When we think about the “art market,” we tend to think of the sellers (the galleries and auction houses) and the buyers (the art collectors, museums, maybe even some speculators). That’s what we looked at last week, in the first episode of a three-part series we’re calling “The Hidden Side of the Art Market.” Those buyers and really, even the sellers, they represent the demand side of the equation. Today, let’s talk about the supply side. In other words: the artists. What does “the art market” look like from their perspective?
Tom SACHS: Well, I would say it’s the world’s largest unregulated commodities market, except I was corrected by a friend that art is not a commodity — a commodity is like orange juice or copper. So you can’t really compare apples and oranges. But it is extremely unregulated and subject to all kinds of monkey business.
That’s Tom Sachs.
SACHS: I’m an artist, 55 years old, and I live in New York City. I’m a sculptor and my priority is making sculptures that really expose the transparency in which they’re made.
Sachs may sound low-key, but he’s a pretty big deal. His work is in the collection of top museums in New York, Los Angeles and San Francisco, Paris, Milan — you get the idea. When we spoke with him, he was in Hamburg, Germany, setting up the fourth installment of a virtual space mission he’s been working on for 13 years.
SACHS: We’re going to the asteroid known as Vesta on a mining mission because we’ve run out of gold here on Earth. It’s a pretty elaborate expedition. You could call it performance art. That’s to me a dirty word. I say “live demonstration.”
Early in his career, in order to subsidize his art-making, Sachs did a lot of manual labor — construction, elevator repair. He has called himself “the second most-talented Jewish carpenter of all time” — after, you know, Jesus. By the early 1990s, he was making art pretty much full-time.
SACHS: I remember once when I first started, I went surfing with a buddy who was an art collector, and he bought a piece of art and then he dumped it at auction.
This was a piece that Sachs had made.
SACHS: And I was like, “Dude!” And it was a really cool sculpture that I like welded by hand. And burned my hand or whatever — you know, welding is hard. It’s toxic and hot and it’s hard work. And I’m good at it, but I probably wasn’t that good then when I made it. It was hard to do. And so I said, “So you’re telling me that money is worth more to you than this thing that I bled over?”
Stephen DUBNER: Are you still friends with this guy?
SACHS: I haven’t spoken to him in many years, but I also, years later, understand with death, divorce, and taxes — which are the three reasons why people sell things, usually — things happen. Money’s a funny thing. People have different situations, so I certainly wouldn’t hold it against him. I just think it was the first time it had happened to me, so I was shocked by it.
As we learned in the first episode of this series, there is a lot to be shocked by in the art market. Here’s a quick recap of what we know so far:
Canice PRENDERGAST: It’s one of the strangest markets that I have ever seen.
Magnus RESCH: The primary market, where most of the artworks are sold, is a complete black box.
Amy CAPPELLAZZO: Galleries are supposed to keep a price list available for anyone to peruse. But that’s just really not how art is sold.
PRENDERGAST: If I have the money to buy a Mercedes, I get the Mercedes. But that is not true for many artists.
Kelly BAUM: Even the Met has been priced out of the market when it comes to certain artists.
PRENDERGAST: Maybe 90 percent of the art that’s sold sits in a warehouse.
RESCH: Art is a bad investment.
CAPPELLAZZO: The art market is a fascinating, sexy, intellectually compelling, unregulated global market.
We also learned last week about the unlikely rise of Alice Neel, an artist who died in 1984. She had been a prolific painter, but she never sold much, and she spent years on welfare. But today, her paintings sell for millions:
AUCTIONEER: At 2 million, 500,000. And selling to Alex’s telephone for 2.5 million.
But those millions don’t go to Alice Neel’s estate; they go to the family of the man who acquired the painting back in the 1960s. He probably paid a couple hundred dollars. That said, the Neel estate still owns plenty of her work — so will they share in the gold rush too? Today on Freakonomics Radio: how do artists get paid?
PRENDERGST: Truthfully, it’s feast or famine.
What’s it like for a living artist to see something they created sell at auction for 100 times what they were originally paid?
Tschabalala SELF: You feel a moment of like, oh, your stomach drops. This is a horrible decision I made.
If you’re thinking “there ought to be a law” to give artists a cut on the secondary market — well, there is a law.
CAPPELLAZZO: It’s proven to be hard to enforce. No one thinks it has big teeth, if you know what I’m saying.
And: how much does the brutality of the art market dampen the urge to create?
SACHS: That’s really the question of the day, isn’t it?
