Tuesday, March 13, 2007

Slow Down. Support Your Local Smaller Art Gallery

The death of the "mom-and-pop" art gallery is being discussed in depth by Marc Spiegler et al. over at ArtWorld Salon and in artnet.de, but there are a few things about this that I think make sense to discuss in the context of the dialog here, and a few things I'd be curious to learn via your thoughts on the subject.

The growing firestorm was ignited last year apparently by Amy Cappellazzo, co-head of Post-War and Contemporary at Christie´s

[She] was quoted in Art Review saying that she expects to someday be auctioning brand-new works, saying, “We’re the big box retailer putting the mom-and-pops out of business.” Cappellazzo says the quote was taken out of context; apparently she meant it as a description of how auction houses are perceived, not their actual aims. But she says seismic shifts are surely afoot. “Auction houses are a barometer of the artworld, and today’s artists have a different relationship to the market,” she explains. “Artists are not ceding so much control to their dealers. They’re leaving for better offers, promoting their own careers, bankrolling projects themselves by working with collectors. The artworld has morphed and shifted. So while the older generation of artists are less likely to work directly with auction houses, for the younger artists that boundary is less delineated.”
Oy vey...where to start. Well, as always, the root of the issue is the best place to begin. Marc sums it up well, as usual:

Despite the strength of the market, [galleries] feel their position is under attack, be it at art fairs [see this post] or in the secondary market. Likewise, auction houses - with their huge staffs and sprawling marketing apparatus - are simply better positioned for the new globalized market, able to target collectors no one (not even the houses) knew existed.

Suddenly, galleries feel forced to play a much more finance-driven game, be it publicly (at auction, as [New York dealer David] Zwirner decried) or privately. “People who never sold work before are selling to auction houses now,” says [New York dealer Roland] Augustine. “A collector of ours, someone who sits on a museum board, just sold a Christopher Wool painting for $2 million. I had sold it to her for $75,000, but she never even offered it back to us. So we find ourselves in the position of calling around to collectors and checking if they want to sell, which is not what I got into this business to be doing.” Given the current market conditions and the way the artworld has evolved, the traditional model of the gallery building its position through close control of its artists’ markets seems shakier than ever. There are too many variables – collectors flipping works at auction, artists defecting to other galleries, sudden market shifts.
There do indeed seem to be major shifts in the way the market works, but what to do about it, is the question. Both of Marc's co-authors on ArtWorld Salon seem to see the writing on the wall for smaller galleries unless they take drastic measures:

Ian Charles Stewart

The strong galleries with good artists, and the ability to locate and promote good new artists, have little to fear. Even if their influence over the secondary market dwindles in the short term, as it must in these volatile times. They will continue to be feted by the fairs and recognised by the auction houses and maintain their position with buyers and artists. It is the second and lower tier galleries that have to worry.
András Szántó

Another, longer term division of labor between small galleries and large arts businesses (be they galleries or auction houses) would be to adopt the model of other creative industries and leave the talent scouting to the small firms. In this model, galleries could focus on what they do best and operate as talent agencies. The production and the distribution would then be the job of larger corporate entities that have the reach and capacity to do the job. This may sound like complete nonsense to some, but it does happen to be the way a couple of other very large cultural industries operate.

My point is that markets and cultural industries are not immutable. They must evolve, and so must galleries.

As noted before, essentially, I believe evolution is the response to change, but I like András' other idea in that comment (consolidating power among smaller galleries to compete) more than resigning ourselves to this talent scout idea of his.

Now I actually wrote a post about this yesterday, including a passionate rant against the auction houses (specifically the idea that they're encouraging young artists to be disloyal to their galleries and deal directly with them [snippet of that rant: I tell you what, Christie's, if that happens, you're gonna get 'em anyway, so why don't we younger galleries just forward you the thousands of submissions we have to sort through now and spare ourselves the trouble?]).

But in re-reading my post, I realized two things: 1) I was angry and 2) I wasn't thinking the issue through very clearly. No one can see what the future will bring for smaller galleries. Some are already adapting to the current challenges with leaner, meaner programming. Others are shooting up through the ranks to challenge the more established galleries, and if they can do it, so can others.

