When the eye of the art world shifts

This week brought half term and the inevitable clash between work and family. Being self-employed and working within the art world, with collectors and galleries in every time zone (also often working out of hours) there is never a moment when there isn’t an email to reply to or an interesting offer to be shared. I see my role as identifying the most progressive and critical contemporary art and pairing that with the aesthetics and interests of the collectors I work with, and it is endlessly engaging and absorbing, and so difficult to draw away from. Like most of the art world, it is only in summer, through much of July and all of August, that things really go quiet. For the rest of the year there are always works being offered and others being sought, and as the years have gone by, I have developed a wider and wider network of collectors and advisors searching and selling.

Sometimes the chain of advisors involved in pairing a seller with a buyer can be unmanageably long, and I much prefer to be direct to the collector. Although none of the collectors I work with buy in order to sell, recent financial shocks have moved a few to reluctantly part with pieces that have increased in value by ten or twenty-fold in the last few years. When describing what is involved in selling these pieces to collectors who have only previously collected, the idiosyncrasy of the art market is highlighted. I thought I might clarify a few things here.

There are two markets – the primary market and the secondary market. The primary market involves selling work for the first time – usually directly from the artist through a gallery. The prices here are dictated by the artist’s profile – their previous exhibitions, museum shows, collection placements etc.. I taught Professional Practice in art schools for many years and would always suggest to students that they use the factor system. I’m sure some of you are familiar with this, but it involves adding the dimensions of the work (I use centimetres) and then multiplying by a factor, depending on the CV. I recommended to painting graduates that they use a factor of 10, so, a painting 1 metre square would be 100 + 100 = 200, multiplied by 10, giving a price of £2000. That would be the gallery price, meaning the artist should expect 50% of that if they’re working with a gallery. (I might discuss those percentages in a future newsletter). As rough guidance, I would halve this for works on paper, and maybe halve again for prints – depending on the size of the edition. Sculpture is a little more tricky, but a similar method can be used.

I also recommend the factor system to the artists I work with now. Bearing in mind that this works as a starting point only (how the artist feels and materials etc. involved will change things), maybe an MA graduate would move to factor 12-15, once you’ve had some good groups shows move to just over 15, and then some decent solo shows would move you towards 20. Beyond 20 I begin to worry. Factor 20 always seems like a sensible price for a painting. As the prices increase way beyond, it becomes more of a reflection of the market and, as usually happens, if an artist’s star falls, then they find that their prices are then too high for new collectors.

I probably need to clarify this a little. Imagine an artist starts to gain recognition – their work is more and more celebrated within the artworld, and the prices rise and rise – suddenly the work is selling on the primary market at what would be factor 40 or 50 – perhaps 100. Some artists will sustain this and their career trajectory will continue to rise as they are offered museum shows and welcomed into the pantheon of A list artists shown by A list galleries. But even here, of course, prices can crash, and if they fall too far, the ‘brand’ becomes toxic. Very few artists become too big to fail, but we’ve all heard the stories of artists being bought by their own galleries and collectors at auction in order to keep the prices artificially high.

Why the prices climb, and how they fall, is where the secondary market comes in. This is where individual works are bought again by collectors through dealers, or, most publicly, at auction – where pieces are bought and sold for a second or further time. One reason a primary market gallery might increase an artist’s prices, is that there is a scarcity of the artist’s work, and excited collectors are buying the work for inflated sums on the secondary market. The best galleries are careful with the prices, not raising them too high or fast, and instead try and leverage long term advantage and positioning for the artist.

For example, an artist will have new work being sold at their solo show for, let’s say, £10,000. Because the artist is currently in favour, the gallery and collectors know that if the work was put to auction the next day, it would achieve, perhaps, £40,000. In these cases, the gallery will be working hard to place the work with museums first (in order to try and ensure the health and longevity of the artist’s career) and then the most prestigious collectors second. But because everyone knows the secondary market potential of the work (and the blue-sky possibility as there is every reason to believe that the work might be worth £100,000 in a year), the galleries can make big demands. I often have had to pitch my collectors to galleries – explaining why they should be allowed to buy the work, and even then, the gallery can and will demand any of the following: that the work isn’t resold except through them for a period of, maybe, five years; that the collector buys two pieces and gives one to a museum (if they have those connections); or that the collector buys one and then also another piece of the same value from another artist from the gallery’s stable. Despite agreeing to these requests, the work will still usually go to a collector who has a long-standing history of supporting the gallery and the artists they show – which actually seems fair and reasonable.

All these requests, when they first became clear to me, seemed extraordinary – I was embarrassed to explain to the collectors what was being asked, but I see the logic. If we all know that the work is worth significantly more on the secondary market, then the gallery has to select who to sell to in the best possible way – hopefully that is in the artist’s long-term interests, not the gallery’s short-term profits. And placing the work in good public and private collections is in the artist’s long-term interests. Increasing the artist’s primary prices too much is detrimental to the artist long-term. I don’t believe in the idea of making hay whilst the sun shines, as, in the art world, it will probably only shine for a couple of years, and when the eye of the art world shifts to a new kind of work, the artist will want to continue their career, selling to new collectors for decades to come. If the prices have been over inflated, that will be increasingly difficult. The art world is full of artists whose prices no longer match their profile.

Last week I was asked to find a work by an artist who was incredibly “hot” about two years ago. I have a colleague who has access to works directly from the studio and he offered me several at about £120,000 – this is the current studio price, which reflects the gallery and auction prices of the early 2020s. He then also offered me a couple that were direct from collectors, looking to sell, and these were priced at the bargain price of £100,000. Of course, the issue is, that there is a lot of the work about, and the hype has passed, and the last year has seen half a dozen sell (and not sell) at auction for closer to £30,000. The collector has decided to wait until something else comes up at auction.

So, to get back to helping the collectors sell, in order to not take part in this over inflation, we have not sent work to auction, but, decided on a price that we would be prepared to sell at, and then asked the artists involved how they would like us to proceed. In all cases so far we have then worked first with the gallery representing the artist – not only do they have the interested collectors on their books, but they should also have the artist’s best interests at heart.

I am grateful to have been able to help collectors solve a short-term financial hiccup whilst also freeing up funds that they have partially used to buy new work from other emerging artists and maintained good relationships with the artists and galleries at the same time. Working with serious collectors, credible artists and credible galleries has made this relatively easy to achieve, but beware as there are plenty out there who are less scrupulous. Be wary of inflated prices from galleries who don’t seem to have anyone's best interests at heart.

Please feel free to share any thoughts or questions.

If you enjoyed this newsletter, you might also be interested in the new Blackbird Rook show online with Artsy. It opened this week and, curated by the artist Peter Lamb, includes work by Birgir Birgisson, Shane Bradford, Jim Cheatle, Peter Lamb, Gustav Metzger, Tahmina Negmat, Aidan O’Sullivan, Playpaint and Kate Steciw.

Check it out here – Value Value Value

You can also follow Blackbird Rook on Artsy or sign up to emails at www.blackbirdrook.com for updates on all future shows.