Thursday, August 22, 2013

i.e., via art fairs

Destination shopping. That's the buzz phrase you need to know to discuss the contemporary art market in an informed way today. What's it really mean? Well, essentially, if you want to sell art, you must bring it to the collector (i.e., via art fairs), because the collectors are no longer seeking out the art the way they used to.

In an excellent summary (in today's New York Times) of the themes we've been talking about with regard to how the market is shifting in the recent Conversations series, Graham Bowley highlights how this change has come rather quickly, even for dealers who live this day-to-day:
Paula Cooper, the New York art dealer, attends some fairs because they allow her to see work from numerous countries in one place. But mostly she sends others from her gallery, decrying the loss of what she describes as a more thoughtful time even just five years ago when she could sit with artists and collectors and talk about art. “It is just like any business in the world now,” she said. “It is becoming a global enterprise.” [emphasis mine]
Bowley notes that collectors will still seek out new artists in the emerging galleries, but unless those galleries grow quickly (i.e., via art fairs), they don't stand much of a chance in the new market:
Some galleries showing younger, more contemporary artists can still attract people from the street, and attendance is up, gallery owners say. But for more established artists, with more expensive work, dealers have to go where the customers are.
Now while dealers may bemoan the loss of the more thoughtful time when buying/selling art was genteel and less hectic, as well as the loss of income they must shell out on travel and shipping and art fair booths (that could have been spent on more catalogs or production costs or purchases of their artists' work), the fact remains that this new system is making it easier (in many ways) for collectors:
One longtime art collector, Howard Rachofsky of Dallas, used to buy his art mainly in New York, but in the past year has traveled to fairs in Basel, New York and London. 
“You want to see art, and you want to see the people behind it, get to know the gallerists and, ultimately, the artists, and the easiest and most efficient way of doing this is at an art fair,” Mr. Rachofsky said.
“It is really about networking and seeing an art gallerist from Düsseldorf and a gallerist from Madrid 50 feet from each other, and getting a chance to spend a few quality minutes with each one of them,” he added. “That is the reason we go.”
And Mr Rachofsky's observation is the key to why this seems irreversible. The globalization of the art market was both the savior of the gallery system (most people predicted a lot more galleries would go under during the recession in 2008 than did, which was in retrospect explained as not happening because the market was much more global by then than it had been in previous, gallery-smashing recessions) and the impetus (i.e., via art fairs) of the death of the gallery system as we knew it.

So what survived (or thrived even, in certain echelons) is not actually the gallery system as we knew it, but rather this new industry that is "just like any business in the world." This new industry where up to 65% of the annual sales for many galleries are made outside the physical space they call home. 

And even among all this chatter about how strong the market is at the top, no one I've read has yet done the math on what that means in terms of profit. Sure, as
The Arts Economics report found ...sales for dealers with annual revenue exceeding 10 million euros rose 55 percent.
But those galleries are doing as many as 10 fairs each year (some I know do 15), with costs ranging from $100,000 to $300,000 per fair at that level, and so you need to subtract $1 to $3 million from those revenue increases to gauge how well they're really doing compared with past years. 

For the time being it does seem to be paying off for the larger global enterprises (er, I mean galleries), but here's what I know about corporation-like entities where profit is Job 1. The expectation is that profits will increase on an ongoing basis. Annual goals will therefore meet reality quickly if (when) artists begin to bulk at "producing work according to the demands of the art fair calendar rather than their own creative rhythms," and when supply doesn't increase to match income goals as expected (there's only so many galleries left to poach from), the bean counters will insist on cost cutting. 

The most obvious place to cut from will be the few perks the long-suffering staff get while on the road for the relentless fair circuit, but then staff retention will become a new headache. Vendors will also be squeezed for better discounts, but there's nowhere near enough volume through all the galleries for them to marshal too much power there. Eventually the fairs themselves will be asked to help cut costs, and then here's where it will get really interesting.... 

