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🔢 Key Takeaways

  1. The art market can be unfair for artists, who may invest immense effort into their work only to have collectors undervalue it. Selling artwork may become necessary, but financial circumstances vary.
  2. The primary market is a mystery, while the secondary market is a gold rush for collectors. However, artists often struggle to profit from their work and wonder if the art market dampens creativity.
  3. Auction prices have a strong impact on the primary art market and justify price increases for some artists, however, this primarily benefits a small percentage of artists and may create tension between collectors and creators.
  4. An artist's prices are determined by demand, supply, and external factors. Managing the gap between primary and secondary markets can dramatically increase prices. This market structure is similar across various luxury markets.
  5. Gallerists must carefully set prices and choose buyers to protect an artist's career and maintain a sustainable market. Marking artwork as 'reserved' can show interest without risking inflated prices from speculators.
  6. Art galleries can be selective with their inventory and may prioritize certain artists and customers. Buyers should be aware of potentially unethical tactics and exaggerated values in the competitive art market.
  7. Despite the strange and opaque nature of the art market, successful artists like Tschabalala Self focus on who buys their work and believe in the power of ownership to broaden the narrative and create positive experiences with buyers.
  8. While the art market places a high value on personal creations, it often neglects the emotional and personal aspect of the work. Artists often feel exploited by auctions, which primarily benefit the buyers and sellers rather than the creators.
  9. Tom Sachs' unique approach to pricing artwork emphasizes its intended concept, rather than its cost of creation. He values the importance of adhering to his studio's principles and the market's role in setting value.
  10. The art market can be influenced by different factors, but the value of art often increases over time. Although some artists may struggle to buy their own work, the art market emphasizes demand over financial value.
  11. Artists are often left out of the value chain when their work is resold on the secondary market. Some suggest higher primary market prices can benefit them, but many artists believe they should receive a royalty on resale to benefit from the value their work accrues.
  12. European law gives artists royalties when their artwork is sold, but the system has flaws and beneficiaries often receive little compensation. A lottery to support the arts may be a better solution. American artists hope for a similar system to support their work.
  13. California's royalty law has shortcomings and the elitist nature of the art market has made it challenging for modern artists to have an impact on society. Artists like Tom Sachs persevere and value the role of galleries in selling their work.
  14. Artists are driven by the pursuit of meaningful work that can shift perspectives. While facing emotional and financial obstacles, the support of others can be pivotal in allowing them to continue creating and striving towards their ultimate goal. Alice Neel serves as an inspiring example of this devotion to creative pursuits.

📝 Podcast Notes

The Ethics and Realities of the Art Market from an Artist's Perspective

The art market from the perspective of artists is largely unregulated and subject to various unethical practices. Tom Sachs, a renowned sculptor, compares the market to an unregulated commodities market. To make a living as an artist, Sachs did manual labor earlier in his career. As artists, they often create pieces that require immense effort, time, and energy to make. However, art collectors, who form the demand side, sometimes value money more than the artwork that artists have invested their sweat and blood in. Nonetheless, artists understand that people have varying financial circumstances that may make it necessary for them to sell artworks.

The Complex and Unregulated Art Market

The art market is a complex and unregulated industry, where the primary market is a complete black box and galleries do not follow the traditional pricing system. Art market experts opine that art is a bad investment, and the majority of the art sold sits in a warehouse. While artists live in a feast or famine situation, the secondary art market is a gold rush for collectors, where prices are 100 times higher than the original cost of art. Despite laws that exist to give artists a cut on the secondary market, they are hard to enforce. The art market is a brutal industry and has left artists wondering if it dampens the urge to create. The craze for expensive contemporary art began in 1973 when Sotheby's auction house sold 50 pieces from Robert and Ethel Scull’s collection for a total of $2.2 million, averaging at $44,000 per piece.

The Power of Auction Prices in the Art Market

The art market's auction prices have great signaling power for the primary market and galleries justify price increases by referencing recent auction results. However, this only benefits a tiny percentage of artists whose work is considered special, while the majority of artists will never see such price increases. Inflated auction prices may lead to tension between collectors and artists, but ultimately, artists like Robert Rauschenberg were lucky to have their work valued so highly.

Understanding the Contemporary Art Market Pyramid

The contemporary art market operates on a gigantic pyramid with few artists at the top who command high prices. An artist's prices are determined by their demand and supply as well as external factors such as major exhibitions and scarcity. In the art world, it's either feast or famine for artists where their artwork is either in high demand or not sought after at all. Once an artist has been anointed, their prices can go from zero to skyrocketing. Galleries representing artists have to manage the gap between primary and secondary markets as the latter can result in significant price increases through well-placed private collectors. The secondary market operates similarly across luxury watches, high-end cars, and even sneakers. Companies are now looking into managing the secondary market better.

