Art Market

The Art Market Has Changed Dramatically—but Is It a Mature Industry?

Anna Louie Sussman
Jul 8, 2017 12:00PM

Installation view of at Art Basel, 2017. Photo by Benjamin Westoby for Artsy.

Once upon a time, art collectors would arrive at a gallery on a Saturday and spend a leisurely afternoon perusing works that might soon be a part of their intimate environment. Today, collectors are more likely to dip into a fair booth, wait for digital images and prices to arrive on their iPhones, and make a handful of six-figure purchases—perhaps destined for a private museum or foundation—in roughly the amount of time it takes to put a few books and some groceries into an Amazon cart and check out. Clearly, things have changed. But is that evolution the hallmark of a “mature” industry?

Five industry insiders, representing various nodes in the marketplace, debated this and other questions about the art market at Art Basel in Basel in June. The panelists were Lindsay Pollock, former editor-in-chief of Art in America; Olav Velthuis, sociology professor at University of Amsterdam; Adam Sheffer, partner at Cheim & Read, and president of the Art Dealers Association of America; Pierre Valentin, partner at law firm Constantine Cannon LLP in London; and Bob Rennie, Vancouver-based collector. András Szántó, an author and cultural consultant, moderated.

Szántó introduced the panel by observing how the art market’s soaring value (an estimated $56.6 billion in global sales in 2016, down from a high of $68.2 billion in 2014, according to Art Basel and UBS’s The Art Market | 2017) has reconfigured the industry’s relationships, concentrating more power and influence in the hands of the wealthiest collectors.

The panelists agreed that the art market is larger, more global, more transparent, and moves faster than ever before, but were quick to debate the finer points of the market’s need for regulation, and how much it had truly evolved. Here are three takeaways from the talk.

“Refreshing” transparency, but still “very local”

Pollock opened the panel by describing some of the changes she has seen in her decades covering the art market for the likes of the New York Times, Bloomberg, and Art in America. Most prominent among those shifts has been the sharp increase in interest in and prices for contemporary art, a change from when Impressionist and Modern works, as well as jewelry, dominated the auctions. From a journalist’s perspective, she said, transparency is on the rise, citing the recent story about a sale by collector Agnes Gund to hedge fund manager Steve Cohen of a Roy Lichtenstein painting for $165 million, the proceeds of which were slated for a criminal justice non-profit. The forthrightness around those sorts of details, she said, was “very refreshing.”

Pollock also noted a blurring of boundaries around the different roles various actors now play in the market. Auction houses, for one, have assumed new functions such as handling estates—more often the role of dealers or foundations—and offering in-house art advisory services. The blurriness extends to individuals such as François Pinault who can influence the market through a number of channels, whether as owner of Christie’s, a major collector with over 3,000 works to his name, or as the funder of non-profit spaces for contemporary art (in his case, the Punta della Dogana and Palazzo Grassi in Venice, and a forthcoming location in Paris).

But Velthuis, the sociologist, noted that in many ways little has changed. Some of the key features of today’s art world—its financialization, say, or its global nature—are either not new or vastly overstated, he said, pointing out that syndicates of buyers have operated in the art market since the early 1900s.

While the art market certainly spans the globe, with mega-galleries and auction houses establishing new outposts across oceans, Velthuis drew a distinction between the high-level deal-making that happens at international fairs such as Basel, and the way the majority of dealers still operate, relying on a small coterie of collectors who typically live in their immediate vicinity.

“It is still often a very local market,” Velthuis said. “Don’t overestimate how global it is.”

“It’s very hard to regulate morality”

The discussion of the art market’s relative maturity raised the question of regulation: with the market currently estimated in the tens of billions of dollars, is it time for governments to step in and put their stamp on the industry? Velthuis was quick to point out that even at the high end of estimates, the entire art market is a drop in the bucket compared to a company like Walmart, which had over $480 billion in sales last year. Rather, he said, the question is: “Is the art market worth regulating?”

Valentin, the London-based lawyer, said the idea that the art market isn’t regulated is “nonsense.” A few years ago his firm counted up the existing regulations that apply to the United Kingdom’s art market, finding at least 167 rules and regulations, most of which applied broadly to all businesses, although there were some that were specific to cultural objects or antiquities. Some were national, others came from the European Union, and others stemmed from international bodies, such as UNESCO. But he stressed the challenge of regulating a market that is so international.

