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Tag: Alexandra Anderson-Spivy

  • What Price Art? A Market of Mirrors

    The paper [by Alexandra Anderson-Spivy] excerpted below, an explanation of how to “make a market in a living artist’s work,” was a highlight of the [“What Price Art?”] conference. Further details appear in Ronald Feldman’s truth-in-jest advice later in the year.

    “What Price Art? A Market of Mirrors”
    Friday, April 26, 1985
    What Price Art? The Economics of Art: An Agenda for the Future
    New York University, Graduate School of Business Administration, New York

    The art world in the 1980s at Mr. Chow (photograph by Michael Halsband)
    The art world in 1985 at Mr. Chow (photograph by Michael Halsband)

    Art is a conveyer of status, a vocabulary of power. Men and women of wealth and influence, after they have acquired their money and power, need signs and symbols of their importance. Collecting art is often a way to gain entry into a desired social stratum….

    How do dealers “make a market” in a living artist’s work? With virtually any new painting commanding an entry gallery price of $1,200 to $2,550 (sculpture begins a bit higher), there are price thresholds that a new or unrecognized artist must break through as he or she goes up the ladder. Assuming the dealer truly believes in the quality of the work, he [sic] must publicize this belief through exhibitions, critical reviews, word-of-mouth….

    Dealers try to get their artists’ work seen by museum curators [and get] well-known, serious collectors to buy. Many galleries will only release works by certain artists to certain collectors, recognizing the Doppler effect of those collections. These collectors are also likely to be on museum boards and to encourage recognition of artists they favor at those institutions. Ten percent or 20 percent discounts [or more] off quoted prices to valued customers are common. (I have heard it rumored that some sales are made at up to 80 percent off quoted gallery prices.) Sales to museums at far-below-market prices will permit the dealer to jack up subsequent prices. The aura of market activity can also enhance an artist’s reputation and build market interest. There is a high risk-high reward factor…. Collectors respond to the idea of buying a hot young artist’s work at prices which will escalate rapidly. The idea of investing in contemporary art is rather new, and one which reputable dealers claim they do not use as a sales tool. But the media attention given such artists makes that kind of hard sell almost unnecessary, since speculation becomes a tacit factor in everyone’s mind.

    About three years ago, I noticed a brand new painting by Jean-Michel Basquiat hung in the loft of a famous artist. He said, “This time I wanted to get in at the beginning. I’m tired of seeing the collectors make all the profits.” In three years, Basquiat’s prices have risen precipitously. Sales to major collectors also build an artist’s image and thus allow his prices to rise. Once an artist’s reputation is established, the auction house may play a part. Sales at auction are not only important exposure … they publicly ratify prices. Dealers have been known to put up a work at auction and buy it back themselves simply to establish a price…. If works are “bought in” (i.e., do not reach their reserve price), a certain superficial credibility of price still remains to the public at large. However, savvy collectors who follow auctions closely may then consider a picture “burned,” thus making it harder to sell subsequently….

    Because the “value” of a new work is in fact so much a matter of opinion, those who wish to participate in the game soon discover that becoming an insider, i.e., having access to the informal as well as the formal network of information about the art, is crucial…. In the oddest way, works of art achieve value because certain individuals in certain sectors of the system decide they are valuable, but much of what goes on goes on behind the scenes…. An artist whose production is very small or who shuns the publicity machine [may not achieve] “brand name” status. [Yet] in the long run … mediocre pieces bring mediocre prices and great works bring ever-greater prices.

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    Andy Warhol and Jean-Michel Basquiat (photograph by Michael Halsband)

    Another market factor is the “auction ring.” A group of dealers interested in the same material agree not to bid against one another, assigning one to bid unopposed. After the sale they reauction the things among themselves. [This] is strictly illegal. But, when done skillfully, it is almost impossible to uncover. Auctions have also been manipulated in another way. Dealers bid up prices of their own artists even if they themselves have to buy the work. Then they call claim the auction price as ratifier of prices in the gallery. Or it may be arranged in advance to have people (assigned to go up to a certain price) bid on a work, thus pushing up the price.

