
High-end art is one of the most manipulated markets (2013) - nabla9
https://qz.com/103091/high-end-art-is-one-of-the-most-manipulated-markets-in-the-world/
======
JumpCrisscross
Art is extensively used to, _ahem_ , conveniently move around large sums of
money [1]. It is difficult to differentiate unusual prices due to money
laundering from unusual prices due to manipulation.

[1] [https://mobile.nytimes.com/2013/05/13/arts/design/art-
proves...](https://mobile.nytimes.com/2013/05/13/arts/design/art-proves-
attractive-refuge-for-money-launderers.html)

------
Geekette
The biggest issue in the art market is transparency and it continuously amazes
me that governments allow it to go on because at minimum, a lot of tax money
is lost. The fact that this sector is so under-regulated enables the opacity,
making it a great avenue for money laundering and fraudulent behaviour
including forgeries (enabled not just by forgers but some dealers), inaccurate
reporting (flawed stats), price manipulation, collusion (at all levels and
between individuals and organizations), etc. Buyers often never know whether
they just overpaid or underpaid or what the current value for a piece is.
Change is most possible (and has been occurring in fragments) in the primary
art market vs secondary (resales, mostly of dead artists).

BTW, for those implying artists benefit the most: galleries often make the
bigger share of any sale they're involved in, with commissions ranging anyhere
from 50-70% or more. Plus, auction house premiums are often at least 20%,
leaving less of profit for seller (after subtracting original purchase price).

~~~
JumpCrisscross
> _a lot of tax money is lost_

Art sales are taxable.

~~~
simonsarris
Yeah and you buy a piece for $1m and sell it for $1.1m to the guy who wants to
"donate" it to a non-profit for a tax write off of $10m, offsetting his tax
bill on something much larger.

It's a vehicle for tax write offs and laundering.

~~~
xtreme
I never understood how this works. If you donate $X to charity, you reduce
your taxable income by $X but now have $X less. If you paid your tax on $X,
you would still have $X-Y. How can the former approach save you any money?

~~~
simonsarris
> If you donate $X to charity

When $X is $REAL_LIVE_MONEYDOLLARS, yes.

When $X is $ARTWORK_THAT_I_CLAIM_IS_WORTH_10M, which I bought for not 10M but
1M, but got "appraised" at 10M, what did I just do? Pay $1M for $10M of tax
writeoffs.

------
ThomPete
My wife works in the high-end art and auction world.

I always joke that artists are the most extreme capitalist you will ever find.
This is a world where a dinner table can easily be sold for 1$mio because it's
owned by some famous person. Pretty fascinating world.

On a slightly different note. This is also the reason why I think
cryptocurrencies/tokens are going to be doing just fine. Humans very rarely
exchange and value based on utilitarianism alone.

~~~
vinceguidry
My whole attitude towards cryptocurrencies changed when I realized that
intrinsic value literally didn't matter to the global rich, they're not
interested in growth or value at all, only in security, and they'd be willing
to pay a premium to store their wealth if it only means that they can control
the risk.

Crypto can provide them with precisely that. The volatility of crypto is
immaterial, what matters is that it's still around. The _resilience_ of
Bitcoin means that rich people can park wealth there. They can trust the
protocol more than they can trust their nation's banks, their political
institutions, and their social order.

Techies can make a nice side income arbitraging the scrambling of the global
elite for a safe haven. It's the new Cayman Islands bank account, only now
it's math keeping the filthy government's hands off your money, not the flimsy
sham of sovereignty.

~~~
boffinism
> They're...interested...in security, and... [c]rypto can provide them with
> precisely that.

20% of all bitcoins have been irretrievably lost [0] and 7% have been stolen
[1]. If I was the global rich, I'd rather hide gold bars in my mattress rather
than put it in Bitcoin if my goal was just security.

