14. Art & Ethics 3: The Art Market
Notes for this lesson come from this video and this one, by Sarah Green.
What's a fair price for an artwork? What's a fair range in price? How would you figure this, ethically? If an artist deserves a living, say, $70,000 a year, and she makes 10 artworks a year, should they sell at $7,000 each? At what point does a price become absurd?
In my life, I've had people offer me $5 for a drawing, as if it were a postcard. And I've seen Michael Winkelmann (Beeple) sell an NFT (non-fungible token) for $69 million.
These prices may seem absurd to you and me, but they don't to many others, and so it's worth considering what effect the art market has on art, what we make, how it's presented, who gets to see it, what's promoted, and what eventually gets into the history books.
Capitalism has been a constant factor in art history - from patrons who paid for commissions to guilds that established standards of quality, to the first art dealers who helped propagate the notion of trends, so that art styles would go in and out of fashion, spurring the rich to keep buying more and more. Today, the art market is the world's greatest arbiter of what is or isn't (good) art, and it has pushed the definition into some pretty odd places, especially as conceptual art.
So, how does the art market work? There are two basic options:
The Primary Market
This is where artists sell directly to customers. This most often happens through artist-made websites, that show available works. Artists also use popular websites like Etsy and Ebay to sell their art - it's easier to get a large audience to view your work that way. Marketing is crucial if you want to succeed on the primary market. You need to create a website, and an email list, and find patrons who really like your work and are willing to buy more than once.
Many artists own their own gallery space. If you happen to live in a "gallery town", and you can afford to rent or own a building, you can show off your work and get a steady trickle of tourists and potential customers. It's risky, but at least it's face to face. If you're charismatic and a good salesman, you could be successful at it. Note, most gallery towns have a season, usually in summer. Selling in the off season is much harder.
What's an NFT (a non fungible token)?
These are digital files that prove ownership of something - anything. You can make them for digital artworks - or digital images of traditional artworks. They use "block-chain" technology, which is anonymous and (supposedly) impossible to hack. All crypto currencies are basically NFTs. But, while every Bitcoin you buy is identical, with the same value, every art NFT is different. Who knows if one will ever hold any real value? Or, which ones to buy? People are selling them, hoping for them to balloon in price the way Bitcoin did, but there's no sign they ever will. The effort itself is sleazy, feels like it ought to be illegal, and in no way encourages the creation of quality art. In a world where respect is key, NFTs are the fastest way to scuttle your reputation.
The Secondary Market
This includes guilds, galleries and auction houses, like Christie's and Sotheby's, that look for great art (or art that suits their taste) and find customers for you. Note, not every art gallery does a good job at this. Most small and local galleries struggle to survive, and to get any visitors into their show room. Galleries that do better business will be more exclusive.
The most famous galleries, like Saatchi, Gagosian, Pace, Ropac, and others, will find young, unknown artists at various universities, and offer them grants for future works. They might say, we'll give you a grant for $100,000, and in a years' time, we expect x amount of artworks, which we will sell for $100,000 each (or more), of which, you get 20-50% of the sales. If none of your works sell, we expect you to return the $100,000 we gave you. It's a frightening concept, but in this way, these exclusive galleries have launched the careers of the most famous artists alive today. All the big names made it this way, making these galleries extremely influential to well, everything - art history, the direction fine art has headed over the last 60 years, where it's headed into the future, the very definition of art, what museums look to collect, and so on.
How Does Art Get So Expensive?
I answer this question in my lesson on the value of art. But, it's worth considering the ethical implications. When art becomes extremely valuable, only the rich get to enjoy it - it's a situation so patently unfair, even the rich have acknowledged the problem, which is why so many of our world's art museums were founded by the wealthy. They could die happy, knowing their favorite art treasures were housed safely in temperature and humidity controlled environments, with security guards, and the public could enjoy them too. Awesome, thanks rich guys!
It's a system that allows us plebes to enjoy much (though not all) of the great artworks in the world - but it's not guaranteed to last. It's at the mercy of our elected (or unelected) leaders, who may revoke museum funding at any time, or worse, demand works be sold or even destroyed. In March, 1939, Nazi Germany labeled over 5,000 artworks "degenerate" and burned them in a public square in Berlin. In 2013, the city of Detroit tried, unsuccessfully, to sell of its museum's art to pay off debts - luckily voters prevented that happening. Besides this, there have been many recent examples of Museums being either looted during political instability (Iraq & Egypt) or from accidental fire - Rio de Janeiro's Art Museum. So, museums are great, but they're not fool proof.
What's worse, this capitalist approach to the art market has caused prices to balloon to such high amounts, that most museums can't afford to buy what they want - they have to rely on rich collectors to donate works - if and when they feel it'll help them save on taxes.
Another result of the art market has been the looting of indigenous cultures for their cultural artifacts, carvings, clothes, and so on - to be sold as art in western markets. This happened all throughout colonial periods, all over the world. Often, the original stories and purpose of the artifacts gets lost - and customers are often fed lies by dealers to make the work more appealing. As these artifacts lose their stories, they lose their historical value, becoming mere curios to ponder.
Another issue stems from why collectors spend so much, when there are real problems in the world that need funding - how can one morally justify spending $400 million on a painting? And, besides that, isn't it foolish? Well no, actually, it's risky, but can lead to great rewards.