* * *
In October of 1973, Sotheby’s auction house in New York held a sale of contemporary art. It came from the collection of Robert and Ethel Scull, who had made their money running a taxicab empire. The sale turned out to be the start of a craze that has only accelerated ever since. Robert Scull had been a passionate collector of paintings by Jasper Johns, Mark Rothko, Andy Warhol, Robert Rauschenberg, and many others. When Scull started buying these paintings, often directly from the artists, they weren’t particularly expensive. By 1973, that had changed. Sotheby’s broke several records that night, selling 50 pieces from Scull’s collection for a total of $2.2 million. On average, that’s $44,000 per piece. Today, that number sounds quaint. As we heard last week, a single Alice Neel painting — and not at all a remarkable one — recently sold for $2.5 million. But in 1973, people were blown away by these auction prices. Big prices were one thing for Old Master paintings. But for art that was made recently, and bought cheap? Here’s the art critic Robert Hughes from a documentary called The Mona Lisa Curse:
Robert HUGHES: One thousand to 2,000 dollars on average for a Rauschenberg or a Jasper Johns.
The painter and graphic artist Robert Rauschenberg, a fixture in the Pop Art scene, was one of the biggest names in the sale. Years earlier, Robert Scull had bought directly from Rauschenberg a piece called Thaw. He’d paid $900. On this night, at Sotheby’s, it sold for $85,000.
HUGHES: Rauschenberg, on whose work Scull had made such a profit, gate-crashed Scull’s celebrations.
The documentary shows Rauschenberg giving Scull a not-so-playful punch in the shoulder. And then he says:
Robert RAUSCHENBERG: For Christ’s sake, you didn’t even send me flowers.
In case you couldn’t make that out, the artist says to the collector: “For Christ’s sake, you didn’t even send me flowers!” To which the collector says:
Robert SCULL: Send you flowers? For what?
Then Rauschenberg says, “It was a great mark-up.”
RAUSCHENBERG: It was a great mark-up.
SCULL: You’re right, you’re right.
RAUSCHENBERG: I’ve been working my ass off for you to make that profit?
Rauschenberg was angry. He felt Scull was disloyal — no longer a collector, but a profiteer. But then, Scull turns the tables. He points out that Rauschenberg would also benefit from these inflated prices.
SCULL: How about yours, that you’re going to sell now? I’ve been working for you, too. We work for each other.
Rauschenberg freezes. He doesn’t seem to know what to say, as if he hadn’t even considered what the inflated auction price would do for him. And then he gives Scull a hug.
RAUSCHENBERG: You buy the next one, okay? You buy the next one.
SCULL: Well, I’ll take a look at it.
RAUSCHENBERG: Come to the studio.
SCULL: All right, why not?
So that was a quasi-happy ending for Robert Rauschenberg. Still, here’s the big question: when you see an artwork selling at auction for many multiples of what the artist originally received, should you feel bad for the artist, knowing they don’t get a penny?
RESCH: No, you shouldn’t, because auction prices have great signaling power for the primary market.
That’s Magnus Resch, an economist who studies the art market.
RESCH: Sometimes prices in auctions are much higher than the gallery prices. However, you’ll soon see that the prices in the galleries will go up because the gallerist justifies the price increase by saying, “Hey, look at the recent auction results.” Galleries and buyers are using auctions in order to inflate prices.
But, Resch argues, there is a catch. A gigantic catch.
RESCH: Ninety-nine-point-nine percent of the artists that you see at galleries and exhibitions, their value will never increase.
In other words, Robert Rauschenberg was lucky to have the problem he had — lucky that his work was considered special enough to be sold for a huge markup on the secondary market, in an auction. This meant he could at least indirectly recover some of that markup by increasing his prices on the primary market. But again, Rauschenberg was in a tiny minority. The art market is a gigantic pyramid, with just a few artists at the top who command high prices.
PRENDERGST: Truthfully, it’s feast or famine — everybody wants to buy your work, or nobody wants to buy your work.
That’s Canice Prendergast, another economist who studies the art market. He is at the University of Chicago, where he also manages the business school’s art collection.
PRENDERGAST: We have an endowment, and our annual budget is a little short of a quarter of a million dollars — which, even though it’s a lot of money, is a pittance to the contemporary art world.
DUBNER: So, talk about that. I’ve had a little experience with galleries, and artists, and auction houses, and museums in New York, where it seems that there is really almost a handful of desired upcoming artists. But the minute they’re anointed, their price goes from close to zero to quite a lot.
PRENDERGAST: The way that relationship usually works is that they will show their first couple of times, and the price might be $20,000. Once it becomes known that this is a desired artist, there is a line around the corner. But the price doesn’t change from 20 for a while. Instead, what they do is: they give it to MoMA, if MoMA’s interested.
