Kelly Crow’s sprawling profile of Larry Gagosian’s gallery business has a number of interesting facts. There’s the estimate that Gagosian generates $1 billion a year in sales; the information that his people get paid 10% of the gallery’s commission which should work out to 5% of the price paid for a work of art; the 60 shows that need to be mounted each year to keep his galleries fresh; and the charming quote from José Mugrabi that he “shudders[s] to even think of” what would happen if Gagosian were no longer there to support his artists’ prices.
As good as the story is, there’s a bit of circular reasoning when it comes to the prices Gagosian charges for his artists’ work:
In the contemporary art market, there is no standard formula for determining what an artist is worth. It’s famously difficult to determine which artist will have lasting cultural significance over decades or centuries, and which will be a flash in the pan. This gives top dealers like Mr. Gagosian enormous power to influence and even set the markets for the artists they represent. Anyone who wants his art must pay his prices.
That would be true in the case of artists in great demand where Gagosian controls the supply–a rare occurrence. But the explanation comes after Crow demonstrates the extraordinary effect Gagosian’s representation will have upon an artist’s work. (Crow offers Cecily Brown and Richard Prince as examples but also Jeff Koons’s remarkable price jumps.) So what’s at work here appears to be the reverse. Gagosian’s pricing power comes not from his access to artists but his control over a body of collectors willing to pay his prices because of Gagosian’s track record. Indeed, Crow goes on to adduce as much with these quotes:
“Sometimes we don’t know if the stuff we’re buying is historically significant, but because the prices are so high, we need to believe they’re important,” said Dallas collector Howard Rachofsky, a Gagosian client.
Private dealer Richard Polsky says that in many cases, when collectors buy from Mr. Gagosian, what they’re really buying is Mr. Gagosian’s cachet: “You cannot underestimate the egos of the people who buy from Gagosian. Most would rather overpay to be part of his world, and he counts on that mystique to draw clients to him.”
Polsky’s pettiness doesn’t obscure the fact that Gagosian has succeeded in winning over these buyers–maybe by steadfastly supporting his artists’ prices and therefore his collector’s investments–and now devotes much of his energy to feeding that billion-dollar-a-year demand.
The Larry Gagosian Effect (Wall Street Journal)