Though I have taken a break from the art world, I am still excited by its economics. Based on my time at an arts PR firm, Christie's, The Met, and an online art gallery, I have put together some of my observations about the many overlapping exchanges between market actors.
These observations may not hold true in international markets. (the US market is much smaller than Europe, and there are cultural differences that impact dynamics in foreign markets, for example I am ignoring the exchange of jewelry, watches and wine, which are superior "art" commodities in Asia, these come with their own unique set of considerations)
Alive, with gallery representation: The artist now shares profit with his gallery. Depending on the prestige of the artist and gallery, the percentages will vary. Sometimes galleries take up to 60% and sometimes as little as 10%. A gallery is largely responsible for the health of an artist's career.
Dead, with gallery representation: The gallery, together with the artist's estate, controls the supply of work. Since supply is finite, one major role of the gallery is to ensure that the value of the artist never drops. This means controlling the consumption of work by clients, secondary galleries, and auction houses; directing the provenance of a work; or partnering with museums to boost the profile of the artist through group exhibitions and retrospectives.
Secondary: A secondary gallery sells work already in circulation. Often, the goal of selling in the secondary market is to achieve the highest price possible. Selling at a low price point is damaging for the artist and his gallery. An artist's value goes up if his works do well on the secondary market, even though he does not receive direct payment from resale of his work.
Client: A client working with a gallery is sometimes given preferential treatment depending on his relationship to the gallery. If I were a repeat client of PACE, then PACE might give me a special price for an artist I love, or a heads up if the artist is represented at an upcoming art fair. Separately, if I had a poor taste and an unrefined collection, PACE may decide against selling to me for fear of dirtying the provenance of the work, by association.
Sometimes, an artist may work directly with an auction house, but this is in very rare cases. I suspect it is more common for online auction houses, like Paddle8 or 1stdibs.
Gallery: It is incredibly rare that a primary gallery or artist works directly with an auction house. Instead, the auction house typically dominates the secondary art market. Interestingly, galleries sometimes buy up work by their artists to stabilize the market price.
Museum: Even though museums are nonprofits and they often acquire through donations and gifts, museums also have a budget to purchase directly from auction.
Clients: Auction houses keep close watch of their clients. The who's who of clients get to attend evening auctions, which are private and invite-only. Within their databases, auction houses often track collector wealth, lineage, deaths, and collecting events. It behooves a museum to play nice with prominent collectors and their families, because that may lead to a huge consignment in the future.
The identity of a client making an outrageous purchase is often kept anonymous by the auction house. His identity is revealed when the newly acquired work is loaned or bequeathed to a museum.
Gallery: Similar to the impact on artists, galleries also benefit from its artist featuring in a museum show.
Galleries now compete with museum's to hold curated artist shows. An emerging artist may receive a solo exhibition at Guggenheim but not yet be worthy of a solo exhibition at the Met. However, confidence from the artist's gallery may be enough to drive inflated sales.
Donors: Donors can bequeath gifts to help alleviate tax on their descendants. Since they control a large portion of supply, donors have huge sway over the purchasing decisions and curatorial direction of the museum. A donor may also directly hype the value of his living collection by lending related works out to the museum. Public appreciation for a donor's collection positions him favorably in the eyes of galleries and auction houses.
Public: Art is both a public good and a vehicle for conspicuous consumption. However, art is now less of a public good as museums increasingly charge prohibitive costs.
Clients: Clients work directly with galleries to make purchases. If a client is preferred by a gallery, he may be invited to purchase a work before it is viewed by the public.
Public: Attend to see and be seen. I have rarely seen someone from the public walk into a booth and buy on site. Although this could happen at an outsider art fair.
Gallery: Good press for a gallery indicates that it is doing something right to preserve the dignity and memory of an artist's creative spirit. I personally can't imagine a critic giving a gallery a good review for purely positioning the artist as a hot commodity.
Museum: Good press for an artist show improves the value and reputation of an artist and his gallery, as well as says something about the curatorial chops of the museum. Good press also means more visitor traffic, which is more ticketing revenue for the museum. (ticketing revenue incidentally ranks very low in terms of overall profit)
Art fair: It seems that good press for an art show means that the art fair went to great lengths to obfuscate the fact that it is a glorified trade show...
Often banks have their own art corporate responsibility program. I believe these are disguises for strategic art investment funds.
~
I have been far removed from the art world for a number of years now, so I'm sure that interactions between actors have only become more complicated. I'd love to know about your own experience if you have something unique to add.
P.S. If you are into infographic design, I'm dying to these interactions mapped out. Please hit me up so we can collaborate.
These observations may not hold true in international markets. (the US market is much smaller than Europe, and there are cultural differences that impact dynamics in foreign markets, for example I am ignoring the exchange of jewelry, watches and wine, which are superior "art" commodities in Asia, these come with their own unique set of considerations)
Artist
Alive, unrepresented: An unrepresented artist will likely be found on Instagram, and conducts sales over social media or on his personal website. Selling without gallery representation means the artist does not have the marketing budget to promote his work but, on the flip side, will earn 100% of margins.Alive, with gallery representation: The artist now shares profit with his gallery. Depending on the prestige of the artist and gallery, the percentages will vary. Sometimes galleries take up to 60% and sometimes as little as 10%. A gallery is largely responsible for the health of an artist's career.
