The Dangers of the Secondary Market for Living Artists
This was the first thought that popped into my head when I read Sean Capone's question on yesterday's thread on contracts:
Art bubbles are great.
Art bubbles suck money into the art world.
Who gets hurt in an art bubble? Greedy artists; stupid collectors.
Who else? Nobody with their wits about them gets hurt in an art bubble.
---Dave Hickey, "Schoolyard art: playing fair without the referee," a keynote speech delivered at the Frieze art fair this year (as edited on The Art Newspaper).
Can anyone explain to me why the gallerist should get first pick to buy back an artist's work before it goes to the secondary market?I'd like to address the essence of that question, but to do so think it behooves us to re-frame it ever so slightly to read "Can anyone explain to me why someone who has the artist's best interests at heart should get first pick to buy back an artist's work before it goes to the secondary market?" (Instances where it's questionable whether a gallerist truly does have the artist's best interest at heart are another matter altogether in my mind so I'll leave that for another thread.)
In other words, what does a gallerist try to do by having input into how their artists' works enter the secondary market (in addition to making money, that is)? Three main things:
- This doesn't apply to all gallerists, but more and more of us are sharing the profits of resales that we handle with our artists as standard practice.
- Any good dealer will be trying to ensure their artist's prices remain healthy (i.e., don't skyrocket prematurely or go on public record as having tanked).
- Do damage control if the work performs poorly on the secondary market.
2. The biggest dangers to an artist's prices in the secondary market undoubtedly lie in the auction system. A good gallerist will keep work out of the auction system (by reselling it privately) if it's not the right time to test those waters. If a work's price at auction jumps too quickly, it can skew that artist's market in several significant ways. First, it can turn off good collectors who recognize when works are overpriced, leaving only what Hickey calls the "stupid collectors" buying up the work. Getting one's work into the important collections is critical, and this can wreak havoc on those efforts. Secondly, it will wreak havoc on the artist's primary market. A primary gallery can be working for months to place the work with a museum or important collection, just to see prices jump out of their range and spoil a deal because someone flipped a piece at auction. Third, this can lead to a collective awareness that the work is overpriced, and that can stall an artist's career momentum. Finally, and perhaps the biggest reason galleries don't like to see work rushed to auction is the piece can tank. I've see work at auction that didn't perform well essentially end otherwise promising careers. There is a significant ripple effect to work doing poorly at auction.
3. If an artist's work doesn't have a strong secondary market yet, the gallery is the best place to keep that secret. It may not mean a strong secondary market isn't going to come in time, but a public announcement of a failure, at auction or through the secondary market grape vines, is much harder to control. Potential collectors might lose interest. Current collectors might lose faith. By bringing the work to the primary gallery, the collector ensures that the person reselling the work is going to keep it under their hat if what the market will bear is somewhat less than public perception. Perhaps hanging onto the piece just another two years or so, when said artist's first major museum show is being planned to take place (something the dealer has worked behind the scenes to secure but isn't at liberty to issue a press release on just yet) will make all the difference.
Of course, the above are less of a concern (except for the latent dangers at auction) if it's widely understood that there's a strong secondary market for the work. But that understanding isn't chiseled anywhere in stone. Dealers who tried to have collectors sign contracts ensuring they'd bring work back to the gallery first are shying away from that practice in general for many reasons, none the least of which may be that those contracts are unenforceable. So the fears that galleries are potentially harming an artist by requiring first pick are someone overblown. In my honest opinion, artists should want their gallery to have first pick, even if the work is ready to go to auction, so that someone on their side is involved in the planning and potentially bad fallout of such sales.
Labels: secondary market