In an article on the art market’s growth, Nate Freeman wrote:
“[The] handshake-deal norms of the art world hurt young galleries and artists the most, and may be a factor behind the falling rate of new galleries opening, which dropped by 87% from 2007 to 2017.”
While an artistic soul is perfectly content to create art for art’s own sake, the stark reality is that the business aspects of the craft are at times shrouded in mystery.
How do you know you are getting a fair deal when it comes to buying or selling a work of art? And why has the modern art market increasingly become a vehicle that serves the rich?
Here are some problems that plaque our art industry today.
1) Lack of Transparency in Pricing
A report in 2017 found that the online art market’s growth was slowing as platforms struggled to build long-term customer loyalty and trust.
Transparency in pricing is highly valued by new buyers. Respondents in the aforementioned study mentioned that they were seeking a way to compare prices. Artificial intelligence was suggested as one of the ways in which a solution could help measure an artwork’s value.
New artists, in particular, face a tremendous amount of difficulty with earning a living from their art. This is due to the fact that collectors have a tradition of relying on trade data in order to determine an artwork’s value instead of focusing on specific characteristics which make up the quality of the actual piece of art.
Price transparency has several advantages. It puts customers at ease and builds trust within the customer psyche. It allows a company or organization to explain reasons for varying prices and educates customers on what exactly it is that they are purchasing.
Price should not be a sensitive subject. In a transparency ROI study, 73 percent of participants said that they would give their money to an honest company, even when the price tag was higher.
2) Art Forgery
Art Business writes:
“Forgers are at least as much of a problem at small auctions and retail shops as they are at the major sales, and they’re a major problem online.”
While fakes represent a certain percentage of available art, an additional problem is requiring proof that art to be purchased has not been stolen.
Yet another issue is hand-painted copies. Many websites advertise that they are able to make accurate reproductions of any painting by any artist. Some of these copies are of such a high standard that a casual onlooker is completely unable to tell them apart from the originals.
How do you protect or prepare yourself against forged works of art?
Gaining experience with studying different works of art is key to developing a critical eye when it comes to analyzing a piece of art. Speaking with collectors, recognized authorities, and specialists can also help develop those critical abilities.
Some factors to keep in mind with an artist’s unique style include brush strokes, where the signature is usually placed, the mediums and colors an artist enjoys using, and how the artwork is usually framed or displayed. Gallery, supplier, or manufacturer labels or tags are other indicators to look out for.
3) Lack of Regulation
According to Ackerman’s Fine Art, art industry regulation is needed to:
- Protect members of the public from industry fraud
- Put a halt to global as well as domestic money laundering
- Enhance the reputation of fine art, improve investor confidence, and lead to industry growth
Take, for example, the committee or individual that is tasked with determining the authenticity of a piece of work, particularly when it comes to a major deceased artist.
Many experts charge a substantial fee to issue Authenticity Certificates. While an expert should be compensated for their expertise and time, some activities appear to be conflicts of interest, such as when experts purchase the very works they authenticate.
There is a lack of transparency when full documentation and disclosure about prices paid along with fees attained from sales of art on the behalf of a third party. The lack of transparency allows dealers and brokers to profit at the expense of unsuspecting collectors. At the same time, the lack of transparency creates a dent in consumer confidence and sustainable growth within the industry.
Pierre Valentin, a partner at the anti-trust litigation firm Constantine Cannon, writes:
“If the behavior is legal, it may be undesirable, even unethical, but there is little incentive to change it especially if it brings significant economic benefit.”
4) Profit Redistribution
Art galleries manipulate prices in a way that would be deemed illegal in most other industries.
Control is of such importance to galleries that items are not sold to collectors who will flip the piece of art in the secondary market. Secondary market art is usually sold in an auction house. When an artwork goes to auction, prices are made public and anyone is able to buy it. Did you know, gallery owners often bid on their artists’ work during the auction as a way to control the market price.
Manipulation ultimately benefits the galleries, the elite artists working the gallery system, and results in a smaller percentage of working artists.
Furthermore, modern art serves the rich at increasingly higher prices.
What began as a niche trade has expanded into an international industry intricately connected with luxury, celebrity, and fashion. It attracts a pool of ultra-wealthy buyers who compete for works created by brand-name artists.
According to sociologist Olav Velthuis, the “art market benefits from an unequal distribution of wealth,” as new billionaires turn to massive art purchases as a way of signaling their status.
So, What’s A Regular Artist To Do?
A healthy dose of skepticism will help you to stay vigilant.
Be sure to ask questions to be aware of the details when it comes to contracts you intend to sign and agree to. The time to ask questions is before — not after — a legal contract is signed!
Now and then, remember to slow down to re-connect with yourself and what art means to you.
When all seems lost, keep in mind that there are people and organizations out there — like the good folks here at ArtandMe — who place a priority on an artist’s well-being over profits via hefty fees and commissions.