[0] [http://fortune.com/2017/11/25/lost-
bitcoins/](http://fortune.com/2017/11/25/lost-bitcoins/) [1]
[http://www.businessinsider.com/how-many-bitcoins-have-
been-s...](http://www.businessinsider.com/how-many-bitcoins-have-been-
stolen-2014-3?IR=T)

~~~
JonnyNova
Also, Bitcoin is 15x more expensive than gold to store securely:
[https://finance.yahoo.com/news/bitcoin-15-times-more-
expensi...](https://finance.yahoo.com/news/bitcoin-15-times-more-
expensive-130000674.html)

Edit: for large institutional investors in a trust fund

~~~
bfuller
>Also, Bitcoin is 15x more expensive than gold to store securely:
[https://finance.yahoo.com/news/bitcoin-15-times-more-
expensi...](https://finance.yahoo.com/news/bitcoin-15-times-more-expensi..).

This is only the case for this particular trust fund. You can secure your
coins for free on your own.

edit: downvoted for stating a fact? really?

~~~
JonnyNova
Didn't mean to leave that out. Added it in

------
campbellmorgan
Most people tend to dismiss the wide-range manipulation of high-end art as an
irrelevant problem that only affects millionaires and a tiny subsection of
"commercial artists". A point worth making is that more often than not, it is
taxpayers who end up footing the bill when public museums purchase wildly
expensive work whose price has been driven up by the processes described in
the article.

While museums may get a discount for being important "taste-makers", I can't
believe that that makes up for the crazy overvaluation.

This alone should make the case for better regulation as difficult as it must
be across international borders.

~~~
hutzlibu
So lets stop making museums buy overpriced art then.

So while it is nice for the public to be able to see a certain original, I can
think of millions of better ways to spend that money and then just see a
replica.

~~~
gt_
I spent 4 days in a row at the Met last week and I still want to agree with
you. Museums are _mostly_ a delicacy. The Louvre was built for artists to
study other artist's work. That's tremendously not how we use museums. Medium
is valuable for study, yes, but I didn't learn anything last week. I just saw
evidence of it in bare vision.

But I am torn, because the more privately funded museums seem to be more prone
to skewing history. I could be wrong.

------
tw1010
Manipulation _is_ the game they're playing, that is the whole market. Fuzz
your eyes to abstract the details of the art pieces and only look at the
social structure around it, and that's all the information you need to predict
demand.

~~~
e_b
Exactly. Art is the product for which the value is most close to being
completely made up of perception - the artist's brand.

------
cousin_it
I can't make myself outraged about rich people throwing money at each other.
If there was no art, they'd find another excuse. It's not like that money
would go to saving lives.

I'm also not outraged about few artists making a living from all this money
flying around. Artists aren't entitled to rich people's money, it's a side
effect of the game.

The only thing I'm outraged about is when the elite starts foisting ugly art
on the poor, by putting it in public squares and government museums and
textbooks. No matter how advanced your taste is, it's a brute fact that the
poor don't enjoy ugly art. So these actions amount to taxing the poor in favor
of the elite, which is immoral.

~~~
matt4077
Considering most artists are pretty poor, the link between wealth and taste is
a bit strenuous.

I personally know quite a few people who have little income, but enjoy life by
engaging with the kind of art you seem to dislike. Some have consciously made
the decision to forgo a career, earning just enough for their minimalistic
lifestyle, and spending lots of time on experiences. Others are poor against
their will, yet still interested in art.

So, no: it's not a "brute fact". Art isn't even measured on a scale of beauty
vs. ugliness–that's "design" maybe. Good art almost always upsets some people.

The art you may think of as universally appreciated was almost certainly
deeply divisive when it was created. Those dutch still-lives, for example, are
full of sexual innuendo, including prostitution, incest, or homosexuality.
Picasso was the target of Nazi sabotage because they considered abstract art
elitist. Andy Warhol was shot and almost died because his art had become some
woman's paranoid obsession etc.