MoMA is the Museum of Modern Art, in New York.
PRENDERGAST: Or, increasingly, they give it to very well-placed private collectors. And once it gets into that network, that’s what allows prices to go up like crazy. So what you have is that strange interregnum, where people are queueing around the corner. And this is where you also get a lot of the discontent of galleries, where somebody will buy it at $20,000, and the next day they’ll turn around and sell it at auction.
DUBNER: And galleries obviously don’t like that.
PRENDERGAST: No. In the same way as what happens with Cubs tickets, you know, playoff tickets. They turn around and flip it.
DUBNER: I believe this happens with luxury watches, too, even when they’re sold at market prices. And some high-end cars, like a Ferrari or Lamborghini?
PRENDERGAST: Absolutely. It’s exactly the same thing. Or it’s even true for sneakers, for example. And companies are now deciding how to manage that kind of secondary market in a way that they didn’t before.
When it comes to contemporary art, the gallerists who represent artists have to manage this potentially large gap between their market, the primary market, and the auction market or other secondary sales.
David ZWIRNER: I mean, at the core, we set prices based on supply and demand.
ZWIRNER: But then we also look at external factors: what’s happening in an artist’s career? Are there major exhibitions on the horizon? Is this artist making very few pieces? And we come up with the right price that’s fair, respectful to the career, but not ahead of the market, so you create a problem down the line.
DUBNER: Let’s say you find a new artist and this artist has 12 paintings. And the right price is $100,000. Can we work with that number, for starters?
DUBNER: But you know you could easily find 12 people to buy these paintings, or maybe one person to buy all of these paintings for $200,000 each, or maybe $500,000. What would be the downside of going for the maximum price?
ZWIRNER: The downside might be that the artist decides to create a very different body of work, and all of a sudden those 12 buyers run for the exit. They don’t like this work. You are stuck out there with very high prices. The downside is also that all of a sudden, three works by this artist show up at auction and don’t sell. And you are stuck out there with very high prices, and you can’t recover. The prices are somewhat miraculously a one-way road. Prices have to go up to sustain careers. And that’s why I’m very much of the philosophy, if you want to be in it for the long haul, be smart about prices. Don’t be greedy. Go step by step.
This is one of the things that makes the art market such a strange market. For most products, when demand rises sharply, the manufacturer will increase supply and/or raise prices in order to exploit that surging demand. And that works fine if you’re making widgets or t-shirts — you can quickly ramp up supply, even ten-fold if you have to. But if you are a gallerist with an artist who’s suddenly grown hot, you can’t tell them to just paint ten times faster. (Although you’d better believe — it has been tried.) As far as raising prices, that has its own problems too. As David Zwirner told us, you don’t want to have to lower prices later and damage the artist’s reputation. And, as Canice Prendergast told us, you also don’t want to allow just anyone to buy the painting, because that anyone might be a speculator who’s only interested in flipping the painting at auction for a large profit. So what can a gallerist do? Canice Prendergast again:
PRENDERGAST: It’s not pervasive, but does happen, when you buy a work, they will make you sign a contract which gives them — meaning the gallery — the right of first refusal for any further purchases. So if you decide to sell it, you have to sell it back to the gallery. Those contracts exist, but are not very pervasive.
DUBNER: Because they’re borderline illegal?
PRENDERGAST: Correct. I think that’s exactly what it is.
A more common tactic is for galleries to select their buyers very carefully. How do they manage this? Imagine you walk into a gallery and see a piece you really like. Some of the other pieces by the same artist are marked with a red dot, meaning it’s sold. This one has a green dot. That means it’s “reserved.” And what does “reserved” mean?
SACHS: Yeah, that’s a crazy thing.
The artist Tom Sachs again.
SACHS: “On reserve” means — which is such a bullsh*t thing — just means someone’s interested in this. It’s like, “So I can’t really promise it to you.” But it also probably means, “If you are really important, I’ll probably screw over the first guy and sell it to you.”
DUBNER: What kind of important do you mean when you say that? Like, is just wealth important enough?
SACHS: No. I think wealth is very, very important. I think influence, like, “Hey, this guy might buy two paintings and give one to a museum.”
For another view of how galleries manage their buyers, I went to Amy Cappellazzo. She’s an art-market powerhouse who knows pretty much everybody and everything.
DUBNER: I walk in. Let’s say it’s a gallery showing a relatively new artist. I’ve read a lot about this artist. I think she’s amazing.
CAPPELLAZZO: They’re hot, hot, hot, right?
