Hey Kids--- It's Bubble Time!
This article pre-dates the mortgage meltdown. It once was art market news; now it's art business history. But plenty of it is still true...
The apex of the contemporary art market is superheated to the point of meltdown. Money is everywhere-- big money, all kinds, flowing freely, infused with euphoria. Prices are skyrocketing up and up, endlessly, exponentially; everybody wants in on the action and we're all getting very rich very fast. Dealers are delirious; favored artists can't create fast enough. Opportunists strafe the countryside for potential talent, pluck junior art stars like nuggets from the gutters and shower them promptly with the honors they will ultimately deserve. Isn't it the best?
Well dear artsters, there's absolutely nothing wrong with an occasional depraved dose of temporary insanity. It's all good, assuming you understand the underpinnings and know how to play 'em. You see, this is a special time, a fantasy in reality when dreams rule the day-- a utopian moment to be savored-- as we successfully relegate lucidity, better judgment, facts, precedent and logic to the closet where we all know they belong.
You've heard this irritating expression, haven't you? The one that starts, "When truth rears its ugly head..." Well, the truth is that it's true. The rook's not gonna last forever, and then comes that pesky hangover. Fortunately for those who imbibe in moderation, splashdown will be solemn, but at least survivable. In the meantime, who cares? Let's party!!
Here's the skinny. Normally, people buy art (or any product) based on past performance, but sometimes that gets all twisted up and goofy, and people instead buy based on future expectations. There's an excellent reason why they do this, of course-- it's way more fun. I mean, who wants to do all that thinking, that pain-in-the-ass research, that critical evaluation and assessment? Boring! It's far easier to justify our actions with a quick hocus-pocus like, "It doesn't cost all that much now, but you just wait and see-- it's gonna be major mega mucho grande tomorrow." There's a term for this, you know-- it's called "speculating."
OK. Ready for a pop quiz? Of course you are. Here we go...
When was the last time large numbers of people bought based on future expectations as opposed to past performance?
Exactly! The Dotcom Debacle.
Give yourself a gold star on the forehead and flush your wallet down the toilet.
But back to the matter at hand, conditions are perfect for an artland end run. The stock market's been floundering for years, gold's topped out, oil prices are going nowhere, the housing boom teeters on the verge of collapse, hardly anyone seems to recall the Japan-fueled art market shenanigans of the mid-1980's through the early 1990's, and those who do aren't talking. But wait; there's more. The economy is bountiful; corporations wallow in monster profits. Those irritating rich people are making more money than ever, so much so that, bane of banes, they have no idea what to do with it all. You see where I'm going with this?
Yes. Sights are being increasingly trained on art. But there's a glitch; art has no empirically measurable or quantifiable properties. It's just mushed around paint, metal, wood, plastic, digital files, photosensitive surfaces, audio, video, clay, and whatever else those wacky artists can get their hands on. How the on earth do galleries wring value out of that?
To complicate matters, people who love art (aka serious dedicated seasoned collectors) buy it for intrinsic intangible reasons. They know they can't do anything with it; they don't intend to do anything with it. It serves no obvious purpose. It just sits there enriching their lives. They could care less what they paid for it, what it's worth now, or what it might be worth tomorrow. They have no intention of selling it anyway. So that's a dead end; no hyperheat there. Sellers can definitely do better.
How about this? Jump start the wealth-mobile by shifting the focus away from those worthless intangibles, away from how great, significant, original, or enriching art may or not be to what it sold for last year, six months ago, or better yet, two weeks ago-- and make sure today's selling prices are always higher than yesterday's. Now there's a plotline fiscal mercenaries can understand.
But it's tricky. Wait. What if a potential buyer asks a seller why dollar values are spiraling towards the stratosphere? Here's how to get around that one: If at any point, anyone questions a new higher price, the seller says, "It is because it is"-- that's what it's worth. This is the classic create-your-own-reality gambit, and if the seller does it it well, suddenly two people believe it. Better yet, if lots of galleries say stuff like that simultaneously, the "it is because it is" phenomenon morphs into reality-by-consensus, and what starts out as random arbitrary price increases becomes a pervasive broad-based upsurge, and best of all, it seems almost plausible.
For straggling doubters who still have the temerity to question the new dawn of perpetual price hikes, savvy sellers can do a simple bait-and-switch. Just name a famous high-profile artist or two, compare their art to the "it is because it is" upstart art they're inflating, and imply that they're both basically the same, the only difference being that the upstart art is on an inevitable trajectory to where the famous art is now. Culminate the ruse with some recent selling prices for the famous artists, like "if this was a Jasper Johns, it would be worth $$$." Suddenly the gallery's "it is because it is" art seems like an unbelievable bargain. That's usually enough to get doubters get all frothy and convinced, and to pull the trigger and buy the "bargain" art for more than it sold for yesterday (either because they're new to "collecting," consumed by greed or both). So there you have it-- upwardly mobile prices. And we all lived happily ever after, right? Not quite.
