
More art is being produced and sold than ever before, at ever higher prices - prismatic
https://newrepublic.com/article/147192/modern-art-serves-rich
======
spectaclepiece
The interesting metric in this relationship is the amount of money that
actually goes to the artist.

A recognized artist at a mid-high level gallery is usually promised a show
approx. every 18 months. Average earnings for such a show is commonly expected
to be around $100.000, (10-15 works each selling for between $5.000 and
$10.000).

That would be a decent amount of money for that time but here comes the crux;
the gallery takes 50%.

This leaves the artist with an income of $50.000 before taxes. Say you live in
Sweden, where you have to tax nearly 50% for sales in a private company that
leaves you with $25.000 every 18 months in disposable income, hardly something
you can get a flat in Stockholm for.

What's even worse is that if you are tied to a gallery you are most commonly
prohibited to sell privately or show with other galleries.

~~~
elorant
Well of course the gallery will take 50%. They're the ones doing all the work.
I don't know if you've ever met an artist, but most of them are quite unsocial
and naive people. They don't know shit when it comes to selling, and I'm
telling you this from the perspective of a computer geek, and they don't even
care to learn. The gallery not only finds the people to buy the paintings but
they also do constant PR work for the artists they represent, past well any
exhibition, they talk with museums and collectors trying to promote the works,
they provide legal and financial advice and so many other things.

~~~
krrrh
Your comment is getting downvotes for your casual absolutist statements, but
you have a point.

An interesting illustration is that one avenue for artists to get paid for
making art that side steps their gallery arrangement is public art for
municipalities or integrated into new building construction. Lots of artists
end up doing more poorly than they expect with these projects, because they
lack or are never taught good project management skills, and they suddenly
have to manage a budget in the hundreds of thousands, and attend or lead
meetings with engineers and architects. OTOH, artists who have more of these
skills can end up doing really well once they have a few successful projects
under their belts.

~~~
elorant
Whoever thinks that galleries take too much of a cut could very easily try and
market their work themselves. Or better yet, try to disrupt the art world by
building an online art gallery that takes let's say just a mere 10%. After
all, online sales are on the rise.

But guess what. Even online platforms take a significant cut. Why's that?
Because marketing to the rich and well-off has a significant cost that's much
higher than running a targeted AdWords campaign. You have to be out there,
talk to people, attend art fairs and galas, socialize, then socialize more,
network with critics and journalists who are considered influential, negotiate
with collectors who will try to rip you off and do it constantly. On top of
that, if you're one of the renowned galleries and an artwork for an artist you
represent goes on sale at an auction at a low price you pay from your pocket
to keep the price high in order not to hurt the reputation of the artist.

So yes, I'm making generalizations but I've also happen to work in the art
world and I've seen how things work. Owning and operating a commercial art
gallery is all about personal connections and that costs.

------
pluma
A few years back I talked to someone involved in the business of international
sales and procurement of luxury watches. Although there are a few genuine
collectors, most of the business seems to be in aiding money laundry and
dubious financial transactions (a $50k watch is easier to smuggle than a bag
of $50k in cash, especially when the price is sufficiently stable).

EDIT: To be clear, what he was doing was perfectly legal but he had no
illusions about who his customers actually were.

~~~
dageshi
The other user who replied on this thread saiya-jin is [dead] and has been so
for over a month. Their comments appear to be entirely reasonable to me, can
we un-dead them?

EDIT: User is visible again, thanks.

~~~
M_Bakhtiari
Ever since I've turned on 'show dead' most of what I've seen as [dead] has
been perfectly reasonable, go figure.

~~~
GFischer
Sometimes people go on a rant and are shadowbanned, but are otherwise
reasonable.

------
strictnein
Tangentially related: if this article isn't written about you or your friends,
a great place to find really nice art for relatively cheap is at a student art
sale for your local art school. Money typically goes to the students directly
to help them pay their tuition.

Some of them even have "VIP" opening nights, which end up being just kind of a
nice date night. $125 gets you food, booze, and first crack at the art, most
of which will be in the $100-$1000 range. An example, in Minneapolis:
[https://mcad.edu/about-mcad/events/art-sale](https://mcad.edu/about-
mcad/events/art-sale)

There will be a lot of stuff you'll probably not like, but there's some
absolute gems. Bought a lacquered painting of Ai Weiwei for $300 that I
wouldn't sell for $3000.

