The Back Room: Primary Pressure

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This week in the Back Room: auction houses shake up the primary market, which countries’ gavels ruled August, your favorite roundup of cross-sector news morsels, and much more—all in a 7-minute read (1,877 words).

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Top of the Market

When Worlds Collide

Kevin Beasley, The Red Banana Tree (Forstall) (2022) is one of the inaugural works included in the Artist’s Choice initiative at the Contemporary Curated sale at Sotheby’s New York on September 30.

Remember the good old days, when auctions were strictly a resale channel?

While that memory is more nostalgic than many observers want to admit (especially if you consider NFTs), the past month has seen three separate Western auctioneers move to put primary-market works under the hammer: Sotheby’sChristie’s, and Simon de Pury’s namesake online platform.

All three have caused agita among industry insiders, particularly gallerists who already felt under siege from bigger beasts in their own sector. But a pre-existing Korean auction series and an overlooked bottleneck make this trio seem far less diabolical than the prevailing narrative.

For brevity, let’s start by unpacking only the most talked-about of the three Western initiatives, Sotheby’s Artist’s Choice. (You can read about de Pury’s first-to-market sale here, and Christie’s variation here)…

 

Artist’s Choice

The Brief: Masterminded by Noah Horowitz, Sotheby’s worldwide head of gallery and private-dealer services, the ongoing sales channel invites a small number of artists and their respective dealers to jointly offer new work at auction. The initiative will launch as a part of the house’s “Contemporary Curated” sale in New York on September 30. (More details here.)

The Pitch: “The win-win ethos at its core empowers artists and galleries to lean into auction by selecting the right work at the right time on their own terms,” said Horowitz. So the artists are “actively involved with how their work will be represented at auction, rather than responding to these dynamics reactively as is usually the case.”

The Split of Proceeds: 92.5 percent of the hammer price to each pairing of artist and gallery; 7.5 percent to a cause or charitable organization designated by the artist; and a 7.5 percent match by Sotheby’s from out of the buyer’s premium.

The Artists (and Galleries): The first seven participants include Kevin Beasley (repped by Casey Kaplan), Vaughn Spann (Almine Rech), and Kennedy Yanko (Jeffrey Deitch).

Critics Say: Very few artists actually stoke enough demand at auction to win themselves and their dealers a career-changing windfall. Even if that low-probability outcome hits, Sotheby’s is making the primary market even more baldly transactional while normalizing auction houses’ presence in the business of selling work fresh from the studio.

However, the criticism feels overcooked once you compare Artist’s Choice to a Korean auction initiative called…

 

Zero Base

The Brief: Launched in November 2019, Zero Base is a dedicated sale series in which Seoul Auction sources work directly from Korean artists—most without gallery representation—and offers much of it at a starting bid of zero South Korean won (KRW), with no reserve price.

The Pitch: A Seoul Auction spokesperson said that Korean galleries “frequently come to recognize certain artists through Zero Base and subsequently work with them.” Others allegedly catapult from anonymity to healthy resale markets. Some supposedly do both.

The Split of Proceeds: Zero Base declined to confirm how proceeds are divided, saying only that “a range of plans” is used.

The Artists: To date, there have been nearly 30 Zero Base auctions featuring works by more than 140 Korean artists. The house also operates partnerships with cultural foundations in three provinces to identify and bring more local talent to market.

One success story is Qwaya, a former illustrator and K-Pop album-cover designer whose paintings have risen in price by 24X since his first Zero Base work sold for KRW250,000 ($179) in December 2019. This summer, a 2021 Qwaya canvas went for KRW 6.2 million ($4,446) on Blacklot, Seoul Auction’s e-commerce resale platform.

Critics Say: A spokesperson for the Galleries Association of Korea called the Zero Base sales “reckless auctions for one-off profits” that “threaten the time for young artists to receive proper evaluation and grow,” citing “cases where artists are thrown into the market without time to solidify themselves.”

Ironically, those words sound almost identical in substance to what we have heard from some dealers about Artist’s Choice, even though Zero Base rams auctioneers much deeper into the primary market much earlier in artists’ careers.

Sotheby’s initiative also has the potential to help solve a problem that is rarely discussed outside of closed circles of dealers…

 

The Wedge

“As demand for contemporary art has continued to escalate, a wedge between primary and secondary market prices for the most sought after artists has opened up,” Horowitz said.

But the wedge doesn’t just create tension when secondary prices are more visible than primary prices; it also creates tension when secondary prices .

Tim here: During my years in the gallery sector, I cannot tell you how many times a collector with a baseline level of competency responded to work by a midcareer or overlooked veteran with some variation of, “Why would I buy this new painting at $40,000 when the artist only has four auction results since 2002, and none of them is for more than $18,000?”

What buyers often don’t know (or don’t care about) is that the auction data hides vital nuances like the condition of the earlier lots, how they fit (or don’t) with the artist’s current practice, the caliber of the auction house offering them, and the market timing of the sale—all of which can warp expectations and kill future sales even years into the future.

This is the unadvertised downside of dealers tightly managing their artists’ resale markets: most buyers would rather walk away than pay a primary price higher than what the auction data says they should.

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The Bottom Line

Artist’s Choice may not be a perfect solution to this problem, but at least it aligns the incentives of the auction house, the gallery, and the artist—and gives the latter two an unprecedented degree of control of what goes under the gavel.

