Volume 11 - Issue 53
/ May 2022
9
https:// www.amazoniainvestiga.info ISSN 2322 - 6307
DOI: https://doi.org/10.34069/AI/2022.53.05.1
How to Cite:
Sokolyuk, L., Kasianenko, K., Bilozub, L., Chursin, O., & Shaulis, K. (2022). Development of the art market in Ukraine: towards
the competitiveness of Ukrainian artists under the conditions of informatization of society. Amazonia Investiga, 11(53), 9-15.
https://doi.org/10.34069/AI/2022.53.05.1
Development of the art market in Ukraine: towards the
competitiveness of Ukrainian artists under the conditions of
informatization of society
Розвиток арт-ринку в Україні: до питання формування конкурентоспроможності
українських митців в умовах інформатизації суспільства
Received: March 31, 2022 Accepted: April 30, 2022
Written by:
Sokolyuk Lyudmyla1
https://orcid.org/0000-0002-9564-8672
Kasianenko Кarolina2
https://orcid.org/0000-0002-4602-314X
Bilozub Liudmyla3
https://orcid.org/0000-0002-2384-827X
Chursin Oleksandr4
https://orcid.org/0000-0002-2734-0772
Shaulis Kateryna5
https://orcid.org/0000-0003-4029-5790
Abstract
The aim of the article is to analyze the key
features of the modern art market in the context
of the digitalization of art, as well as to study the
potential for further development and
dissemination of online trade in art. The study
concluded that the Internet and cyberspace
provide new opportunities for artists to make the
global art trade more universal and efficient, and
for artists themselves to be more competitive in
the art market. The scientific novelty lies in the
fact that the authors highlight the issue of
digitalization of the contemporary art market and
the impact of this phenomenon on the formation
of the competitiveness of Ukrainian artists in
these conditions. The practical significance of
the study is that the authors analyzed and
highlighted the most significant changes in the
art market in Ukraine under the influence of
digital technologies that affect the
competitiveness of domestic artists. The authors
1
Doctor of Art History, Professor of the Department of Theory and History of Art Kharkiv State Academy of Design and Fine Arts,
Faculty of Fine Art, Kharkiv Region, Ukraine.
2
PhD in Art History Assosiate Professor in the Department of Fine Arts and Design Faculty of Ukrainian and Foreign Philology and
Art History Oles Honchar Dnipro National University Haharina, Dnipro, Ukraine.
3
PhD in Art History, Assosiate Professor in the Department of Fine Arts and Design Faculty of Ukrainian and Foreign Philology and
Art History Oles Honchar Dnipro National University Haharina, Dnipro, Ukraine.
4
Candidate of Study of Art Senior teacher of Department of Painting Kharkiv State Academy of Design and Fine Arts, Faculty of
Fine Art, Department of Painting Art Street, Kharkiv Region, Ukraine.
5
Candidate of Art History, Associate Professor Kharkiv State Academy of Design and Fine Arts, Faculty of Audiovisual Arts,
Department of Audiovisual Arts, Kharkiv Region, Ukraine.
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emphasize that the modern world market of art
objects is actively developing and is reformed
through the introduction of modern digital
technologies, remains reliable for investment.
The authors note that the market of works of art,
as a significant part of world culture, in which
such a social and cultural phenomenon as the art
market, is a system of relations between creators,
distributors (dealers, art consultants), and
consumers of artistic products. are realized
through commodity-money relations, and the
biggest obstacle to the further growth of the art
industry is the lack of trust between the parties to
the agreements and their transparency in the art
market.
Keywords: art market, digitalization, investment
activity, trade, economy.
Introduction
The investment market in any sphere is a
complex system in which the main function is to
balance the interests of buyers and sellers. This
system is usually defined as a set of the
legislative environment, trade and settlement
infrastructure, as well as the information field.
Investment markets combine government
regulation to define clear rules, tax regime and
information disclosure, self-government to
organize trade and settlement, and private
initiative to conduct the entrepreneurial activity.