~~~
cousin_it
Do you have an argument why making people upset (e.g. by ugliness) should be
the criterion of good art?

~~~
matt4077
It's not required, obviously. But art as its commonly understood (and
specifically protected in many countries' constitutions) functions as one of
the mechanisms of a "civil society", much like journalism, unions, religions
etc.

In that sphere, i. e. politics (broadly), there are no crazy new inventions
that make everyone happy. Science can find a cure for AIDS and nobody will
complain. But politics is to some degree a zero-sum game, where a finite
amount of "power" can only redistributed.

Almost any change will therefore have opponents: the sexual revolution
frustrated catholics, #metoo unearthed buried guilt etc.

"Ugliness" really doesn't play into it. Every city has places far uglier than
any piece of publicly displayed art I can think of. More often, it's the
actual idea that freaks people out: The holy Mother Maria spanking the infant
Jesus[0] is not too bad on the eye, but it's a really strange idea[0] (From
the 1920, by the way–shock value isn't a new idea).

The Nazis hated Picasso not (just) for his _Guernica_ , but because they
abhorred uncertainty, subjectivity, and doubt. That's why they rejected his
(and most other) abstract art. It's also why they really didn't like
relativity and quantum physics: it's possible that they missed their chance to
get the atom bomb first because they had aesthetic objections to this "strange
new relativism".

[0]:
[https://i.pinimg.com/originals/2e/8b/96/2e8b9610aca3535a8d6b...](https://i.pinimg.com/originals/2e/8b/96/2e8b9610aca3535a8d6b9fdee80b7a88.jpg)

~~~
cousin_it
I agree that art is communication, but not all communication is art. To me,
good art is a message that relies solely on argument from beauty to prove its
point. So any art that looks ugly to someone is self-defeating in their eyes,
because it throws away its only weapon.

The artists that speak to me most (like Pushkin, Orwell, Hunter Thompson,
Andrew Hussie, davesecretary...) are keen observers of their time and have
strong opinions, but they play fair in a sense. They make their points of view
aesthetically compelling and stop there. What they can't say with beauty, they
don't say at all. Anything more forceful is closer to a Fox News editorial
than to art.

~~~
andybak
> any art that looks ugly to someone

> Orwell, Hunter Thompson

Orwell looks ugly to _someone_. Hunter Thompson looks ugly to _someone_

Remember Room 101 in 1984? Have you read "Hells Angels"? These aren't
uncontroversial works of "beauty".

You are mistaking your personal aesthetic judgement for objective standards.

~~~
cousin_it
I'm not sure we disagree?

My original comment said public art that looks ugly to many people is harming
them, so elites should stop pushing it.

Then Matt said art shouldn't be concerned with beauty. I disagreed, and argued
that artists should try to express their ideas with beauty. That standard
(whether the artist tried to achieve subjective beauty) is actually objective.
For example, we know that Hunter Thompson tried to create something beautiful
according to him. After all, many other people found his work beautiful, and
that can't happen by accident. Another example of such attitude in modern art
is Rothko. I'm not a fan of his paintings, but he clearly went to extreme
lengths in pursuit of beauty, and I can easily imagine how someone could fall
in love with them.

Compare that to many artists today who don't try to express their ideas with
beauty. They explicitly say as much. Read Matt's comments: beauty is merely
"design", winning power games is what matters... That trend is causing the
current wave of public art that looks ugly to almost everyone.

------
crazygringo
This article is bizarre.

High-end art prices aren't "manipulated" in some kind of nefarious way,
they're just highly illiquid and complicated. The article makes it sound like
there's collusion or price-fixing between galleries, but there's no evidence
of that.

The author makes the argument that more transparency would lead to lower
prices... yet simultaneously implies prices are lower than they ought to be:
"One of the worst things a dealer can do is over-price a work because they
can’t lower the price when it doesn’t sell."

