Secondary Art Market Revisited – Art Print Issues Classic

The secondary art market continues to evolve just as all other aspects of the visual arts business do likewise. There is no standing still.

What Is the Secondary Art Market?

markus pierson

MARKUS PIERSON “Wanderlust”2000 Hand-embellished Serigraph on Canvas www.artbrokerage.com

Editor’s Update: The steady traffic this post generates shows the interest in the secondary art market remains high. This repost updates some broken links and outdated information.

While prices may not be as inflated as in the past, particularly in the art print market, it is easy to see why the work of some artists stays constant on the secondary art market.

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What is the primary art market?

In order to address the question of what constitutes the secondary
art market, you must first know what makes up the primary art market.

The answer, as with many things in the art market, is complicated.
Since the broad secondary art market includes very expensive work by old and contemporary
masters to relatively inexpensive four-color offset lithographs, you will find
the terminology is used differently depending on circumstances.

The essence of a primary sale is the first transaction where art is sold, in most cases. However, complexities arise when you examine the distribution chain.

It is simple when a transaction is made between artist and
collector. The situation is less clear when an artist makes a wholesale sale to
a gallery that then offers the work at full retail. In this instance, the
retail transaction made by the gallery is considered the primary market
transaction. Of course, there are other methods of first sale to consider.

Defining a secondary market sale

A secondary market sale occurs when the original buyer
decides to put the work for sale a second time. Whereas this sale is most often
initiated by a collector seeking to sell the work, there are cases when a gallery
will put pieces directly into the secondary market. This generally is not good
because it means the gallery has too much inventory and too little demand for
the work. No gallery is going to sell through the secondary market when it has
buyers for pieces in the primary market.

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The venues for the secondary art market range from the toniest auction houses and private dealers to established brokers and galleries all the way down to eBay. In November 2009, The
Economist 
ran a story titled “New or Secondhand?” that accurately depicted the upper end of the market. The information and concepts the article discusses do not apply to most readers here. Alan Bamberger has an useful, illustrative article, “Retail Gallery Prices May be More Than Art is Worth,” on his ArtBusiness.com Website.

The art print market is divided

For our purposes, we are here to discuss the secondary art market
as it pertains to the art print market that includes selling reproductions as
prints. In the art business, there is a split, or bifurcation in the print
market. That is, there are those fine art prints made in time-honored fashion, which
by the nature of their creation are limited. These would include etchings,
woodcuts, aquatints, engravings, serigraphs, stone lithographs and so forth.
See Wikipedia for more details:  http://en.wikipedia.org/wiki/Printmaking
The other component of the print market primarily is made up of reproductions
of original art. Some would call this the decorative art market while others reserve
that term for the open edition and poster market. How you describe it has as
much to do with what end of the market you derive your income as anything.

Art terms are much like
driving laws in Boston, which is to say suggestions.

If you are an artist, dealer or collector involved with etchings,
your view of a giclée is likely to be a decorative reproduction. On the other
hand, if you make your living selling giclees, or some other form or fine art
reproductions, you may take issue with your work being called decorative art.
Unfortunately, you can only control how you market your work.

Different processes create
different perspectives

If you study the work and promotional information offered
over the years by artists and galleries at the New York ArtExpo, I know you
would not find exhibitors characterizing their work as decorative art –
especially those who sell limited editions. It is completely natural they would
use descriptions better suited to help sell their work.

The International Fine Print
Dealers Association
 (IFPDA) also holds an
annual show in Manhattan. You will find this small, but important, group of dealers generally eschews
representing much of the work found at shows such as ArtExpo New York. Most
will argue, as does gallerist Kathryn Markel on her website, where she defines
such work as “wall decor.”

While not stating wall decor is necessarily a dreadful
thing, high-end dealers do not encourage buyers to participate in paying set
prices for higher priced work at ArtExpo. Their reasons are the works typically
are reproductions, and that much of it these days are digital art. And, there
you have the bifurcation in the art print market.

The diminishing secondary
art market

When it comes to the secondary market, there is an active
market for many artists whose work is found at shows such as ArtExpo New York.
You will also find many other artists whose work has transcended the “wall
decor” mentality. In other words, it is a mixed bag. Arguably, the best
example of a secondary market player is Art Brokerage. It carries a vast selection of both originals and limited edition prints from a wide range of artists, including many who have exhibited
at ArtExpo over the years, and many others whose has never been exhibited there.

