IsThe Art Market Following The Footsteps Of The Dot Com Market ?

No way to avoid the international economic meltdown, and clearly the art market is going to be hurt as well. According to TAN Dealers will be hurt most.

The theory: speculation in art (and young art) is over. When several guaranteed Rudolf Stingel works failed to sell at auction last winter, it signalled the end of a certain kind of buying of art. It wasn’t just the sub-prime crisis—it was a signal of something far more important. A change for what I like to call the professional collector who was buying a work one year for, say, $150,000 (from a primary dealer) and turning it around within a year to resell the same work for, say, $500,000 (either at auction or with a secondary dealer). By now the auction houses seem awake to this change and the evening sales have, and will have, fewer and fewer hot young artists, and especially few guaranteed deals in the $1m-and-under range for artists like Anselm Reyle.

Obviously the dealers and artists weren’t thrilled by this - as someone else was making all the profit so what they did was raise the primary price to the same level of the secondary price leaving no more room for speculation, so trading in art as a commodity is pretty much over. Speculation in young artists is over, and the smaller dealers will be hurt the most 

So what is the effect? I suspect that it will hurt the smaller galleries that sell emerging or non-blue-chip art the most. I suspect, but don’t follow it closely enough to say for sure, that it will also happen sooner or later with Chinese, Indian and Middle Eastern art markets as well. One of the factors driving those markets has been the almost annual price doubling for every artist. So collectors have been buying works they hardly care for, thinking, “this is easy.” It’s been kind of like buying Internet stocks—and we know how that ended. With the high prices for younger art “established” by a speculative market where can they go, relative to demand, but down? But galleries never lower their primary prices, so these works will sit in gallery storage racks—with zero revenue-flow for non-brand name dealers. I call this the death spiral for art: sinking prices and sinking demand.

I’m not very financially minded so I can’t decide if this is a good thing or a bad thing - I suppose that ultimately it is a bad thing, a lot of artists will stop selling, it will be harder to get out to the collectors because less people will be interested - the speculators out will only leave art lover in. Galleries might have to close leaving less spaces to show in, but on the other hand - it might revert art back to art, opening different and alternative places to show in - its a little like a natural bush fire - burning the old and making room for new growth. I prefer seeing it in that light.

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