Thursday, 2 October 2008

Opportunities (for the PSBs)

The economy is flailing - but will art prices come down?

One of the interesting points I picked up in The $12 Million Stuffed Shark was that it's very hard for dealers to put the prices of their artists' work down. Whether the work's getting better or worse, prices have to go up - or at least remain stable. However, dealers can give clients a quiet discount - and not-so-quiet clients can ask for them outright.

All questions of the connections between the art market and financial markets (and doing the dirty on your dealer) aside, by taking new work straight to the market via auction Damien Hirst got what people were prepared at that exact moment to pay for it. (BTW, some of the best commentary on this whole hoo-ha is here and here on Art Market Monitor)

The idea of people going to auctions to "pick up deals" makes me deeply uncomfortable. I hate seeing a great work going for a song - mostly because I find that somehow disrespectful to the artist. Sure, it's not the auction house's job to look out for individual artists' reputations by guarding the prices, and sure, fashion plays a strong part in the vagaries of the secondary market, but I still don't like it.

Anyway - what got me thinking about this today was Judd Tully's Art + Auction article Wrangling Over Resales which includes this quote:

Although the wording varies, these clauses basically require or request the buyer to agree, in writing or otherwise, to give the gallery or artist the right of first refusal, usually for a limited time, when the work is about to be resold. A typical clause appears in the invoices of the Chelsea dealer Friederich Petzel: “If the purchaser decides to sell this work within five years of purchase, the gallery will have the right of first refusal to buy back the work at fair market value. Fair market value shall be determined by the gallery’s retail price for works of similar scale and significance at the time of resale and/or auction house estimates, if applicable.”

In this case, resale agreement work two ways: they stop speculators (or speculating collectors) from flipping a work in 6 months for a big profit, but they also protect an artist if the market for their work slumps. Their dealer can quietly buy it back rather than see it achieve a bad price - which could create disparities in the pricing of work in the primary market and the resale market. As noted on Art Market Monitor:

What the article doesn’t say is that the art market may finally be moving to a greater acceptance of transactions as part of the life of a work of art–not unlike a museum show or a retrospective. Of course, that would require dealers to be more accepting of the idea that an artist’s value might fluctuate over time.
All of this is a bit heavy, of course, so to leaven today's post - a cartoon from ArtWorldSalon about arty Facebook status updates (click to enlarge):

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