Challenges in the Art Market

The struggle in the art world between auction houses and gallery dealers has been quietly raging over the past three decades. The prime focus of the auctioneers has been to maximize profits while the galleries have tried promoting and protecting their artists to create an appreciation in value.

The art buyers buyers have been in the middle but the balance has shifted because the collectors making the largest purchases are no longer visiting the dealers but are circulating around the world at some two dozen fine art fairs stretching from New York to Hong Kong. This is causing an increasing struggle for the dealers because the auctions are excluded from the fairs. For many dealers in the world’s mega-cities, who are already facing increasingly expensive rents, it has meant additional costs for space at the exclusive fairs, plus, travel, shipping, insurance, staff and accommodation. Many of the established but gradually exhausted dealers feel compelled to attend three or more of these fairs in a world already consumed by uncertainty.

I must come clean on this immediately: four members of my family have been artists and they are currently represented by dealers in six countries. So I write about this with experience going back to my youth in the Paris of Picasso and Matisse. It is not only that art is increasingly being called into question by the power of money, by the new computer-driven trends of what is “fashionable,” by the reduction of space given to art by the printed media and the corresponding dearth of capable art critics,* but now also by the struggles between gallery dealers, the auction houses and the art fairs. It is on this  aspect  of art as a form of investment in a more insecure financial planet that I shall try to focus.

In our era, money, profit , celebrity, globalization and speed have overwhelmed  how art is valued and consequently how it is promoted and bought. No ideology nor notion, like that of the “avant-garde” affect either dealers or auctioneers. What matters is money, although videos, Instagram, and the digital media, as well as the prestige of museum shows, all affect the market. The sense that high prices suggest quality while lower prices hint at a lack, has grown over the past century. The result is that artists struggle to get higher prices through their dealers, or eventually through the “updraft” of auction sales, as well as through exposure in the media. However, “The random, narcissistic, and viciousness of internet culture,” as described by Holland Cotter in the New York Times, takes its toll.1

Contemporary artists prefer to use independent dealers who will not only make beneficial decisions about their output , but who will look after them and their reputation. Running their own “shops” dealers are not dominated by corporate interests such as auction houses are. This gives the artists greater protection, stability and “longevity,” or continuity, which the auction houses cannot provide. True, some patronizing, big-time dealers, such as Larry Gagosian, may sell paintings which have not yet been created by one of their leading artists to collectors who are over-anxious to buy the newest of creations. How this could affect the artist may not even be considered! Jeff Koons, one of the highest paid of contemporary artists, says: “I love the gallery, the arena or representation. It’s a commercial world, and morality is based generally around economics, and that’s taking place in the art gallery.”2

There are still a number of well-informed and cultured art dealers who have devoted their lives to furthering paintings, sculptures, and water-colors of particular artists and periods. Such dealers tend to follow their instincts instead  of the fashion-driven market.  A little over a hundred years ago, the famous Parisian dealer,  Paul Durand-Ruel, created values for paintings few wanted and he managed to change the taste and economics of the Victorian-age art market. When no one was able to sell such impressionists  as Edouard Manet, Claude Monet and Camille Pissarro, Durand-Ruel was successful in making a business from them.

“What would have become of us if Kahnweiller had not had a business sense?” asked Picasso of the German-Jewish dealer who single-handedly saved the Cubists from starvation. The art expert Bernard Berenson, who became the grand intermediary between historical Italian works of art and the great British dealer, Lord Joseph  Duveen, was to remark that “I soon observed that I ranked with fortune-tellers,  chiromancists, astrologers, and not even with the self-deluded of these, but rather with the deliberate charlatans.” Berenson, who made millions certifying paintings by 15th to 18th century  Italian masters, expected maximum returns from sales he had facilitated for Duveen, but actually took no responsibility for making the sales.

Today those who buy and sell art as a business no longer like to have  themselves described as “dealers.”  They have been transformed into “gallerists” or “curators.” The latter gives credibility to their status. Curators are associated in  peoples’ minds with experts who have academic  or museum training and have developed scholarly concerns with quality and historical origins like Berenson did.3

In the psychological warfare of the market, artists also have been promoted as “ground breakers” doing “cutting-edge work,” which may be described as being “radical” or “seminal.” Their product is no longer “new” or “innovative.” The artists no longer enjoy careers, but have become “masters” working on their latest “iconic” image. Galleries employ public relations firms who create “name recognition” for the artist. Indeed, celebrate status has become vital in today’s global art market. The artists are also being forced to promote their own status as the role of critical reviews has shrunk due to the lack of coverage in the press.