Dead, with gallery representation: The gallery, together with the artist's estate, controls the supply of work. Since supply is finite, one major role of the gallery is to ensure that the value of the artist never drops. This means controlling the consumption of work by clients, secondary galleries, and auction houses; directing the provenance of a work; or partnering with museums to boost the profile of the artist through group exhibitions and retrospectives.
Gallery
Primary: A primary gallery puts never-before-seen work on the market. This could either be new work from a living artist or a newly discovered work by a dead artist. The sell price is determined by multiple factors, for example the size and medium of the work, or provenance and sales record of an artist.Secondary: A secondary gallery sells work already in circulation. Often, the goal of selling in the secondary market is to achieve the highest price possible. Selling at a low price point is damaging for the artist and his gallery. An artist's value goes up if his works do well on the secondary market, even though he does not receive direct payment from resale of his work.
Client: A client working with a gallery is sometimes given preferential treatment depending on his relationship to the gallery. If I were a repeat client of PACE, then PACE might give me a special price for an artist I love, or a heads up if the artist is represented at an upcoming art fair. Separately, if I had a poor taste and an unrefined collection, PACE may decide against selling to me for fear of dirtying the provenance of the work, by association.
Auction
Artist: Similar to fashion consignment shops, competing auction houses vie for a work (or sometimes an entire estate) often by proposing competitive marketing campaigns or favorable consignment fees.Sometimes, an artist may work directly with an auction house, but this is in very rare cases. I suspect it is more common for online auction houses, like Paddle8 or 1stdibs.
Gallery: It is incredibly rare that a primary gallery or artist works directly with an auction house. Instead, the auction house typically dominates the secondary art market. Interestingly, galleries sometimes buy up work by their artists to stabilize the market price.
Museum: Even though museums are nonprofits and they often acquire through donations and gifts, museums also have a budget to purchase directly from auction.
Clients: Auction houses keep close watch of their clients. The who's who of clients get to attend evening auctions, which are private and invite-only. Within their databases, auction houses often track collector wealth, lineage, deaths, and collecting events. It behooves a museum to play nice with prominent collectors and their families, because that may lead to a huge consignment in the future.
The identity of a client making an outrageous purchase is often kept anonymous by the auction house. His identity is revealed when the newly acquired work is loaned or bequeathed to a museum.
Museum
Artist: Group exhibitions are great, solo exhibitions and retrospectives are better. Both living and dead artists can raise the current valuation of circulating works because of representation by a museum.Gallery: Similar to the impact on artists, galleries also benefit from its artist featuring in a museum show.
Galleries now compete with museum's to hold curated artist shows. An emerging artist may receive a solo exhibition at Guggenheim but not yet be worthy of a solo exhibition at the Met. However, confidence from the artist's gallery may be enough to drive inflated sales.
Donors: Donors can bequeath gifts to help alleviate tax on their descendants. Since they control a large portion of supply, donors have huge sway over the purchasing decisions and curatorial direction of the museum. A donor may also directly hype the value of his living collection by lending related works out to the museum. Public appreciation for a donor's collection positions him favorably in the eyes of galleries and auction houses.
Public: Art is both a public good and a vehicle for conspicuous consumption. However, art is now less of a public good as museums increasingly charge prohibitive costs.
Art Fair
Gallery: Galleries pay sometimes more than $30,000 to participate in a fair, so there is a high barrier to entry for a small to mid-sized gallery. There are multiple preview days; often, the art is sold before the fair is open to the public. Art fairs range from outsider art, to contemporary art, to antiquities and books.Clients: Clients work directly with galleries to make purchases. If a client is preferred by a gallery, he may be invited to purchase a work before it is viewed by the public.
Public: Attend to see and be seen. I have rarely seen someone from the public walk into a booth and buy on site. Although this could happen at an outsider art fair.
Critic
Artist: At the NYTimes, there are only maybe 3-4 on-staff critics that hold great sway. A positive review can boost the profile of a young artist, possibly helping them achieve gallery representation.Gallery: Good press for a gallery indicates that it is doing something right to preserve the dignity and memory of an artist's creative spirit. I personally can't imagine a critic giving a gallery a good review for purely positioning the artist as a hot commodity.
Museum: Good press for an artist show improves the value and reputation of an artist and his gallery, as well as says something about the curatorial chops of the museum. Good press also means more visitor traffic, which is more ticketing revenue for the museum. (ticketing revenue incidentally ranks very low in terms of overall profit)
Art fair: It seems that good press for an art show means that the art fair went to great lengths to obfuscate the fact that it is a glorified trade show...
Storage
Clients: For clients who consider art more of a commodity than an item to enjoy. It is also one of the quickest ways to trade art. Through a gallery, auction house or private sale, buyer and seller can make an exchange without the art leaving the warehouse.Investment Fund
Clients: An art fund is for investors that go in on a collection together so that they may reap profits upon resale. In this model, art is purely a commodity.Often banks have their own art corporate responsibility program. I believe these are disguises for strategic art investment funds.
Trading Algorithm
Clients: An algorithm determines the value of an artist and artwork by quantifying intangible factors. By following the art index, collectors can forecast and place their bets on an emerging artist instead of spending more money on the secondary market. Oppositely, collectors can liquidate declining assets and break even before their assets depreciate further.~
I have been far removed from the art world for a number of years now, so I'm sure that interactions between actors have only become more complicated. I'd love to know about your own experience if you have something unique to add.
P.S. If you are into infographic design, I'm dying to these interactions mapped out. Please hit me up so we can collaborate.
