January 24, 2005

Who gets the best art?

Tyler Cowen notes, apropos of the CostCo Picasso story:

For mysterious reasons unbeknownst to this cultural economist, the best artworks are rationed out to regular and longstanding buyers.
The reason for this is quite simple. Every buyer wants to be first in line, but who will the typical dealer approach first? The buyer who can be counted on to pay the price -- preferably with a minimum of fuss. Buyers who turn down too many items or who get too aggressive about trying to beat down the price will find themselves off the shortlist. It's not so much a matter of "longstanding" as of "regular": in a market where the best pieces are hard to get, yet vulnerable to devaluation if shopped around, dealers aren't going to take chances on buyers who are unknown quantities.

So how to get on the shortlist? Be open with dealers; let them know up front that you are a serious buyer in for the long term (this is important), and that you want the best and are willing to pay the price. A leap of faith? To some extent, for many dealers will take ruthless advantage of a freespending newcomer (and note that some fields of collecting are far more ruthless than others). But unless you are willing to put in the time to become a dealer yourself, your chances of putting together a top collection in any but the most obscure subspecialties are slim indeed without dealer assistance.

Here's something that took me years to learn: despite the emphasis usually laid on diligent study and training your eye, people skills are just as important in collecting -- and if developed enough, can be just about all you need. If you can figure out who to trust and how far, who has the knowledge and who doesn't, you will be able to sidestep most of the pitfalls enthusiastically charged into by those who insist on learning everything for themselves.

While I'm at it, I should belatedly comment on another Tyler Cowen post, on CostCo entering the art biz. CostCo has reaped a great deal of free publicity by offering a rather small selection of minor artworks, so I'd hardly aver that this portends a major change in how art is sold. CostCo's markup is minimal because the artworks are a loss leader. Standard gallery markups aren't so much a matter of the "attached aura", but rather what is required to cover overhead. Note too, that the appellation "museum quality" is just about meaningless (of the quality sold in museum gift shops?), and that while the artists may be big names, these "limited edition" prints are no rarities (think upscale Franklin Mint) -- which is why they can be relatively easily commodified in a way that most gallery art cannot.

UPDATE: After giving it some thought, I really must take issue with the following:

Here is rule number one of art buying: if you can just walk up cold and buy it, don't.
That may apply for living artists in high demand, but they constitute a pretty thin slice of the art market pie. When it comes to older art, go to a major art fair (Maastricht, for example) and you'll see the best of the best -- the sort of stuff museums buy, and which you can too if you have the means. Top dealers save special pieces for such shows; the last thing they would want is a reputation for exhibiting stale merchandise.

Finally, keep in mind that stale need not be a bad buy in the long term. Some works have been bouncing around the market because of real faults, whether of quality or condition or attribution. Others may simply be out of fashion, or just overexposed ("if no one else has bought it, there must be something wrong with it").

This is one area where dealers and collectors can work together quite profitably. Experienced dealers are often good judges of what is currently undervalued, but since few can afford to pursue a large-scale long-term buy and hold strategy, most end up concentrating on the short term -- making sales, and leaving the potential long-term gains to their collector customers.

Posted by David on January 24, 2005 9:25 PM

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