Yes, the idea of pooling their power makes sense (hence you have organizations that cater to younger dealers), but I saw two articles juxtaposed today that made me rethink just how much of the conventional wisdom here is based on reality and how much is based on buying the spin put out by the auction houses.

It's too much to quote, so I'll give
the link to these stories on artnews.com:

Christie’s Gets London Gallery And Draws Art Dealers’ Ire


Russians Pay Dearly for Art by Their Own at London Sale [emphasis mine]
OK, so it makes sense to highlight the essence of the second story:

Sotheby’s auction of contemporary Russian art in London on Feb. 15 yielded sales of £2.6 million ($5.2 million) amid heavy demand from private Russian collectors.
Which sparked an idea. Rather than play along by the auction house rules and accept second-fiddle status, I think the best thing galleries, and especially younger galleries, can do is constantly focus attention on the one aspect of the auction house business that doesn't serve their customers well. Namely, auction houses intentionally make art more expensive than it has to be, and this only helps the auction houses in the end. After the glamour and excitement of overpaying for a work of art in the flurry of carefully crafted hysteria wears off, collectors are charged heartily (Sotheby's commission rates -- Christie's commission rates) for that momentary thrill. And even the afterglow of media excitement for broken records is short-lived, because the auction houses immediately go into overdrive to inflate the prices by the same artist at the next sale. More than that though, what happens at auctions affects prices everywhere else, meaning that even if you don't currently buy at auctions, you're still paying more than you should have to for the art you buy.

With some folks so rich they don't care if they overpay and the thrill of acquiring that prize piece being worth every cent to them, I think it will take a concerted effort to help everyone else snap out of it, as Bambino would say, and see that supporting your local art gallery---developing a relationship that will ensure you have access and the best prices available---ultimately makes so much more sense than dreaming you can outbid the überwealthy at auctions. Because when the auctions are the only game in town, what do you think is gonna happen to those commission rates then?

The other big advantage to supporting your local smaller art gallery is the luxury it gives you to slow down in making purchases. Collectors can still get first pick at the art by the artists they like, and I don't mean in the frantic previews of art fairs, but rather in the calm and charm of the artist's studio. Yes, that's still possible if you establish that sort or relationship with a gallery that values that experience. Or, you can get your paddle and waive it enthusiastically, hoping the auctioneer will spot you among the throngs of other bidders, while you try to quickly recalculate whether you really need that much money to retire the way you want to. The choice is yours.

Believe me, you're gonna see more on this here.

Labels: art galleries


Anonymous Henry said...

Pooling power is one of those feel-good ideas that never makes it past the gate. Pooling is a synonym for sharing. You need to actually have something to share in order for sharing to work. There's nothing to share in the low-profit dog-eat-dog world of art galleries in the first place.

Dr Szanto's talent scout idea might be the most prescient and a-propos idea regarding the art market that I've ever read. I'm not saying it's good or bad, but I'm saying it makes a lot of conceptual blocks fit into place.

Hollywood might just be the future of visual art. Artists always want to know how to get into the art world (a question gallerists consistently refuse to answer), and how to be protected (a service gallerists don't provide; like Richard Serra said when asked whether he had a primary gallery, "I have a lawyer" [I woder if it's his brother]).

Also, gallerists always want to know how they can cultivate talent safely (which in fact they do well), and how to profit from art (which they can't do once auctions get hold of their artists; or which they can only do on the secondary market). The talent scout idea might just be the only way to make all these pieces fit.

Why would you be against a model where the gallerist becomes the cultivator and protector of an artist -- which is supposedly what galleries want to do -- and gets paid to do it -- which is what galleries [forgive me for saying so] always complain about?

3/14/2007 11:09:00 AM  
Blogger Edward_ said...

The idea of emulating the Hollywood model makes me vomit just a little bit, Henry.

Artists always want to know how to get into the art world (a question gallerists consistently refuse to answer),


Foot in the Door, 101

how soon they forget....

and how to be protected (a service gallerists don't provide;

galleries don't do dental work either, but I suspect you mean to suggest a gallery should pay for the lawyer if an artist gets sued. I think that's appropriate in certain circumstances.

