art has been seen to generally reduce for both institutional as well as individual purchases. It is expected that the consumption of major and quality ‘arts experiences’ shall not be greatly affected, and hence shall remain stable. On the other hand, it may be anticipated that local arts that are usually small in size may very well be faced with declined consumption (Madden 11). The argument here is that when faced with an economic difficulty, consumers shall always first reduce their spending habit on those products that they deem as discretionary. The result is that the attendance of art festivals and exhibitions shall be tilted towards more mainstream and bigger fares that are pleasing to the crowd. Accordingly, the discriminative nature that audiences portray towards art is due to smaller personal budgets.

Even in China, the global financial crisis has impacted on the art scene in the country. This is manifested by reduced spending of people on art, contrary to the case prior to the global financial crisis (Wei par. 2). Small galleries have been affected the most, with a number of them being forced to close down amid dwindling revenues. In addition, most of the art events that have been held on a regular basis have either reduced in number, or become smaller, owing to reduced funding. There are artists that have opted to hold back their work, as they wait for improved market conditions. In addition, art prices have been on a downward trend. Artists in Shanghai concur that indeed, the global economic meltdown has negatively impacted on the art scene. Even then, there are those who are of the opinion that the quality of an artwork shall also dictate its price, with the result that artworks that are a masterpiece may not after all witness a drastic reduction in price, even under difficult financial conditions.

In China, the trend is that the small players in the art industry have been the most affected, while the big players in exhibitions and art galleries have managed to pick up quickly from the effects of the current economic meltdown. Local galleries have been reporting a reduction in the number of visitors frequenting these galleries. Potential buyers appear to be waiting for the opportune time for the art work to depreciate in value, at which time they intend to make their purchase. Regarding this, it is the view of some art dealers in Shanghai that buyers are now likening artwork to stocks, which appears to go contrary to gallery operation rules (Wei par. 8).

Staff layoffs

A survey that was carried out by The Art Newspaper revealed that a majority of the arts institutions had already experienced a reduction in terms of endowment values by approximately 20 percent (Kaufman par. 1), forcing directors to undertake massive retrenchment of members of staff. This particular survey was carried out in early December 2008, and involved over 40 museums, indicated that almost all the directors to the different art museums in the UK had embarked on a staff reduction exercise. This is because the sponsors had also reduced their financing, leaving the directors with no choice but to institute budget cutting measures.

Cancellation of art events

Reduced funding to the art scene has also seen a number of art festivals canceled. For example, the summer festival held in Britain had to be canceled, owing to reduced sponsorship, thanks to the recession (Parrack par. 2). According to a statement that was issued by the organisers on their website, the credit crunch led to the cancellation of the festival, as opposed to lack of dedication, support, or poor sales of tickets. Elsewhere in Iceland, the Art Museum in Akureyri along with the National Gallery, have both already indicated that they are not in a position to organise an art exhibition that involves foreign participants. This is due primarily to the global recession that has especially hit the Iceland economy the hardest (Bomsdorf par. 8).

Leading museums and galleries in Britain (and these includes Victoria & Albert and Tate Modern) have been left with no choice but to cut back on their expansion and exhibition plans, thanks to recession. Already, Albert & Tate had anticipated obtaining from its sponsors £120m to enable the institution complete its exhibition plans dubbed, “phase two”. Tate Modern anticipates to acquire £125m to enable the institution to attain expansion plans. On the other hand, Scotland-based National Galleries and National Gallery collectively require £100m to enable then complete saving plans for two Titian paintings by the end of 2012. However, chances are that these art institutions may not be in a position to achieve their ambitions, owing to reduced funding from both the private and the public sponsors and philanthropists alike, as a result of cut-back measures that have been occasioned by the economic recession (Akbar & Hickman par. 2).

