THE ART MARKET
“Making money is good art … and good business is the best art.” (Andy Warhol)
Confusing and uncertain: the art market is foreign to many, even lovers of art, yet at the same time it holds great fascination. It is a network made up of countless participants—artists, gallerists, auction houses, fairs, museums, art critics, and collectors.
The international art market is flourishing. Edvard Munch’s Expressionist painting The Scream was auctioned in 2012 for the historic price of 119.9 million dollars. Never before had such a sum been paid for a work of art at an auction. The crush at the auction of the famous painting was so enormous that Sotheby’s online system failed for a while.
Since art is currently being sold at the highest prices ever, it is a worthwhile object for an increasing number of investors and is as common in their portfolios as stocks or real estate. There is no exact empirical data on the total profits of the global art market, but experts estimate a sales volume of around forty-six billion dollars in 2011—an increase of over sixty percent in two years. At no other time in history has art been marketed as much as it is today; never have larger sums of money been in play, and the number of visitors to art fairs and exhibitions is also steadily on the rise. New customers are emerging from China, Russia, India, and the Arabian Gulf region. All in all, the art market is an important, dynamic, and growing branch of the cultural and creative economy. Yet how can the complex structures of this market be described? Who are its influential actors?
On the art market, art is a commodity. In the beginning there were bitterly contested debates about whether or not art should be considered a commodity; art and commerce were regarded as blatantly opposite poles. Yet ever since people have been making art, there has been a market for it. According to ancient sources, 1500 years before the birth of Christ Egyptian art dealers were taking copies of divine images to Crete and selling them to the faithful there.
Still, 1967 is regarded as the year the modern art market was born; it was then that the Kunstmarkt in Cologne—the first art fair in Germany—came into being. It has been known as Art Cologne since 1989. During the early years of the art market, writes Claudia Herstatt in Fit für den Kunstmarkt (Fit for the art market), silkscreens by the Pop Art pioneer Richard Hamilton were purchased for fifty deutschmarks, and drawings by the star artist Joseph Beuys were acquired for 350 deutschmarks—an unimaginable sum today. In the years following, especially between 1980 and 1990, the market experienced a big boom; prices rose to dizzying heights. Impressionist paintings, for instance, increased in value by around 940 percent. In May 1990 Christie’s auctioned Vincent van Gogh’s Portrait of Dr. Gachet for 82.5 million dollars, the highest price ever paid at an auction up until then. In the early 1990s the art market bubble burst, triggered by the international economic crisis. After reaching a nadir, the market recovered in the 2000s. It brought in record profits, thanks in part to new groups of buyers in an increasingly globalized world. The worldwide financial and banking crisis in 2008 put an end to this boom, but the market recovered quickly. By 2010 Nude, Green Leaves, and Bust by Pablo Picasso had changed hands for a record sum of 106.4 million dollars at a Christie’s auction in New York.
Gallerists play a key role in the art market network. As a rule, they sell artists’ wares on the so-called primary market and are professional intermediaries between works “fresh from the studio” and their viewers/buyers. Often they discover art, advocating for artists new to the scene, positioning them on the market, and making considerable contributions toward establishing their reputations with experts. Hence, they have to master the rules of the art world and the market alike.
Since the mid-1980s competition between art dealers and auction houses has taken off, and both now have new competition from dealers on the Internet. Individual gallerists have invented new distribution models; for instance, dealers join together to form auction houses. The Villa Grisebach, for example, was founded in Berlin in 1986 by Bernd Schultz and four of his colleagues. Two years later it was known as the most profitable auction house for Classic Modern art in Germany. Among the current greats are Sadie Coles, London; Galerie Eigen + Art, Berlin; Peter Freeman, New York; Gladstone Gallery, New York; Hauser + Wirth, Zurich; Pace, New York; White Cube, London; and David Zwirner, New York.
Closely related to gallerists in terms of their job description, art consultants have been established in Germany since the 1980s, basing their profession on the American model. With backgrounds in art history and knowledge of business and tax law, they advise collectors, museums, banks, and insurance companies on how to build collections. Helge Achenbach is considered one of the groundbreaking art consultants in Germany.
Besides the galleries, auction houses have also become more firmly established platforms for marketing art since the mid-1970s. Around 3000 auction companies now operate around the globe, attempting to sell their wares at the highest possible prices. Home to the market leaders Christie’s and Sotheby’s in London, Great Britain is considered the largest marketplace in Europe; France is in second place, followed by Germany in third. Traditionally, auction houses are devoted to the buying and selling of works already on the market—the so-called secondary market. However, they are becoming more active on the primary market, because of their acquisitions of galleries, for instance—a fact that art dealers, the classic venues for new art, view with a sense of unrest. But contemporary art is in vogue: more than half of all works handled today are sold by auction houses at prices that make some art dealers shake their heads, for auction prices rarely have anything in common with market prices. Here, some transparency can be found on Internet portals such as artprice.com and artnet.com, which provide auction results, price developments, and market tendencies.
For quite some time now auction houses have been conducting sales on the World Wide Web; Christie’s, for example, has been very successful on the “marketplace of the future” since 2006. In Kunst ist käuflich. Freie Sicht auf den Kunstmarkt, Dirk Boll, Managing Director of Christie’s in Zurich and a sagacious expert on the market, reports that twenty-nine percent of clients are new and sixty percent of them are from the United States. On “Christie’s LIVE” a webcam broadcasts auctions on the Internet, and interested buyers can bid online from their PCs at home. Pure online auctions are offered by companies such as Ketterer Kunst, which has headquarters in Munich and Hamburg. “The advantages are obvious. Auctions do not depend on seasonal rhythms; objects don’t have to be transported and insured; catalogues don’t have to be printed. That lowers costs,” says Hans Neuendorf, a successful gallerist, co-founder of Art Cologne, and chairman of the board of artnet.com in New York.