    In recent years, auction houses have attracted a much wider public, often competing with the dealer for the collector’s dollars, so that antagonisms between the two have surfaced. Large advertising budgets, increasing media publicity, glossy catalogues, and an aura of theatrical glamour attract high rollers to the auction rooms (recently refurbished) of Sotheby’s and Christie’s. [R]ecord-breaking prices are touted widely, while heavily bought-in sales are played down whenever possible. Auction houses have learned how to use the tools of modern marketing. Michael Thomas, a former investment banker, in a column about the forthcoming Sotheby’s sale of pictures owned by the late Florence Gould, [wrote that] “advance publicity would have us believe that the equivalent of the Jeu de Paume or the Phillips Collection are being disgorged at auction, but by and large … the pictures are pretty and accessible, just the kind of thing with which rich Arabs like to decorate their Home County mansions.”

    The combination of hype to create demand that takes advantage of ignorant, cash-heavy, status-hungry consumers of art is hardly a new one, though it may operate more widely and efficiently than in the days of Joseph Duveen and Bernard Berenson. Policies of full disclosure for critics, scholars, and curators (to reveal any vested interest in art they write about or curate) and for dealers and auction houses might go a long way towards correcting the abuses of the art market as we know it. Meanwhile, caveat emptor remains sound advice.

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    Source

    Written by Alexandra Anderson-Spivy, “What Price Art? A Market of Mirrors” was originally published within Cynthia Navaretta’s “Conference: What Price Art?” in Women Artists News 10, no. 4 (June 1985): 5; and reprinted in Judy Seigel, ed., Mutiny and the Mainstream: Talk That Changed Art, 1975–1990 (New York: Midmarch Arts Press, 1992), 237–38. In Terms Of thanks Midmarch Arts Press for permission to republish this review.

  • The Art Talk That Ate New York

    What Price Art? The Economics of Art: An Agenda for the Future
    Friday, April 26, 1985
    New York University, Graduate School of Business Administration, New York

    Another ’80s workshop on spinning art into gold—and as motley a collection of speakers as one could imagine, even on such a fey topic. As it happens, my community and I recently had dealings with one of them—the representative from the Port Authority—only instead of “Arts as an Industry,” she detailed why our historic district should be trashed for the benefit of the Port Authority. That report, with figures and measurements and citations, was, as we proved in court, a complete fiction, but it served the purposes of those receiving it and became fact. Such diddling is of course hardly news in city politics—or in business and real estate either, as we see increasingly in the papers these days. But in art? Let’s just say the figures here sound official, for what that’s worth, but don’t bet the farm.

    On the other hand, at least from my limited experience, Alexandra Anderson-Spivy’s rundown on the workings of the art market can be taken as a marvel of acute reporting. That is, you’ll love it—and relish the hindsight.

    Cochairs: Kenneth Friedman, publisher of The Art Economist; and Oscar Ornati, professor of management, New York University

    Speakers: Noel Steinberger, Rosemary Scanlon, William Baumol, Michael Montias, A. D. Coleman, Dick Higgins, Ed McGuire, Martin Ackerman, Marshall Kogan, Alexandra Anderson-Spivy, and John Czepiel

    Cynthia Navaretta, “Conference: What Price Art?” Women Artists News 10, no. 4 (June 1985): 4.

    Titled “What Price Art,” and provocatively subtitled “The Economics of Art: An Agenda for the Future,” the conference promised to explore the economics of the visual arts market, with practical details on costs and price structure provided by “national experts in economics, finance, law, public policy, art and journalism.”

    Noel Steinberger, vice president of marketing at Sotheby’s, the world’s oldest auction firm, identified key players in the art game as the media, banks, auction houses, and galleries (notice omission of the artist).

    Rosemary Scanlon, a discussant and chief economist of the New York–New Jersey Port Authority, described her recent study, The Arts as an Industry, made to determine value and economic impact of cultural industries (including theater, dance, music, film, television, and visitors to New York City, but not the city’s art sales or art inventory) on the metropolitan area. Her “conservative” estimate was $5.6 billion. Although hard data is lacking, worldwide transactions in the visual art market are estimated at over $25 billion annually.

    Scanlon’s presentation was followed by floor discussion of the art customer. The important role of the press was briefly touched on as “shaping tastes and spending habits.” Recent studies estimate the number of US art critics at over 2,500; Art in America has counted more than 2,600 critics among its own subscribers. Assuming an equal number might not read AiA could bring the total number of art critics to more than 5,000.