Why would you be against a model where the gallerist becomes the cultivator and protector of an artist ... and gets paid to do it

What you're leaving out of this equation Henry is any respect for the gallerist's own vision. To me the best galleries are a collective statement, not merely a group of individual artists. That statement may only have one focus (quality), but I believe a context is valuable to artists (in fact, I know to many of them it is). Galleries provide that context.

3/14/2007 11:35:00 AM  
Anonymous David said...

Support Your Local Smaller Art Gallery...

Edward, I can understand what this means in a small town w/ 3 or 4 galleries. But what does it mean in NYC? Which galleries are the local ones, all of them?

3/14/2007 12:16:00 PM  
Anonymous Cedric Caspesyan said...

>>Which galleries are the local >>>ones, all of them?


Seriously, if an artist only cares about getting the most money possible, then they can go to auctions. They just need to know that any rich mafia guy can get their art and once it is sold, they or no museum will ever be able to exhibit it again.

When they deal with a gallery, the gallerist is "supposed" to sell it to collectors that will help out the artist and get the work shown (in exhibits). Galleries are generally selective of their buyers and this is upsetting to the casual buyer, who goes for the auction.

Now of course, smaller galleries don't have that amount list of collectors for an artist to sweat, but as soon as you get into bigger galleries, things can become elitist and there has been games that have been deemed unfair to the market. There is a point where I think an artist could legitimately stand against some of these practices, and they may even consider auctions as a "fairer" ground.

Basically, the "friend" of the gallerist doesn't mean is the "friend" of the artist. So gallerists should be reminded of that too.

And once in a while, you always tumbled on a bad mood gallery (usually a bad mood gallerina) that in my opinion is really not the way an artist should be represented. So, artist, do visit your gallery, or send someone incognito, just to see how they are treated.

Spy on your gallerist, ;=)


Cedric Caspesyan

3/14/2007 12:51:00 PM  
Blogger George said...

"...which is not what I got into this business to be doing." [David Zwirner]

As an artist all I can say is "me neither."

In a perverse way the current art market reminds me of the real estate boom in the mid-eighties. At openings and parties, the topic of conversation was focused on real estate, not art. Of course back then, real estate prices were considerably less than they are today but never the less, by 1988 the real estate market was in trouble and talk turned to other things.

Pandora’s box has been opened up and the genie isn’t going to go back in the bottle.
In other words, I do think there have been some structural changes in how the art market is operating today compared with the past. Never the less, some of the issues are being exacerbated by the capital inflows into the art market. For the first time in my memory some financial advisors are suggesting ‘art’ as an investment in a diversified portfolio in double digit percentages. In the past, ‘art’ was usually only recommended as a much smaller proportion of ones total investment holdings. In a situation where there is an influx of capital, the marketplace rises to the demand. If I consider what a relatively uninformed but interested ‘investor’ might do when faced with channeling funds into ‘art’ as an asset class, I ask myself how do they do this? Most investors with substantial sums to invest are wealthy and they probably didn’t get that way by being dumb. For this reason the marketplace has created a new niche service provider, the "art consultant", or "art stylists" as I like to call them.

The art consultant is another layer in the art world bureaucracy which helps the "collector" part with their investment capital by suggesting what to buy. At a larger scale, but still essentially functioning with in house art consultants art the art hedge funds which aggregate capital destined for the art market from several sources. Unlike the critic, whose role is fairly transparent, the art consultants activities are not nearly as transparent and I suspect geared more to "what’s going up" in the art market than necessarily to the quality of the works being recommended. I don’t know what the fee structure is for this service but I cannot but suspect that their activities coupled with a hot auction market are helping to inflate prices.

So, what does this have to do with anything? I’m not opposed to art consultants, from what I can surmise, they provide a service to the collectors, galleries and artists. What is bothering me is the current art world obsession with money, prices, who’s hot and who’s not etc. My concern is based on sensing what I can only describe as an art buying mania and this type of market activity cannot be sustained indefinitely because it requires increasing capital inflows to sustain itself, capital inflows which may be large but are in fact finite. At some point the market ceases to rise and capital is withdrawn. The people who are hurt by such a contraction are those you would expect, the artists and the less well funded smaller galleries.

