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by gutshallc

The Players in the Contemporary Art Market

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Contemporary art is the art of our time. Academically, the “contemporary” art movement emerged in the mid-1960s as the strictures of modern art gave way to a hegemony of artistic traditions that led to today’s highly diverse, yet fragmented, contemporary art scene. From a market standpoint, contemporary art is defined as art currently being produced and sold.[1] There has always been a loose market to facilitate the transfer of art from artist to patron, but not until the late 20th century did the market become well organized. This paper shall attempt to present the primary participants in the contemporary art market and how their roles facilitate the transfer of art from artist to patron, or collector, in a manner that reinforces the market for that artist’s work.

artist palette
artist palette

The Players

In the contemporary art world, there are five primary players. These players are the dealer, the critic, the auction house, the museum and the collector. Ultimately, the goal of the market is to move a piece of artwork from the originator, the artist, to the patron, the collector or museum. The players in the contemporary art market alternately and successively fill three primary roles: facilitator, influencer and acquirer.

The Facilitators

For the purposes of this discussion, the artist is largely irrelevant. Other than as the creator, and thus the physical originator, of the artwork being marketed and sold, the artist usually exerts the least influence over the transfer of that piece of art.

Typically, an art dealer, or gallerist, first makes a piece of art available to the public and thus is the primary facilitator of a sale. The dealer often represents an artist on an exclusive basis, sets the price for the artist’s work, and earns a commission on each sale. Prominent contemporary dealers include Larry Gagosian and Mary Boone in New York and Jay Jopling in London, who all operate independent galleries.

The dealer’s primary role is to develop a market for the artist’s work. A dealer may accomplish this through several standard marketing and promotional tactics, such as by mounting an exhibition and sponsoring a number of ancillary promotional events. He or she may also advertise in magazines like ArtForum or ArtNews. Similarly, a dealer may court critics and journalists to secure favorable mention in an article or review.

A dealer may also display artwork at annual art fairs, such as The Armory Show in New York, which operate like trade shows where a large number of prospective collectors attend to see a large number of potential acquisitions. The dealer may also employ other tactics more specific to the sale of high-end goods, such as the private placement of artwork in museums or with prominent collectors.

Contemporary art typically enters the market through the primary dealer. The market for artwork available for sale for the first time is referred to as the “primary” market. Once a piece has been purchased, it may enter the “secondary” market. If a purchaser decides to divest the piece from his collection, the piece can potentially be sold by the primary dealer, a secondary dealer, or be taken to an auction house like Sotheby’s or Phillips de Pury to be auctioned.

The Influencers

Whereas the artist serves as the originator of the artwork and the dealer and the auction house serve as the facilitators, the critic and museum serve as the primary influencers. Art is a subjective product and is more than simply a financial investment. Therefore, “expert” approval is a valuable motivator for prospective collectors. To have an artist reviewed favorably by a critic lends credibility to her artwork. In the mid-20th century, Clement Greenberg, a New York Times art critic, could make or break an artist’s career with a positive or negative review. Similarly, when a piece is exhibited or, better yet, acquired by a prominent museum, such as the Museum of Modern Art, the artist’s reputation increases. With such stamps of approval by industry tastemakers, demand for an artist’s work typically increases.

Similarly, the dealer and fellow collectors can serve as influencers in the market of an artist’s work. The quality of a dealer’s program or his past performance can help provide legitimacy to an artist. Being represented in a prominent collection can also bolster an artist’s credibility. Collector Charles Saatchi was so closely identified with the rise of a number of influential British artists that the 1990s are referred to as the “Saatchi” decade, where all he touched turned to gold.[2]

The Acquirers

Finally, both the collector and the museum serve as acquirers. All other players exist to complete the transaction, through its facilitation or by influencing the acquiring party, between the artist and the most highly respected potential repository.

The Flow

For the most part, an artist produces at a constant rate. Therefore, the price commanded for a piece of artwork is largely affected by the demand for the artwork. The tactics employed by a dealer focus on increasing the artist’s visibility. Exhibitions, advertisements and appearances at art fairs increase the visibility of the artist, which increases demand for her work. Other tactics, like strategic placement in key public and private collections, favorable reviews and inclusion in museum exhibitions, are aimed at increasing the perceived reputation of the artist, which also increases demand for her work. As demand increases, the price for the artist’s work increases. Price increases reinforce the belief among acquirers that the artist is a good investment and will thus place further upward pressure on demand.

Over the past few decades a formalization of the art market has occurred in response to a growth in demand for contemporary art and, as a result, a proliferation of artists and market players to facilitate the transaction between the artist and the acquirer. These players include art dealers, auction houses, art critics, museums and art collectors. Each party, to varying degrees, facilitates the transaction, influences that transaction, or is the acquiring party in the transaction, with the ultimate goal of transferring the work of art from the originator to the acquirer.

 


[1] “Contemporary Art.” [online]. http://en.wikipedia.org/wiki/Contemporary_art

[2]“Charles Saatchi.” [online].  http://en.wikipedia.org/wiki/Charles_Saatchi