What They're Willing to Pay (and how that applies, or doesn't, to emerging art)

Working with emerging artists, I explain my thinking on pricing on a regular basis, so it's always something I'm looking for confirmation on or reasons to reassess. In a nutshell, I believe it's a good idea to keep prices attractively low until there's a constant demand for the work. Once there is a constant demand, the prices can rise steadily and carefully, and no one will have to wonder down the road what might have been if the market dries up (i.e., if prices rise too quickly and the market dries up, that might be the sole culprit...so by not raising them too quickly, you take that out of the equation).

Anyway, I note this as introduction to the fascinating article in ArtNews about the astronomical rise in prices of Klimt's work lately. After a thorough history of how several of Klimt's major works recently became available, the article delves into the very mixed assessements on whether Klimt is good enough to warrant the records prices. Even Ronald Lauder, who reportedly paid $135 million for Portrait of Adele Bloch-Bauer I last June, seems to have been among the sceptics until recently:

In 1997 the record for Klimt hit £14.5 million ($23.5 million) at Christie’s London. At the time, amid speculation that Lauder was the buyer of Kammer Castle on the Attersee II, he issued a statement to the ARTnewsletter through his curator, Elizabeth Kujawski: “This is an artificial market created by one person who has bought the last three Klimts at auction. In all cases the values of the paintings were only half of what they sold for. The average price of a Klimt should be $6 million to $7 million.”

Asked about this recently, Lauder said that he had been concerned that two collectors fighting for Klimt’s work were driving prices to irrational heights. Of the price he reportedly paid for Adele I, he says, “I didn’t even think of that. I knew there was nobody who wanted the painting more than me.”

Taking Mr. Lauder at his word, then, the $135 million illustrates the widely debated concept that any given work of art is worth what someone is willing to pay for it. I mean, it's not at all likely that Mr. Lauder, after being on record in 1997 as noting that the average price of Klimit should be $7 million, would now, only a decade later, argue that the average price should be $135 million. His agreement to pay that price seems to single out Adele I as better than the average Klimt.

Conventional wisdom would seem to say that by paying more for Adele I than anyone has knowingly ever paid for any other painting in history, Mr. Lauder raised the prices of all Klimts considerably, but that may not be the case:

Nicholas Maclean, a New York dealer and former co-head of Christie’s Impressionist and modern art department, says of Adele I, “We’ve never seen a Secession picture take a price like this, but it’s driven by a number of things. Great pictures find themselves in a different price bracket—in some cases they can be worth 1,000 percent more than a good work by the same artist.” He adds: “What would van Gogh’s Dr. Gachet get if it came up at auction today?”

So great works can be worth 1,000 percent more than an average work by the same artist. This, of course, throws a wrench into my arguments on pricing work by emerging artists. What if an artist knows that one particular piece is the best work they've ever done...should they insist its price be higher than their other work? And, conversely, just because the market goes nuts for one particular piece by an emerging artist, does that mean that the price of all subsequent work should be higher? What if that one piece is the one true gem and the later work not quite so?

In general I think it's difficult to apply so directly the rules of the secondary market to the emerging art market. There's been a steady worldwide increase in interest in Klimt since the 1980s, making the demand for his work rise while the supply can only do so in spurts. (An interesting sidebar in the ArtNews article is how prices will rise on the secondary market if a good chunk of work becomes available all at once, as opposed to if works become available too infrequently, explaining why Klimt's prices have soared but the more critcally acclaimed Oskar Kokoschka's haven't:

Meanwhile, [David] Norman [head of the Impressionist and modern art department at Sotheby’s] points out, sales of Kokoschka oils have also been infrequent, with the record price of $2.97 million established more than 15 years ago. “So little has come on the market in recent years,” he says. “You need the right combination of rarity and supply to really maintain and move a market.” [emphasis mine]

Again, because it's difficult to apply the way the secondary market works to the emerging art market, in general, I stand by my guideline for pricing the work of emerging artists: keep the prices attractively low until there's a steady demand and then raise them steadily and carefully. This assumes of course that all ships rise with the tide, meaning if the average price of other works by emerging artists (without waiting lists) are rising over time, so should yours.

Of course, at this point in such discussions someone invariably notes how this seems unfair to artists, because everyone else stands to make a killing off their early great works except them. One way emerging artists can ensure they're not being taken advantage of through all this (and I recommend this to every working artist out there) is to keep back very good pieces (at least one a year) for yourself. If the pressure to produce more work seems too great to do this, consider sending one great piece a year off to live with a friend or relative with instructions not to let you take it back for at least x number of years. That is, get them out of your studio or home where curators/dealers/collectors might see them and pressure you to sell (don't hate them for that, btw...that's their role in all this). Or, better yet, if you can, just let everyone know that you're keeping that one for yourself. If they object, just calmly explain why you're doing it and note that you'd rather they not pressure you to sell it. If they still do, after that, just smile and change the subject, or consider whether you really need to work with them. Look at it as an investment in your future and you'll see that you're right and they're not.

Don't take this too far though. You do want some of your best work out there selling your other work for you.