I question to some extent the idea of the gallery as an incubator, the locate and promote idea. It is what occurs but from a business standpoint it leaves the smaller gallery exposed if one of their artists becomes hot and jumps ship. The gallery, after taking the risk, dealing with individual egos, and spending a lot of time exposing and promoting the artist, might not be able to reap the fruits of their labor. Of course, a gallerist with vision and ambition, who develops a track record of successful selections, will probably do just fine as the gallery will grow as well.

I like the gallery system, I like being able to look at other artists work in a less scheduled and more contemplative way than one can do in the rat race of an art fair.

Henry, FYI, Richard Serra’s brother, Rudy, is also an artist.

3/14/2007 01:06:00 PM  
Anonymous oriane said...

George mentioned art consultants. I have a small issue with the idea of art consultants, from an artist's point of view. I don't think they should take a 50% commission on sales. Galleries do that, but with galleries, the artist gets exposure, exhibitions, a place that people can come in and see the work, possibly advertising, potentially reviews, not to mention fairs, etc. That is all expensive for the gallery to provide (especially the real estate for the actual gallery space), so if they are doing their job, they really are earning their commission. Art consultants have a much lower overhead (without a gallery space to maintain) and provide fewer of those services to the artist, so in my view, should take less than 50% commission.

I don't know about Rudy, but I think Henry, above, was referring to Richard Serra's brother Tony, a well-known San Francisco attorney. I very much doubt he is Richard's lawyer, as he has a very different kind of practice, generally criminal defense work.

3/14/2007 02:01:00 PM  
Blogger George said...


Interesting I didn't know about RS other brother, which is why I made the remark.

3/14/2007 03:02:00 PM  
Anonymous Henry said...


I remember that thread very well. I thought your advice was good, but relatively general-purpose and indirect. Maybe I'm looking for something that can't exist.

Tho I thought you said something much more recently (I think it was even since the Pulse fair) which was an explicitly non-commital answer to a far more specific question. Who knows. My memory could be completely wrong.

Still, your blog and the historical entry you linked to above might only show that you're the exception that proves the rule. I've heard more than one gallery owner give the "no comment" answer to that question quite explicitly, even when talking to one of their warmest friends in a non-business setting.

What you're leaving out of this equation Henry is any respect for the gallerist's own vision.

I don't think so. If a gallery's vision is their "brand," and if they start getting paid to maintain their brand, then it's not the gallery's vision we should be worried about, but the artists'. In a Hollywood system, the successful gallery is highly tempted to tell prospective artists that they would be accepted as members of the gallery stable if they would just sprinkle a bit more glitter on their paintings, and incorporate more mirrored surfaces.

In the thread you (kind of snarkily) pointed me toward above, one of your most important points in my opinion was that an artist needs to find a gallery whose vision comes closest to their own. In a Hollywood system, the gallery's vision may in fact become strengthened, because the powerful galleries can start claiming it's their vision -- their "brand" -- that's giving them success.

P.S. Yes, I was referring to Serra's lawyer brother Tony. Oriane is right that he's a criminal defense attorney (inter al.), so my comment above is irrelevant.

3/14/2007 03:18:00 PM  
Anonymous oriane said...

No, no, your comment wasn't irrelevant; my post was almost completely off-topic. So to go even further off-topic, I followed your link to Tony's Wikipedia entry and found this surprising statement:

Tony Serra's younger brother is the famed American sculptor Richard Serra. Despite the brothers having a strained relationship, Richard, an affluent artist, paid for the college education of Tony's five children.

I guess Richard is more warm and cuddly than the public image he likes to project. But who writes these wikip. entries anyway? (Richard's accountant?) How do they know these things?

3/14/2007 03:36:00 PM  
Anonymous ml said...

I view the artworld more like the baseball world with its farm system. The big difference is that the smaller A/AA/AAA league galleries are NOT subsidized by the Major galleries.

While change is inevitable, I do hope the small galleries thrive. Admittedly I am an artist, not a collector, but I really enjoy talking with the gallery folks about their artists. In LA mid week there aren't a lot of people in the galleries and these conversations teach me not only about the artists but what the gallerists are seeing.

The current art buying boom seems a lot like the stock market in a way no one I've seen has pointed out: investors buy stocks for the profit, not the products produced by the corporation. The whole green buying movement - supporting industries which try to improve the planet even if the profit is diminished in doing so - is tiny in comparison to the bottom line investors. When people buy art like they buy stocks - for maximum profit, they aren't thinking long term or impact. It's just about the money. That attitude is part of a pyramid scheme - it ultimately collapses under its own weight.

