The theory: speculation in art (and young art) is over. When several guaranteed Rudolph 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.
So what happened? Well, first of all the arbitrage possibilities that may have existed with international price anomalies are harder to find—people in Frankfurt know what works in Los Angeles sell for now. After all, everyone travels more and gets more (but not necessarily better) information online. Galleries too have kept track of the shenanigans of their clients and want to cut the speculators out. After all, how do we think Richard Prince (and his dealers) felt (at first) when his “Nurse” paintings that were sold in 2003 for $75,000 were turned into multi-million dollar profits within a few short years? Traditionally that was avoided by selecting buyers who never sold—but now galleries have a new tactic. If you raise the primary prices to the level of the secondary market there is no room for speculation. So, game over.
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.
What is the silver lining in all this cloudiness? Perhaps a return to the importance of museums, critics and alternative spaces for validation and the introduction of new art.
The writer is a private dealer and publisher of the Baer Faxt based in New York
