The Art Market: Part I
Welcome back to Surviving Art. Here we explore the world of art, from economics and simple tips on equipment to surviving the existential dread that is the art world.
My name’s Matej Tomažin and today we’re going to talk about the art market.
The art market can be divided into roughly 5 segments:
1.) The direct market
2.) The primary beta market,
3.) The primary alpha market
4.) The secondary alpha market and
5.) The auction market.
Today we will be looking at the first two: the direct market and the primary beta market, so watch out for the next blog, as this is a two-parter!
To go through the labyrinth, that is the art market, we will run a simulation in which we will be placing Rachel; a fresh MA graduate, who is just starting of her career in the arts.
In the beginning of her journey, her art is worth roughly 0€. Such a price point normally does not work for Rachel, so she decides to enter the direct market to establish a base price for her work. She sets the price at 100€ + expenses for a 50 cm x 70 cm impressionist painting of a figure. She opens a few accounts on various online “galleries” like Saatchi Art and Fine Art America, but after a while she does come to the bitter conclusion that there are gazillions of other artists on such web places and her chances of being noticed solely because of someone searching for works, similar to her own, are slim to none. She therefore leaves her profiles on these webpages, but does not bother to much with them and only sets a weekly review email from both, so as to see if there was any activity on there profile.
Rachel soon finds, that the best way to start is to get in touch with people from her local city, as there is much less competition for artistic work there, than there is on the world wide web. She starts talking and inquiring about any potential work with her friends and family. As luck has it friend of a friend is getting his child christened and because of high interest for impressions works, similar to her own style, she does manage to sell one to the semi-wealthy friends family (a portrait of the child) and eventually she sells a few other paintings — solely because of the aesthetic look of her work. She also manages to exhibit one of her works as part of a group exhibition and after her first gallery opening decides to pursue her wish to become involved in the primary beta market. At this point she feels she is good enough to become a real artist with exhibitions an the like.
This market place is crowded with low status galleries, none of them having any real influence on the art market apart from the immediate local area where Rachel resides. The primary goal of such galleries is to sell their work to buyers, who make decisions solely on subjective evaluations of the aesthetics of the works in question; they don’t care about the investment potential, or just don’t really understand the inner workings of such investments and as such mostly fail to spot real opportunities for investments in art. The prices in this segment are fairly low (compared to higher segments of the market). Here the artist will set a price similar to other artists in the segment and the price will also be based upon the particular motif, size and material cost of each work. For now Rachel demands 200€ + expenses for similar works, as she has been doing before.
And our hypothetical artist is in luck, as the demand for impressionist paintings is still quite high, a gallerist from gallery B is introduced to her by a friend already under the wings of his gallery. She arranges a studio visit with the gallerist and he, after seeing her work, decides to exhibit it in his gallery.
One work is soon sold to a nice couple, because the painting in question is in the exact blue tones as their designer couch. They acquire it to fill the empty wall space behind it with something interesting. They are also compelled into the purchase by the idea of their personal contribution to our poor intellectual artist’s career; a look that Rachel more than embodies. This is important as the runner up was a really neatly made printed copy of some Kandinsky’s painting from Ikea for around 49€, but in the end the idea of being a patron of the arts sways their decision and they reach a bit deeper into their pockets.
Because the couple, now happy with their decorative investment, has quite a few likeminded friends, who of course wish, or maybe need to compete with the couple’s patronage, three other paintings from Rachel sell in the following two months, and she now feels that the demand for her work has risen quite a bit, thus decides to raise her base price to 300€ + expenses.
Keep in mind that from the total sum, the owner of gallery B receives 50% and, because Rachel, who lives in Slovenia, hasn’t reached the required number of exhibitions, needed to apply for the status of self-employed creative (a status that may be similarly replicated in other countries, you may be residing in — as for Slovenia, currently one needs at least 6 group exhibitions or 2 solo exhibitions and a few good critiques in the papers coupled with a few media coverages of his or her work, though the reality is even if you have 30 exhibitions, you are not automatically eligible for this status and many are rejected due only to the conservation of funds at the Ministry of Culture), she must also pay a 25% tax on her share and a 7€ coupon, as a contribution for social security and the pension fund. Rachel is now left with 105,5€ under the current law and regulations in Slovenia.
Also I do have to add here that this is quite the simulation, as Rachel probably wouldn’t have sold the three works in question in real life, as she is by far not the only artist being showcased in gallery B. Also the possibility of all the coupe’s friends going into the gallery and buying the same artist as the couple is a fantastical one, as we have to understand that the idea of owning more or less the same furniture as our neighbour is out fo the question for any neighbourly good competition. And this is true for wall furniture as much as it is true for the more common floor variety. And in this segment of the market, works of art are more or less furniture for the walls, but to functionally continue our simulation, our artist Rachel will have sold her works nonetheless.
And Rachel is again in luck, as a gallerist from gallery A is an acquaintance of one of her customers and when she sees Rachels work and hears about the others who also bought her paintings, she decides to have a talk with Rachel in her studio.
This is where we break off from our story for today. We will continue in the next blog!
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