There is an implication that art reaching the secondary market will have appreciated in value, and thus have become more collectible along the way. For some artists, this is accurate, but for the few
who enjoy seeing their art selling well above initial prices, finding an active
secondary market for most is not a reality, especially in their lifetime. It is
one of the reasons I have argued for not having limited editions of fine art
digital reproductions.

There is a bit of a
conundrum here

In today’s market, if an artist is productive and continues
to put new editions in the market place, it tends to reduce the resale prices of
earlier pieces. This is different from the previous boom decades. If artists combats the problem of lowered prices on the secondary market with small editions, of 200 or less, they cap their income
for that work. This leads to the need for higher and higher prices for their new
work, or to put more editions in the pipeline to maintain a steady income, both
actions have consequences.

Should artists be paid a
resale royalty?

When it comes to the secondary market, artists do not
participate in the inflated prices. Only California has droit de suite laws
where artists are legally ensured a share of the proceeds when it is resold in
the state. The legislation is known as the  California Resale Royalty Act, which was struck down last May as unconstitutional. Resale laws are common in European Union countries. I doubt there will ever be a movement within the U.S.. beyond the now failed attempt in California.

Until the past few years, you could go to the back of Art Business News or Art
World News
 and find several pages of small ads from dealers in the secondary art market.

In a sign of the times, those publications have fewer ad pages with secondary market ads almost
vanished. Coincidentally, in another telling sign, if you research art prints,
particularly giclee prints on the sites of secondary market art brokers, you
will find many pieces being offered well below their original price.

In the art business, more
than secondary market is hurting

A factor in the market that has diminished with trade magazine ad
pages are secondary art market websites offering works while having little
inventory. Attorney, Joshua Kaufman, a long time columnist for Art
Business News
, wrote, “The Online Secondary Market: Resourceor Parasite?” It is an informative piece details the business methods of rogue operators who put a negative effect on the market place. It
also warned that much of the way they were operating was illegal.

While we like to think it was the industry policing itself that
drove many shady characters out of the market, it was eroding market and
economic conditions that took away their incentive. What remains to be seen for
the industry is whether the market will return to a place where artists using
the giclee medium will see an active market with rising prices for their work
on the secondary market.

Where is the print market
headed?

My opinion is it will be difficult for the market to bring us back
to the old days of a booming profitable secondary art market for several
reasons. First, most artists working in multiples these days are using the giclee
or digital printing format. I do not think the public clamors for limited
edition giclees. It is a supplier driven product.

I think most of the public would rather pay a little less and get
to enjoy the art as an open edition. This hypothesis is supported by evidence
some longtime publishers in the giclee market are moving away from creating
limited editions, or using the term “giclee.” Lastly, once there is an
established pattern of digital prints not increasing in value, it will be difficult
to reverse such a trend.

This may be a market with a beautiful creative product, but it
also a business that follows trends. If the trend grows stronger to open
editions, it will depress the secondary market for fine art print
reproductions. That is not all bleak. I think it will force the art to be sold
for its enjoyment rather than the implied wish it will increase in value.

Buyers of giclees found, before the current economic crisis, that they
could not recover close to the sale price of prints they bought when they tried
to take them back to galleries, sell them on eBay, or through an art broker.
Things certainly have not improved in recent years. The upside for artists is
they are freed from artificially limiting their income with the limited edition
marketing model.

What should artists
thinking about getting into the print market do?

I think giclees offer artists a powerful way to sell more work.
Rather than looking to maximize the sale of a limited edition, I recommend
keeping the edition open. There is no reason the pieces cannot still be
numbered using your own open numbering convention. If the artist’s work does
become collectible, then the lower numbers will probably have some higher secondary
market value than original prices.

For those who feel a need for limited editions, I would consider
producing a small edition of 200 or less that is hand-embellished by the
artist. I think if it is clearly stated the edition will be accompanied by
lower-priced open edition pieces, there would not be conflict with buyers.
Certainly, recently retired artist, Terry Redlin, was able for decades to sell
both open and limited editions of the same images without creating a problem
for his self-publishing company or the dealers who carried his work. I am
guessing, and would suggest, that in such a situation, with both open and
limited, the limited edition have exclusive dimensions.

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Barney Davey

I help artists and photographers find buyers, sell more art and operate profitably.

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