------
kev009
One thing I've never understood - and if I ever become absurdly wealthy I will
try these kinds of random absurdities - is how few of the rich use the power
they have to create new definitions of art. For instance, sure you can
commission paintings and trade them. But how trite and boring.. imagine
commissioning your own RISC-V implementation, or a file system, or something
similar that millions of people come to rely on. You could do these kinds of
things for a few million dollars each. Without any commercial expectation you
could do pretty audacious reaches that would occasionally deliver humanitarian
value. Maybe I'm a weirdo..

~~~
L_Rahman
You're not a weirdo. This is something I feel similarly about, but here's the
thing about rich people:

1\. The path to becoming rich puts them in a social class that warps their
view of what matters and leaves measuring themselves against arbitrary
hierarchies of their own making.

2\. The path to becoming rich in modern society is such that the kind of
people who would commission RISC-V implementations or security audits of
popular open source software or cheap medical interventions simply cannot
succeed. It may require too much of a compromise of those beliefs to actually
win.

~~~
kev009
Don't get me wrong it would totally be about ego and about how excellent your
own design tastes are. You'd name all the stuff after yourself. That's why
it'd be considered art :D

Some of the robber barons did some interesting eccentricities like Carnegie
libraries.

The Long Now clock is the most recent thing I can think of.

------
mateus1
I was astonished when I met this 20-something art dealer here in Sao Paulo at
an event.

He was talking about how, after graduating he developed a passion in dealing
art, some 2 years later the guy has opened 4 or 5 galleries around the world.

Quite a star, right? Then I found out he's the son of one of the most
notorious corrupt politicians in Brazil...

~~~
badosu
Art is huge in money laundering, e.g.
[https://www.nytimes.com/2017/11/17/arts/design/bernardo-
paz-...](https://www.nytimes.com/2017/11/17/arts/design/bernardo-paz-inhotim-
prison-brazil.html)

Casinos and jewelries as well, anything that might have a lot of non-tangible
value and can be inflated without questions.

I am not too aware of markets outside of Brazil, but I'd assume sports teams
and auctions are big too. I remember that in the last 15 years there were a
lot of football team acquisitions by russians in europe.

------
pasta
Some time ago real Banksy prints were sold for $60 at a street stall in NY.
They didn't sell much but people who bought one later discovered they are
worth around $20,000.

A week later some guys (Dave Cicirelli and Lance Pilgrim) sold fake Banksy's
with a certificate saying they were real fakes. They sold out in an hour.

This was a great way to show the real value of art.

Edit: found an article about it:
[https://www.theverge.com/2013/10/22/4864592/fake-banksy-
stal...](https://www.theverge.com/2013/10/22/4864592/fake-banksy-stall-new-
york-sells-40-artworks-one-hour)

------
mindfulplay
In a funny way, I cannot but draw a parallel between the bitcoin folks and
'modern' art folks:

Very little intrinsic value; mass produced but still the producers and
consumers feel like they are part of some niche (and somehow the rest of the
world doesn't 'get them'). And dare I say, an easy way to launder dirty money
out.

I just don't get why either of those two things deserve any attention other
than it's just another way that money exchanges hands.

~~~
M_Bakhtiari
It even has a notion of proof of work:

[https://en.wikipedia.org/wiki/Levitated_Mass](https://en.wikipedia.org/wiki/Levitated_Mass)

The only thing that thing accomplishes is proving that a contractor had moved
a rock from A to B, about as useful as figuring out how to get a certain
number of zeroes in a hash.

~~~
ajmurmann
Let me guess, you also don't like Yves Klein?

~~~
M_Bakhtiari
I really don't mind the goofballs, it's their enablers, the modern art
dealers, critics and collectors, that I have a problem with.

I even like some of the things that came out of the movement from an aesthetic
point of view, for example much of the stuff that came out of pre-PC IBM. But
I don't consider it to have much artistic merit, if any at all.

