Will Price Transparency Ruin the Art Market’s Exclusive Appeal?
At Art Basel a dealer, an art advisor and an art market commentator talk through the role prices play in the art market
At Art Basel in Miami Beach this year, LiveArt’s Marion Maneker moderated a panel on price transparency in the art market. During the panel Esther Kim Varet, founder of Various Small Fires gallery in Los Angeles and Seoul, made the point that was lurking behind the question of why art dealers avoid posting prices.
“I think the art world feels very sexy to people,” Kim Varet said, “because it is secretive and there are a lot of barriers and it feels exclusive once you get in.” She went on to ask if price transparency becomes the standard, what other barriers will arise to create “this aura of exclusivity or privilege. Not that those things are things that we should value, but it's just kind of what the art world is built on so far.”
Explaining why prices are usually not publicly listed with the art, Kim Varet said, “I think it was really about the dealer maintaining control over the prices in a way that could best serve the artist over time. I think right now collectors benefit from having pricing available; advisors and galleries benefit because it is expanding our collector base pretty rapidly; the only people in the art world that might not benefit in the long run are the artists.
From the perspective of a collector, art advisor Heather Flow responded that, “when we walk into a gallery, there's a completely asymmetrical relationship. The seller for the gallery knows exactly what that price is.” The collector and the advisor do not. Even if the prices are listed, there’s still the question of what type of discount the collector will be offered. To Flow, asking the price is a “barrier to entry,” even if the collector might respond to the price with surprise that it is so affordable.
Price discovery is part of the job that Heather Flow would be happy to part with. In her mind, it’s the least valuable and most time consuming contribution she makes to advising clients. Everyone’s time and interests would be better served if there were just a checklist easily available.
Prices are easily available on Artsy but that didn’t happen easily or overnight. Alexander Forbes explained that his platform has a “unique vantage point into the market because we've worked with over 3,400 galleries from 100 countries.” When they talked to their collectors, “two thirds of them say that not having that price available online has stopped them from buying a work.’ For newer collectors on Artsy, a full 75% say they haven't bought a work because there wasn’t a listed price.
Artsy showed these statistics to their galleries and now, Forbes says, “75% of the works that are uploaded to Artsy recently have their price public.” Anecdotally, Artsy sees more buyers who simply want to pay for a work rather than negotiate. They’re also seeing more galleries who held off using the platform’s “Buy Now” option getting traction once they’ve tried it. “We’re getting calls from galleries and they say, "I sold half the works in a couple of days to all-new collectors.”
Transparent pricing may work in the collector’s interest. We’re in the midst of possibly the biggest seller’s market the art world has ever seen. But if that changes, the collectors aren’t necessarily the ones who will suffer. The artists are more at risk from a significant downward move in prices.
‘I work very closely with all of our artists about pricing.” Esther Kim Varet explains. Many artists new to the market hear from artists with more experience that there are dangers in pricing the work too high. “ Trust me, I'm in a retail business,” Kim Varet says, “I would like to price them as high as possible, but I wanna do it in the good graces of the artists. And so I spend a lot of time talking with artists about pricing. Whenever there's a price increase I notify them. I'm very very transparent with them where we are, and I'm very honest with them with where their market is, whether or not it's good or bad.”
“You never wanna be like, ‘Uh, maybe we should price 20% down,’” she says, “because the market isn't there anymore. That's a hard conversation.”
“We introduce a lot of artists for the first time,” Kim Varet adds, “and give them their first solo shows. The pricing thing at this stage of the game is really … I mean … you're just making up stuff—you really are. We have a reputation for being quite conservative considering the kinds of demand we have for certain artists. Other galleries have the opposite reputation. The one thing that I've learned over the last few years is that when you're growing an artist from the ground up, you have to really be careful to make sure that the other partner galleries have similar philosophies to you.”
“People don't want to have paid more and then find out five years later,” Flow says, “now the trends have changed.” That’s the issue that bothers collection. If they overpaid significantly in response to demand, they’re not going to feel better when that demand has changed and the price has gone down. So the collectors prefer stable pricing too.
“We have folks that'll come back and try to sell some of the abstract works they bought in 2014,” Forbes observes. ”And it's really sad for them to hear, ‘Hey, it's worth a fraction of what it used to be worth.’” Forbes feels that puts potential buyers off the market. “We are in a weird industry where people expect their art to hold value where they wouldn’t with most of the other luxury goods.”
There’s another dimension to pricing that Heather Flow wants collectors to think about. It isn’t whether that work you want it cheap or dear. Her question to collectors is, which artist would you buy if you understood that their work was the same price. Artists with longer careers often have work that is reasonably priced though it may not be easily visible. Would a collector prefer that work to the work of an emerging artist?
That raises the whole issue of whether price discovery is the role an advisor should be focused upon. “I feel like helping a collector move through the transaction,” Flow says, “is not the large majority of my job. My job is helping them know what artists are out there and how the artists who are out there might be a good fit for them and their collection.”