Today, more and more, we are faced with a prejudice directed against the happy bedfellows of art and money.
Wake up everyone, this is a love/hate relationship that is ancient beyond time, it just so happens to appear much more pronounced now. But don’t be hoodwinked, squeezing money out of art, like hay into gold, is an alchemical transformation that doesn’t always go according to plan. As the global financial picture grows grimmer by the day, bluer than a 1904 Picasso, there is the double dilemma as manifested in the art market, the classic fence-straddle: expressed in art today as collectors that don’t sell as there is nowhere else to stash their cash and those that won’t buy, fearful of a bubble with a crash around the corner of the next art fair aisle.
Art is an incontrovertible asset class, unless you actually need to convert it to money in anything resembling a hurry. Yes, art is a store of value in the form of an appreciating asset, but a peculiar one at that, a potentially unforgiving beast with a nasty bite. Selling with time constraints never goes to plan (trust me) unless an object is of unassailable quality and rarity and even then not a sure thing if time really of essence. Trying to do business in the art world is a waiting game with more downtime than on Hollywood set, most of which is spent wading on eggshells rather than in a glamorous trailer. There are many variables that need to fall into place to execute a deal in a universe where the sought after objects are characterized by a seemingly random collision of fashion, design, art and architecture.
Initially, the process of determining the pricing of art in a given transaction entails a lot of parrying; a back and forth ritual with constant dancing, prancing, roping and doping till a number is locked in. The mercenary, dogged competition is relentless and frequently turns into a nasty, zero-sum putdown game to win an edge. This dealer is nearing insolvency, that work has been shopped to death and hence badly burnt. It’s a scorched earth mentality that makes war look fair. Never me of course, I don’t subscribe to dealing Daily Mail style, never—maybe once in an isolated, specially warranted occasion. Back to collectors: wrenching fresh works to market is harder than pulling teeth and the most difficult part of the hapless job today. Often the refrain is something to the effect: I don’t want to sell, I don’t want to sell, I don’t want to sell; ok, I want to sell, sell high, and sell yesterday—it has a tendency to creep up before turning into outright impatience. After all is determined, i.e. a particular work for sale at an acceptable price point then all the fun begins, something akin to banging your head against the wall. Repeatedly. The buyer won’t hit the price, then she does and seller decides not to sell. Or a deal is struck and one of the parties evaporates without a word.
With some luck, there is an agreement of terms; the clicking of sensibilities is hit amongst dueling parties after a string of irrational expectations from both sides of the equation. When the trigger is finally pulled on the sale of work, the initial reaction is invariably one of remorse, both on the buy and sell side. The self-doubt unfolds: did I sell too soon, too low, or maybe I shouldn’t have sold at all. Did I buy well? Should I have bothered? No one satisfied in a given transaction is without the corollary, if fleeting, feelings of misgiving. But like running in place, art is an addiction where a successful deal only serves to fuel the next acquisition never lurking very far.
Auctioning is an altogether different animal that is advisable to steer clear from due to excessive transaction costs, as high as 25%; but, like everything in the art world, according to who you know or are, those costs can just as easily fall to 0%. A public sale only makes sense if the heat surrounding an object is particularly white-hot. But due to pioneering Internet sites like Artnet.com, the pricing residue left online has an infinite shelf life that needs to be measured with Carbon-14. As a result, there is an intangible that is compromised in the essence of an artwork when such info is laid bare for eternity.
Working within the quirky confines of the art world is as much exhilarating as exasperating. The business has functioned the same for centuries and more, two people having a meeting of the minds, whether face-to-face, phone-to-phone or device- to-device, really nothing has changed since wampum was traded on a beach in the 15th Century or before. As a result, art is not the most efficient of markets and information is as shielded as shared. I have seen repeated sales between the best of unsuspecting friends; where, unbeknownst to either, the deals were orchestrated by intermediaries. There is also the phenomenon of fakes and frauds, a trend surely to explode further as hyper pricing attains more notoriety than it has garnered in the recent past, which was already a lot. Who prospers from this minefield that has global reach as never before: the lawyers of course, but also the feeding system of dealers, collectors, artists, hangers-on, spectators and speculators. And how does art so consistently manage to be in a macro situation unto itself? In addition to being a growing economic powerhouse and one of the last sectors where it is possible to attain short-term, double-digit returns, art still is, after all these years, the best and last free lunch in town.