The Art Market. Three vague words swirling overhead a volatile, borderless tangle of cash-slinging consumers, competitive institutions, and personal interests. We know this murky force to be capable of commanding sums reaching into the hundreds of millions; to be able to speak glibly of its ups and downs is pre-requisite for circulation in certain social strata. But what constitutes the backbone of the mega-commerce surrounding artistic production?
Simply enough put, the art market is an unpredictable entity which employs some secret alchemy and turns the cultural good into a commodity. It is the sole mechanism for assigning value to artworks and antiques, and there’s something magical about that. Somewhat unfortunately, there’s no hunchbacked wizards whispering over frothing cauldrons involved, not even a sparkling fairy godmother whipping pumpkins into sales record-breaking Picassos. Yet an expansive web of professional activity spins itself tightly around the art market. Sellers, buyers, dealers, agents, advisors, artists, auction houses, collectors, foundations, museums and critics are some of those vying for the often juicy tidbits proffered at this manifold baazar.
An international behemoth, the art market oversees the movement of the obvious visual arts, as well as of antiquities, ethnographic art, furniture and decorative art, heirloom jewellery and fine watches, illuminated manuscripts and literature, musical instruments, even seminal wines. Often driven by the cropping up of great wealth, the art market is also largely unregulated. Within its various layers, to be quickly peeled apart below, insider trading is rife. There’s plenty of friendly advice and chances to act on priveleged information to go around. That may sour some perspectives, but let’s call it an inevitable part of the intrigue which keeps the engine purring.
An artwork begins its transformation from material culture to financial portfolio fodder on the primary art market. At this potentially risky level, pieces without previous ownership are sold to gallerists and collectors directly from artists’ studios or perhaps estates. The artists and dealers involved are more likely to be early in their careers, full of aspiration and without deep pockets. An object may then travel on to the secondary art market, where all the re-selling by various agents and money making occurs. Established names with bread and stock play about here, and the art which exchanges hands is generally of modern, highly-lauded contemporary or Old Master provenance. On the tertiary art market, a fair amount of subversion among rival institutions takes place; objects already filtered through the secondary market are in a way recycled at events like blockbuster auctions and ever trendier art fairs, which also serve to keep prices transparent.
If you’re one of the happy elites able to gain some control over all of the art market’s various facets, you can virtually print money. Yet as a whole, the art market is mercurial, prone to blowing hot and cool. If playing the market with nothing but financial gain in mind, it’s never wise to consider yourself perfectly safe. Reputation is fragile, and intimately correlated with value. While some working artists, those with surnames like Hirst and Murakami, can legendarily skyrocket from relative anonymity straight to glossy auction catalogues (and eventually suffer brand-wise from unsustainably exorbitant prices), it remains sad, sort of funny, and overwhelmingly true: most artwork will never claim blue-chip status until its creator is deceased and suddenly adored.
A question remains, why bother investing in art?
Well, if you fancy bars of gold to be cold and land to be bland, art remains an independent asset class, allowing for diversification from less titillating equities, bonds and properties. The art market has a tendency to buck trends as well, often moving in a more liquid direction when other investment areas are not. And, if it’s what you crave, buying art can often buy entrance into the artes mundi, the scene of hip young things and gem-crusted philanthropists. It is a market which teases its disciples with jackpot-sized gains, and cripples with unforeseen losses. But therein lies the joy of a “passion investment”; whether it leaves you in the black or in the red, hopefully, you like the look of what’s hanging on the wall.