------
narrator
One angle on the modern art world I heard is that it is used as a bribe that
is tax deductible. They briber buys the art from the person they are bribing
and then they donate it to a museum at the paid value and deduct it on their
taxes. The IRS can't set a fair price for a painting after all.

~~~
nradov
The IRS has been known to occasionally require independent art valuation
estimates during income tax audits.

------
fergie
For those who missed it there was a pretty good article/discussion here a few
weeks ago about how the art market is systematically manipulated for profit,
and nobody wants to fix it:
[https://news.ycombinator.com/item?id=16200100](https://news.ycombinator.com/item?id=16200100)

------
mcantelon
Pretty good way to launder money and, via the Art in Embassies program,
smuggle anything anywhere.

[http://www.independent.co.uk/news/world/modern-art-was-
cia-w...](http://www.independent.co.uk/news/world/modern-art-was-cia-
weapon-1578808.html)

~~~
ethagknight
Sorry to embark on a conspiracy theory rabbit hole, but when i read something
like that, I am left wondering who really conned whom? Who was the real
mastermind? The CIA, in some far fetched scheme to control the world? Or did
bohemian artists con the US Government and American people into bankrolling
their lifestyle? There is a surface narrative, to cover up the ‘real story,’
but why should i be so naive to believe this telling of the story either?
Without a doubt , for any interpretation, the American taxpayer certainly was
on the losing team.

------
motohagiography
Hardly need to read the rest of an article with a headline that includes, "the
Rich," as fairly clear what it's about.

An acquaintance recently (2011) wrote a book about the world of art theft.
([https://www.amazon.ca/Hot-Art-Chasing-Thieves-
Detectives/dp/...](https://www.amazon.ca/Hot-Art-Chasing-Thieves-
Detectives/dp/1771000694)) The point I remember him making was that the stolen
art was often used as collateral for black market transactions, owing to the
opacity of the market in general.

It's an asset class like any other. Depending on what it is, it will have
different liquidity, volatility, and portability properties. The notional
value can be used as collateral in other transactions, with no real
transparency on rehypothecation. New appraisals can mark it in support of
other calculations, and you can insure it. It can be a bit of a financial
black box.

Also, art is and always has been a path to social mobility. Hence the parties
where young people go to meet older wealthy ones. The real business of art is
brokering relationships and transactions, with the art as a pretext. If you
have money and fewer relationships, you can go buy art in any major city as a
short cut to local society. If you want access to partners and the kind of
social networks that provide opportunities for your future family, it's
surprisingly accessible. Gallery owners perform a kind of social gate keeping
role without a lot of the insular baggage that comes from establishment
networks. These relationships and transactions _are_ culture.

The idea that someone can just make money, participate in culture by buying
art, then move easily between social classes seems offensive to some people,
but that's really how it works.

It also provides a perfect straw man for people who go on about "the rich."

~~~
shams93
Well if you're an artist with an MFA over time its easy to be sitting on over
250k in debt. The key point is the artist is selling a piece for $750, the
collector then can turn around and sell the same piece for $40k+. The art
doesn't start gaining real value until the artist is no longer participating
in the value chain of their work.

~~~
petesalty
Honestly, as a collector with 16 years of collecting under my belt, I can tell
you this does not happen very often. I do have a few things that I paid
hundreds for that are now worth thousands, but I also have works that I paid
hundreds (and sometimes thousands) for that are worth nothing (although I
really treasure them).

If you happen to catch an artist at the beginning of their careers, and are
willing to take a chance on them, then this might happen but more often than
not it won't.

Also, as a collector you actually want artists to be successful so you want
them to be growing and continuing to get more recognition and keep producing
work. In order for them to do that you want them to get better and better
value from their work.

The artists mentioned here might not have done so well in that auction but
they certainly went on to very lucrative careers.

------
wyclif
This is a fascinating article. But what I'd like to know about is the effect
of this activity on the other side of the table: the modern artists who
produce the works the rich purchase and auction.

How does one become a top modern artist? (I'm thinking primarily of painters
and sculptors).

~~~
holdenc
How to be top modern artist:

1) Move to NYC, get a job working for a near blue-chip artist. Look for one
with the fewest assistants. Accept $20 an hour.

2) Go to art openings, sign your name in every gallery guest book and attend
every after-party.

3) Have a studio, and get your friends, employer and his gallery contacts to
visit

4) Start showing your work, or repeat steps 2 and 3 until someone shows your
work.

5) The ball is now, rolling. To add some momentum do the following:

\- Curate a summer show at a gallery somewhere

\- Upgrade your studio to someplace people like to visit. (Dark wood floors,
on the waterfront in Red Hook, Brooklyn perhaps) Throw good parties.

\- Grow a lumberjack beard. Or, only shop at comme des garcons. Or thrift-
store jeans and a white T, for all occasions.

6) Make friends with writers and critics. (Their needs are human, just like
yours)

7) Get shown, written about, and finally get collected.

8) Now...this is the part where most artists discover how life as a successful
artist is actually appalling. You'll need to socialize with and be popular
among some very wealthy, but ultimately superficial people who treat you and
your art as a certificate of their cultural sophistication.

9) If you have made it this far, and still want to continue, you probably have
what is takes to be a successful modern artist whose work will appear at
auction in a few years. Just keep in mind -- you'll receive none of those
auction proceeds, and there's no promise you'll every go to auction again.