In this sense, the optimal outcome for Artist’s Choice lots would be if they were bought for either within their estimate ranges or modestly above them. Higher than that, and the wedge creates serious speculative pressure. Lower than that, and the wedge creates serious “Why would I overpay for primary?” pressure.

Will it work? Either way, it will be a fascinating trial to watch. If you thought Artist’s Choice went too far, though, Zero Base is proof that, as more and more of the old boundaries fade away from the art market, someone else will always be willing to go even further.

 

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Paint Drippings

Curator David Breslin. Courtesy of the Whitney Museum of American Art.

Our trusty gossip-hound Annie Armstrong is on vacation this week, so Wet Paint is too.

In the meantime, here’s what made a mark around the industry since last Friday morning…

 

Art Fairs

  • Art Basel‘s 20th edition in Miami Beach will be its biggest yet: the 283 announced exhibitors hitting Vice City include 26 first-timers (London’s Soft Opening and French gallery Sultana among them). (Artnet News)

  • Contemporary Istanbul opened with early six-figure sales reported by Dirimart gallery, led by a €350,000 ($347,420Fahrelnissa Zeid work and a €125,000 ($124,076) Franz Ackermann. Lower-value sales included a €50,000 ($49,630Azade Köker work at Zilberman. ()
  • Christie’s will offer an estimated $50 million worth of works from the collection of ex-energy exec Roger Sant this fall. The headliners? A Joan Mitchell canvas expected to fetch up to $15 million and a Gauguin painting that hopes to bring up to $8 million. (Artnet News)

Auction Houses

  • Cologne-based auction house Van Ham and its Munich-based competitor Karl & Faber are joining forces to mount an “auction alliance” as Sotheby’s encroaches on their turf. The homegrown houses will hold joint previews and publish joint catalogues, but sales will remain separate. ()

  • Phillips will partner with Chinese auction house Yongle on a series of sales in Hong Kong and Beijing running from November 30 through December 1. (Artnet News)
  • Christie’s will offer an estimated $50 million worth of works from the collection of ex-energy exec Roger Sant this fall. The headliners? A Joan Mitchell canvas expected to fetch up to $15 million and a Gauguin painting that hopes to bring up to $8 million. (Artnet News)

 

Galleries

  • Marian Goodman Gallery has appointed dealer/advisor Adrian Rosenfeld as executive director of its Los Angeles outpost opening in early 2023. Former Simon Lee director Nathalie Brambilla will also take over Goodman’s Paris space. ()

  • François Ghebaly elevated senior director Blaize Lehane to partner. Lehane, a former co-owner of Ramiken Crucible, plans to expand Ghebaly’s New York space. ()

  • Almine Rech will debut its second New York location in Tribeca in 2023. The 10,000-square-foot space will be sited at 361 Broadway, a stone’s throw from Andrew KrepsPPOW, and Kaufmann Repetto. ()

Institutions

  • The Met has finally named its new curator of modern and contemporary art: Whitney Museum curator David Breslin. His first major task will be to oversee the planned $500 million expansion of the museum’s modern and contemporary wing. (Artnet News)

  • Construction delays have forced the Lucas Museum of Narrative Art to push its debut all the way back to 2025. ()

  • After just two years, MoMA photography curator Clément Chéroux is returning to his native France to lead the Henri Cartier-Bresson Foundation. ()

 

NFTs and More

  • Swiss “freeport king” Yves Bouvier has reportedly sold his Singapore freeport to Chinese cryptocurrency billionaire Jihan Wu for $28.4 million60 percent less than its reported $70 million construction cost in 2009. (Artnet News)

  • The former U.S. ambassador to FranceCraig Stapleton, filed a lawsuit against the chief executive of French auction house Tajan, accusing her of improperly withholding an estimated €715,886 worth of paintings he hired her to resell in 2010. ()…
  • Breakout auction star Huang Yuxing is entering the crypto game with a series of generative-art NFTs to be sold on LiveArt. When minted, the “mystery boxes” craft digital gemstones and minerals that will tie into future chapters of a wider project. ()

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“Pinch me—I must be dreaming. Brad Pitt is an extremely impressive artist. I certainly didn’t expect to be saying that when I got up this morning. He has sidestepped the embarrassment of celebrity art to reveal what by any standard are powerful, worthwhile works.”

 

—art critic Jonathan Jones, the U.K.‘s crown prince of hot takes, endorsing Pitt’s museum debut in Finland… despite only having reviewed press photos online. ()

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Data Dip

National Treasure

© 2022 Artnet Worldwide Corporation.

© 2022 Artnet Worldwide Corporation.

If you need analytical proof that big-ticket auctions are now a year-round business, the chart above breaks out which countries’ auction houses played host to the 15 highest-value fine-art sales in August. The cohort collectively brought in almost $28.8 million—and a few storylines worth watching…

  • China was the runaway leader: its hammer-holders sold nine of the 15 priciest lots, good for $18.6 million and 65 percent of the windfall by value.
  • Singapore placed a strong second thanks to Sotheby’s first live sale there in 15 years. The island moved four of the top lots for a combined $7.1 million and one-quarter of the pie.
  • South Korea ($1.9 million) and Australia ($1.1 million) rounded out the list, each selling one of the 15 apex-priced lots—despite that only the former had the momentum of a major art-fair week to build on.

For an illustrated piece-by-piece accounting of the works behind these juicy numbers, click through below.

[Read More]

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Thanks for joining us in the Back Room. See you next Friday.

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