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Art Market: 3 Unwritten Rules to Protect It

Why pay the bank to look after your billions when you can buy a Picasso? 

2 minutes

 

Why pay the bank to look after your billions when you can buy a Picasso?

 

Imagine you were a billionaire and had an interest in buying art. Although your money could buy you most of the things you desire, art would not necessarily be one of them. Solely having money is often not enough to acquire the best art. To buy popular art on the primary markets is a privilege to collectors who have taken the time and effort to build a good reputation within the art world.

The backbone of the art market, as in any market economy, is in the relationship between supply and demand. However the art market is defined by its buyers and sellers as well as by many other interdependent players. The complexity in the art market lies in regulating the prices to protect the artist’s integrity and creative freedom. As art has become “financialized” over the last decade there is an even greater need to protect it and its market.

 

Amedeo Modigliani, Nu couché, 1917-18. Price: $170,405,000. Courtesy of Christie’s. Above: Picasso, Les Femmes d’Alger, (Version O), 1955, Price: $ 179,365,000 Courtesy of Christie’s.

Amedeo Modigliani, Nu couché, 1917-18. Price: $170,405,000. Courtesy of Christie’s. Above: A Robert Motherwell Forgery. Courtesy of the Dedalus Foundation.

 

Investment shouldn’t be your top priority

 

Claiming that art is “financialized” means it has become more or less established as an asset class, similar to stocks and bonds. Some claim the latter categories are more predictable than art and that they perform more consistently in response to changing economic conditions. However, political and economic situations do have an impact on the art market, which some buyers seek to take advantage. These buyers are increasingly interested in the financial performance of art and a meaningful rate of return on their investment.

Such way of collecting art is not well regarded in the art world and gallerist, who most often take upon the role as dealers, curators and artists’ managers, have the responsibility to protect art and potentially say no to buyers who seem interested in “financializing” art pieces. In contrast to auction houses, galleries work to present an artist’s in an appropriate space while retaining the integrity of the artist. Therefore, gallerists’ highest priority is to find a serious and good collection for the art and to avoid, at all costs, making it a financial asset.

 

Pieces should not be resold

 

What is often seen today in the art markets is a distortion where the secondary markets (i.e. auction houses) influence the primary markets (i.e. galleries and dealers). To avoid higher prices at auction houses rather than in galleries, reselling art is most often considered as a “forbidden” act in the art world when trying to build a good reputation. The unwritten rule is that an art work should be resold to the same gallery it was purchased from. If that gallery refuses to buy the piece back, only then should  it be sold privately or at auction. That way buying art should not be based on gaining profit and it should not create a market for buyers who are only interested in selling its pieces.

 

les femmes d'alger 1955 uberaura

Picasso, Les Femmes d’Alger, (Version O), 1955, Price: $ 179,365,000. Courtesy of Christie’s.

 

You need to build relationships

 

As previously mentioned it is the various actors and institutions and their interdependent relationships that constitute the art market. To understand and become a player in it as a buyer and a collector you need to build relationships, this will show a commitment to the art world beyond private interests.  Gallerists are especially important players to see art through since they usually know the artist’s work better than anyone else. Building relationships with gallerists and other art institutions can broaden the perspective and the knowledge of art; give a bigger picture of the art world and its (re-) creation of meaning, making one a well-reputed collector.

The high-end art is considered to be one of the most manipulated markets in the world with collectors often breaking the aforementioned rules on a regular basis. Despite this, many players in it, such as responsible gallerists and artists, aim at protecting it while trying to make the market, and the public, understand that art should not communicate money but should communicate ideas.

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