DUBNER: Right. And I’m not told they’re sold, but I’m not told the price either.
CAPPELLAZZO: “I’m sorry, it’s on hold right now.”
DUBNER: And I say, “Well, whatever it’s on hold for, I’m willing to match and increase 25 percent.” What happens now?
CAPPELLAZZO: Typically dealers won’t do that because you probably have a cadre of four or five that are your mainstay collectors. And you really have got to reward them first because they come back for every show. And they’ll buy something even that’s not hot, hot, hot in your next show.
DUBNER: Do you find it an ethical practice of the gallery?
CAPPELLAZZO: I find it a practice of necessity. They might have only 10 paintings and there’s 100 people asking. So it’s going to be some discriminating process that determines who gets what. A lot of small galleries have a roster of artists, let’s say, 10, 12 artists that they sell and represent, and maybe one or two of them is the cash cow for the whole pack. So those two artists become the bait for collectors. And the dealers might say, “Well, I can’t sell you this, but I can tell you this other artist I represent. And if you start buying the stuff you don’t want, it will eventually get you the stuff you do want.”
SACHS: I heard a story of a gallerist saying, “I’ll sell you this piece by this artist, only if you buy this other piece by this other artist that I represent that doesn’t sell as well.”
DUBNER: Right. I mean, it’s not like that’s illegal, right?
SACHS: It’s just sh*tty. Can you imagine if you’re that second artist and you heard that story? I guess you’d be grateful that something sold because it’s money, but like, eww, it’s slimy.
Just to be clear, that is not the only slimy scenario that Tom Sachs has encountered during his career.
SACHS: So there’s this phrase that was coined by a friend of mine, an art dealer named Hugo Nathan, called L.P.M. — lies per minute. He says, “Oh, she’s got about seven L.P.M. He’s only working at a three.” And the lies are things like — always in secondary market, they will sell a piece for like $100,000. Let’s say you own it, and I’m the dealer, and I sell it for $100,000. And we had a deal that we’d split it 50/50, right? But I tell you that we only sold it for 70,000 bucks. And everyone finds out everything, because they’re bragging about it at the cocktail party. But the art world is so f*cked up that they’ll tolerate a certain amount of lying as long as it’s worth their while to do the next deal. I don’t really understand it. That’s not how I was brought up. But that’s something that happens. And I know that’s happened to me, because I found out.
DUBNER: And the guilty party in this case was a gallerist then?
SACHS: It’s always the gallerist that lies.
Coming up, we speak with another successful artist, Tschabalala Self, about being on the supply side of this very strange market — especially in the auction market:
SELF: It’s a completely dystopic, surreal situation.
And: what is it that makes an artist keep going, even with all these headwinds?
Phoebe HOBAN: Nothing will stop them. Nothing.
* * *
SELF: My name is Tschabalala Self and I’m a painter.
Tschabalala Self grew up in Harlem, got a degree in studio arts from Bard, and then an M.F.A. from Yale. Soon after, she landed a solo show and gallery representation. Now she’s in her early 30s; her career has already been a critical and commercial success.
SELF: I think the art world can be very opaque. And until the point that you are fully immersed in it, many things don’t make sense.
Self is especially known for historically-conscious portraits of Black female figures, mixing paint, fabric, and other materials. In galleries, her work likely sells for the mid-to-high five figures but the art world being what it is, that’s hard to verify. One of her galleries told us, “I am afraid I cannot provide a price range for Tschabalala Self’s artworks on the primary market.” Whatever the case, price isn’t the only thing that Self is thinking about when she sells a piece.
SELF: I care a lot about who buys my artwork. The work has its own life once it leaves your studio. And in it having its own life, it has its own story and part of its story is the person who owns it. I like to know that them owning the work could somehow broaden the narrative around that one particular piece.
Self has had some positive experiences with buyers.
SELF: Like works going to people who are wonderful collectors that maybe down the line, because they’re not huge-name collectors, wouldn’t have been offered works.
And she’s had some less-positive experiences:
SELF: Early on in my career, a lot of people presented themselves as if they were going to be good fits for my work, that they really liked the work, that they respected the work. But in reality, they saw no value in the work outside of it being an object.
If you’re not an artist, or don’t care much about art, that may sound odd, because a painting by Tschabalala Self is, of course, an object.
SELF: Those kinds of people are the ones that have resold the work. Those are the kind of people that have reduced the work to a pure monetary value.