Between 2007 and 2008, business sponsors of art scenes reduced by 7 percent. Such a slowdown is expected to continue up to 2013. This is a clear indication that indeed, arts are not fully immune to the effects of a global economic meltdown. Consequently, there has been an increase in the number of art festivals that have had to be canceled. For example, the Art Festival in Chelsea, which has been held on an annual basis for the last 15 years, experienced limited funding and hand to be canceled this year. Even as current sponsors may be trying hard to “honour their commitments” nevertheless, such art scenes as exhibitions are faced with a difficult time. For instance, the ‘Royal Academy of Arts’ could not easily locate a sponsor for an exhibition to showcase the works of Andrea Paaldio, an Italian architect. Eventually, several Royal Academicians were forced to intervene. On the other hand, individual American philanthropists, as opposed to corporate sponsors, are the ones who funded the National Gallery, to enable it organise a religious Spanish sculpture exhibition. According to Emma Collings, who is the art institution’s corporate fundraising chairperson, “We are concerned, but the National Gallery is fortunate to have in place a three-year partnership with Credit Suisse and a strong upcoming exhibition schedule” (Akbar & Hickman par. 6).

Reduced investment into the art business

In the UK, Boris Johnson, the London Mayor, convened a meeting on September 21, 2009, in which he urged sponsors and philanthropists to continue with their good gesture of giving to the various art institutions. The event that was held at both the Albert and Victoria Museum was titled, ‘Cultural Capital: Maintaining Investment in Culture through the Good Times and the Bad’. The intention of this meeting was to assemble the public sector, artists, and businesses. At this meeting, the Mayor illustrated how capital needs to be viewed as ‘a cultural powerhouses, in the form of galleries and museums, cinemas, theaters, as well as concert halls. The convening of this meeting by the Mayor of London came amid fears that the recession has negatively affected the art scene, in effect resulting in a reduction with regard to the funding of the art institutions (States News Service 1).

Even as there could be an increase in the number of visitors that are now frequenting galleries and museums in such a city as London, this should not however be taken as a sign that the art sector is on the way to recovery. This is because these art institutions rely heavily on the sponsorship that they get from the government and private sponsors. Accordingly, visits to national museums and galleries are usually free. There are also indications that even as the number of visitors to these art scenes have been on the increase, business investment is at the same time falling. This is in addition to a reduction in the funding received from foundations and trusts, and also from individuals. It has been estimated that in 2008 alone, there was a reduction of 7 percent in business. Further, 42 percent of the individuals that have made their investment in the art business have indicated that over the last four months, investment into this sector has dropped drastically (States News Service 1).

Already, there is a chance that the funding to the art institutions may have to wait till the end of 2011 in order to once again pick up. This would impact negatively on the art sector not just in the short-term, but also in the long-term. Jobs would be lost, and this would affect the overall economy. One of the sectors that would be affected the most in tourism. It is estimated that tourism contributes to nearly 16 billion towards the economy of London (States News Service 3). In addition, most visitors to London have opined that the main reason why they come to this most visited city in the world is as a result of its rich endowment in both art and culture.

Positive impacts

The current economic recession has also impacted on the art scene on a number of positive ways. For example, Caroline Briggs, an arts and culture reporter with the BBC, has written on how impromptu exhibitions have witnessed an increase within the city of London. This has been the case owing to the desire by various artists to take advantage of commercial property already empty, thanks to the recession. The latest addition to these impromptu art galleries is a restaurant within Covent Garden in London, which formerly dealt in Italian food. ‘Up-and coming artists’ have been the main beneficiary of this arrangement. A case in point is an exhibition that has been organised at the former hotel by Watch This Space, in which 12 artists have their work showcased. This hotel had been empty for a total of two years now, but it has today undergone a major transformation to become an exhibition.

The curator and organiser of this show is Lee Johnson, and she has concurred that the reason why so many “pop-up” shows have cropped up is due to the economic downturn. As Ms Johnson observes, “Pop-up galleries seem to have really taken off, it’s become a bit of a buzz-word in London at the moment,” (Briggs 5). Ms Johnson further argues, “The artists get the space for free, and the landlords would rather have the space busy and full of creativity than have it empty” (Briggs 5). The curator further opines that even as the recession may have spelled doom for the world of art scene, nevertheless there are benefits that artists may gain form it. The recession has been more like a wake-up call to art galleries and exhibitions, who had been used to a trend of spending a lot of money to showcase the works of various artists, in effect meaning that they were forced to overcharge for this kind of work.