And anyways, I find myself sympathizing far more with artists than with the
rich buyers here -- making a living as an artist is already hard enough! Why
would we want to _lower_ what they can make? And for buyers who want less
expensive art, there's _tons_ \-- just don't shop at Gagosian!

Finally, the article seems to imply that art is subjectively bad now ("rape of
dismembered corpses"), but that lowering prices would help fix that. That
doesn't follow at all, and modern art on the vanguard is _always_ considered
"bad" by the majority at its time -- whether Monet or Pollock.

For anyone interested in details of how the art world really works and why, I
highly recommend "Seven Days in the Art World" by Sarah Thornton.

~~~
fwdpropaganda
> The article makes it sound like there's collusion or price-fixing between
> galleries, but there's no evidence of that.

I would say that a gallery bidding on an auction because they have an interest
in increasing the transaction price of pieces being sold by an art dealer
connected to them is a textbook example of collusion (as opposed to bidding
because they want to own the piece).

As usual free market fundamentalists will disagree that this is wrong in any
way.

~~~
gjem97
Furthermore, restricting future sales to a buyer because you don't like that
they sold the last one sounds pretty anti-competitive, especially when you
consider that usually a gallery has a temporary monopoly on an artists works.

------
TheOtherHobbes
I found this contradictory. Galleries set prices, but

"desirable collectors are well educated consumers and won’t blatantly
overpay."

What are collectors educated in, exactly? Is it reading the collective market
and understanding the pricing signals it generates? Is it marking new art to
this market?

If the latter, how does that work if the art has no intrinsic value?

~~~
jaclaz
There is also another effect, which I call recursive over-valuation.

The "high-end" art collectors tend to be extremely wealthy, and - with of
course some exceptions - wealthy people are wealthy also because they care
about money.

So, imagine that you are a wealthy art collector and you have just paid -
let's say - 100,000 US$ for a painting by an "emerging" artist.

It is only human to show off your new painting, and the people you frequent
are likely to be also wealthy and art collectors.

So, if you have a name as an art collector, that painting soon becomes in your
elite a "set point" for the value of the new artist work.

The year later, a gallerist that is selling at 115,000 US$ another similar
painting of the same artists can well say "Last year TheOtherHobbes bought a
similar one for US$ 100,000, and you know him, he wouldn't pay that kind of
money if it hadn't this value".

And this sets a second precedent, and it goes on.

BTW it is all in your interest to "defend" and "promote" the artist (because
you defend your investment into it) even if the painting is awful.

In a couple of years this way you will be able to re-sell the painting for -
still say - US$ 200,000 while having - besides the profit - reinforced your
fame as good investor and educated art expert, capable to see the potentiality
of the artist ahead of all others...

~~~
CPLX
Sure but this dynamic is always true for all markets for things. You're just
loosely describing a Keynesian beauty contest.

At the core there's still someone or some group of people making some kind of
fundamental aesthetic valuation. It's really more the severe lack of liquidity
and impossibility of commoditizing of the market that creates the effect
you're seeing.

------
djsumdog
This makes me think of an episode of the short lived Dilbert animated series,
where Dilbert engineers the perfect piece of art (a Blue Duckie).

It becomes highly popular and the rulers of the underground art world (I think
it included a still living Michelangelo or DiVinci) kidnap him and tell him to
cut it out.

------
jamesfe
In short, there is no objective way to value art, so galleries charge as much
money as possible for the art.

The author of the article is somehow either confused or offended by this.

------
currymj
shocked that this doesn't mention taxes at all.

if you donate a piece of art to a museum, in the US you can deduct its "fair
market value" from your taxes. so if there's a way to drive "fair market
value" up higher than what was paid, say if a few comparable artworks sell for
an inflated price, everyone can donate to museums and effectively realize some
profits without crashing the market by actually selling their art.