This, too, may sound odd — Tschabalala Self objecting to the idea that the original buyer of her work would focus on its monetary value. There was, after all, a mutually-agreed-up financial transaction that put the painting in the buyer’s possession in the first place. In a capitalist environment, we tend not to think too much about the emotional connection between the things we consume and the people who produce them. This does seem to be changing a bit: more and more consumers want “ethically produced” food and clothing, for instance. But for the most part, free markets train us to not make a strong connection between producer and consumer. That’s what prices are for. A price is the point at which the desire of a consumer meets the need of a producer. But the art market is different. As we’ve been hearing in this series, price doesn’t necessarily perform its standard function in the art market — there’s too subjectivity and too much volatility. But there’s an even bigger issue: the products being sold here are the personal creation of an individual artist; a given artwork is an intimate, emotionally charged extension of the human who made it. So think about it from the artist’s perspective. You’ve already agreed to sell what is essentially a piece of yourself. But then later, the buyer decides to get rid of it? Tschabalala Self has been successful enough to see her work resold at auction for a significant markup: her auction average is over $270,000. How does she feel about that?
SELF: I don’t like my artwork selling at auction. I think the whole thing is vulgar. Especially given the subject matter of my work. The overwhelming majority of my paintings deal with the Black female body, and just the whole idea of having to have conversations about these works being at auction is so gross. It’s a completely dystopic, surreal situation. And I don’t want my work in that context. I don’t want my work being spoken about in that context. I don’t want people bidding on my work in that way. And it’s very exploitative in many ways. The artists don’t gain anything. You’re using their name and all the works that they’ve made to put on this big production. And a lot of people are making money off this, but the artists themselves, they oftentimes feel overly exposed, and not in a way that’s productive.
I asked Tom Sachs how it feels when his work comes up for auction.
SACHS: How does it make me feel? It feels a little bit like a grift. But I mean, not a lot of my work goes up at auction. My work is so great that people love it more than money and they hang on to it.
DUBNER: Does the auction house even contact you or your gallery to say, “We’ve got this Tom Sachs piece coming up for sale?”
SACHS: They contact me because they want me to promote it. They want to make sure that it looks good and make sure that it’s not broken, that it’s clean. And that I made it. They want to make sure that there’s a certificate of authenticity. And it’s in my interest for it to yield a high price at auction, even if I don’t get any of that.
DUBNER: It’s in your interest because it affects your overall reputation?
SACHS: There’s a hope that it helps and doesn’t hurt the primary market. But I really don’t care about that stuff, because I can’t really control it. I can consecrate that I made it. I can offer help to explain if there’s some questions. But it’s not the motivating force.
Sachs is represented by several galleries in the U.S., Europe, and Asia. Some of his pieces are large, complicated, and very labor-intensive, like the interactive space mission he was getting ready to show in Hamburg. But he makes smaller stuff too — like a sneaker he made in partnership with Nike, designed to hike around Mars in an earlier virtual space mission. His studio in New York employs roughly 20 people, all trained in the intricacies of producing Tom Sachs originals. He even created a film about the proper way to work in the studio. It’s called Ten Bullets and the film itself a work of art — tongue-in-cheek, and quite possibly a masterpiece:
SACHS: The studio is a complex and enigmatic working environment full of precise rules and principles. We call these rules and principles: The Code.
Considering his substantial overhead, I wanted to know how Sachs and his galleries price his work.
SACHS: One thing I never do is say, “Oh, it costs me a dollar to make it, so I can sell it for two or sell it for five.” I never think about it like that. I make the thing I want to make and then I kind of hold it at arm’s length, like Macbeth and it’s a skull in my hand and I’m like, “What is this thing?”Is this worth $3 or $1?” And then I have to be really honest with myself and put whatever the cost and time aside and just like let it be what it wants to be. Because when Marcel Duchamp leaned that snow shovel up against a wall and the critics said, “How long did it take you to put that snow shovel up against the wall?” And he said, “Only just but a moment, but a lifetime before in contemplation.”
DUBNER: But when the sneakers, let’s say, get sold on the secondary market for like two grand, what’s that feel like for you?
SACHS: I know — it’s eight grand now, by the way, which is super annoying. It’s embarrassing. It wasn’t my intention. We were working to correct that because the whole point of doing a sneaker is to get it on people’s feet and the fun of that, and sharing.
CAPPELLAZZO: I always tell artists, “Look, stop trying to hide from the art market.”
That, again, is the art-market maven Amy Cappellazzo.
CAPPELLAZZO: And by the way, you need the market, because otherwise, the value of your work is simply a curiosity. There is no real assertation of value. So if you want to make a living, you need that big, bad market out there.
Cappellazzo has sold the work of countless artists at auction, often for prices much, much higher than they sold it for originally. She also knows many of these artists personally, including Tom Sachs.