In Singapore, the art scene has managed to thrive amid the current financial crisis (Lim par.1). The current global financial crisis has been touted as the most severe that Singapore has ever witnessed in history, and yet this recession is turning out to be something of a godsend within the context of arts scene, with local performers and artist gaining fame by participating in annual arts festivals that entails foreign productions.

Playwrights and dramatists alike have also not been left out in the quest to cash in on the global financial crisis. David Hare, who is a leading playwright in Britain, has sought to address the plight of sup-prime mortgages and toxic securities in the form of a play that premiered at London’s National Theater. A book that has been authored by Sebastian Faulks on swashbuckling traders in hedge funds has become a best seller (Lawless par. 2). A TV drama based on the woes that resulted into Lehman Brothers’ collapse has also been produced by BBC.

Zeitgeist in current art

Zeitgeist is a term that has been borrowed from the German language and when translated into English, it means, “the spirit of the time”. It therefore signifies the cultural as well as intellectual climate that characterizes an era. Accordingly, it may be argued that when an individual finds themselves within an environment that supports art scene, chances are high that such an individual may gain access to and interest in art work. To Hegel, a German philosopher, Zeitgeist leads to homogeneity in the quality of art, music and literature, within a given period in time. In this regard, moving away from the twentieth century led to the loss of zeitgeist in the form of ideas, words, cyberspace travel, and opinions. The idea here is that Zeitgeist “makes its own silent statement” (Erganian par. 6). Due to the fact that the arts scene has become more liberal, a lot more young people are getting lured to the profession. Furthermore, art has become a profession that is now paying competitively, relative to the other professions. This too, has meant that an increasing number of people would want to get involved in it.

Conclusion

The current global economy has impacted on various spheres of the economy, and the art sector has not been spared either. In this case, there is a need to appreciate the fact that there have been both positive as well as negative impacts of the recession on the arts scene. To start with, a lot of artists have been rendered jobless, as a result of changes in the consumer behaviour of buyers, who prefer to hold back their money until the prices of artworks come down. In addition, individual buyers have cut down on their spending habits, as art is proving to be more of a luxury during harsh economic conditions. Museums and galleries have also witnessed massive reduction in terms of the finances from private and public sponsors. Consequently, art institutions have been forced to retrench part of their labour force. Lack of enough funds has also resulted in canceled exhibitions by galleries. On the positive side however, budding artists have taken advantage of abandoned commercial property, transforming these into exhibitions. Such exhibitions have helped up-and-coming artists to showcase their work. Enterprising playwrights have also written books on the impact of the global economic crisis, and these have proved to be an instant hit. The global recession has also seen a lot of the local artists gain fame, as they endeavour to fill the shoes of international artists who have been forced to cancel their participation in international exhibitions and art festivals, thereby stealing their moment of fame.

Work cited

Akbar, Arifa, and Martin Hickman, Martin. “Recession puts galleries’ future in the balance”. The Independent. The Independent, 2009. Web.

Bomsdorf, Clemens. “Iceland’s art scene faces an uncertain future”. The art newspaper. The art newspaper, 2009. Web.

Briggs, Caroline. “Art goes ‘pop’ during a recession.” BBC News. BBC News, 2009.

Erganian, Leslie. “Art Zeitgeist”. 2009. Web.

Kaufman, Jason. “Museums make deep cuts in face of global financial crisis”. The art newspaper. The art Newspaper, 2009. Web.

Lawless, Jill. “Playwrights make drama out of global financial crisis.” Daily Herald. 2009. Web.

Lim, Phillip. “Singapore arts thriving in financial crisis.” AFP. AFP, 2009.

Madden, Christopher. “Global financial crisis and recession: Impact on the arts.” 2009. Web.

Parrack, Dave. “British Summer Festival Cancelled – Wax: On Live Organisers Blame Global Recession”. 2008. Web.

States News Service. “Mayor issues stark warning and urges continued spending for arts and culture”. 2009.

Wei, Liu. “China’s Contemporary Art Market is Becoming More Rational.” Shanghai Daily. Shanghai Daily, 2009.

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