Market Monday: Overexposed

This week, stories about art's exposure to risk and the risk(?) of exposure to art...

Identity Protection: News broke last weekend that the Old Master market may be tainted by as many as 25 counterfeit paintings collectively sold for up to £200M. Passed off as works by Frans Hals, Lucas Cranach, and Orazio Gentileschi––if not others, as well––the forgeries are said to be executed with such skill that one anonymous dealer dubbed their unknown maker "the Moriarty of fakers." (Related: It speaks volumes about who's still buying and selling Old Masters in 2016 that said dealer thought, "What this situation calls for is a Sir Arthur Conan Doyle reference!") The scandal has already embroiled the likes of Sotheby's (which brokered a sale for a fake Hals painting), the National Gallery in London (which exhibited a fake Gentileschi), and the Prince of Liechtenstein (who acquired a fake Cranach). French authorities are currently investigating the entire sordid affair, with their sights reportedly set on a ring of Italian forgers and an "unknown dealer" named Giuliano Ruffini, who "claims he has discovered a string of Old Masters" yet denies any wrongdoing in this case. Sounds like a rock-solid citizen to me!

While we wait to learn just how many purported experts have been duped by "Moriarty," this raging dumpster fire in the Old Master market serves as a great reminder of an overlooked reason for contemporary art's dominance in the 21st-century art trade. Excepting the (let's hope) rare Peter Doig debacle, everyone with a stake in the market for living artists––from collectors and dealers to auction houses and institutions––can go to sleep every night knowing an immediate, ironclad answer will be available if any work in their orbit ever raises the slightest suspicion about authorship. As long as an artist is still drawing breath, it's relatively easy to confirm with them whether or not they actually created a given piece.

But getting such clarity becomes a much bigger challenge in the case of deceased artists––and the difficulty only magnifies the further one recedes into art history. As I wrote in 2014 about the supposedly "under-market" price paid at auction for the is-it-or-not Leonardo painting "Salvator Mundi," anything short of a spotless provenance should (and generally will) convince wise collectors to price the risk of mis-attribution into their offers for works by long-dead artists, sometimes depressing the market beneath what the most self-secure experts believe is warranted. Contemporary collectors, on the other hand, generally aren't exposed to that danger, which removes the related incentive to hedge on their bids. So the next time you see headlines about record totals being spent on the output of living artists, remember that, whether they realize it or not, buyers are partly paying a premium for something older genres often struggle to provide: authenticity insurance. [Daily Mail]

The Resale Remedy: In the opening installment of a multi-part series on the midlevel gallery squeeze, Christian Viveros-Fauné profiled consultant-turned-gallerist Cristin Tierney, with a particular focus on how she keeps her operation centered despite the well-publicized sector-wide pressure to size up or size down. (Shameless plug: I make a cameo in setting up that pressure.) While it's not her only answer, a key part of Tierney's response to this dilemma has been to adopt what has increasingly become the post-recession orthodoxy among midlevel-and-higher gallerists: reselling in-demand yet off-roster works to fund new shows by the talent one actually represents. As Tierney puts it: "I can present an 83-minute film by François Bucher in the main gallery because I sell paintings and sculptures by dead or nearly dead artists out of the back room."

Yet this strategic trend by gallerists reaches back further than Lehman Brothers. Based on his original research, sociologist Olav Velthuis published a study back in 2007 claiming that secondary-market works already made up 25-60 percent of annual sales for contemporary galleries in New York and Amsterdam, while exhibitions in their public spaces were basically revenue neutral. Still, my impression is that primary-market gallerists have begun relying on resales to an even greater extent in the years following the financial crisis. As Tierney states, theiroverhead expenses have moved from "demanding" to "back-breaking" in recent years, as the costs of even basic line items like packing/crating, shipping, and insurance have gone berserk. 

In my view, that's a knock-on effect of art's ascension to the status of must-have luxury item. Just as an oil change for a Bentley costs exponentially more than an oil change for a Honda Civic, market forces dictate that a crate for a supposed "financial asset" should cost exponentially more than a crate for a niche curiosity. Along with a slew of related and even-more-meaningful shifts in the buyer base over the past 15+ years, this surge in operating expenses has helped convinced most gallerists that they're at risk of collapsing into the grave unless they lean on a crutch made from the bones of deceased greats and the fibers of branded contemporaries. I don't think it's the only solution. But I understand why it's such a popular one. [artnet News]

Fair Sighted: Finally, since it seems inexcusable to ignore the art world's epicenter for the past seven days: Eileen Kinsella looked back on how Frieze London mutated from a single art fair held during the previously quiet month of October into the raging annual extravaganza of auctions, openings, and other industry events now branded as Frieze Week. Her story reinforces my perception that the inaugural Frieze London in 2003 was mostly the right idea in the right place at the right time––a centralizing force in the industry's no. 2 hub and a first-mover in the 21st-century art-fair uprising, just as the art market and the larger world economy began to bounce back after the demolition of the dotcom bubble. Thanks to a blend of smart brand management and favorable socioeconomic trends in the years since, Frieze has evolved into a must-attend engagement for ambitious art-world players of all types, as well as unaffiliated financial elites committed to sharing a year-long, globe-spanning circuit of see-and-be-seen experiences. 

To me, though, the most interesting aspect of Kinsella's piece is a populist nugget included for context. To highlight Frieze's runaway growth, she notes that the original fair brought in just under 28,000 visitors. In contrast, last year's editions of Frieze London and Frieze Masters together brought in a crowd of 105,000, i.e. a nearly four-fold swell in attendance in 12 years. That statistic reveals an important consideration about how––and which––artworks define the public's understanding of contemporary visual culture: Fairs have at least joined, if not yet overtaken, museums as primary venues for in-person art experiences.

According to The Art Newspaper, the 2015 museum exhibition with the most daily visitors was the Centro Cultural Banco do Brasil's "Picasso and Spanish Modernity," which attracted 9,508 visitors a day. At 105,000 attendees over just four days, Frieze's two concurrent London fairs attracted 26,250 daily visitors in 2015––almost triple the Centro's sector-leading pace. And while I would much rather have hundreds of thousands of people exposed to contemporary art via fairs than not at all, it's also valid to ask a second-level question about how their understanding of the field will be shaped by the deal-centric and increasingly pop-culture-indebted nature of premier fairs––and what that might mean for gallerists, artists, and the rest of the industry going forward. [artnet News]

That's all for this edition. Til next time, remember: Sometimes the only way to do it is to overdo it.