~~~
codingdave
Or, to translate all that to HN-speak -- learn an industry, network, do
marketing, and cultivate a brand, until some day down the road, your product
becomes big, and all your backers take the lion's share of the exit.

How is all that any different than what the rest of us do to grow our
business? Seems to me like the process of building a business doesn't differ
by industry as much as people might think.

Now, if we think that art SHOULD be different, that is a completely valid (and
possibly more interesting) question.

~~~
evrydayhustling
Processes are similar. Likelihood of success, impact of your actions on
outcome, and ownership of upside (both real and social capital) are very
different!

Art is a black swan industry where compensation for effort is a lottery
ticket. Only the fringe of "wantrepreneur" culture comes close to extracting
as much effort for equally uncertain reward... And even then the efforts
develop and demonstrate skills (tech and business) which can be transferred to
low risk / well paid jobs. Artists who don't become famous can't recycle much
of the investment.

~~~
j_lee
This is very true. I was involved in the NYC art market for about a decade.
The smart artists either became professors or started over in a new career.
Most of my art world friends are now programmers, lawyers, etc. A very small
number of the people I knew actually made it, most of whom had a social or
financial advantage to aid them. I knew exactly one artist who briefly made it
on talent alone, and he was the art making equivalent of Lebron James.

------
svantana
Can someone explain what the downside is? I'd much rather the rich spend their
money on art than activities with huge negative externalities like flying
around in private jets, buying land or employing servants.

~~~
igorkraw
The negative externalities here are (nonexhaustive)

* tax evasion (kindly fuck of with "it's legal so it's avoidance", it's evasion even if it's legal. Spirit of the law)

* money laundering for $CRIME_YOU_DESPISE/$DICTATOR_YOU_DESPISE

* shutting down/perverting the market for those that actually care about art (not me, but they

~~~
roenxi
> * tax evasion (kindly fuck of with "it's legal so it's avoidance", it's
> evasion even if it's legal. Spirit of the law)

At its heart, modern tax law separates people into classes and then allocating
the burden of maintaining society unequally between those classes.

The spirit of the law that you are defending here is that people should
shoulder unequal responsibilities to their society. Although that isn't
controversial, it also doesn't automatically have a moral high ground; it
could be a better outcome if everyone contributed equally. It just happens
that everyone contributing equally flat-out won't work, because most people
can't contribute enough.

The spirit of the law is unfair. That is an unfortunate reality of taxes - in
a sense they can't reduce the total unfairness in the world, only shift it to
people who can better deal with the burden. That people should ignore the
detail of the law and voluntarily subject themselves to an unfair burden is
not clear-cut. The clear cut part of this is that the law should be clear,
pass through the usual channels and be enforced with due process - ie, as
written or as commonly interpreted by the courts.

If you want to call it tax evasion, someone is going to have to change the law
so it is actual tax evasion. Until then, it is legal so it is avoidance.

~~~
hedvig
All of those usual channels and law-making are easily influenced by wealth and
power. By avoiding taxes they have committed a crime against the state and the
people and should be punished.

------
ivanhoe
The most expensive postage stamp was sold for more than 2 millions, and
initially was worth a few cents. Antique items are also usually ridiculously
expensive compared to the initial value. Even old legos are being sold for
thousands of dollars. That's what collectors due, overpay for rare or
otherwise "special" items, and of course, when there's money in the market
there will be people turning it into a business. Art is just one (very
lucrative) piece of that cake.

~~~
emodendroket
Yes, perhaps, but the difference with art is that artists are encouraged to
pump out works to cater to the whims of these rich collectors in a way
antiques dealers cannot.

~~~
purple-again
Have you ever felt encouraged to pump out code to cater to the whims of rich
overlords?

I can't tell you how many $50,000 (our fee) tax returns I filed
with...questionable sections because I was being encouraged to pump out work
to cater to the whim of partners that didn't even come into the office
anymore.

Nothing unique to art here.

~~~
emodendroket
People still read The Odyssey but I'll be lucky if anyone cares about any code
I ever worked on in fifty years.

