The Profitable Psychology of Pre-Selling
Late in my adventures at Art Basel Miami last week, my friends and I followed a recommendation from a dealer to introduce ourselves to the work of a rising painter named David Ostrowski. A few different gallerists were showing Ostrowski in their booths, but only one - Peres Projects in Berlin - had dedicated their entire inventory at the fair to his work. Peres’s sales reps informed us of two interesting tidbits: first, that they were installing a different mini-exhibition of Ostrowski pieces every day of the fair; and second, that all of the pieces they would exhibit throughout the entire week had already been sold before they arrived in Miami.
After we left, the friend of mine least familiar with the art world raised a question that I think most people would ask: What’s the point of paying to travel from Berlin to Miami to mount an exhibition at one of the industry’s most well-known sales engines… only to show a collection of pieces that aren’t for sale?
The answer is part psychology, part economics. (Then again, economics is essentially mass behavioral psychology, so that statement may be redundant.) The principles involved here are actually fairly simple. Just as in any other walk of life, scarcity (or the complete inaccessibility) of an artist’s work tends to breed desire in the minds of potential clients. If Ostrowski’s paintings are so sought after that even the most elite collector with the earliest preview pass would have been too late to strike a deal with Peres Projects at the fair, the perception becomes that his work is desperately lusted after - not just by one or two other collectors, but by a large enough contingent of clients that an entire week’s worth of paintings was unattainable before it was even loaded onto the cargo plane.
(Side note: While there’s theoretically no reason that a single collector couldn’t have bought out a gallery’s entire stock of new work by an artist, gallerists normally prevent this for the sake of cultivating a number of clients rather than just one. Regardless, the actual number of collectors involved in buying out a selection of inventory is irrelevant to the collector who finds she is too late anyway. Whether she was pre-empted by one buyer or the pooled funds of a tiny island nation, the work is equally unavailable.)
Creating a perception of desirability and scarcity gives a gallerist an opportunity to do two connected things. The first is to begin building a waiting list for the artist’s work. The second is to raise the price of that artist’s subsequent output.
Waiting lists originally came to prominence in the New York art scene of the 1980s - the first real boom times of the contemporary market. The famously aggressive Mary Boone is often credited as the tactic’s innovator, though I’m not sure how one positively confirms that. A number of gallerists have since embedded waiting lists into their business models. They are a tool that collectors almost universally despise… and yet often subject themselves to anyway, as a regrettable but necessary part of getting what they want. If acquiring the work is great sex, then the waiting list is foreplay that forces the collector into an oppressive leather gimp suit and a variety of unwanted humiliations.
The concept is simple. When demand for an artist’s work outstrips supply, collectors who weren’t fortunate enough to acquire the artist’s most recent work place their names on a list with the gallerist for the artist’s next round of production. When the new work is ready for sale, the gallerist starts at the top of the list and begins placing each piece with each successive pre-authorized client.
The dynamics of this process vary somewhat from gallerist to gallerist. The most hardcore treat the waiting list as a binding contract and a blind lottery; signing on is a client’s firm commitment to buy whichever piece from the new bounty the gallerist sees fit to assign her - no questions asked, no price negotiable, no escape hatch to the deal. The most moderately tempered gallerists equate a spot on the waiting list with the right of first refusal for a new work. The softest form of this approach gives the collector the option to select her favorite of the artist’s full run of available, freshly finished pieces when supply renews, but carries with it no requirement to buy if she does not love what she sees.
Still, even this kinder, gentler form of the waiting list exerts extra psychological pressure on the client to buy, since the very existence of the waiting list means that she knows someone else is hungrily looming in the shadows behind her to pounce on anything she might pass up. But in comparison to the alternative model, this latter species of waiting list practically qualifies as an act of charity.
There are a range of variations between these two extremes. In some cases, exercising the right of first refusal carries the consequence of being shunted to the bottom of the list, or being booted from it entirely. In others, a collector can maintain her spot on the list even if she passes, but will only ever have the option to acquire whatever work the gallerist pre-selects for her. It all depends on the personalities involved.
The important point about waiting lists is that they are both a marketing tool for the artist and a source of guaranteed (or at least probable) revenue for the gallery. Going to a fair like Art Basel Miami with only crates full of pre-sold artwork enables a gallerist all the cause they need to start building a waiting list full of interested new clients throughout the week. And once they have a waiting list, they have tangible proof of demand for the artist’s work - which in turn grants them the justification to raise the price of the next round of works from Ostrowski’s studio.
The principle doesn’t just apply to art fairs. High-profile gallerists regularly try to sell out exhibitions of their artists’ new work prior to the opening reception. Call the phenomenon whatever you like - social proof, herd mentality, the aphrodisiac of unattainability. The label doesn’t change the underlying economics. Pre-selling is a savvy way for a gallerist to play the long game with an artist she represents. In the case of art fairs, it’s a short-term sacrifice of profit for the chance at a broadened/diversified client base and a much larger cumulative payoff in the future. A gallerist just has to make sure that the artist doesn’t self-destruct between the construction of the list and its satisfaction.