"Average Is Over" III: Size Matters (Until It Doesn't)
In Part I of this series, I laid out my reasoning for the future dominance of art gallerists who act primarily as talent managers/artist supporters. In Part II, I explored how that market preference would affect the entrepreneurship and employment prospects of more classically sales-oriented players in the sector, likely by shoving them away from both working with artists at their own galleries and working for Leo Castelli type artist-nurturing galleries. Today I want to talk about what the first two sets of conclusions mean for the Castelli-esque galleries that remain after this shift.
The potential to replace hard-sellers with technology would offer gallerists something rare and wonderful: a reduction in the cost of doing business. Selling art is a notoriously cost-inefficient industry. From a strict business standpoint, commercial art spaces are showrooms. They exist because, until recently, it’s been impossible (or at least mind-bendingly difficult) to sell artwork without physically installing it in a room. Otherwise, how would collectors look at it and make a decision to buy?
But a gallerist who wants to succeed on a grand scale currently needs more than just any old room with four walls. First off, her space has to be in one of the metropolitan power centers of the art industry, so that she can more easily magnetize clients who are already visiting other top-tier galleries nearby. State-side, that means setting up shop in New York, Los Angeles, or if she’s prepared to fortify her oxen cart and blaze a new trail, Silicon Valley. Outside of the US, her primary options are London and Berlin. Beneath those cities, there is a decidedly lower tier that includes destinations like Paris, Milan, Geneva, Zurich, and increasingly Hong Kong, but a gallerist who sets up in any of these is already restricting her exposure to a significant extent. I would never proclaim to be a real estate market expert - if I was going to lie, I would choose something much more creative, like when I used to tell women at bars that I worked as a pet psychic or a mechanic specializing in those tiny Shriners’ cars - but with the possible exception of Berlin, none of those destinations is cheap. The rent hurts any potential gallerist right from the start.
Say our hypothetical gallerist is undeterred, though. The next problem is how much space she needs to acquire in one of these luxurious locations. In a pre-online art market, she could only sell artworks that would physically fit through her galleries’ doors and on her galleries’ walls. Related, her sales prospects were also constrained by how many artworks she could exhibit at a given time. Add to this calculus that, within the industry, it’s standard practice to directly relate size to asking price. (If you feel like taking my word for it is a little too close to trusting some sweaty ne'er-do-well in mirrored shades offering candy from the back of an unmarked white van, scroll down to the paragraph that begins “Once you’ve set your base price…" here.) In a business where lucrative clients can pop in unexpectedly at any moment, a gallerist also needs to maintain robust on-site storage space, so that inventory beyond what’s currently exhibited can be easily pulled for spontaneous viewing. The fall-out of all this is simple: the incentives compel gallerists to maximize their business’s physical size.
But it’s still not enough to acquire a large space in a booming arts capital, either. Presentation is a huge part of the battle when it comes to selling art. It’s not a wise strategy to try enticing a billionaire to spend six or seven figures on artwork if, to see it, she has to step inside a staph-ridden former meat-processing plant that still reeks of pork entrails and looks like it may very well be haunted. (It can be done to a certain extent, but only under very specific circumstances, as I’ve written before and as has been demonstrated elsewhere.) Posh redesign and remodeling is costly, especially for a large space. And even after it’s finished, a gallerist must continue eating the overhead costs, all of which scale with the size of the gallery. Lighting, heating/cooling, and general upkeep all take a serious toll on the books. A gallerist tries to skirt them at her own peril. It is not a good look in a presentation-dependent business if clients have to keep their coats on in the winter so the gallerist can conserve heating costs, or abruptly enter to see the lights turned off in the exhibition space because the gallerist wanted to minimize the electric bill while no one was visiting.
The inefficiency horror show continues. Even if a gallerist pays dearly to lock in a big, beautifully remodeled space in a serious arts metropolis, the cost of mounting new exhibitions is often ghastly, too. Though there are a variety of different arrangements between gallerists and artists’ studios, gallerists almost invariably pay at least half (and often more) of the costs of art fabrication (e.g. foundry costs if the show consists of bronze sculptures), framing, specialty packing/crating, shipping (also specialty, often), and installation (ditto). Certain exhibitions even compel gallerists to completely redesign a part of their interiors. For example, showing the works of an installation artist like James Turrell can require a gallerist to build a series of technically precise spaces inside her base gallery, only to demolish them after the exhibition closes. Selldorf Architects, Gagosian’s go-to firm, has redesigned the interior of his West 21st Street gallery in New York five times since it’s founding in 2006, and did the same honors once at his Britannia Street space in London, as well.
This last point completes the inefficiency picture: If a gallerist wants to be truly prime time in the current industry, she needs multiple galleries. I’ve written about this problem in a dedicated way before, but suffice it to say that the more market share a gallerist wants (or at least, the more prestigious she wants to appear), the more spaces she must operate. Mega-gallery Pace is currently spread across eight spaces on three continents; Gagosian presently maintains sixteen spaces in six countries worldwide. (A seventeenth temporary exhibition space in LA recently closed.) And all of these must be fully staffed, too, which is a big part of the reason that individuals who excel in sales are still in demand in the gallery world.
But if we progress to a point where the majority of sales are happening online, then what’s the value of all this? The more online purchases contribute to the art market’s profits, the fewer incentives there will be to bear the enormous financial inefficiencies of one premier physical gallery, let alone multiple. This trend should nudge the industry away from the franchising, overhead-intensive model that currently dominates the market toward one based around lean operations.
Specifically, I expect the gallerists of the future to significantly scale back not only the number of spaces they operate, but the size of each one. The ideal would be to run a sleek office space with a small attached showroom where a few selected pieces can be hung in the instance of a live presentation. The majority of one’s inventory can be exhibited digitally while it physically resides offsite in a full-service, third party art services facility, such as Crozier in New York or Gallery Services in LA. Businesses in this sub-field provide not only climate-controlled storage but also supplementary services such as private viewing rooms, which a gallerist can rent out in order to install a specific piece or pieces for an interested client to evaluate. This function would be especially useful in an era where gallerists will actively seek to minimize their physical footprint. Why pay an exorbitant monthly rent over and over again for the two times a year you need a client to see a 10’ x 20’ artwork? It’s basically the argument for Zipcar, only applied to a boutique industry: exhibition space when you want it.
So while galleries themselves physically shrink, I would expect these supplemental players to physically expand as a complement. I believe we’re already seeing the beginning of this trend in the colossal, tax-free, wealth-driven freeports now popping up in places like Luxembourg and Singapore. Think of them not as independent entities but as symbiotic elements of a changing art sales industry.
But if that’s the physical landscape of the commercial art world’s future, what about its online topography? Who participates, who dominates, and how? I’ll cover that next time.