How to run a gallery: three threats you can’t ignore

Dealers in contemporary art are being warned that their disregard for a cocktail of new challenges is not a sustainable option, and that they will have to adapt if they are to survive in an evermore competitive environment


I have researched a range of emerging risks and rivals to the traditional contemporary art gallery model, including the three highlighted here: the rise of the mega-galleries, the maturing of online channels and social media, and the explosion of art fairs.

One of the conclusions I came to is that this new combination of growing threats means gallerists can no longer afford to assume the traditional model will reign supreme. Instead, they must think carefully about what separates them from their competition, broadcast that to current and potential clients (including collectors as well as the artists they seek to represent), and even revise their current artist contracts to account for these risks.

The traditional contemporary art gallery value proposition (that is, the competencies a gallery offers and which distinguish it from any competing model) has succeeded so well it has prevented virtually any other model from displacing it as contemporary artists’ preferred intermediary in the art world. However, the lack of serious competition is at an end, regardless of how seriously or not gallerists take these emerging rivals.

Traditional gallerists used to have a number of exclusive advantages within the primary art market (a few of which they still have, such as being able to offer regularly scheduled solo exhibitions), but that is changing. Other intermediaries, such as mega-galleries, online channels and social media, and art fairs, are becoming the brand or authority most trusted by collectors. It can be argued that these intermediaries have evolved to be more agile than traditional gallerists and so have been able to respond better to shifts in what artists want from them and how collectors buy art today.

But let’s talk specifics: what are the actual threats these new intermediaries present? And what can traditional gallerists do about them?

1. Mega-galleries: poaching bankable artists A mega-gallery is defined as an influential gallery with multiple international locations, deep pockets, a roster of at least 40 artists, and (for the purpose of distinguishing them from other well-regarded top-level galleries) a public perception that they are focused on expanding their enterprise. The basic threats here for traditional galleries are pretty obvious: super-sized exhibition spaces, significant financial resources and carefully protected relationships with top collectors that most smaller galleries simply cannot hope to compete with.

The more direct threat, though, comes from the mega-galleries’ need to increase their rosters constantly with what the Belgian collector Alain Servais calls “very bankable artists” (or VBAs) to finance their growing empires. As mega-galleries are generally not in the business of discovering new talent, they often find these VBAs in the rosters of other, smaller galleries. Losing an artist to a bigger gallery has long been viewed as simply part of the business, but the six galleries I classify as mega-galleries (Gagosian, Zwirner, Hauser & Wirth, Marian Goodman, Pace, and White Cube) have actively increased the size of their rosters by between 16% and an astonishing 189% between 2003 and 2015, according to the artists listed on their websites in those years. These galleries did not find those new artists in MFA programmes or in open studio tours, so those big increases must be thanks to established artists joining their stables from other galleries.

Contracts in plain English

Procedurally, there is not much that a gallerist can do to prevent poaching, other than perhaps providing its artists with something that deep pockets cannot always give, such as a specific context or a personal relationship that they value enough. Contractually, however, things seem to be changing. More traditional gallerists are coming around to the belief that the long-standing avoidance of representation contracts (to help keep the relationship with artists warm and fuzzy) is not worth it.

One of the recommendations our legal contributor suggested is to have contracts written in plain English rather than in intimidating legal terms. This may seem risky to litigators, but for many smaller galleries the likelihood of either the dealer or the artist actually taking matters to court remains small (mostly due to limited funds). The huge advantage of asking artists to sign representation contracts lies mostly in forcing both sides to be very clear about expectations and responsibilities in their partnership.

Perks of the underdog

One of the obvious advantages smaller galleries have over mega-galleries is that they cost less to run. Mega-galleries must sell either much more expensive art or a great deal more art to maintain their empires, let alone keep expanding. This need has led some art critics to protest that the mega-galleries’ continual exhibition of more or bigger art often results in a substandard show. This perception opens up another opportunity for smaller galleries to distinguish themselves from the mega-galleries, at least among the artists and collectors for whom the authenticity of the art-viewing experience is important.

2. Online channels and social media: chipping away Many gallerists will dismiss the threat of online channels or social media actually replacing them as the main marketplace for art, but I would argue that the larger, long-term threat lies in online channels and social media’s ability to chip away at the authority gallerists have traditionally maintained via their exclusive hold on information, such as what art is available or what other collectors have paid for similar pieces. When collectors call the gallery asking about new work they saw in a studio shot on Instagram that the gallerist did not even know existed, that traditional authority begins to crumble. When sites like ArtRank can convince collectors they have a solid sense of where an artist lies in the market pecking order, they do not need to consult the dealers they used to turn to for such information.

I believe gallerists should accept that more transparency is coming to the primary art market, whether they like it or not. Major corporations have accepted this and now tout how transparent they are as a core value. Gallerists should do the same. If they do not, they will find the transparency-demanding millennials that they hope to convert into art collectors eventually turning more and more frequently to more transparent intermediaries.

Specifically, this transparency includes things like prices on checklists, linking from gallery websites to artists’ social media pages (and asking artists to link back), and ensuring the gallery’s online presence remains current and engaging. It also means more openness about secondary market pricing. The days in which guarding such information provided an advantage are ending.

3. Art fairs: the new brand I found more than 220 contemporary art fairs taking place around the globe each year, but the sheer amount is not the main threat to galleries, nor is the tendency of collectors increasingly to buy works at fairs rather than at galleries. The real problem is that, in the minds of many art-world insiders, the brand of the fairs is beginning to supplant the brand of their participants. Walk around New York’s Lower East Side gallery district any day and you are very likely to overhear someone say “she’s a Nada artist” about a new painter. Ask any insider to tell you more about a gallery you have  never heard of, and they are very likely to respond with something like, “Well, they do Artissima and Liste,” which communicates immediately where they stand in the gallery hierarchy and the perceived quality of the art they show.

Knowledge is power

Since around 2009, most fairs have insisted participants forward their top clients’ contact information to distribute the fair’s VIP cards. This came about as a sincere attempt to address a growing problem (when the fairs simply sent the galleries cards to distribute themselves, many top collectors ended up receiving an absurd number of them), but it has resulted in the fairs having much more comprehensive mailing lists than any of their individual participating galleries. I have not heard of any fairs exploiting these lists, but as the top fair brands continue to rise in stature, this resource gives them a potentially game-changing advantage over galleries.

Not all bad news

The more obvious competitive advantages that gallery shows have over fairs is that artists have more control of how their work is presented, collectors can slow down for a better experience of the art, and the longer duration of most gallery exhibitions facilitates a much more flexible schedule for getting target viewers in. One way gallerists have responded to the rise of art fairs is to buy or launch an art fair themselves. (Full disclosure: Murat Orozobekov and I co-founded the Moving Image art fair in 2001.) Fairs run by dealers tend to be more gallery-centric, which can give them a competitive advantage over other fairs, but the time that running a fair takes away from running a gallery is a significant consideration here. On the flip side, most dealers who run fairs say it greatly increased their profile and helped them to meet a wider range of major players in the art world.

Selling Contemporary Art: How to Navigate the Evolving Market, by Edward Winkleman, Allworth Press, 2015

• Note: all the contractual strategies described in this article are from chapters of the book co-written with M Franklin Boyd, a New York arts lawyer, who reminded me to clarify that any comments presented here are for information only and do not constitute legal advice