3/14/2007 06:09:00 PM  
Blogger George said...


I wrote three fairly long posts abour art-n-finance on FutureModern last year, if your interested here are the links.

speculators etc.
BID as proxy.
Peaked yet?

3/14/2007 06:42:00 PM  
Anonymous ml said...

Thanks, George. I'll check them out.

3/14/2007 07:53:00 PM  
Anonymous Anonymous said...

My peers who run small galleries do it for love, or for money. Meaning they would rather have a gallery than wait tables, or take up a teaching position. Generally these galleries have other things going on inside to ensure income and perhaps their success.
one strategy I'm interested in taking up is sawing artworks in half and selling them to different bodies, whether they be collector or museum. At some time later, sooner or far off, these two halves can come back to form the original artwork. This is where the auction house starts to feel very important, so I'm not about to start beating them. We've approached the Chapmans and they sound very interested. We have a young Cezanne we are focusing on at the moment, a young artist, unruly, will paint for peanuts, who the Chapmans feel has promise. We'll divide three canvases, all still lives, and exhibit the halves in three different locations, Leipzig, London, and Paris. Then Berlin, NY and Madrid.
BTW I always buy my beer and wine from a small local vender -- three generations in there.

[] [] more info later: see you at the openings:)

PS someone should write a Wikipedia entry for ma&pa; galleries

3/14/2007 08:32:00 PM  
Blogger Lisa Hunter said...

At the risk of sounding hopelessly old-fashioned, I think the "service" galleries provide -- which auction houses never, ever will -- is an "eye." Certain galleries have an aesthetic that aligns with our own -- even if we don't yet know what that aesthetic is.

When I was younger, for example, I always knew that I'd like whatever the late Alan Stone had in his gallery. The same artists might have been for sale at Sotheby's, but that's not where I went to look for new art. It takes a special kind of focus to appreciate brand-new art in a sale of 300 pieces, where only one piece may be by the artist.

Dealers like you, Ed, can spot something amazing in a crowd of competing artworks. Maybe it comes so naturally to you that you don't realize it's "service." But it is, and the something-for-every-taste auction house can never duplicate it.

3/14/2007 09:40:00 PM  
Blogger Joanne Mattera said...

Speaking of “service,” thanks, Ed, for bringing up these issues.

As always when we’re talking about the art world, we’re talking about the head of the comet—that small fraction of galleries, artists and collectors who drive the market. But there’s a long tail to that comet, which includes probably every one of us reading and responding to Ed’s blog posts.

Artists and dealers find one another based in part on esthetic, but in part on price point, degree of availability (I-want-to-show-you-do-you-want-to-be-in-my-gallery; I-want-to-be-in-your-gallery-do-you-want-to-show-me?) and degree of artworld experience. Collectors gravitate to the dynamic of esthetic and price, too.

All that hype at the head of the comet energizes the tail. Are we going to make and sell paintings with million-dollar price tags? Probably not. But the electrified market means that more dealers are showing and selling work by more artists, whether in their modest galleries or at the modest dealer-run, even artist-run fairs. And more collectors are acquiring modestly priced work.

So unless I’m missing something, when the head expands, the tail elongates. That means more of us get to show and sell—-you know, actually get to be working artists instead of artists working at some other job. And if that's the tradeoff to the auction houses getting bigger, I'll take it.

3/15/2007 12:00:00 AM  
Anonymous Cedric Caspesyan said...

I think each artist should have their wall of nympheas. A central project that won't easily be sold neither at auctions houses nor to collectors by their gallerists.

I'm afraid that if they don't, then they are merely earning a living and wasting their time.

Maybe I'm being too wagnerian about this issue. I can live without an art fair, or an expensive Munch, but so many other people would be depressed if they didn't have them. So, to each his own. Whatever. NEXT question.

Cedric Caspesyan

3/15/2007 04:46:00 AM  
Anonymous Cedric said...

Expensive KLIMT.

For some reason I had the painting of Munch in hell in mind...