Gallerists and “their” artists increasingly look to art fairs for new clients who enjoy collecting. Art fairs represent the glamorous side of the art world; openings are often staged as big events. At Art Basel, for example, about twenty percent of all of the visitors can be found at the opening event, First Choice.
Ever since the creation of today’s Art Cologne, the oldest art fair per se in the world, fairs have become increasingly predominant platforms for sales and information; many more fairs have been founded since then in Germany and abroad: Art Basel and its international branches in Miami Beach and Hong Kong; the Art Forum Berlin; the fine art fair frankfurt; The Armory Show, New York; The European Fine Art Fair (TEFAF), Maastricht; ArtBrussels; FIAC, Paris; ARCO, Madrid; Paris Photo; Arte Fiera, Bologna; ARTissima, Turin; Frieze Art Fair, London; ART HK, Hong Kong; ShContemporary, Shanghai—to name only the most famous among the echelons of art fairs, which attract the public with a variety of exquisite specialty programs. Experts maintain that strictly formulated requirements for high quality are necessary for lasting success and an international presence.
In 2011 the VIP Art Fair—the first online art fair—celebrated its virtual opening. More than 130 experienced galleries, including some of the most important institutions in the world, were represented. Despite the technical mistakes at the premiere, did it create an ideal sales platform for a new and younger target group, for everyone, “whether in pajamas or Prada,” as the organizers of the “private viewing” fair claimed? Or it is impossible for the art market—an “elite market,” as Dirk Boll calls it—to tolerate mass marketing? At any rate, the steady increase in the numbers of art fairs means tougher competition and shrinking profit margins.
In addition, museums and curators are also important protagonists in the art market. Among them are the Musée du Louvre, Paris; the Metropolitan Museum of Art, New York; the Tate Gallery of Modern Art, London; the Museo Nacional del Prado, Madrid; the Uffizi, Florence; and the National Gallery of Art, Washington. An artist’s reputation and market value are directly linked to the fame of their exhibition sites or to the renown of the collections in which their works can be found. (An artist’s “market value” also increases with the number of big art events he or she participates in. These events are also steadily multiplying, from the world’s oldest art show, the Venice Biennial, founded in 1895; to the documenta [also known as the “museum of 100 days”]; to the countless “imitators” of these successful events, such as the Biennial d'art contemporain in Lyon, the Berlin Biennale, the Sharjah Biennial in the United Arab Emirates, or the Gwangju Biennial in Korea.)
Some of the key duties of a museum are collecting, maintaining, and researching. Also of importance, though, are the tasks of exhibiting and mediating, so that the public can experience objects for the purpose “of study, education, and pleasure,” as stated in the most current definition from the International Council of Museums, dated 2004. Unlike galleries, auction houses, and art fairs, therefore, museums are non-commercial art mediators—something the Deutscher Museumsbund also established in 1978. Along with art critics, the special role of museums is to “explain art,” especially in the scientific publications that accompany their exhibitions, which are also available on the book market through publishers.
Some collectors of the new generation might see art as an investment, but most sales are determined by an amour fou between the passionate collector and a work. Like the famous museums and their acquisitions, the great private collectors also exercise considerable influence over artists’ reputations. Through loans to exhibitions or sometimes through their own museums, collectors have a strong effect on the art audience. On occasion, though, great masterpieces acquired by private collectors are permanently removed from the market, as public museums are frequently no longer able to buy art at irrationally high prices. Every year the New-York-based ARTnews publishes a list of the two hundred most important collectors. This year the top ten includes Hélène and Bernard Arnault, Edythe L. and Eli Broad, Jo Carole and Ronald S. Lauder, François Pinault, and Sheikha Al Mayassa bint Hamad bin Khalifa Al Thani.
A rankings list of artists (those who produce the commodity of art) was called into life by the editor of Die Zeit, Willi Bongard, and has been published annually since 1970. Using a point system—based on presence at exhibitions, mentions in reviews, sales to leading collections, and awards received—the Kunstkompass has determined that the most in-demand contemporary artists in the world in 2013 were Gerhard Richter, Bruce Nauman, and Rosemarie Trockel, to name just the top three. Looking back at their history, the rankings can alter dramatically: for example, the co-founder of Op Art, Victor Vasarely, was in second place in 1970, but in 2001 he was missing from the list entirely. Richter, on the other hand, was in 57th place in 1970, but in recent years he has consistently occupied the top places.
Profits from sales are not included in these charts. But these days, market forces often take on the task of establishing the value of an artist or a work of art. “Much of today’s art is defined exclusively by its success on the art market; it is as separate from the meaning of the work of art as the finance economy is divorced from the real economy,” deplored the Austrian artist, exhibition curator, and media theoretician Peter Weibel. Whatever sells well is declared good art. But, again, Weibel emphasizes, “Anyone who buys a Jeff Koons doesn’t buy anything that has to do with life or even halfway relevant ideas … This art only exists as a very expensive commodity. When the prices fall, it loses all of its allure and becomes completely meaningless.”
January 13, 2014 Stefanie Gommel
