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Virtosu Art Gallery Liquidity in the Art Market

by Robert McIntosh

11 April '19

Expensive art


Why is art so expensive?


There is no universally agreed upon answer, but personally, I would be a little Aristotelian about it: art has a purpose, and the degree that it is fit to that purpose is the degree that it is great art.

Some would say that the purpose of art is to make our surroundings more pleasant. It is to make us feel good, so we may judge whether lots of people "like" something to determine its value. Under this definition, wallpaper could count as art.

Professional opinion is all that counts as it takes training to evaluate how well a piece of art maintains a particular tradition or not. Art seems to have a language all of its own, and the way that we respond to art is largely determined by the associations we have with art from a similar tradition.

Great art needs to have something to offer to the audience. Really great art seems to have a quality that allows it to transcend the art tradition in which it is based. It is almost like even if you don't fully understand it; you just know that it has a lot to say. So in that way, we can all judge great art to some extent, but it is good to have people around that can read it properly so we know whether it is really great or whether it is really just a babbling imposter.

In the consideration of artistic expression, whether as creator or spectator, the most important factor is the ability to discern between what is true quality and what is merely a novelty.

Novelty may have popular appeal but fades in its importance with the passing of time like Andy Warhol. Quality in spite of unpopular or controversial inception increases in its importance with the passing of time as the likes of Pablo Picasso, Claude Monet, David Hockney, Francis Bacon who hold up the titles of most expensive painting ever sold.

Quality in art is the ultimate truth expressed through an individual’s unique experience of existence. Its success in expression and transmission lies in its potential to communicate more than its surface values.

The short answer is that most art isn’t. Pieces sold for six and seven figures tend to make headlines, but most living artists’ works will never sell for that much. It all lies in appreciation as art tends to grow in value in range of 4-14% average per year.

To understand why a few artists are rich and famous, first, you need to realize that most of them aren’t and will never be. To break into the art market, an artist first has to find a gallery to represent them, which is harder than it sounds.

Emerging artists’ works are generally priced based on size and medium. A larger painting, for example, will usually be priced between $10,000 and $15,000. If an artist is represented by a well-known gallery like David Zwirner or Hauser & Wirth, however, the dealer’s prestige is enough to raise the artist’s sale prices, even if the artist is relatively unknown.

If we were to consider the maintenance, logistics, custom packaging, and insurance, it adds up considerable amounts year by year. And then paintings sold at auction houses are subject to buyers premiums and sales commission. Finally, add the VAT or sales taxes and you shall realize that the art world is quite expensive to run and maintain.

This process is becoming increasingly difficult thanks to the shuttering of small galleries around the world. Meanwhile, large galleries are opening new locations to cater to an increasingly global market.

Many people are going after a small number of artists. That’s what’s driving up prices.

Given the subjective nature part in general and contemporary art in particular, it’s hard for collectors to discern whether an artist is truly good. So what people do is look at quality signals. Those signals can, for instance, be what an important curator is saying about an artist; if he/she has exhibitions in museums; if influential collectors are buying his work. Because everybody is, to some extent at the least, looking at the same signals, at one point they start agreeing who are the most desirable artists.

In other words, some artists’ works are expensive because there’s a consensus in the art world that their works should be expensive. And art “is a market for unique objects” which adds a sense of scarcity into the mix. There are only a few known da Vinci paintings in existence, some of which belong to museums and are therefore permanently off the market.

About author Robert McIntosh was born 1965 in Amsterdam, North Holland. He studied at Royal College of Art in South Kensington. Educated in England and the United States. Lives in Amsterdam. Has also lived in Russia. He works mainly with oil paintings and sculptures and is interested only in authentic and genuine art. He writes extensively on abstract art.

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