Art Market Myths and Reality

Art Market Myths and Reality When a need becomes an obsession, the question “to have or not to have” transforms into “to be or not to be.” P. Dossi Y...
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Art Market Myths and Reality When a need becomes an obsession, the question “to have or not to have” transforms into “to be or not to be.” P. Dossi

Yury Petukhov [email protected]


Contemporary art market. Short summary of trends and future developments.


o begin with, we should make it clear what is meant by the “art market”. The art market is the vaguest sector of commodity-money relations. It is the meeting place of art and money, holy prayer and mundane speculation, art auction records and the misery of artists. It is the junction of the inexhaustible creative potential and unbridled consumption, of long art development cycles and short phases of artwork sales. Art is sold for money. Roles in the process of turning art into money have long been defined: the artist is to believe in his art, the gallery owner to sell it, the art critic to make it known, museums to elevate it, and collectors to pay for it. No other market is governed by such profound uncertainties about the value of goods on offer.


deally, the art market should be a strong, well-organized and developed structure of relations in the movement of a work of art from its maker to the buyer. It is a selection and filtration mechanism, with the function of all sorts of filters performed by a host of organizations and individuals that are involved in various ways in pricing and the promotion of not just a concrete artwork, but primarily the artist himself. Furthermore, the ideal market model includes a lot of factors and nuances, hidden from the public at large, that strongly (and more often than not critically) influence the pricing and popularity of artworks.



t is a two-way traffic: artists are looking for fans and buyers, and potential buyers, collectors (investors) to be, for the right artists. Both the former and the latter, beyond doubt, need all those people and organizations, on the one hand, as a filter of sorts and, on the other, as catalysts speeding up the processes on the road to success. Artists and buyers need all those structures in equal measure. Collectors can contact artists directly and buy whatever they like, yet they will need assistance from the entire body of specialists (or some of them) in putting the purchased artwork and the artist himself on the art scene.


lthough the art market is continuously changing and art fashion tends to vary depending on the situation, the fundamental principles governing the market remain in place.


Main Trends 1 Art has become an independent sphere of capital in-

vestment alongside stocks, real estate, etc. A handful of investors are not the only ones to speculate on art. In addition to art dealers and gallery owners, banks, auction houses, investment funds and major corporations, pension funds and insurance companies, as well as art and investment magazines all engage in operations with capital in the form of artworks. Comparable to operations with textbook financial instruments, these operations range from conservative capital retention to risk investment and speculation.

2 The very principle of collecting has changed. Collectors today follow three fundamental principles: •

Investment attractiveness



We can thus say that works of art are often bought for considerations that have little to do with art. Anything – any idea of the beautiful, any style or national school – is possible on the contemporary art market, provided it brings profit.

3 Today’s collectors are better informed due to global-

ization and the growing role of the Internet in promoting works and certain artists on the market. However, this expansion to new segments of buyers, who have more than enough money but lack education to understand the intricate aspirations of the artist or his/ her allusions to myths and allegories, leads gradually to an erosion of the conceptual content of artworks. Vigorously growing demand among young and enthusiastically consuming collectors triggers changes in art. Consumption has little to do with the true nature of the consumed product.

4 There is a tendency towards a superficial approach

to a sphere that intrinsically presupposes profundity. On a brisk market art is a successful product only if it immediately attracts attention amidst a flow of offers. A simple message and instantaneous impression are

crucial to winning attention. From the market point of view a good work of art is one which is perceived at first glance. As a result contemporary art is becoming increasingly more decorative and shifting to a border state between design and advertising. To judge by the Artprice database sales figures, the deeper knowledge an artwork requires, the more modest its success.

5 The widening gap between the markets of old and

contemporary art has led to a fiercer struggle for buyers. Stories of fakes and crooked antique dealers spread by the media have caused stricter requirements to artwork provenance and their documentation.

6 The larger number of art market players and mount-

ing investment and speculative sentiments have resulted in a fast growing tendency towards the purchase of more expensive artworks. Money as such is not of paramount importance in the upper echelons of the art world – everybody has it. What matters is possessing a rare value. The wealthy strive to acquire status things to “position themselves”, as the economists say, that is, demonstrate to the rest of the world that they are really wealthy.

7 Speculative demand for works of mass, albeit not

quite justified interest and sticking to social codes characteristic of the world of luxury.

8 Off-market institutions (primarily art museums) are

becoming increasingly involved in the process of indirect, yet rather active influence on pricing.

9 Active market entry by European art and photography is a signal new trend on the Russian art market.

10 Countries, until now regarded as underdeveloped in this respect, are now more and more active on the market.


A multitude of mutually exclusive tendencies are clashing on the art market:

• A work of art is the product of the creative energy of

a single person and therefore a symbol of personal freedom, the chief ideal of society and culture. Conversely, the market is a place where commodities are exchanged and where a thing acquires value in the act of exchange. The market reduces the value of an artwork to the amount of money that the buyer is willing to pay for it at a given moment. This desire to wed art to money is by definition a mean trick. Art is incompatible with the market because the latter tries to reduce the fruit of an absolutely special creative endeavor to the level of ordinary goods.

