01 Oct 2018

In 2014, two very different artworks appeared at auction: one was an excellent Old Master painting by Pieter Brueghel the Younger, the other was Tracey Emin’s My Bed. Both paintings sold for 2.7 million GBP and 2.2 million GBP respectively. While it is quite easy to understand that a painting that has survived the test of time is worth a considerable amount of money, it is not always clear why contemporary art is valued for as much as it is.

Zooming in on contemporary art in particular, the value-differences between artists become even more extreme, and while there are a lucky few artists who operate at the top of the market, the majority of the contemporary artists will probably never be able to sell their works at that price level, and this has everything to do with the ecosystem in which the contemporary art world operates.

When talking about the value of art, many writers outside the art market make a distinction between cultural value and economic value, with economic value being the price tag of a particular artwork, and with cultural value being the value an artwork could hold within society or as part of a particular culture. To economists, prices are determined by a process of supply and demand, which holds up in the art market to a certain extent: there are few surviving pieces from Picasso’s blue period, which is why a higher price is attached to them than to other works by Picasso. Cultural value can have both a positive and a negative influence on the economic value of a particular artwork: an artwork could see huge decreases in value if it, for example, turns out to be a fake or a forgery.

The art market is thus - in effect - a cultural constellation: many different factors can influence the value of an artwork that are other than basic supply and demand. To make sense of these factors, the theory of the Art Ecosystem was developed, in which economic value is described as a function of a process of endorsement by taste makers within that ecosystem. These tastemakers can be everyone active in the art market, from institutions (museums, galleries) to individuals (private collectors, art dealers). These tastemakers in turn influence the trajectory of an artist’s career, and with that can have a major influence on the success of a particular artist on the (international) art market.

 The Artist Career Trajectory 

The Artist Career Trajectory 

As you can see in the trajectory, an artist’s career can be divided up into three distinct phases: the formation phase, the expansion phase, and the consolidation phase. In the first phase, the artist gets represented by a younger and smaller gallery, who will help him generate interest and attention, and who will be able to generate international attention, not only with other galleries, but also international collectors. In the expansion phase, the artist moves to a more established gallery, which will put his works in internationally renowned museums, and the artists makes his auction debut. In the consolidation phase, the artist shows consistent and strong market activity, as well as strong and consistent commercial and museum activity. The further the artist gets along his career trajectory, the higher the cultural and economic value of his pieces will be.

In order to price artworks, galleries and dealers use pricing mechanisms and pricing scripts. Prices can be determined on the basis of negotiation, auction, and fixed or posted prices set by galleries. In order to come to these prices, dealers and galleries follow different pricing scripts, which change depending on the phase of an artist’s career. For new artists, without a real price history, prices are set low and based on other artists, but for an artist with some price history dealers will adapt or extrapolate prices based on the size and medium of the work. Price increases are based on the number of sales, the length of an artist’s career, and on his reputation within the international art world.

Reputation is an important thing to focus on, as it ties in everything that has been described earlier. Because the art market is very opaque and volatile, buyers are looking for ways to take some of that uncertainty away from their purchases, and they rely heavily on quality judgements. Quality in turn is being defined as the process in which experts, institutions, and the media are constantly assessing work and conferring reputation (Beckert & Rossel, 2013). Reputation can take many different forms, and can range from the artist’s personal reputation, the reputation of his collectors, the reputation of his gallery or dealer, and the reputation of the museum which is exhibiting the works.

For many famous artists you could map out their artist trajectory quite clearly, and they almost always follow the model described above. However, over the past two decades this model no longer holds for everyone - museums are often priced out of buying artworks by artists with a strong market, and are not willing to buy artworks by lesser-known artists because they are unsure about the quality of the artworks and the reputation of the artist. With institutional validation no longer being at the forefront of quality creation, the new generation of contemporary artists have to learn how to fend for themselves, and are increasingly building reputations through the use of social media and other contemporary ways of self-promotion.

The big issue is that most of the art world has not caught up with this new movement. Traditional galleries only represent a limited number of artists, and are still very much dependent on finding the next big thing at degree shows or through their existing networks. For an emerging artist who does not have a traditional art background or the the network to break through those barriers it can be extremely difficult to get representation in the first place, let alone build a reputation in the traditional sense. This becomes even more difficult for emerging artists from conflict regions or countries with a limited arts infrastructure.

While there are some players in the art world who are trying to change the game (such as Saatchi Art, Artsy or ArtFinder) and provide artists with a platform where they can showcase their art, they are not providing the artists with the attention and resources that they need to actually start building a reputation, and to get the international art world to take them seriously. Let’s just hope Art Represent can change that.