Rennie, a real estate developer, pointed out that discussions of art market regulation often tend to confuse regulatory action with “good morals.” In the real estate business, for example, brokers’ fees are typically standardized and clearly spelled out, which is frequently not the case in art deals. The relationship-based art industry generates information asymmetries that can be larger than in other spheres where more information is publicly available, creating more opportunities for bad actors. But is that something regulation can solve?

“It’s very hard to regulate morality,” Rennie said.

Sheffer noted that the industry group he chairs, the Art Dealers Association of America, requires its members to pledge to abide by a code of ethics, a form of self-regulation. He said any further steps towards regulation should be made carefully and thoughtfully, and most serious issues (such as fraud, perhaps, or forgeries) should be left to the courts.

“Do you want to regulate whether somebody is buying for investment value, for personal enjoyment, or for speculation?” he asked, noting these evaluations are already in the purview of the Internal Revenue Service and sometimes the legal system.

“Do you want to regulate if someone buys a horizontal painting and decides they prefer to hang it vertically?” he asked again, to some laughter. “We need to decide what we want to regulate.”

Sheffer noted this debate is more salient in places where the art market is still reaching puberty, than, say in more mature markets such as New York or London. He described visiting an organization of Korean art dealers in Seoul last winter as a board member of the international organization Talking Galleries. There, he advocated for how trade associations could work to improve and upgrade industry practices, in addition to promoting the market by organizing gallery weekends and other events. He said a trade group’s responsibilities included creating a code of ethics, ensuring members adhere to it, and disseminating news and legal developments that impact the trade.

“It was all new information to them,” he said.

Sheffer suggested art fairs could take a more robust role in promoting best practices and codes of ethics, given the outsized role they now play in the market.  

The art world is still an exclusive club

One hallmark of a mature industry, Szántó observed, is fairness, or an even playing field for all market participants. Could that be said of the art world?

Rennie, the veteran collector, described visiting Mary Boone’s gallery in the early 1990s, dressed in a ripped ski jacket, and asking two young men standing behind a desk and a woman sitting behind a typewriter whether Mary was in. Both men said no. As Rennie began to explain who he was and why he was visiting, the woman behind the typewriter jumped up, extended a hand and said, “Hi Bob, I’m Mary Boone.” That kind of selective attention, he said, happens routinely in the art world.

Further along in his collecting career, in 1999, Rennie said, things changed “very clearly” for him and his wife, after they acquired Mike Kelley’s John Glenn Memorial Detroit River Reclamation Project (Including The Local Culture Pictorial Guide, 1968-1972, Wayne/Westland Eagle).

“I found that when I mentioned that, I got into the club,” he said. “We all of a sudden got access to works that other collectors couldn’t be the custodians of.” He challenged anyone listening to “try and get a Mark Bradford.” You can’t, he said, unless you have a relationship with museums or an existing collection deemed strong or important enough to merit the opportunity to buy one of his works.

Yet this sense of exclusivity, even snobbery, is not just a fact of the art market, but the thing that makes it glimmer and shine, said Velthuis.

“It is that part of the market that makes it attractive to people, the whole spiel about the waiting lists, and about getting access and not getting access,” Velthuis said.

Art acquisition serves as “a status mechanism,” he said, a way for the newly wealthy to understand “where they are in this global cultural elite.”

In that respect, there may be parts of the art world that never fully “mature”—if by maturity one means a large, liquid market such as those for commodities or equities. As it stands, the art market is continuously welcoming new consumers, producers, and dealers from different parts of the world; new sources of data and information; and new ways to discover, discuss, and purchase art, perhaps putting it more in a stage of prolonged adolescence. But the depth of the conversation underscored the how seriously some of its top players are thinking about the challenges and opportunities at stake in an industry that is clearly growing and evolving.

Anna Louie Sussman
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Jenna Gribbon, Luncheon on the grass, a recurring dream, 2020. Jenna Gribbon, April studio, parting glance, 2021. Jenna Gribbon, Silver Tongue, 2019