------
cbzbc
This has always been the case to an extent - see the Esterhazy's patronage of
Haydn and the Prince of Salzburg's sponsorship of Mozart.

The exception is the 20th century when the Soviet system pushed art as
something for the people [though the incentives on who was sponsored was again
skewed at the top], and the various publicly funded arts programs in Western
Europe - driven by social democratic ideals.

------
mlinksva
> Yet the most troubling examples of the exploitation of art for financial
> gain are perfectly legal. As Adam outlines, collectors and their agents have
> continually found creative ways to use their art holdings to defer paying
> taxes, including the establishment of private museums and foundations,
> storing artworks in offshore freeports where they can be exchanged without
> incurring customs duties or VAT, and loopholes in the tax code such as
> “like-kind” exchanges. Originally set up in the 1920s to aid farmers by
> enabling them to defer taxes on livestock trades, “like-kind exchanges” are
> now regularly invoked by art collectors in order to avoid paying taxes on
> the sale of artworks: So long as a collector uses the proceeds of the sale
> of one work to purchase another within 180 days, the tax obligation can be
> perpetually kicked down the road.

This may have been eliminated for art by the most recent US tax bill, or
[https://www.nytimes.com/2018/01/12/your-money/taxes-real-
est...](https://www.nytimes.com/2018/01/12/your-money/taxes-real-estate.html)
seems to say so ("property" was changed to "real property").

The previous administration also wanted to end like-kind treatment for art
[https://www.nytimes.com/2015/04/27/arts/design/tax-break-
use...](https://www.nytimes.com/2015/04/27/arts/design/tax-break-used-by-
investors-in-flipping-art-faces-scrutiny.html) but without digging more, I
assume changes proposed then didn't get enacted.

------
mpweiher
To me it sounds like a good way for the ultra-rich to play their status games
and burn off wealth without impacting the rest of the economy.

Maybe end the tax-deferral?

------
taurath
If you want to see the richest art markets in terms of consumer participation
and artists succeeding (and don't care about adult nature), look no further
than the anime and furry communities. It is a THRIVING market for commissions
and patrons - tens of thousands of artists running the gamut from $5 sketches
to $10k oil paintings. Its the best example I've ever seen of a lower/middle
class art market working well. What you're "buying" is a representation of
your individual expression.

The high end "art world" and NYT/New Republic articles could not be further
away from these artist communities, both in terms of accessibility and
relevance outside the ultra-rich circles that traditional art galleries serve.

------
dang
Comments in this thread illustrate how even a tiny bit of linkbait like "the
Rich" tends to dominate discussion, riling it up and dumbing it down.

We've edited the title to the subtitle. There's a lot more to this article
than that.

------
SagelyGuru
I am struck by a thought: isn't this just yet another kind of a pyramid
scheme?

~~~
M_Bakhtiari
I don't see the similarity. I can't see any notion of recruitment rewards in
modern art.

It's more like Pez dispensers and Beanie Babies and all that nonsense. Over-
priced and over-hyped collectibles with no real-world (not even aesthetic)
value.

~~~
SagelyGuru
Yes, I should have said bubble, like the original tulip bulbs. At least the
tulips did have some aesthetic value. There is recruitment reward: buying
early, hyping up modern "art" and making a profit.

------
thathappened
I always hated middlemen but as I got older and saw the difference between
creators and capitalists. You don't see the 50% being spent to maintain the
relationships that bring buyers in and interested in supporting the artist.
Arts subjective, you can play the free game and use the internet but if you
want a network of people that support galleries it's because they gained
something from that gallery at some point. Also that gallery isn't free, some
are cheap and some don't earn their keep but you get free choice and no known
test to differentiate the honest from the dishonest but experience.

------
jackcarter
This, on the market for high-end artworks, is one of the most interesting
papers I have read:
[http://faculty.chicagobooth.edu/canice.prendergast/research/...](http://faculty.chicagobooth.edu/canice.prendergast/research/MarketContemporaryArt.pdf)

tl;dr: Art markets are unusual or unique in several ways, including thin
demand (few buyers are interested in a given artwork, and their reserve prices
will be very different), contempt for "flippers" (including shunning by
galleries), and refusal to reduce prices, which would cause an artist's
personal bubble to pop.

------
djexns
This is completely logical... The whole point of art business is a safe
investment area where the rich won't lose money.

------
fiatjaf
If making the rich trade their money for something that will hurt them
mentally is "serving" I don't know in which world I'm leaving anymore.