• Although we are discussing the market here, artworks

tion, while gallery owners are not so much sellers as instructors and collectors not so much buyers as art lovers. Art trade derives profit from the idea that art is on the other side of commerce and thus asserts its special status among other commodities. Art market commerce is thus a negation of commerce.

• The economists are bewildered by pricing on the art

market, which renders the basic laws, such as that of demand and supply, nil and void. A picture may stay in the gallery waiting for its buyer for an indefinitely long period of time, yet its price, despite any economic forecast, will not go down.

put on offer by galleries usually have no price tags. Collectors buying artworks distinguish between discussing art and talking money. To deal in art is believed to be not a profitable occupation but an avoca-


The art market is currently divided along two lines:


he first barrier is rivalry between the markets of old and contemporary art. As far as contemporary art is concerned, there is neither an established “right” taste nor a stable price structure to support it. Unlike the more or less definite range of prices for Old Masters or the Impressionists, prices for contemporary art may differ dramatically. The fancy that an artistic action is capable of awakening in an investor will then determine whether he will keep away from it or grab it. Contemporary art is disposed to such fancy because an artwork that already has a certain place in art history ceases to be a source of pecuniary ambitions. In no other segment of the art market is the difference between reality and potential so uncertain as in contemporary art.


ague criteria of craftsmanship, claims to unlimited freedom and endless innovation make it impossible to explicitly judge the quality of a contemporary artwork. What is more, the iconic consumer and trendsetter in art for sale, one who tips the balance of prices for one artist or another, is by and large no connoisseur of contemporary art.


he other “watershed” is the significant difference between world markets and the Russian art market. We have our own specifics and characteristics, our own “show”.


ow if the well-organized and streamlined art market of Europe or America has long been functioning within the framework of market laws observed by every player, Russia’s market is still an unstructured system, in which every player is like the characters of Krylov’s fable Crayfish, Swan and Pike. Few of those involved in actual processes think of market development and future clients rather than of today’s profit. We do not know what awaits every one of us tomorrow and this lack of confidence about the future has taught the Russians to live here and now.

The numerous drawbacks of the Russian art market include:

• Lack of a clear-cut structure in the chain of relations, institutions and organizations needed for normal market operation and development

• Lack of relationships and interactions among the market players

• Lack of professionally trained personnel needed by the market


Types and characteristics of art galleries. Their role and importance, prospects for interaction and cooperation.


s a rule, what leads up to a meeting between the collector and the artist and his works is intense gallery work. Gallery owners lay the groundwork, follow the early progress of tyro artists, draw comparisons and make choices. After the artists themselves, they are the initial investors in the art market. They are the people who put their energy, time and money into promoting artistic careers. Gallery owners are champions of insights that they share with artists included in their gallery programs. Herein lies the difference between them and art dealers, who confine themselves to selling pictures and luring successful artists away from competitors. An innovative spirit and willingness to risk that are often ascribed to collectors are in fact the key features of gallery owners.


n accordance with the established world hierarchy, art galleries are divided into several categories:

• Small shops looking more like souvenir kiosks offering inexpensive pictures, souvenirs, postcards and posters;

• Larger art shops with specially trained staff that offer works of art (including easel art) priced from 2,000 to 3,000 euros (dollars);

• Art galleries with a modicum of exhibition policy

and a limited circle of artists, whose works may go for 10,000 to 15,000 euros (dollars);

• Galleries with clear-cut exhibition policies that organize at least four public shows a year, publish exhibition catalogues, actively cooperate with museums, take part in various festivals and fairs, and maintain an established circle of artists, most of whom cooperate on a contract basis.

• Art galleries working with young or not well-known artists, whose works are priced at about 5,000 euros (dollars);


Communication specifics and business cooperation options and terms

Step 1 To begin with, it is necessary to ascertain the status of a

work of art the client wants, namely, whether the aim is interior decoration or whether the client plans (considers the possibility) of forming his own collection.

Step 2 Make certain what type of work is needed. Whether it should be a work of old, new or ultra new art.

Step 3 Study the list of galleries representing this art segment on the market.

Step 4 Study the gallery history and its artists through the Internet, paying attention to how actively its site is being upgraded and how often the gallery stages events.

Step 5 Prepare for your visit to the gallery. It is important that your wishes be formulated clearly:

Step 6

approximate size of the artwork

date of execution


price range

intended placement

size of sales commission

Cultivate goodwill and openness to cooperation: after all, most of the gallery owners are people who love art.


In lieu of an epilogue


ollecting is but one of the many ways of disposing of one’s extra money and time.

ollecting is an endless undertaking because every satisfied whim leads to another. Striving after consummation is inexhaustible and its attainment is bound to remain an illusion.


rtwork should arise from an inner need and appeal not only to the eyes, but also to the mind and the heart. And, finally, its contemplation should enrich humankind. Even though the invasion of the art market by purchasing groups that have little to do with art threatens to upset these criteria, they are pivotal to any work aiming to stand its ground on the other side of the market. Indeed, even if the market is addressing art that is a good commodity because it sells well, art that does not sell for some time still remains good art.

References: 1.

Piroschka Dossi. Hype!: Kunst und Geld


Judith Benhamou-huet. The Worth of Art. Pricing the Priceless


Don Thompson. The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art


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