Big Bucks: The Explosion of the Art Market in the 21st Century

by Georgina Adam

This highly readable and timely book explores the transformation of the modern and contemporary art market in the 21st century from a niche trade to a globalised operation worth an estimated $50 billion a year.Drawing on her personal experience, the author describes in fascinating detail the contributions made by a range of actors and institutions to these recent developments. The book focuses on the development of auction houses into globalised, often cutthroat 'art business' firms; the emergence and modi operandi of 'mega-dealers' and middlemen; the 'new frontier' of selling art on the internet; the radical changes in the profile of art collectors; the phenomenon of the 'branded' artist and the explosion of art fairs. It addresses the negative side to the art market's expansion, particularly its lack of transparency and light regulation. The author's engaging style makes this informative text ideal for collectors, students, and anyone interested in learning more about the evolution of the unprecedented market for art which exists today.

Genres: Art, Nonfiction

208 pages, Paperback

First published January 1, 2014

Reviews

[Lance Charnes · Rating 4 out of 5]

It's hard to escape the breathless news stories about the megabucks art market, even if your idea of art is limited to the comics pages in the newspaper. Every auction seems to break another record as very rich people pay increasingly crazy money for artworks on which the paint is barely dry. Shiny new museums named after people you've never heard of are springing up everywhere, presenting the kind of art that used to inspire your mom to say, "You kids could do that kind of thing when you were six years old..."

Georgina Adams' Big Bucks shows that this frothy contemporary art market is yet another symptom of the ever-increasing global concentration of wealth. While a few of the big boys are making mint, this bubble isn't an unalloyed good; as previous crashes in the art market have shown, it's the small players who will get hurt the worst when the music finally stops.

The author is a journalist who's spent the past three decades covering the global art market for The Art Newspaper , the Financial Times and BBC WorldWide. She's been to many of the major art events and interviewed a great many of the players (artists, gallerists, advisors, museum directors, freelance curators, collectors, brokers...). It's safe to say that she knows where the bodies are buried, and who buried them.

It used to be, not so long ago, that art collecting was a relatively genteel pastime in which old money pursued old works of art. Auction houses were for the trade (mostly dealers), museums still bought on the open market, and collectors would lend or donate their holdings to museums if they wanted the world to see them.

So what happened? The author leads us through a collision of factors that have pumped a great deal of hot air and laughing gas into the market since the 1990s:

- A historically large but globally small number of people have become rich beyond the wildest dreams of rich people in all previous generations. Many of these got their money through finance, which rewards aggression and risk-taking -- the sort of people who thrive on auctions and placing high-stakes bets in a volatile market.
- These people are constantly seeking new asset classes to exploit for profit, or to shelter their money. After you've bought your second Gulfstream, third wife, fifth yacht and eighth home, where do you go? Art has become a high-performing asset class (better than real estate, on a par with the S&P 500) since the last time the market collapsed.
- Like anyone else, megarich people want to gain social acceptance and cachet from their peer group. Collecting art is a proven way to do just that. Adam says, "Art has become to this age what rock was to the 1960s -- the hip place to be."
- Old-school collectors bought art because it spoke to them, or they appreciated the craftsmanship, or they just loved it. The new collectors are buying for investment, relying on advisors to pick pieces that will bring in a healthy return in a short period. In this case, art is a share of stock that you can hang on a wall.
- The major auction houses started directly pursuing high-worth collectors, bypassing the dealers who used to be both the houses' primary buyers and the primary sellers of art to those same collectors.
- A growing shortage of collectible "old" (pre-1940) art started pushing collectors into contemporary art, of which there's an endless supply because the artists are mostly still working.
- An incestuous network of advisors, freelance curators, and major dealers eagerly started declaring certain contemporary artists to be "important" and "collectible," unleashing the platinum cards on their works and quickly driving up the price.

Adam serves as savvy tour guide through this parallel universe, contrasting how things used to work in the old days (1970s-80s) with how business gets done nowadays. She starts each chapter with a vivid anecdote that shows how over-the-top things get when an unlimited stream of gold flows into a market with less-than-usual regulation, chronic problems with transparency, and a pricing regime that makes the American healthcare system look like a model of rationality. Among the more intriguing consequences:

- In 1970, there were three significant contemporary art fairs (the dealers' revenge against the auction houses); in 2012, there were well north of 200. There are now so many biennales and fairs and so forth that there's no longer any room on the calendar for more.
- Major collectors are now no longer donating their art to museums; they're building their own museums. This trend is especially visible in the West, where it directly competes with traditional museums (the Broad Contemporary went up across the street from the Los Angeles Museum of Contemporary Art), but even more prevalent in the emerging world, where there's little state presence in museums or public art.
- To woo the shrinking number of major collectors who don't have the horsepower or interest in building their own culture shrine, museums are increasingly staging special exhibits that feature artworks held by collectors who have relationships with the museums. This works to the advantage of both: the museum gets (for a short time) a piece of art it could never afford to buy on the open market, and the exhibition validates the "importance" of that artist, increasing the piece's value to the collector.
- Because there's only a small circle of people who serve the needs of the megarich collector, and they all read the same trends, collections (especially of contemporary art) are starting to look more and more alike, with the same artists' names popping up everywhere. The favored artists have to become like Jeff Koons or Damien Hirst, the James Pattersons of contemporary art, who churn out work in industrial scales. Art becomes a commodity, a luxury good. It's not random that François Pinault, who owns Christie's, is both a leading collector of contemporary art and the owner of (among other things) Chateau Latour and Gucci.