It is clear that the more effectively the market is
adapted to the economic and social challenges,
the lower will be the transaction costs of its
participants and the fate of the commercial
benefits of intermediaries, at the same time with
greater benefits for investors and issuers carrying
out their activities in the market of investment
objects. An effective investment market enables
its participants to focus more attention on new
ideas of more precise forecasting of investment
objects’ value dynamics (accordingly, evaluation
of investment profitability in these objects) as
well as on new methods of elimination or
minimization of investment process risks. Unlike
the market of, for example, securities, real estate,
the market of art objects is slow in its
development because of its closedness, caste, and
seasonality. However, despite this fact, the art
market has significant potential as well as an
excellent alternative for the deposit of free capital
for investment income.
The modern period of development of the world
economy can be characterized by the rapid
development of the art market. Demand for art
objects is growing among both buyers in Ukraine
and abroad, the infrastructure of the art market is
growing and developing, and along with it the
interest in it as a profitable field of investment.
Economic crises in recent decades have shown
that investing in art is a real possibility for saving
and increasing capital, as opposed to real estate
and luxury goods, which have fallen in value
during the crisis periods. At the same time, under
the influence of digitalization, there is an
institutional change in promotion strategies and,
just as importantly, in motives for acquiring art.
The development of information and
communication technologies fuels the digital
economy, accelerating the pace of production,
delivery, and consumption of goods and services.
The Internet has touched every economic sphere,
and artwork and the art market are no exception.
New technologies are gradually leading to a
paradigm shift in the trading and brokering of art
objects in the marketplace and are stimulating
new structures for art enterprises that are
supported by new interdependencies between art,
technology, and commerce.
Метою статті є аналіз ключових
особливостей сучасного арт-ринку України в
умовах цифровізації мистецтва, а також
дослідження потенціалу подальшого
розвитку та поширення онлайн-торгівлі
Sokolyuk, L., Kasianenko, K., Bilozub, L., Chursin, O., Shaulis, K. / Volume 11 - Issue 53: 9-15 / May, 2022
Volume 11 - Issue 53
/ May 2022
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https:// www.amazoniainvestiga.info ISSN 2322- 6307
предметами мистецтва у нашій країні. [The
aim of the article is to analyze the key features of
the modern art market of Ukraine in the context
of digitalization of art, as well as to study the
potential for further development and spread of
online trade in art in our country.]
Theoretical Framework or Literature Review
Scholarly studies of the art market depend on
financial statements and legal documents. One of
the first books on the history of art markets,
Gerald Reitlinger's trilogy The Economics of
Taste, was published back in 1961 (Reitlinger,
1961). However, it should be noted that most of
the deals and transactions in the art market still
take place without the use of modern technology,
accordingly, both domestic and foreign
researchers have not paid enough attention to the
phenomenon of the Internet as a powerful
innovation in the market. art, and consider
cyberspace as a simple auxiliary tool that can be
used to increase sales of works of art. According
to the above, the main problem is that due to the
academic novelty of the topic in question, one
has to deal with a lack of statistical data, which
makes it very difficult to develop a
comprehensive retrospective narrative.
Analysis of existing studies on the impact of
digitalization on the art market (instant access to
a full amount of information about the product,
the absence of unnecessary contacts and
unwanted questions, saving time on the
transaction and the subsequent delivery of the
purchased goods, etc.) leads to the conclusion
about the semantic and methodological changes
of the modern art market.
Most art market practitioners are inclined to
believe that digital art has become part of
everyday life and strongly influences traditional
art in its current phase (Schukei, 2019; Sanders,
2018), along with the fact that many digital artists
have begun to explore traditional art. Some
scholars draw attention to the advantage of the
economic relationship emerging in the art
marketplace: newcomers to the online art
marketplace should recognize that the intention
of users to use an online art platform is
determined not only by the technological
usefulness of the website but also by the
symbolic capital of the information provider (Lee
& Lee, 2019). Other scholars focus on the
composition and functional orientation of the
online segment of the contemporary art market,
highlighting three of the most prominent cyber
phenomena that could have a huge impact on the
further development of the global online art trade
(Sidorova, 2019). Some scholars focus on
exploring the analysis of the main characteristics
and problems of digital art in a general sense, as
well as the solutions and problems offered by
cryptographic certificates in all aspects of
artwork life: production, distribution, and
preservation (Cuesta Valera et al., 2021).