3/15/2007 04:53:00 AM  
Anonymous emilyhall said...


longtime reader; infrequent (and obviously late to this particular party) commenter.

I just wanted to add that I would very much miss the public culture provided by galleries. When art goes straight from the studio to the auction, what's left for the public? (Pace, of course, those collectors who are good about lending and displaying. But that's a fraction, no?)

Part of what's so dismaying about art fairs is that the conceptual angle of exhibiting is entirely removed. No one doubts that galleries are commercial enterprises, but in a gallery show there's generally at least some curating, some unifying element, some conceptual integrity. Art fairs just strip it away until all you're looking at are the wares. I've been going to art fairs for a few years now; I know it's time to leave when I start to forget what art is for.

3/15/2007 01:25:00 PM  
Anonymous Anonymous said...

Oh boy! We have been talking for a while about these and many other problems and nobody paid attention.

What do you think we were talking about before? What do you expect when you have 16 fairs one weekend and 7 more 2 months later? Do sharks smell blood? Money to be made? What do you expect when anybody can start a fair and anyone can buy a booth? How many “curators” are selling art? How many “curators” are working with branding companies? How many galleries are writing reviews? No innocents here people.

Auction houses tried to take over in the 80’s. This is Not a new phenomenon. They failed only because the market collapsed. They are at it again but what’s different is this time they have the art media on their side. It’s over dear. This time they win the prize. They did it to Latin American art and now they are here. Make space and be aware that most small very contemporary-galleries in Chelsea will close soon after the bubble collapses. Not even the leftist academics will save us, not even another lower east side with cheap rents.

If I were you I would do what Mr. Huber did. Dump the collection and think about a long vacation in…

NY is dead, long live NY!

3/15/2007 03:28:00 PM  
Blogger John Morris said...

Wow, this is a fertile area for discussion. I have this place in Pittsburgh -- in the tail of the comet. At the margins you are seeing the internet as the big issue. Artists want galleries to exist just to get shows while they do everything they can to sell works online or on Myspace.

The end result is a situation in which it hardly pays to invest in anyone's career.

3/15/2007 05:04:00 PM  
Anonymous Anonymous said...

All interesting comments.
The walls are there because generally people aren't altogether ready for them to come down.

In the future who says you can't celebrate an Auction sale, e-bay, my-space, or some other art engine surprise gearing itself for sales. It's out there!
Prestige, that's all it takes.

3/15/2007 07:31:00 PM  
Blogger John Morris said...

The sadly depressing posibility is that the most galleries in second tier markets will end up charging artists to exhibit.

You can sort of see that evolution happening in the Chelsea. A lot of galleries can support spaces that can't fully show the artist's they represent. They are counting on getting their artists into non profit and museum shows while they sell the work at the fairs I guess.

3/15/2007 07:57:00 PM  
Blogger George said...

"When art goes straight from the studio to the auction, what's left for the public?"

I doubt this is going to occur on any meaningful scale. A normalized pricing model for auction sales ultimately depends on events from the other parts of the art world, the galleries, non profit spaces, museums, written literature etc., in order to expose new work, vet it, and generate collector interest. Without collector interest, there is no auction party.

It seems that many of the current concerns are supply related issues, which are a side effect of a hot market. In other words, in a situation where there is strong demand, the auction market benefits from high prices and a tight supply of good artworks. When the participants are in a buoyant mood they tend to feel that the current economic (pricing) conditions will extend into the future in the same manner. History tells us that this is never the case, the current art market is not the exception to the rule of economics, it is just in an extended positive period which will invariably correct itself.

I wonder if the auction houses buying galleries, are not doing so, just for the obvious near term benefits. It is possible they are trying to develop another, less public venue for secondary market sales. As long as prices are rising, the auction houses benefit from the publicity. If the situation should change, they might be better served to try and execute the secondary market sales more discretely with the gallery as a front. I would suspect that the auction houses are quite sensitive to the mood of the market place, a soft sale may be hidden by a few headline record prices but betrayed by softer bidding for most of the other works. What do they know? Sotheby's is a publicly traded company and must report insider sales, they have been overwhelmingly on the sell side recently. There are a lot of technical reasons which may explain this, but overall the insiders are cashing out while things are still looking positive. [see: http://finance.yahoo.com/q/it?s=BID ]

3/15/2007 08:16:00 PM  
Anonymous Anonymous said...

they are counting on getting their artists into non profit and museum shows while they sell the work at the fairs I guess
Right John, very observant, and from a distance.
Curated shows, museum shows. The hot curator has the fingers. It's got to be fast. One show every 18 months 2 years, is too slow, by which time everything should have been sold, if not three times over, to push demand. There are a lot of positive side effects to the increased speed an artist needs to travel to get their name out. There is a lot of flexibility to this, as well, for those who enjoy promotion.
Change is not bad, unless you have an aversion to it.