------
hansmalone
While I feel I've seen enough evidence to suggest that galleries are used to
launder/manipulate the market, this writer's reasoning seems problematic. Her
whole argument starts from a place of misunderstanding art entirely:

"You’d think the value of art would depend on its aesthetic value; a picture
you enjoy looking at on your wall. How could a dismembered corpse artist be
remotely successful? Yet these paintings were classified as desirable by the
art market."

aesthetic value != "a picture you enjoy looking at on your wall"

and further, a corpse can't be enjoyable to look at?? (Picasso's Guernica,
Caravaggio's Death of a Virgin...)

That'd be like saying the movie market is clearly manipulated because Blair
Witch Project is the most successful indie of all time.

------
vinceguidry
The objective of any industry is to collect power and influence for itself.
Collusion is the natural state of affairs once people with power and money
start entering the arena. Once you've exhausted the income opportunity that a
single firm can offer you, your priorities change. Mere cash grabbing won't
move the needle anymore.

What you want to be doing at that point in time is move up the value chain so
you can capture a healthy percentage of the entire market. Artists that make a
killing open galleries and provide for emerging artists to make their mark, of
course while you take your cut. You see it in every creative arena. Musicians
open record labels, actors open acting schools and talent agencies. Career
trajectories differ, but the principle remains the same. You move up the value
chain.

Once you've mastered selling shovels to the prospectors, then you have to
learn how to control value itself. There is no intrinsic value to products of
human creation, so that value has to get created somehow. The making of the
value sausage is often really, really dirty. But as long as humans want it,
then there needs to be a price attached. And that price has to be arrived at
somehow.

~~~
theoh
"Artists that make a killing open galleries and provide for emerging artists
to make their mark"

This is not generally the case in art. While there exist informal "artist run
spaces" set up by struggling young artists, it is unknown for an artist to
become a prestigious commercial gallerist. It doesn't happen. Setting up a
gallery primarily requires capital, and only secondarily involves artistic
judgement.

Damien Hirst is the only partial exception I can think of, and he was also
involved in coordinating group shows in temporary industrial spaces early in
his career, so he has always had an interest in staging exhibitions. His
London gallery is definitely not about making sales or supporting emerging
artists, though. It's a status symbol.

There are a few ways of looking at the art world that explain why artists
don't become gallerists. One thing is that gallerists/curators are "cultural
intermediaries" rather than creators. It's a different talent. Artists are
sometimes asked to curate but they don't get involved in setting up galleries
or publishers. It would be like an actor setting up a chain of cinemas.

I guess the phenomenon you perhaps have in mind of movie stars becoming
producers differs because producing is still a creative activity.

There's a book called "Art World Prestige" that does a sociological analysis
of what goes on -- all the things that are specific to the art world.

------
onion2k
_You’d think the value of art would depend on its aesthetic value; a picture
you enjoy looking at on your wall._

Considering a lot of the art collectors buy is immediately whisked away to
temperature-controlled, pitch dark warehouses where it can be kept safely
until it's put back on the market a decade later, I really wouldn't expect the
value to be related to what the art looks like _at all_.

~~~
ThomPete
Exactly. It's not. It's the history of it that matters.

~~~
pbhjpbhj
The history of an artistic work relies on its aesthetics though, surely?

~~~
JumpCrisscross
Not necessarily. I don’t have an aesthetic fondness for Klimt’s _Lady In Gold_
[1]. Its history, however, is fascinating.