The author ties together these and many other threads through the course of eight extensively footnoted thematic chapters in this shortish (184 pages) book. Adam's a journalist and writes like one; some of the chapters have the flavor of extended feature articles in the likes of The New Yorker or Vanity Fair. There's a certain amount of mostly unavoidable overlap and repetition that serves more to reinforce her points than to irritate you. No pictures, but bonus points are given for copious endnotes and a useful bibliography. You don't have to be an art expert to understand what's going on; this is a book about business, finance and culture, and art's just the McGuffin. A good internet connection won't go to waste, though.

Big Bucks is a highly readable field guide to the jungles of the contemporary art market. It's also in many ways an exercise in money porn, and a profile of the top 0.1% doing what they do best. You may grow queasy reading about people who could end world hunger with their pocket change if they bought a couple fewer Murakami anime takeoffs, or you may find it aspirational. In any event, you'll learn a lot about how the top end of the art market works today and how it got this way, and maybe add a couple entries onto your bucket list.

[Breakingviews · Rating 3 out of 5]

By Carol Ryan

In “Big Bucks: The Explosion of the Art Market in the 21st Century” Georgina Adam describes how today’s contemporary art boom is reshaping the business of art. Much of what goes on in the global market, worth 47 billion euros ($65 billion) in 2013 according to the European Fine Art Foundation, is not new – from the sky-high prices paid by super-wealthy collectors to market manipulation. What has changed is its global scale.

Auction houses Sotheby’s and Christie’s combined sold over $1 billion of art at their November contemporary sales alone. The genre is sizzling, growing 564 percent in value between 2004 and 2012, according to Adam. Francis Outred, head of contemporary art at Christie’s, told the author that he expects to see a work of art sell for $1 billion in his lifetime.

That’s still hard to imagine, even though prices are edging higher all the time. The record when Adam was writing was $250 million for Cezanne’s “The Card Players”, rumored to have gone to “the desert”, as Qatar is referred to in the business, in a private sale. On Feb. 5 The New York Times reported the sale of a Gauguin to a Qatari buyer for $300 million, citing art world sources.

The more public displays of eye-watering buying power come in auctions. Hedge fund billionaire Steven Cohen paid $101 million for Giacometti’s “Chariot” at the recent November sales. A year earlier, Christie’s secured a new auction record price of $142 million for Bacon’s “Three Studies of Lucian Freud”. But such sums are not unprecedented, at least after adjustment for inflation. Van Gogh’s “Irises” sold at auction for $53.9 million in 1987, equivalent to about $112 million today.

One thing that is new is the enrichment of a clutch of artists who are still living. Damien Hirst, of pickled shark fame, is worth 215 million pounds according to the Sunday Times. Jeff Koons, Takashi Murakami and Anselm Kiefer have all made fortunes from their work.

The art world has also been reshaped by globalisation. Adam describes how, in the 1940s, any letter arriving at Christie’s in London bearing a foreign stamp was put directly in the bin because it couldn’t possibly be important. No longer.

The new wealth of emerging economies is driving up prices and bringing vast amounts of cash to a market historically dominated by collectors in the United States and Europe, while communications and transport infrastructure mean the awareness and interest surrounding major works of art is now truly global.

In 2011, Art Economics research showed China briefly outpacing the United States and the UK to become the world’s No. 1 market. The Qataris have been spending up to $1 billion a year on art. Activist investor Dan Loeb’s 2013 critique of Sotheby’s accused it of being leaden-footed in its response to the art world’s new geography.

Yet for all the changes that have taken place, competition among the super-rich for desirable works of art is perennial. It may be no coincidence that what seems like a boom at the top end of the market has coincided with a new high in inequality. The wealth held by the top 1 percent of the world’s population has climbed to levels not seen since 1928, according to economist Emmanuel Saez.

The 1920s also played host to an art boom. A biography by S.N. Behrman of the era’s most famous art dealer, Joseph Duveen, describes a decade when America’s so-called robber barons, people like Henry Frick, John Rockefeller and J.P. Morgan, were spending huge sums on art. They were, in a sense, buying their way into high culture by importing European Old Masters. Their collections led to the establishment of some of America’s most famous galleries, including New York’s Frick Collection.