    Dr. William Baumol, professor of economics at Princeton University, and a collector himself, described the art market as an “imperfect market,” i.e., not behaving in a predictable manner, as financial markets sometimes do not. Therefore, he said, “there is no rational way to assign value or to invest” (except, of course, on an aesthetic level). Price information, he said, is beside the point. An unidentified speaker contradicted him on that claim, asserting that price information is “needed for literacy and curiosity.” Baumol added that “the elasticity of supply” is zero for deceased artists and “the holder of a single piece of art has a monopoly on that item,” so the supply of art is fixed.

    Michael Montias, professor of economics at Yale University, rejected the inelasticity theory, claiming existence of a “large supply of paintings on walls, in attics, and museum basements.” New interests (and rising prices) in specific periods cause hitherto unknown works to surface.

    Cynthia Navaretta, “Conference: What Price Art?” Women Artists News 10, no. 4 (June 1985): 5.

    A. D. Coleman, photography critic, added that values change, using as example that van Gogh’s painting (auctioned the previous evening for $9.9 million) was no longer what van Gogh had painted; it has since been certified as a work of art.

    Dick Higgins, writer and artist, noted that “art is one of the only commodities routinely produced at a loss.”

    Ed McGuire added, “The artist does not profit by art, galleries do, museums do, and the collector who uses it as a tax shelter does.”

    Then the topic of whether or not art business and art galleries are profitable, or doing better than in previous years, was tossed around for a while. The editor of City Business quoted a dealer as saying, “A good dealer is one who breaks even and puts in his basement what he thinks will increase in value.” The director of the Berry-Hill Gallery dismissed this as nonsense, saying “any serious gallery” does very well financially.

    Martin Ackerman, attorney, addressed tax policies and changes in tax law by which the Internal Revenue Code says, in effect, that “in death the work of an artist is valued at appreciated retail value, but in life it is valued at the cost of material. This, obviously, has caused artists and their estates to liquidate or even destroy large portions of their work to avoid these unwarranted and unfair tax burdens.”

    With allowable tax deductions for donations of art restricted to “adjusted costs,” museums report drastic reductions in gifts from artists. The Whitney received 142 works in 1969 and 17 (of which 13 were prints) in 1970; MoMA received 47 in 1969, none in 1970. Although art collectors have not yet lost the privilege of this contribution, they frequently encounter hostile questioning by the IRS as to “fair market value.” (Ackerman believes this stems from a probably well-founded IRS belief that all contributions are overvalued.)

    Marshall Cogan, chief executive officer of GFI/Knoll Industries and noted collector, mentioned the amazing growth in museum attendance since the ’70s. He also pointed out that 875,000 people earned over one million dollars in 1985, suggesting that, as income rises, the value of art rises too. Cogan’s recommendation to collectors was to buy “the most extraordinary piece of work available.” He saw a decline in good works of art, attributing current “extreme increases in price” to this scarcity.

    John Czepiel, associate professor of marketing at New York University, quoted something he had read: “It ain’t art unless you have the urge to possess it.”

    Kenneth Friedman, cochair of the conference, summed up: “The art market is poised on the edge of profound change. This is a market moving from its cottage industry phase into something radically different. All other factors in the economy being equal, I predict that the dollar volume of the art market will increase at a rate far better than inflation during the next decade. If this is so, we’re going to need—and we’re going to see—studies in everything from client service by art dealers to credit financing for consumers, from information services, to investment opportunities in the art industry.”

    Perhaps, however, the clearest indicator of art’s new financial status is simply this conference itself. New York University’s School of Business hosted a conference on “art.” Footing all bills, it invited press, dealers, consultants, lawyers, collectors, and bankers to attend as its guests—but no artists.

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    Source

    Written by Cynthia Navaretta, “The Art Talk That Ate New York” was originally published as “Conference: What Price Art?” in Women Artists News 10, no. 4 (June 1985): 4–5; and reprinted in Judy Seigel, ed., Mutiny and the Mainstream: Talk That Changed Art, 1975–1990 (New York: Midmarch Arts Press, 1992), 236–37. In Terms Of thanks Midmarch Arts Press for permission to republish this review.