Pricing Art: Balancing Demand, Reputation, and Sales Tactics

In the art market, setting prices is a delicate balance between demand, supply, and the artist's reputation. Often, gallerists are cautious about raising prices too quickly to avoid hurting an artist's career. They also need to carefully select buyers to avoid selling to speculators who may drive up the price of the artwork artificially. Contracts granting the gallery the right of first refusal still exist but are rare. Gallerists instead use tactics like marking an artwork as 'reserved' to show interest without committing to a sale. In summary, building a sustainable artistic career requires gallerists to be strategic and thoughtful when setting prices and choosing buyers.

How Art Galleries Select Pieces for Sale

Art galleries often use a discriminating process when deciding to sell a piece of art. Dealers prioritize loyal customers and artists who sell well to bait new collectors. Sometimes galleries will only sell a piece to a customer if they also buy a less popular piece by a different artist. These tactics may seem slimy, but they are necessary for galleries with limited inventory and many interested buyers. Art dealers are also known to exaggerate the value of art and use unethical tactics. The art market can be cutthroat and competitive, and buyers should be aware of these practices.

Creating and Selling Art in Dystopian Markets

The art market can be a strange and dystopian world filled with lying and opacity. Despite this, successful artists like Tschabalala Self continue to create and sell their artwork. When selling a piece, Self cares about who buys it and believes that ownership can broaden the narrative around the piece. However, she has also encountered buyers who see no value beyond the object itself. While price is a major factor in the art market, it is not the only one, and artists like Self are driven by a desire to share their stories and create positive experiences with buyers.

The Exploitative Nature of Art Auctions from Artists' Perspectives

In the art market, the personal creations of individual artists are sold, which are intimate and emotionally charged extensions of the artists themselves. However, the market focuses on the monetary value of the artwork, and the artists don't gain much from auctions. Despite the success of artists like Tschabalala Self, who have seen their work resold at auctions for a significant markup, artists, in general, feel exposed and exploited by the auction system. Furthermore, artists like Self find the idea of having conversations about their Black female body works being at auction vulgar, and the whole notion of bidding on their work in that way completely dystopian. The artists themselves don't gain much from auctions, while others profit off their creations.

Tom Sachs: Valuing Art Without Concern for Market Price

Tom Sachs, a well-known artist, doesn't price his artwork based on the cost and time it takes to create it but on what it wants to be. His art pieces are sold through various galleries, but he believes in creating the work he wants to make without concerning himself with the market value. Despite this, Sachs acknowledges the importance of the market in setting the value of one's artwork. Additionally, Sachs employs roughly 20 people in his New York studio and ensures that his works adhere to 'The Code,' which are strict rules and principles of his studio. These factors contribute to the reputation and certificate of authenticity of his artwork.

The Art Market and the Supply-Demand Game

The art market often rewards those who manage or manipulate it, rather than those who supply it. Despite this reality, many successful artists find themselves priced out of their own market, unable to afford their own work. Although some artists may feel uneasy selling their work for much higher prices than they originally received, often the market value of an artist's work can increase dramatically over time. This is a product of capitalism at work, and not necessarily indicative of any wrongful practices. Ultimately, the art market runs parallel to the museum world, which is more concerned with the art and culture itself than the financial value assigned to it.

The Struggle of Artists in the Secondary Market

Artists may struggle to afford their own work on the secondary market, leaving them out of the value chain. Some suggest that the increased value of an artist's work on the secondary market can benefit them through higher primary market prices, but this is not always consistent or stable. Furthermore, artists like Tschabalala Self feel that they should receive a royalty on resale to benefit from the value their work accrues. While this idea is not new, the art market has a complicated history with implementing such legislation or regulation.

The Flaws of Droit de Suite

Droit de Suite is a European law known as the Artists' Resale Right that gives living artists and their heirs a share of the price when their physical works of art are sold on the secondary market. However, the law is flawed as the royalty is capped and beneficiaries often receive meager amounts. A better solution could be to follow Britain's lead and start a lottery to support the arts, including artists who do not have commercial output. While the droit de suite has been discussed in America, it has not been adopted due to the lack of consensus among states and the federal government. However, American artists would like to see it practiced in the US as musicians and filmmakers benefit from copyright structures that permit them to benefit from the ongoing use of their works of art.

The Struggle of Artists in California's Narrow Art Market

The California royalty law, meant to collect royalties for artists, has failed due to its narrow restrictions. The strange and elitist nature of the art market also contributes to the failure of modern artists to have a real impact on society. While it is difficult to quantify the cost of this failure, it is heartbreaking to think of so many artists trying to make a difference but ending up in a Swiss warehouse. Despite the challenges, artists like Tom Sachs remain devoted to their craft and appreciate the role galleries play in selling their work.

The Challenges and Rewards of Pursuing an Artistic Passion

Artists are devoted to their passion and creative drive, willing to face various hurdles, from emotional to financial, to pursue their craft. Making true and meaningful works that can change people's perspectives is an artist's ultimate goal, before they ever get paid or gain recognition. Alice Neel is an inspiring example of an artist who continued her art-making despite life's challenges, eventually gaining recognition for her work posthumously. For artists, their work is their life, and finding support from dealers or others who can facilitate their pursuits can mean everything.