CAPPELLAZZO: Oh, he’s a high maker, like he’s obsessive maker.
DUBNER: So his priority is not making a lot of money. But he’s got a studio to run. He’s got a family, and so on. Let’s say I buy a piece by Tom Sachs through one of his galleries. Let’s say I pay 50 grand. Then 20 years from now, I sell it at auction for 100 times that much. As Tom’s friend and supporter, how do you feel about that progression? Because the auction house is going to get more money from that commission than he did for making it. Does that strike you as fair?
CAPPELLAZZO: Look, artists used to sometimes call me and say, “I can’t believe you’re selling my work. I just sold that for $50,000” — I was like, “Well, listen, I can put you on the phone with some other artists who sold their work for $50,000 and today it’s worth two. If you want to just balance out your concern, we can talk about what would happen on the other side.” And I’d say, “Did you sell the work for money? Because if you traded it for love or something, maybe there’s a rep-and-warranty problem on the ownership and I’d want to make sure there was a clear title. But if you traded it for money, that’s the way it goes.”
“If you traded it for money, that’s the way it goes.” How can you argue with that? But here’s an interesting fact about the art market: many artists are themselves priced out of it. Even very successful artists. Tom Sachs again:
SACHS: One of the things that’s been frustrating for me about my art career is I’m not an art collector. I don’t have the resources to buy the art that I want.
DUBNER: You don’t have the resources to buy your own art at market price, right?
SACHS: I don’t, and I can’t. Things have come up at auction and I haven’t been able to buy them.
This, we should note, is how capitalism often works: the bounty goes not to those who supply the market, but those who manage it or manipulate it. I wanted another perspective on this idea. So we went to Glenn Lowry, director of the Museum of Modern Art. When it comes to the art market, Lowry is a knowledgeable but largely disinterested party.
LOWRY: If you’re in the museum world, the art market runs parallel and sometimes intersects with what we do. But we are not as focused on the art market as many might think.
DUBNER: Talk to me for just a moment about Tom Sachs, if you would. I understand MoMA owns a lot of his works, practically a complete collection. And Tom told us that he’s grateful for all the support he’s had from everywhere. And he’s hardly a starving artist. But he told us that he doesn’t really have enough money to buy his own work when it goes on the secondary market. And I’m curious what you think of that situation, of the value that’s being accrued to artworks where the creator is often left out of the value chain.
LOWRY: That’s complicated. I like Tom a lot. I admire him. I think he’s one of those artists whose work asks probing questions and is always surprising. He can take you to the moon and beyond faster than any other artist I know. But I’ve never thought about the degree to which artists are capable of acquiring their own work on the secondary market. You can look at that through many different lenses, one of which is it shows that his work is accruing in value. And presumably, that means that the next thing he sells will also benefit from that value.
This, you will remember, is the same point the art collector Robert Scull made to the artist Robert Rauschenberg back at that 1973 auction.
RAUSCHENBERG: I’ve been working my ass off for you to make that profit?
SCULL: How about yours, that you’re going to sell now? I’ve been working for you, too. We work for each other.
Tschabalala Self has also heard this argument. She doesn’t quite buy it.
SELF: The idea is your work sells for a certain amount of money at auction, then you can raise your prices. But that’s not always the case. And even if you could, the auction is not something that is consistent or stable or even sane, really. So to base your market on something that’s constantly in flux like that is not really a good idea.
As for being priced out of the market, Self is in a similar position to Tom Sachs.
SELF: Could I afford to buy one of my pieces at auction? No, I would not be able to. I don’t know if I could even buy one of my pieces at primary market. Art’s very expensive. But some pieces I would definitely love to buy back in the future. There ae pieces that I miss and have disappeared. They have been purchased at auction and no one knows where they’re at. It’s all very secretive. But if I don’t, it’s okay. I’ve made the work myself. I suppose I can make myself another one? It’s not the end of the world.
But if you ask Tschabalala Self whether an artist should get a share of the sale price when her work is resold at auction?
SELF: Of course, I definitely feel like artists should get a royalty if their work is resold. I think most people would agree with that.
The notion of an artist’s royalty on resale is not a novel idea, and it’s not an imaginary idea. I went back to Amy Cappellazzo for some details.
DUBNER: Can you tell me anything about legislation or regulation having to do with secondary-market sales and the share of those sales that may go to an artist or estate?
CAPPELLAZZO: The art market has a funny history about this. A resale royalty to a living artist or an artist’s estate exists in Europe in something called droit de suite. And it’s for E.U. countries and it includes a couple of other, non-E.U. countries.