Personal galleries seem to be in vogue again among billionaires. LVMH Chief Executive Bernard Arnault just opened a Parisian “ego-seum”, as cynics call such ventures. His arch-rival Francois Pinault of Kering already has two in Venice, entrepreneur Eli Broad has one in Los Angeles and Carlos Slim showcases his private collection of art at his Soumaya Museum in Mexico.

Financially motivated behaviour, not all admirable, is also hardly new in the art world. Adam describes an overheard telephone conversation between dealer Larry Gagosian and a member of the Mugrabi family, whose collection of Warhols gives the family significant influence in the market for the American’s work. Adam concludes that the pair were “protecting the market for Warhol, in which they are heavily invested.”

Buying and selling art is minimally regulated and offers plenty of scope for the manipulation of prices. Duveen, for example, made a habit of overbidding on busts by Jean-Antoine Houdon, of which he had a collection. According to Behrman, this helped increase the average cost of the artist’s work from $25,000 to $245,000.

Anecdotes abound of attempts to control prices right up to the present day, including for living artists. Auction houses frequently guarantee prices for the most prestigious works, making the resultant valuations unreliable as true guides to the market. When Christie’s sold $852 million of art on Nov. 12, Barrington Research says that 34 per cent of the lots were guaranteed.

Adam’s “Big Bucks” is at its best debunking what the slick Sotheby’s and Christie’s public-relations machines say about the market and describing the industry’s extravagant parties and outsized egos. Her dissection of the globalisation of the art world is also striking. But in art as in so many things, there’s little that’s really new. The “explosion” in her subtitle may really be just another bubble, driven by fashion and the latest peak of inequality.

[Aistė M. Grajauskaitė · Rating 4 out of 5]

Georgina Adam – „The Art Newspaper“ vyriausioji redaktorė, žurnalistė, daugelio tekstų apie meno rinką autorė dienraštyje „Financial Times“. „Dideli pinigai. Meno rinkos sprogimas XXI amžiuje“ – pirmoji jos knyga, kurioje nagrinėjamas meno rinką ištikęs širdies smūgis, kai 2008 m. ekonominė krizė meno bei investicijų pasauliui tapo tikrąja praraja.

Knyga padalyta į 2 dalis („Žaidėjai“ ir „Kintanti rinka“), o kiekviena jų turi po 4 poskyrius. Juose preciziškai apžvelgiami esminiai meno rinkos ir ekonomikos veiksniai (meno aukcionai, vadybininkai, menininkai, kolekcionieriai, mugės bei kūrinių pardavimas internetu), o tai garantuoja gana lengvą navigaciją bei knygos skaitymo procesą. Ir nors knyga gausiai padruskinta datų, pavardžių bei menininkų darbų pavadinimų (knygoje nėra meno kūrinių reprodukcijų, tad, ko gero, nuolat guglinsite, kaip jie atrodo!), gerą žurnalistinį stilių mėgstančiam skaitytojui ji bus įdomi ir vertinga. Tam tikra prasme, įveikus šią knygą, staiga taps aišku, kodėl senamiesčiuose ar pajūriuose nekilnojamasis turtas yra gerokai pigesnis už meno kūrinius ir kodėl senieji magnatai pirko meno kūrinius juos studijuodami, o naujieji megaturtuoliai susibičiuliauja su meno prekeiviais ir jų numerius į telefonus įsiveda kaip aukštesnio prioriteto nei šeimos narių.

Šis leidinys apie verslą, finansus, investicijas ir meną, ir tai, kaip globalizacija restruktūrizavo kolekcionavimą ir meno vertės suvokimą. Svarbu paminėti, jog G. Adam nesustojo ties pirmuoju leidiniu ir 2017 m. išleido antrą knygą „Dark Side of the Boom: The Excesses of the Art Market in the 21st Century“ („Juodoji pakilimo pusė: perteklinė meno rinka XXI amžiuje“). Joje aptariama, kokia yra juodoji meno rinkos sprogimo pusė (kolekcionierių mokesčių vengimas, apgaulės ir sukčiavimas, pinigų plovimo schemos ir t. t.). Ir nors Georgina gera žurnalistė, antrosios knygos nerekomenduoju, nes tai paskirų straipsnių kratinys, o ne rinktinė.

Išversta į lietuvių kalbą: NE | Įvertinimas: 8/10

[Liu · Rating 2 out of 5]

Art market is a very interesting topic because it is so secretive. Adam forgets that most of us don't know the name of the dealer, some artists and auction house. She quotes examples after examples but fails to grasp the gist of the story and explain her case. It makes reading the book difficult and boring. She also only touches on tax evasion and money laundering very briefly, to my dissatisfaction.

[KT · Rating 3 out of 5]

A good, if brief overview of the recent boom in the art market resulting from increases in wealth, privatisation and globalisation

Particularly enjoyed the section on art as an asset and how speculation has changed the way art is created, produced and marketed

[Visible · Rating 5 out of 5]

The Art World is about a lot of things that aren't "Art" in the strictest sense of the word.