The Art of Tax Evasion
In America, you can donate an artwork, and deduct it's current "fair market value" from your taxes. Imagine you spent $1 million on an artwork. Let's say you really liked it, so you bought it. You also paid the sales tax of $88,000. Then, a year later, a museum asks you to donate it to their collection? Why would you do that? Just give up a painting worth a million? Well, let's say it increased in value since you bought it. Now it's worth $5 million. How do you know? Because you hired an expert, "independent" art appraiser, who examined the artwork and set it's new value at $5 million. And, because the dollar value of art is so arbitrary, no one, especially in the government is ready to call B.S. so, you get to deduct 5 million from your taxes - so long as $5 million is less than 30% of your annual income - and if you're income is less than the required $16.6 million, don't worry you can divvy up the charitable $5 million over the course of 5 years of taxes.
In other words, this is a tax loophole that only the super rich can ever use - even when they give away an artwork, they're still making money. And, if no museum wants it, they can always auction it off - other collectors are eager to spend big just to prove that these objects really are increasing in value. Do you see, now, why they're so happy to buy artworks at such outrageous prices? People wonder why Maurizio Cattelan was able to sell bananas duct-taped to a wall for $120,000 each. Well, one of the buyers was able to resell the work five years later for $6.2 million. That's why.
What Ethical Responsibility Do Art Buyers Have?
Is art a product like any other? Like a pack of gum, or a car? Is it something of short-term use, eventually to be discarded? Or does its value hold, or even increase over time? And does this increase in value make it important to future generations? Does all art increase in value or only some, and how can you tell what will or won't? Do art collectors owe anything to future generations?
I remember when I was in college, there was a news story about some art collector who would burn one purchase every year as "performance art". The artists had no idea their work would be destroyed until it was too late, sparking outrage and lawsuits. So, what do you think? Should that be legal or illegal? Here are some other stories:
In 1970 John Baldessari burned all of his early art, forming the ashes into cookies, as a performance art piece.
His next artwork (1971) was titled I Will Not Make Any More Boring Art:
There are many examples of artists destroying their own work because it wasn't good enough for them - Michelangelo did it, as did Monet, Georgia O'Keeffe, Francis Bacon, Jasper Johns, and many others. It's actually quite common, it's just surprising to hear famous artists do it, because it's worth so much money now. What do you think? Is it okay for an artist to destroy their own work?
In 1976, aging artist Ettore DeGrazia learned he had cancer and that his children would have to pay extremely high inheritance taxes to get his artwork - and they didn't have the money for it. His work was worth millions on paper, but no one was buying them. So, he burned over 100 of his own paintings. He then learned he could set up a non-profit foundation and give his art to that, with his children in control of it, saving the rest of his art. Note, before you destroy something, check with a lawyer. ;)
In 1995 artist Ai Wei Wei videotaped himself dropping and destroying a Han dynasty ceramic urn - a priceless treasure.
It was an act of desecration, but also an act of protest. When people complained, Wei Wei quipped, "Chairman Mao used to tell us that we can only build a new world if we destroy the old one." Wei Wei was using the words of China's most famous communist leader against them. Wei Wei also said an object is only valuable or powerful, ". . . only because someone thinks it's powerful, and invests value in the object." Kind of like how, if a tree falls in the woods, but no one hears it, does it make a sound? But, is it really so arbitrary the way people assign value? Or, do people do things for a reason? Is a Han dynasty vase really just an object like any other?
In 2018, the graffiti artist Banksy (real name unknown) sold a work on paper titled Girl with Balloon, for £1.4 million at Sotheby's. The second the auctioneer struck his gavel, the work began descending out of the frame - which had a shredder hidden inside it. The art work was cut to ribbons, and Banksy gave it a new title, Love Is in the Bin.
The work then sold in 2021 for £18.5 million.
In 2022, artist Damien Hirst sold 10,000 NFT versions of his paintings, for $2000 each, and then offered buyers a choice - give up the NFT and get to keep the original artwork, or keep the NFT and he would burn the original. 5,149 asked for the original artworks, while 4,851 preferred to keep the NFTs - so Damien burned them up.
Also in 2022, collector Martin Mobarak hosted a party where he burned, on video, a watercolor by Frida Kahlo - which he claims was valued at $10 million. Before doing this, he managed to create 10,000 NFTs of the image which he intended to sell, and he claimed that a portion of the sales would go to a children's charity. The stunt backfired, only 4 NFTs ever sold, gaining a total of $11,000, and Mexico's National Institute of Fine Art & Literature plans to sue him for the destruction of their cultural heritage. Oops.
End Notes
Tori Campbell, "Nine Famous Artists Who Destroyed Their Own Work", Artland Magazine, no date, viewed Feb 18th, 2025.
Marie-Louise Gumuchian, "Damien Hirst Burns Artworks After Collectors Pick Their NFTs Instead", Reuters, Oct 12th, 2022, viewed Feb 18th, 2025.
Ella Feldman, "Did this man destroy a Frida Kahlo drawing to make an NFT?", Smithsonian Magazine, Nov 10th, 2022, viewed Feb 18th, 2025.
"Ai Wei Wei Dropping a Han Dynasty Urn", Guggenheim Bilbao Museum, no date, viewed Feb 23rd, 2025.
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