Droit de suite means “right to follow” in French. It’s officially known in Europe as the Artists’ Resale Right. The law is meant to ensure that when a physical work of art is sold on the secondary market, the creator or their heirs will get a share of the price.
CAPPELLAZZO: But it wasn’t really constructed right. It’s not an intelligent form of taxation, because you end up writing checks to like Gerhard Richter for 14,000 euros.
As a matter of fact, the royalty is capped at just 12,500 euros. Gerhard Richter is one of the top-selling living artists. His auction record is over $46 million.
CAPPELLAZZO: If there’s ever anyone in the world who doesn’t need 14,000 euros, it’s Gerhard Richter. And the artists who would be beneficiaries of such a thing generally have no markets. So when you sell something for 5,000 euros and they get a check for 50 euros, I mean, it’s hard to say you’re really doing what you intended. Maybe the smarter solution is like in Britain, they started a lottery where a certain percent of the lottery went to support the arts. Because what you’re trying to do is — with all the big rich money flowing into the art world, you’re trying to help artists and help those pursuing artistic practice who might not have commercial output or are more committed to performance or other kinds of artworks that are less commercial — to have a robust culture of that. I think the droit de suite is goofy and misguided.
Goofy and misguided as this type of law may be, there are plenty of American artists who would like to see it practiced here. But it doesn’t exist here. I asked Glenn Lowry, from MoMA, whether he’d be in favor.
LOWRY: Well, other forms of artistic production, like music, have different copyright structures than the visual arts that permit creators to benefit from the ongoing use for periods of time of their creation. And in fact, living artists today do benefit from any reproduction of their works of art, at least if they belong to one of the many arts collaboratives that have come together. I’m all for artists benefiting from their creativity, and while the droit de suite has been discussed in this country on many occasions, it has been impossible to adopt for a variety of reasons. But we know from Europe that it can be made to work. And there’s no reason why an artist shouldn’t have the same benefit that a musician or a filmmaker has.
DUBNER: What are the reasons that that isn’t possible here?
LOWRY: I’ve been in enough discussions over the years to understand that there just isn’t the kind of consensus, either at the state or federal level to make that happen.
There have been artists’ royalty acts proposed in Congress, but none passed. The state of California did pass a royalties act — backed by, among others, Robert Raushenberg. It set aside a 5-percent royalty when the work of a California artist was sold in California by a California collector. As you can imagine, these restrictions were sufficiently narrow to prevent many royalties from being collected. After some legal challenges, the California royalty law was narrowed even more, and now applies only to artwork created during a single year: 1977. Somehow it seems fitting, given everything we’ve learned about the art market thus far, that an attempt to address this relatively simple royalty issue was so badly mangled. As we heard earlier from the economist Canice Prendergast:
PRENDERGAST: It’s one of the strangest markets that I think I have ever seen.
And Prendergast, who truly loves art, believes that the strangeness of the art market — its illiquidity, its lack of clear and obvious rules — that this has a large consequence.
PRENDERGAST: I think the market structure itself helps to lead to what’s a very elitist good.
DUBNER: Because it is an elitist good and a luxury good, I think I see the obvious downside of that, which is that most people are excluded from participating in or enjoying something that, theoretically, could be a public good instead of a luxury good. Is there any way to quantify the loss of not having art be, for the most part, a public good?
PRENDERGAST: It’s a terrific question. I don’t know quite how to do it. Let me do it in a more negative sense, which is: most forms of contemporary culture could legitimately claim to change people’s beliefs, change political discourse, or whatever. That’s certainly true for music over the last 30 years. I think it’s true for film. I think the great failing of contemporary art is that it leaves no mark, essentially, on the public. And I think it’s because the public simply doesn’t understand it, because the public simply doesn’t interact with it. So it’s very difficult to quantify what the cost is. But I think its great failing is its absence of impact on society more broadly, in a way that I think most cultures have successfully done. And I think what’s so striking is how many artists are trying to have that impact, but instead end up in an art warehouse in Switzerland.
It’s kind of heartbreaking, what Prendergast suggests — that the art market itself is responsible for the failure of modern artists to have a real impact on society. Isn’t that, in the end, the true value of art? But Prendergast also notes that artists don’t give up trying. I was struck by Tom Sachs’s view of the art market, that for all its sliminess and bullsh*t and “lies per minute” — all his words, by the way — that he is as devoted as ever to doing what he does. He’s even fine with the current gallery system, and the 50-percent commission that most galleries take:
SACHS: I think whatever they take, it’s a really good deal for me.
DUBNER: Because why?
