For most people, the art world is an area of sophistication, finesse, and creativity, which takes a high moral ground in today's society. It is acknowledged that art is one of the highest social achievements of people within society, placing the discipline of art on a cultural plane that is viewed as being pure and uncorrupted. Art is therefore seen as one of the most highly valued artifacts of society, sitting magnificently in art galleries, museums, and collections around the world, which are unquestionably considered to be one of the pinnacles of human prowess.
Maybe this was true in the past, but the authors believe that this has all changed because art today is considered a valid asset class, just as real estate, stocks, bonds, and precious metals are. The leading auction houses and art galleries of the world have commoditized the art market. Institutions which traditionally had nothing to do with art, like banks and transnational corporations have set up art funds purely for investment purposes.
The art world has attracted a number of business opportunists who have set up funds to dabble in art trading. These dealers have very little appreciation of art as art and see it only as a means to make profits. Thus the art market is adopting the characteristics of any other tradable commodity market. The trading of art around the world today is in excess of USD66 Billion, and growing exponentially, as more and more institutions are becoming involved.
As stock markets are losing their values during 2015, the prices of art are rising rapidly.
Contemporary art today is seen by many as one of the best means of wealth preservation.
Ultra-wealthy collectors can't get enough new art and are putting pressure on galleries to produce more art of the right names, which are like brands in this market. For the right kind of art, this means that being post WWII and contemporary art has multiplier effects which has never been so high. Collectors are going into a frenzy over these rapid rises in values, driving the market even higher.
It is undeniable that the contemporary art market is on a high. Some say this is a bubble, while others say that it is not, as the ultra-rich are sheltered from the ups and downs of national markets and economies.
The best contemporary artists like Damien Hirst and Jeff Koons, who are two of the highest priced, are owners and directors of 'art factories'. The typical creation of an artist within these art factories is usually done without the artist ever touching the art piece. The artist develops the concepts and represents it to his team of technologists, assistants, and art manufacturing experts. Most often a computer model is pre-made of the planned piece. The concept for many pieces are represented not by sketches or drawings by the artists, but by an object he selects from a store or any other place he finds them. Jeff Koons for example, likes to find souvenir items from gift and toy shops and style these pieces into extravagant art pieces using the latest technology. Thus the tiny toy becomes a 2.5 metre shinny stainless steel object which can be sold for tens of millions of dollars.
Such art factories are extremely reliable in their production and can consistently turn out art products which are branded by the name of the artist. Therefore art galleries and collectors vie for such pieces even though their prices are astronomical.
Today even lesser known artists maintain factory style production for their galleries and collectors. Their pieces are even booked in advance in massive quantities.
There is an even newer trend that tries to exploit the expected multiplier with the works of very young artists. These young artists are drawn into full scale professional art production by galleries, right after they complete their MFA, possibly even before their first solo exhibition. These artists are thereby coached by the galleries, who very actively participate with the artist's work in developing concepts, and arranging manufacturing, etc. The desired end can be reached with continuing rising prices and increasing profits for the galleries; a cycle of profit making.
Collectors happily buy in, possibility in the first and second rounds, expecting double triple or quadruple multipliers in subsequent sales of the pieces, which no other commodity market can generate.
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