Financial Accountablity is Needed in the Art Markets

Elisabeth Eves of Forbes recently published a good article on the current plight of the art and publishing markets. She makes some very interesting comments which are relevant to appraisers. Eves mentions artistic hype as well as the subjectivity of predicting demand as the rationale for market volatility.

Yes she does bring up the economy a fair amount for the slowdown in sales, but she also points out that businesses and institutions, including museum have to be held accountable for the financial decision they make.

She also mentions the current art market theory that a downward adjustment in values very well could have a postie effect on the industry. Eves does not buy into this theory, calling it and other current rationalizations bizarre. The rationale behind the theory is that many individuals and dealers were speculating on the annual increases in prices and values (especially on contemporary art). Many were not true collectors but investors and speculators looking for short, medium and long term gains. Those investors are now fleeing the market, leaving it to the true collectors and connoisseurs of the arts. Eves discounts the theory, stating it would never apply to banking. Well, that is probably true, but the fine art and decorative art markets are very different than many other industries (as Eves herself points out with the volatility and subjectivity of the markets, but I am not sure you can compare the two.

The other art world theory she mentions as foolish is one that is being advocated by museums. This theory states that by watching the financial bottom line it may, in actuality, hurt artistic institutions. The thought process by some in the art world is if you do not completely cater to the art and the mission of the institution, it will not survive regardless of the financial management. Here I do absolutely agree with her. There has to be a combination of both what is good for the art from an institutional point of view, but also, the finances and business aspects need to be effectively managed.

Eves states In these industries, though, reaction to the recession has produced some bizarre ideas, ones that would never occur to anyone analyzing, say, banking. The first is that the recession might be good for artists and writers. All the yahoos who were in it for the money will get lost, or so the theory goes, leaving the field open to the truly dedicated, who will make work that is "authentic."

Eve continues The second idiosyncratic argument being circulated in the world of arts and letters is that better bottom-line management is more likely to hurt than to help.

Both ideas are misguided.

In The New York Times in January, Holland Cotter observed that financial struggles at the Museum of Contemporary Art in LA weren't the result of "the economic downturn so much as stupidity."

Eves closes with Money is good for the arts, but until it returns, we can at least be grateful for decent accounting.

The article is very good regardless if you buy into Eves analysis or the current art market theories or not. To read Click HERE.