SACHS: They don’t do nothing. They have their expensive real estate. If they’re good, they get out there and they sell it and do their job so I can do my job. My work is my life, so my dealers are really taking care of my life. It’s kind of life and death, so if someone can facilitate that in big ways and small ways, like emotionally, and then just take care of the finances, it means everything to me so I can do the one thing that I’m put on this planet to do better than anyone else, which is make Tom Sachs art. I’m the best at making Tom Sachs art. That’s the only thing I’m the best at.
And Tshabalala Self, who finds the art market opaque and bizarre and vulgar — again, all her words — she, too, is fully committed to her life as an artist.
SELF: Artists are meant to make works that are true and meaningful, that can help change people’s opinions about themselves and about others and about the world in general. It’s something that I’ve always done. It was something I did before I ever got paid, before I made any money. I made art and I wanted to study art and I wanted to be an artist. And in retrospect, I realize that I always was an artist. But just now I’m a working artist. It’s really the only difference. And if I never got paid for another piece of work, I’d probably get more rest. So maybe I would make better work. I don’t know. I’d be a little bit more clear-minded.
And if you’re looking for the ultimate example of the commitment to art-making despite a mountain of hurdles — despite poverty, despite not having your work sell — just look to Alice Neel. In death, her work sells for hundreds of thousands, even millions of dollars; in life, she was marginalized. And yet:
HOBAN: Alice Neel continues to inspire artists.
HOBAN: But it’s not just because of the fact that she’s a great artist. It’s also because she never gave up. As a role model, as someone who is so devoted to their passion and to their own creative drive that — nothing will stop them. Nothing. Not the death of a daughter, then the estrangement of a second daughter, the abandonment of her husband, suicide attempts — nothing stopped this woman. Painting alone for 20 to 30 years and just piling up the canvases in the hallway.
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Freakonomics Radio is produced by Stitcher and Renbud Radio. This episode was produced by Morgan Levey. Our staff also includes Alison Craiglow, Greg Rippin, Zack Lapinski, Mary Diduch, Ryan Kelley, Jasmin Klinger, Eleanor Osborne, Emma Tyrrell, Lyric Bowditch, and Jacob Clemente. We had help on this episode from Alina Kulman and Jeremy Johnston. Our theme song is “Mr. Fortune,” by the Hitchhikers; the rest of the music this week was composed by Luis Guerra. You can follow Freakonomics Radio on Apple Podcasts, Spotify, Stitcher, or wherever you get your podcasts.
- Tom Sachs, sculptor.
- Canice Prendergast, professor of economics at the University of Chicago.
- Magnus Resch, lecturer in art entrepreneurship at the Yale School of Management.
- Amy Cappellazzo, co-founder of Art Intelligence Global and former chairman of the global fine arts division at Sotheby’s.
- Tscabalala Self, painter.
- David Zwirner, owner of David Zwirner Gallery.
- Phoebe Hoban, author and journalist.
- Glenn Lowry, director of the Museum of Modern Art.
- “Alice Neel’s Portraits of Difference,” by Hilton Als (The New Yorker, 2021).
- “Alice Neel’s Apartment Is Still a Portrait of the Artist at Work,” by Rennie McDougall (The New York Times, 2021).
- “How Does National Lottery Project Grants Work?” by Arts Council England (2021).
- “How a Smart Digital Strategy Is Keeping David Zwirner at the Top of His Art World Game Amid the Pandemic,” by Julie Belcove (Robb Report, 2020).
- “Why Is Art So Expensive?” by Gaby Del Valle (Vox, 2019).
- “Ending a Seven-Year Dispute, a US Court Rules That Artists Aren’t Entitled to Royalties for Artworks Resold at Auction,” by Eileen Kinsella (Artnet News, 2018).
- “Nike and Tom Sachs Introduce the NikeCraft Mars Yard 2.0,” (Nike News, 2017).
- “How the Scull Sale Changed the Art Market,” by Anna Louie Sussman (Artsy, 2017).
- “An Illustrated Guide to Artist Resale Royalties (aka ‘Droit de Suite’),” by Tiernan Morgan and Lauren Purje (Hyperallergic, 2014).
- “The Scull Collection,” by Roni Feinstein (Art in America, 2010).
- Ten Bullets, film by Tom Sachs (2010).
- Alice Neel: The Art of Not Sitting Pretty, by Phoebe Hoban (2010).
- The Mona Lisa Curse, film by Mandy Chang (Oxford Film & Television, 2008).
- “‘A Fascinating, Sexy, Intellectually Compelling, Unregulated Global Market.’ (Ep. 484)” by Freakonomics Radio (2021).