Methodology
Multidimensionality of the research purpose is
dictated by the search of economic instruments to
optimize the art market in Ukraine in the
formation of competitiveness of Ukrainian artists
in terms of informatization of society. For
cognition of economic phenomena and actions
are carried out special researches, the process of
research using certain ways of the essence of the
phenomena for the purpose of optimum
organization of purposeful activity of people in
one or another sphere of production. The subject
of economic research are social phenomena and
processes in the production of material goods.
When carrying out the research on the topic the
authors used general scientific methods, such as
analysis, synthesis, induction, deduction,
analogy, modeling, abstraction, concretization.
The authors also used specific methods of
research, which are used by economic sciences
for cognition of the essence of phenomena and
processes: calculation-constructive and abstract-
logical.
Results
The art market as a significant part of world
culture in which such social and cultural
phenomenon as the art market acts as a system of
relations between creators, distributors (dealers,
art consultants), and consumers of products of art
culture, realized through commodity-money
relations. In other words, we can conclude that
the art market in its essence is a set of art-cultural
and economic relations in the form of equivalent
exchange of various art objects for material
values, in which economic agents are the creators
of works of art, buyers and intermediaries
between them. The economy with implemented
information and communication technologies is
a digital economy based on digital technologies,
more properly characterizing the field of
electronic goods and services.
The contemporary art market in the context of
informatization is an autonomous segment of the
contemporary art market, offering alternative
ways of buying and selling works of art. The
online art market has two important differences
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from the offline market: firstly, due to its ability
to spread information about art and artists
instantly and worldwide, an art market connected
to the Internet can reach many new buyers and
enormously expand the market. Second, virtual
cyberspace exists across national and continental
borders, and an online art marketplace can be
accessible to any number of sellers around the
world, while being represented on only one site,
making it accessible to more potential buyers.
who purchase art directly from home.
The Internet has evolved from an art marketing
tool into an art market with its unique features
and developmental patterns. Estimating the size
of today's online art market is difficult, as is
predicting the future of online art markets,
although it is clear that online platforms have
become increasingly important over the past
decade.
On the example of the sales of paintings, we can
determine the overall performance of the market:
− the capitalization of the investment-quality
art market, which can be calculated as the
aggregate value of all the artworks included
in a particular sample;
− the average value for the most valuable
artworks is calculated as the average value
from the list of selected artworks;
− the marginal price, which corresponds to the
value of the last artwork in the emerging
ranking;
− market breadth index - the number of artists
included in the rating;
− market depth index - turnover over the past
12 months as a percentage of market
capitalization. Turnover is calculated as the
total value of all-new artwork, which is
included in the ranking over the past 12
months;
− resale index - this indicator reflects the
turnover of the most significant artworks on
the open market and is calculated as the
number of resales of paintings from the
rating in the last 10 years as a percentage of
1 thousand;
− the average annual yield is calculated as the
changes in market capitalization over the
relevant period, reduced to a percentage per
annum.
In the practical activity of analyzing the market
of investment-quality art objects the
segmentation of the paintings selected for
analysis is carried out. Based on this the
indicators of the art market of the second level
are calculated, to which we refer:
− the market capitalization of individual
artists, which is calculated as the aggregate
value of all the artworks of a given artist on
the selected list, both in nominal and real
value;
− index “yield” of historical periods, which is
calculated as the total market value of the
artworks included in the selected list and
were created during a certain period.
The contemporary art market has not only a
certain geographical structure, given the fact that
the United States, China, and Britain are leaders
in sales in the art segment, but also a typological
segmentation. Among all the participants in the
art trade market, the most influential are the
auction houses, which are the instruments of
influence that determine the main directions of
further economization of art and increase the
competitiveness of artists. One of the branches of
the contemporary art business, which is the most
dynamically developing at the present stage in
Ukraine and in the world, is internet trade
(internet auctions). However, there is a certain
amount of distrust in the reliability of such online
auctions, both among large auction houses, such
as Sotheby's or Christie's, and among buyers,
which is related to the quality of artworks
(paintings, sculptures) which are on sale, their
originality, as well as the seller's reputation.