3/15/2007 10:01:00 PM  
Anonymous Anonymous said...

George, thanks for your informative posts. It's fascinating to think about what is going on in the art world within a historical economic model.

"History tells us that this is never the case, the current art market is not the exception to the rule of economics, it is just in an extended positive period which will invariably correct itself."

Given that, why would anyone buy art as an investment? Do financial advisors really think that art is a good investment? I find that hard to believe, so start to look for answers elsewhere for the current buying frenzy. If you believe, like I do, that every desire arises from some primal urge, however distant, then you have to scratch your head. I mean, are status signifiers that important?
My guess is that it's all about the hunt.

3/16/2007 01:28:00 AM  
Blogger George said...


Given that, why would anyone buy art as an investment?

Interesting question. I think the term ‘investment’, though commonly used, is not quite correct, technically it is probably viewed as an asset allocation other than cash.

The collector possess an artwork, which they can enjoy and which has the possible potential to appreciate in value. It is something they can touch. This may seem like nitpicking, but people collect things for other reasons than just financial ones, if the artworks appreciate in value it is an added bonus.

High quality artworks, tend to hold their value better than others and all other things being equal will hold their value against inflation over time. Even in a soft auction market, high quality artworks tend to remain more liquid (easily sold) even if the prices decline a bit. This type of price fluctuation is somewhat similar to high quality equities (blue chip) which may fluctuate in value over the short term but generally appreciates in price when viewed in a longer timeframe (10-20 years). Of course, nothing is written in stone, ‘blue chip equities’, do decline in value and so can art, but again the collector has something they can live with and enjoy, not just a piece of paper or ledger entry somewhere. Additionally, artworks may be viewed as a store of wealth, independent of the local currency and may be stored offshore, providing a resistance to seizure, especially for collectors in countries with unstable political regimes.

... so start to look for answers elsewhere for the current buying frenzy.

The idea that it "is all about the hunt" is a valid observation about the collectors who see themselves as speculators. In general, this is a different type of game, it is about the "thrill of the hunt", the desire to buy low and sell higher, not just for the profit involved but for the psychological thrill of winning. It is a murkier area in the artworld, as this type of buyer tend to do whatever they can to help prices move higher. At the same time, they are willing to abandon ship, cutting their losses, if they feel they have made a mistake. In general I suspect, they may make the overall price behavior more unstable. So far this has been occurring in a rising market, the effect has been supportive of rising prices. If the art market, ceases rising, this group of players will probably liquidate their holdings, and move on to a different asset class with more excitement.

While the ‘speculator’ may be responding to one type of ‘primal urge’, I suspect many collectors collect with a similar passion, but different motivations.

I wouldn’t discount the significance of those who collect art as a status signifier, I think this motivation is real and driven by strong psychological desires.

Other people who collect things, seem to be a psychological personality type with a desire to accumulate and organize. (and other things I can’t think of right now) Among other things, they tend to be passionate and interested in learning about what they collect. In general, I think they desire to keep what they buy and will only sell what they decide they dislike or when forced to by other circumstances.

All in all, the current art market is driven by a complex set of motivations on the part of the participants. In a rising market, one would expect more speculative froth but somewhere in the mix there is a core group of individuals with a true love of art, along with the finances and passion to form an art collection for their own enjoyment.

3/16/2007 10:00:00 AM  
Anonymous Anonymous said...

The hunt, and the chance for a good return, not to mention the small sense of playing a manipulating god, collusion, things like that come to mind, with current collecting mannerisms. Definitely not about the art. Not the meanderer.

3/16/2007 07:37:00 PM  

Post a Comment

Subscribe to Post Comments [Atom]

<< Home