Galleries need new art to replace the art they just sold. But where are they gonna get it? Oh-- you're good-- you read my mind. They get it from obscure start-up galleries showing obscure young artists fresh out of art school and having their first or second shows. Or if they're really smart, they get it from artists right after they graduate from art school, sometimes based on their BFA shows, preferably on their MFA shows, but before they have any actual significant gallery shows. Or if they're really really smart, they "discover" artists while they're still in art school, even before they graduate.
This phenomenon has begun to parallel the draft in professional sports. Pro teams harvest the standouts fresh out of college, or if they're shrewd, they snag 'em before they even graduate. Who cares if comparing art careers to sports careers is preposterous? So what if a typical sports career lasts a few years while a typical art career lasts a lifetime? So what if we have no idea whether an artist is destined for eminence until after at least a decade or two of consistently impressive production? We're talkin' money here-- and lots of it! Don't be a poo-head and ruin the whole thing!
In spite of the irritating facts, galleries proceed to take their fresh peppy replacement art and price it higher than the art they just sold. The person who bought the art it replaces sees that the replacement art costs more, which means he's already made money. Then he tells his friends, his friends buy the replacement art, the replacement art gets replaced with new more expensive replacement art, the friends make money, they tell their friends, those friends buy the next round of replacements, they make money, and then they tell their friends, and those friends tell their friends, and those friends tell their friends, and then... wait... we're running out of friends. Uh-oh.
More bubble stuff:
* Auction houses have already commoditized the art market; now they're trying to get hip. How? They're auctioning newer and newer art by younger and younger artists, and using less and less secondary market data (facts), and more and more imprimatur (it is because it is) to value it.
* Art funds are increasingly presented as investments. This has the effect of further distancing "investors" from art's intangibles (like expressions of creative genius, brilliant visions, and materializations of new perspectives on reality), positioning art more and more like securities-- which we all know it isn't because it has no tangible value-- and less and less like art.
* People who don't know much about art, but who've made money selling ancillary extravagances like exotic real estate or luxury yachts are getting into the art business, opening galleries, or if they're collectors, presenting their collections like timeless museum treasures.
* Not enough time has passed to know which young art stars will fade and which will endure, yet they're all priced to endure. (Pick up a 1990s issue of any major art magazine and count the artist names you've never heard of. Then run for cover.)
* Not enough time has passed to know which young-art-star art is fad or fashion and which is classic and enduring, yet it's all priced as classic. (In extreme cases, prices for brand new art by relatively untested artists exceed those of established masters-- which makes no difference because many new "collectors", blinded by the glamour of the contemporary empire, are unaware of how much art by established masters sells for... or why it's even worth owning.)
* Selling prices for an alarming number of young artists are doubling, tripling, quadrupling, and more in alarmingly short periods of time. Hint: no substance known to man gets that valuable that fast.
* Bubble boosters like to cite Basquiat and Haring as young artists whose prices continue to rise. Well, if either were alive today-- Basquiat at 52 and Haring at 54-- do you suppose they'd be middle-aged artists with prices rising just as fast?
* More and more people who know less and less about art are getting into the market.
* In the traditional art market, prices go up because people who buy the best art by the best artists love it so much, they either never sell it or donate it to museums. In other words, SERIOUS DEDICATED COLLECTORS BUY ART TO KEEP, NOT TO SELL. In speculative art markets like the one we have now, the exact opposite is true. PEOPLE BUY ART TO SELL, NOT TO KEEP. And therein foments the implosion.
The good news is no matter what happens in the short term, great art will stand the test of time, as it always has, and will maintain or increase in value. Pretty much everything else will fade into relative degrees of obscurity. Yes, the art market is today's darling for dabblers. Some will come away winners, many won't. But they don't care because it's not about art; it's about money. When the boom busts, rest assured they'll find new rainbows to chase.
As for you artists, if you're fortunate enough to be part of the updraft, here's what you do-- you live life exactly like you did before the engorgement, shelter your windfall, let time take its toll, and when the dust settles, you pick right up where you left off. In the meantime, savor the moment, blow off the hype, remember that reality rules, and never ever get juked to the point that you dare to speculate on yourself.
Thanks to Robert Berman and Louis Stern for their assistance with this article.
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