Discussion
The ongoing processes of informatization affect
not only the economy but also directly on the
person, a key component of an effective and safe
life becomes free possession of digital and
information-analytical technologies, through
which the person receives the amount of
information that produces (within its adequacy)
and abilities) its assessment and builds a model
of their social behavior. Digital art requires no
less skill than traditional artmaking, but it does
require a different mode of thinking (Schukei,
2019). Creating brushes, shapes, and patterns for
your program gives you flexibility in what you
can do with your artwork, and it gives you the
possibility of earning extra money from those
unique creations (Sanders, 2018). User
participation in the online art market is guided by
curatorial direction rather than social influence
(Lee & Lee, 2019). The behavior of an art
purchaser is quite often characterized by a high
percentage of subjectivity and irrationality in the
decision to purchase a particular art asset. This
has negative consequences, first and foremost,
for the buyer himself, especially during a
financial crisis, during which investment
decisions must be balanced and rational.
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In the art objects market in Ukraine, as in any
other investment market, we can distinguish two
general types of participants, depending on
which business model they use: auction trading,
financial services, information business, or
dealer business (including private museums and
galleries). Most of them are public, private, and
professional investors pursuing all possible
investments, including collecting strategies in the
art market. The second category is institutions,
organizations, and individuals that serve the art
investment process and represent the
infrastructure of the art market.
Digital technology, which appeared in the '80s
and consolidated itself in the following decade
with what was called the “third industrial
revolution”, has transformed not only our daily
environment but also the way in which we
produce and experience artistic work (Cuesta
Valera et al., 2021). The contemporary art market
is a complex and multifunctional phenomenon.
The transition to a market economy entails active
commercialization of art, the formation of new
relationships between creators of works and their
admirers as well as buyers of their works. The
growing interest of the world's economies in the
art trade is evident, as well as the benefits of
being active in the art market.
The art market is often mistakenly referred to as
a completely unregulated market, which is
certainly not true in any way. In world practice,
there are many rules, in particular on auction
sales, that regulate buyers' rights and ensure their
protection. Digital artwork made recent
highlights with the integration of the
cryptocurrency market that already tops 2 trillion
and is still rising dramatically (Wang & Wang,
2021). Nevertheless, it must be recognized that
compared to much larger markets, such as the
stock market, which has strict rules, for example
concerning insider trading or market
manipulation, the art market, that is, art trading,
takes place in a much less regulated environment.
It should also be noted such a feature of the
global art market as a tendency to the anonymity
of transactions, in contrast to the usual business
transactions in other sectors, such as real estate.
But when someone sells an artwork at auction -
even something worth $100 million, much more
than your house - the identity is typically
concealed (Bowley & Rashbaum, 2017).
When works of art are in market circulation, they
acquire a commodity character. The art market,
both in Ukraine and all over the world, is subject
to the trends that exist in the world economy,
among the most important ones one should
highlight the globalization of the art market, the
development of various ties between states in the
field of culture, as well as the increasing role of
information technology and the development of
online commerce.
The widespread usage of digital formats and
techniques in the production and presentation of
artworks has made contemporary art practices
more accessible and thus open to being
experienced (Selen et al., 2022). The modern
online art market has its own structure, in which
we can distinguish hybrid online-offline-art-
businesses, as well as online art enterprises.
Online-offline companies present in today's
online art market are traditional primary
(galleries) and secondary (auction houses)
participants in the art market, operating both
online and offline. They use cyberspace to
increase sales and create new marketing
channels. There are three main types of online art
enterprises currently functioning in the art
market-online auctions, online galleries, and the
online marketplace (Sidorova, 2019). Internet
auctions (e.g., Auctionaftersale, Barnebys,
Birdsquare, Heritage Auction, Hihey, Invaluable,
Liveauctioneers, Thesaleroom, Paddle) offer
their customers the opportunity to bid on works
of art without leaving their homes. This erases
the social barriers inherent in bidding at
traditional auction houses, where one often has to
have a certain financial and social status. Online
galleries (Artgallery, Degreeart, Ideelart,
Newbloodart, Upriseart, Weng Contemporary,
Zatista, etc.) are virtual exhibition halls designed
to display and sell works of art, attracting art
dealers who do not want to spend money to rent
gallery space, in particular, because the new
generation of clients is not used to the traditional
– “offline” - viewing and purchasing of art. Yet,
another cultural factor sets auction houses apart
from galleries: an investment logic that advanced
over the last two decades. Unlike dealers, auction
houses post prices publicly (Buchholz et al.,
2020). Online shopping platforms (1stdibs,
Artnet, Artsy, Artandcollect, Artviatic,
Saatchiart) allow buyers to purchase art
immediately at the click of a button. They are the
starting point for new art collectors and, unlike
online auctions, provide direct communication
between artists, art dealers, and potential buyers.
