Are Art Galleries Becoming Outdated


These three articles caught my attention this summer after assisting a friend and client who had been caught in the private sales trap on an art purchase. We say business is business but sometimes the gray area makes this process bordering on deceptive trade. In the past the auction house has been at least to some degree an open public forum for answering the question of an object's worth. Galleries and auction houses existed in a world of uneasy truces where both parties politely trashed each other but still coexisted as essential parts of the art world. Now with the increase in private sales there no longer will be a balance between private and public sellers. We all should look at the auction houses with a skeptic eye , for apparently business is business and whatever happens happens. Transparency and objectivity now really don't exist in the art world as auction houses become more and more like public and private dealers.  As an appraiser this transformation certainly makes our jobs more difficult. It is just a matter of time before the auction houses will have their dirty laundry aired in a court of law which will be the final arbiter of what's fair. In this system the big will only get bigger and in their way the auction house will attempt to be the judge and jury on what's valuable and what's not. I am a borderline libertarian and, therefore, against almost all government oversight and regulation. In this changing art world I will support oversight. JB

 1. Gallery system is structurally weak - A new report by the non-profit dealers’ federation Cinoa finds that fair-led and online business is taking over as the main source of revenue

By Charlotte Burns | From issue 226, July-August 2011
Published online 28 Jul 11 (News)

BRUSSELS - The Art Newspaper - The traditional gallery model is in decline, according to a new report by the non-profit dealers’ federation Cinoa (Con­féd­ération Internationale des Négociants en Oeuvres d’Art), which found that fair-led and online business is taking over as the main source of revenue.
Gallery visits are declining as the art market expands to new international centres served better by art fairs or electronic media.
“We do much more business at the fairs than at the gallery—no question,” said Dominique Lévy, the co-director of L&M gallery.
András Szántó, consultant and contributing editor to The Art Newspaper, said: “The fairs have done very well in exploiting a structural weakness of the gallery system—it is inchoate and based on local markets.” With the withdrawal of those markets during the downturn “the overall weight has shifted to clients who don’t live where you work—so you service them through art fairs,” said dealer David Zwirner.
According to a recent report from Capgemini, the Asia-Pacific region has overtaken the west in terms of the number of individuals with investable assets worth $1m or more. It is no coincidence that the Hong Kong art fair, Art HK, in which Art Basel bought a 60% stake in May, attracted such a stellar line-up of western dealers this year.
The growth of fairs brings with it huge pressures for dealers to fund travel, staff fairs and find enough material. Whether the traditional gallery model can sustain all this outreach remains to be seen. Some think not. “It is more convenient and inspiring to work in a more unconventional format, having an office and platform, and doing temporary projects and pop-up shows,” said Berlin dealer Matthias Arndt, when he announced earlier this year that his gallery would now open only sporadically for shows.
“We are in a major systemic shift,” said Szántó. “The expansion of the auction business and art fairs is adding a whole layer above the gallery system as it evolved in the 20th century.” A handful of galleries, including Gagosian, Hauser & Wirth and David Zwirner “have pulled away from the pack, but the question is, where does that leave the regular rank and file gallery?” he added.
Dominique Lévy is sanguine. “The proliferation of fairs is ridiculous. They will strangle each other in the end,” she said. She suggested that the old-fashioned benefits of a gallery may, in fact, be key to their survival. “The secret is to inform new buyers of all the options—and galleries offer a special service, whether it’s taking care of shipping, hanging works, advis­ing on exhibition loans, refram­ing or insurance. Collectors will realise [this],” she said, but added that it “may be later [rather] than sooner”.
Several web-based ventures, including the VIP art fair, Art.sy and Paddle8, have recently emerged. However, dealers remain to be convinced that online business will work for expensive art. “There’s a lot of potential for cheaper works…but nobody is going to spend a huge amount on a work without seeing it,” said the New York-based, secondary market specialist Christophe Van de Weghe. “The comfy price limit is $100,000,” confirmed Alexander Gilkes, the co-founder of Paddle8.

2. Private Sales & Internet Bidding Up; US Sales Down at Christie’s in 2011 So Far
Christie’s has released it’s first half sales totals. The company had $3.2 billion in turnover, a 19% rise in dollars (but only 10% in Sterling.) Private sales soared reflecting Christie’s emphasis on building the category. Although there were many new clients buying at the auction house, the vast majority of them come from Europe and the US, not Asia. Christie’s business has moved toward London with European sales rising the most and US sales falling by 6% in dollar terms.
  • Christie’s Private Sales secured £286.7 million ($467.3 million) of sales in Jewellery, Old Masters, Impressionist and Modern Art, Asian Art, American Art and Post-War and Contemporary Art, up 57% year-on-year.
3. Private Sales Still Rising at Sotheby’s
Sotheby’s CEO Bill Ruprecht made this comment during this week’s quarterly earnings call:
“Also positively contributing to these excellent first quarter results is our continued commitment to private sales, with private sale commissions up 79% in the first quarter. Since 2007, we have underwritten almost $1.7 billion in private sales, and we will continue to focus on this valued service to our clients. Private sales are an important source of revenue for our business and a strategic initiative for Sotheby’s.
Why is this important? Tobias Meyer recently emphasized the importance of having a worldwide platform in selling an artists work. Few dealers beyond Gagosian have such a platform and one reason for the growth of the auction houses in the last 15 years has been their ability to tap into and service the globally integrating art market.
Ruprecht is signaling that the auction houses won’t easily let go of their market share in private sales now that the auction market has returned. The level of private sales at the houses will be a key indicator to watch going forward.

Also of Interest:

  • France Opens the Gates to Auction House Private Sales
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  • Christie’s Exploding Private Sales
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  • India Rising
    Four Artists Get Evening Sale Billing Sotheby’s makes a concerted effort to break out Contemporary Indian and Pakistani artists in...
  • Private Placement
    The Telegraph‘s Colin Gleadell reports on the growth of private sales. Using Sotheby’s unique Beyond Limits exhibition space at the...
  • Frieze Sales: Private Competition
    Bloomberg‘s Scott Reyburn previews the Frieze art fair auctions in London with the now familiar scare statistics: volume down 70-80%...