Artists today are being defined by their capacity to convert feelings, experience and thoughts into a tabloid of our increasingly exposed world. Although most artists of the past were once considered “contemporary,” our current “Contemporary market” has a vitality that is now absent from the market for Old Masters and Modern Art. In part, it is the relevance to immediacy that explains the current success of the Contemporary in the global art market.

Since the year 2000, the Contemporary global art market has multiplied in value by close to 14 times. The number of art buyers generally has risen spectacularly from around 500,000 in the 1950’s to around 70 million today. The average age of these art enthusiasts also steadily decreased, as the number of those in their thirties and forties has risen markedly and 95% of the participants are now connected to sales via their mobiles. According to Metcalfe’s Law “the market’s potential on the internet is proportional to the square of the number of its connected buyers, collectors, dealers and curators.”4

There is no regulated code of conduct in the globalized art market. For the auction houses as well as most galleries, commercial values rule supreme. Sales are driven by desire, greed,  prestige, and competition.  The works of the leading contemporary artists become blue chip investments while those of the younger creators who receive lower ratings must face the inevitable market adjustments as their art is viewed as a financial investment. A successsful French artist, Thierry Ehrmann, contends that “Contemporary art will always be … constantly criticized for its record auction prices, its difficulty of interpretation and its inherently subversive nature.”

As far as the auction houses are concerned the market place warfare is about money and not about “the new” nor about artistic innovation. Amy Cappellazzo of Sotheby’s explains that the management is trying to transform their image from being an auction house into that of an “art business service.” There is a recognition that to do so, as auctioneers they must try to buy or takeover a number of  galleries and in that way insert their presence into the flourishing art fairs which have become the largest transactional arena for art.

The big fairs, like those in Maastricht, Basel and New York, all are in competition with Christie’s, Phillips, and Sotheby’s. The fairs bring in rich collectors, the museum curators, dealers, critics — all of whom enjoy the art world social atmosphere with only the rare presence of actual artists.  As the New York Times headlined it: “As prominent artists age, the art world hopes to cash in.” The frantic gossip at the fairs, the networking, and exhibitionism all add to the excitement of these gatherings. A wild, single sale can set the market rolling. In part that is why the market is so notoriously vulnerable to manipulation. A ring of a few promoters can bid up the price of a youthful but dubious painter. This was certainly the case of Jean-Michel Basquiat, who after his early tragic death from drugs, was promoted by a small group of top dealers led buy Bruno Bischofberger of Zurich. They pledged to keep the price of Basquiat’s works at auctions rising and over the past thirty years they have been spectacularly successful: The price has risen from the $5,000 level to the multi-million dollar range.

Neither dealers nor the auction houses have any connection to aesthetic principles. They leave that to the burgeoning world of museums. Whatever standards still exist are now in the hands of these representative institutions. Each year about 700 new museums are opening up around the world. More  have been built in this short new millennium than in the previous 200 years.** As each of these new institutions  search for museum-quality creations, they underpin the art market sales of the dealers, the auction houses, and the fairs.

As Philip Hook concludes in his latest book, Rogues’ Gallery, “The history of art dealing is the story of many varieties of human folly and duplicity, interspersed with ingenuity, inspiration and occasional acts of heroism.”

1Holland Cotter, “Artists reflecting their era,” The New York Times, January 31, 2017.
2quoted by Jackie Wullschlager, “Lasting Impressions,” The Financial Times, February 21, 2015 (Arts Section, p.11)
3Philip Hook, Rogues’ Gallery, (2017)
4 First formulated in this form by George Gilder in 1993, and attributed to Robert Metcalfe .
5The Economist, February 4, 2017, p.82

*The painful lack of truly incisive art critics such as former prominents Clement Greenberg, Hilton Kramer, Herbert Read, Harold Rosenberg, and David Sylvester is manifest in both the US and the UK.

**The supremacy of money in our time has been characterized by one artist, James Stephen George Boggs, who specialized in creating new bank notes. He would take a picture of himself and place an engraving of it on a hundred dollar bill where the bank name might be “Federal Reserve Not.”  When merchants wouldn’t accept his art, he would point out the beauty of the engraving. As his biographer, Lawrence Weschler noted,  “he was just short of being a con-man –but no more so than anyone else in the art world.”  Although Boggs died in January, the Economist’s obituary noted that his art remains on the walls of galleries and museums all over America and Europe.

2 thoughts on “Challenges in the Art Market

  1. Thank you Yorick. Most of what you say makes me sad but, like others, I continue to paint regardless of the “market” because there isn’t anything else I can do. Eventually, many of us believe or hope, perhaps stupidly, that the world will see.

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