[1] [https://en.m.wikipedia.org/wiki/Portrait_of_Adele_Bloch-
Baue...](https://en.m.wikipedia.org/wiki/Portrait_of_Adele_Bloch-Bauer_I)

~~~
pbhjpbhj
But, the original creation is centred on aesthetics for most (historic) works,
no?

FWIW I love Klimt, Lady in Gold isn't my favourite but she's grown on me.

------
candiodari
A story I heard is that it's very useful for tax cheating. You want to pay
someone a lot of money ? "Sell" them high end art cheap. Nobody questions if
art suddenly sells for 40% less or more, and then resells after a few years
for 4x or 5x it's original amount. Of course, not entirely risk-free.

Same goes for things like some watch brands and a few other things.

------
sillysaurus3
This is tangential, but if you're looking for an oldschool history channel
style documentary of a reclusive artist, this video on Henry Darger was
fantastic:
[https://www.youtube.com/watch?v=vjCS_u3Sgpg](https://www.youtube.com/watch?v=vjCS_u3Sgpg)

------
d--b
> You’d think the value of art would depend on its aesthetic value.

This is just plain wrong. Not only does the author not understand art at all,
but he also doesn't understand basic collecting.

Following that judgment, people collecting post stamps are just morons, cause
a stamp that's been used can't be used again and so has 0 value - except
perhaps its aesthetic one, which is not huge...

------
doh
There is a fascinating book on the topic of pricing art [0]. It was an eye
opening study for me.

[0] [https://www.amazon.com/Talking-Prices-Contemporary-
Princeton...](https://www.amazon.com/Talking-Prices-Contemporary-Princeton-
Sociology/dp/0691134030)

------
damontal
F For Fake is a great movie/video essay by Orson Wells investigating the work
of one of the most notorious art forgers of the 20th Century. Fascinating
story worth seeking out. The full film is on youtube at the moment, as well as
Filmstruck.

~~~
samfriedman
It's a brilliant film not just because of its subject, but because Wells uses
the structure of the movie itself to say something about the world of forgery.

------
kingkawn
The opening paragraph’s assumptions imply that the history of art is
meaningless. This is ignorant of the entire evolution of the discipline.

------
replayzero
Art is just good provenance - If you attach provenance to anything it becomes
art.

------
petecooper
Perhaps a (2013) in the title?

------
blauditore
Off-topic, but:

    
    
      > If an owner sells a gallery's art, then the gallery will often cut her off from future purchases
    

I don't understand why some authors default to female pronouns in such cases,
given English has a gender-neutral one ("them").

Is this a political statement? It just appears childish to me and makes the
article look less professional.

~~~
JumpCrisscross
> _given English has a gender-neutral one ( "them")_

I use "they" and "them" as gender-neutral singular pronouns. There is
disagreement on this choice of style. Alternating between gendered pronouns
seems to be the preferred alternative to the last decade's (s)he he/she
garbage.

~~~
StavrosK
Eh, I still prefer "(s)he" to ze/hir.

------
golergka
> You’d think the value of art would depend on its aesthetic value; a picture
> you enjoy looking at on your wall. How could a dismembered corpse artist be
> remotely successful?

Cannot the author imagine a person who would find a dismembered corpse to be
aesthetically pleasing and relaxing? If so, I don't think that person with
such low empathy should be a journalist.

~~~
galfarragem
Art is not utilitarian. Art doesn't have the function of being hanged in a
wall or maximise good feelings. That's just a low trick to make common people
buy it.

Art is (self) expression.

~~~
pveierland
> Art is not utilitarian. Art doesn't have the function of being hanged in a
> wall or maximise good feelings.

The sentiment can be appreciated, but as a general statement I believe this is
false. As an example: when new hotels are built, they are commonly outfitted
with a collection of original art consisting of pictures and sculptures. This
is certainly done to a large degree due to the utility of the art, which
serves to make the hotel more interesting and aesthetically pleasing. Would
you argue that decoration for such a purpose does not constitute art?

~~~
galfarragem
No, I'm just saying that art is not _made_ to be hanged in the walls and
maximise good feelings but is _sold_ to be used like that. And only a subset
of artworks are suitable to be sold as original decoration.

I'm not a seller but I believe is way easier to sell something with a clear
function than the opposite.

~~~
dagw
_I 'm just saying that art is not made to be hanged in the walls and maximise
good feelings_

Would you also accept the corollary that any object specifically made to be
hung on wall to maximise good feelings cannot be art?