With online ventures ramping up, nipping at their heels, the physical fairs will need to innovate in order reduce their fees. They can't cut back on production or advertising, lest they lose their valued position in the pecking order of fairs (oh, yes, there is one, and they care dearly about where they stand), and they can only pay the electric bills on the backs of younger galleries (who can't hope to recoup their costs) for so long (eventually, most younger galleries get tired of bringing the harder-to-sell "street cred" work to the bigger fairs, while the more established galleries unload their secondary market inventory). So what will the fairs do, when the bean counters demand saner rates? They could have simply welcomed other galleries in (who are willing to pay), but the fairs' very success is contributing to a decrease in the overall gallery numbers:
According to the Web site Galleries of New York, which collates real estate data, the number of galleries in the big art districts has declined in the past few years — galleries in West Chelsea have fallen to 282 from a peak of 364 in 2007; those in SoHo have dropped to 87 from 337 in 1995.
Eventually those trends will run smack into each other. Unless, the fairs become more gallery-centric. Oh sure, they'll tell you they understand the galleries are their clients and that they are there to serve their clients, but what I mean is that they better build their own business around their clients' businesses.

I'll give some of them credit, actually. Just after Hurricane Sandy last year, a few big fair directors reached out and asked how they could help. I believe they did this from a human point of view, as well, not just a business point of view, but I would like to see that impulse taken even further. If the fairs are here to stay (and they seem to be), I'd like to see the model evolve such that each expense is analyzed for how it might be reduced with the reality the galleries must deal with in mind. How can the fairs help galleries coordinate shipping and save on travel? (They can announce who's been accepted much earlier than they do, for starters.) How can the fairs help galleries deal with the times of year in which the schedule is simply nuts? October through December, and then March through June are so overloaded with fairs. They won't most likely volunteer to collaborate with the other fairs (they're trying to put the others out of business), but I know galleries who are opting out of one or the other of the major fairs' editions in different cities because they'll drop dead otherwise. How can the fairs help galleries reduce the staff they have to send to each fair? Can services be offered at discounted rates for art handlers or even booth sitters? Currently the fairs make a huge chunk of change from the "extras" they charge galleries. Lighting, closets, carpet, etc. Can these costs be reconsidered? 

Oh I know, the fairs are a "business"...but as I noted, their success is systematically contributing to a reduction in their future clients. Taking steps now to build their business with the galleries' costs in mind can help offset that trend, as well as help reduce the relentless demands on artists to make more work for the fairs. 

There's nothing less than the quality of our collective cultural legacy hanging in the balance here...


Blogger bgfa said...

I like your take on this Ed, but in my experience the fact is that fairs are actually real estate operations and are not terribly interested in the art side of things, except as far as it bolsters their primary business model, which is to rent space.

My fear is that this trend, while understandable from the collector's perspective, will lead to an unavoidable consolidation at the top of the market, and kill off many smaller, local galleries.

8/22/2013 11:48:00 AM  
Anonymous Patrajdas Contemporary said...

Always intelligent and insightful, thank you.
To your para regarding the fairs changing the business model, becoming more gallery-centric - I note that PULSE, over the last year, has been promoting the in-gallery exhibitions of its clients throughout the year, as well as plugging the fair itself, up to the point where it organized a gallery crawl for its exhibitors, during *Armory Week*. Even (e)merge has done a bit of this.
Might we eventually see the merger of certain publications/online ventures/fairs to become year-round art-marketing and production companies/services?

8/22/2013 12:39:00 PM  
Blogger Edward_ said...

in my experience the fact is that fairs are actually real estate operations and are not terribly interested in the art side of things, except as far as it bolsters their primary business model, which is to rent space.

Like any business, though, they are smart to be concerned with the health of their clients (current and future).

I've seen signs that the "powers that be" (including, but not limited to fairs) understand the threat to smaller galleries (i.e., their future clients). How they collaborate to resolve that threat remains to be seen and most likely will not be all that public. So I don't fear so much smaller galleries will fade as much as the middle galleries will lose what makes them so special to me (i.e., their context as an incubator for experimentation among post-emerging artists).

PC...I've noticed that trend as well and think that's brilliant. I suspect you're right that fairs will promote their galleries year round (I know we try to do that with Moving Image, for example).

8/22/2013 01:23:00 PM  

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