The Art Gallery and The Primary Market

Lindsay Pollock writing for The Art Newspaper has an excellent article on buying art from galleries, while discussing the ability to both control and place works of in demand artists.  The discussion is on artists that rarely appear in auction, and where demand is usually higher than the supply.  These scenarios are often of interest to appraisers, and the market levels, both primary and secondary should be understood by the appraiser as we select comparable property. Many contemporary artists and the galleries which represent them wish to placeproperty in museums and collections where they will remain, and not be used as speculative investments.  There are several cases, previously posted about on the AW Blog about artists blacklisting collectors for flipping artwork for profit.

All in all an excellent article for the appraiser to read.  I highly recommend taking time to read and understand the article.

Pollock states in the article

Art adviser Allan Schwartzman says strategic placement is a gallery’s core obligation to its artists. “A primary market gallery’s principal job is to protect the developing and fragile markets of artists,” says Schwartzman. “It would be easy to see the idea that you wouldn’t sell something to someone as elitist or abusive, but the idea of placing the art supports the financial, critical and art historical value of the work.

”All the angling and maneuvering to “place” and essentially protect the work is aimed at eventually landing works in museums, not auction catalogues. “Every dealer’s anxiety about a work less than two years old is that it winds up in a night sale,” says Schwartzman. When paintings fail to sell at auction, or sell for weak prices, it can taint the work, if not the artist’s reputation. “We have seen over and over in the marketplace, when a number of works come for sale in the secondary market at auction, and are passed, it has a tremendous impact on how people feel about an artist and their marketability,” says Miami collector Dennis Scholl.

On those occasions when a work does appear on the block, dealers resort to a host of crafty strategies. Sometimes the aim is bid to win, with the dealer able to afford to buy and either resell or hold a work. Other times dealers say they aim to be the underbidder—ensuring the piece sells above a reasonable threshold—but not stuck with the goods themselves. In another scenario, the dealer tries to “place” the work at auction. In this instance, certain collectors are called on. They are alerted to the upcoming sale and urged to buy.

One reason the works need to be protected is that contemporary art comes loaded with temptation. With the explosive rise in contemporary art prices, primary market prices are sometimes well below the auction price tag.

To read the full Art Newspaper article, click HERE.