It is art in cyberspace and the art market under
the influence of digitalization that is becoming
complex and multi-structured. With the advent of
computer technology and communication
technologies, areas such as computer graphics,
computer, and digital design, and phenomena
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such as digital art have emerged (Osadcha, &
Baluta, 2021).
The creation and presentation of art become
cultural phenomena. While social needs
determine the development of technology,
innovations, and differences in production arise
in all areas of life (Aydoğan, 2019). Whether it is
digital art or traditional art they are both art. The
differences between the two are the media you
use (Gupta, 2019).
The number of publicly-traded art companies is
small, and information on the profits and
expenses of the participants that are the
infrastructure of the art market is, in most cases,
classified information, and therefore of little use
for comparison. In general, the art market does
not have a single geographical location. For
example, digital art in public places is part of the
city’s creative infrastructure as well as of the
space of places; it is a weak location factor, it
influences people’s information behavior, and it
has effects on the city’s knowledge-based and
creative economy (Littwin & Stock, 2020).
Most transactions are made and conducted
directly between the owners of paintings and
sculptures or through professional art dealers. A
significant part of art asset trading activity, in one
way or another, is associated with major art
exhibitions taking place all over the world, but it
should be noted that these exhibitions do not
perform the function of organized and permanent
markets that can eliminate counterparty risk and
ensure liquidity and constant formation of the
market price of art assets. We can state that the
function of organized markets is attempted by
large auction houses, which, unlike exhibitions,
have a permanent location, hold auctions
throughout the year, act as a clearinghouse,
eliminate counterparty risk, and also eliminate
the risk of counterfeiting art objects.
Factors affecting the art market can be divided
into internal and external. To the internal, we can
include factors, which in turn are indicators
(indicators) of segments of the art market. These
indicators can be divided into general and
second-tier indicators. To the external factors, we
can refer the main indicators of the
macroeconomic situation in the world, we are
talking about global world indices, indices of
national markets, price of gold, silver, platinum,
and oil. The aim of key indicators of the
investment segment of the art objects market is
the most objective reflection of the current
tendency of price dynamics and liquidity of the
public market of the most expensive art objects.
These key indicators allow estimating the market
composition (structure of market capitalization
by sectors by analogy with the stock market
analysis), distribution of value, trading volume,
and growth rate of value by types of art objects.
Conclusions
Based on our study, we can identify the most
significant changes in the art market in Ukraine
under the influence of digital technology, which
affect the competitiveness of artists in Ukraine:
− information about auctions and dealer sales,
including the advertising component, is
publicly available and freely posted on the
Internet in its entirety, which attracts a large
number of new buyers;
− the digitalization of all stages of
communication between the participants
(communication via e-mail, payment for the
agreement itself, and related costs);
− the creators themselves (artists, sculptors,
and others) actively promote their products
through accounts on social networks and on
official websites;
− significant democratization of the art
market, both in terms of the composition of
participants and the range of items offered
for purchase and sale.
Due to the dramatic growth of the volume of the
art (work) market and the increase in the number
of its participants, digital technologies should
resolve the key problems of the art market -
issues of trust and transparency of transactions,
which create the greatest obstacles to further
growth of the art industry.
As can be seen from the above, the global art
market is beginning a process of reform and new
rules are seen as a necessary reform of the
industry, which requires stricter regulation and
increased transparency.
To summarize the above, we can conclude that
despite changing international relations and the
global environment as a whole, the art market in
the era of digitalization has become a single
global space. We believe that today's global art
market is actively developing and reforming due
to the introduction of modern digital technology,
so it remains competitive and reliable for
investment.
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