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By Alan Behr

NEW YORK, 14 MAY 2009 - The question that launches and preoccupies Don Thompson's new book on the contemporary art market is how a dead shark ended up costing a reported $12 million. In homage to the shark, the book is entitled The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art (Palgrave Macmillan, 272 pages). Although the work is both scholarly and entertaining, there is no attempt to balance economics with ichthyology. The fish is simply a metaphor for a large measure of human desire and a healthy dash of greed.

What the rich seem to want to acquire is what economists call positional goods; things that prove to the rest of the world that their owners really are rich.

Like Vladimir Lenin in his mausoleum in Red Square, the shark currently rests on public view at The Metropolitan Museum of Art in New York. By the ordinary rules of angling, the 14-foot tiger shark should be the trophy of Vic Hislop, the Australian fisherman who caught it, but because it was placed into a formaldehyde bath in an oversized fish tank under the supervision of the British artist Damien Hirst, the shark has been transformed from slain aquatic predator into art.

In its postmortem transfiguration, the shark bypassed two rules that normally apply to an original work of art: (a) the artist should make the art, and (b) once made, dated and sold, the art cannot be not substantially altered or replaced. As chronicled by Thompson, the shark was a replacement for a starter shark that had begun to decompose within the same clear sarcophagus. The first solution was taxidermy, but it soon became apparent that wholesale substitution was necessary. The new shark was injected with ten times the formaldehyde, in a stronger concentration, then entombed. The most fascinating part of a visit to see the 22-ton artwork may not be debating if it is really a profound statement on death and predation but merely checking in to see if it is still there.

Throughout, the work has retained its original date (1991) and title, The Physical Impossibility of Death in the Mind of Someone Living, prompting Thompson to ask, "Does Hirst's contemporary art have an intrinsic meaning or does the meaning just flow from the brilliant titles?" This one is indeed a catchy title, but it has problems. Death can only be contemplated in a living mind, so if we drop the redundant "of someone living," we are left with the insubstantial The Physical Impossibility of Death in the Mind. The art is shocking, and shock adds value to art these days in the way beauty did in former times, but plenty more things that shock the senses sell for less - and all too many of them come your way for nothing. The artist is famous, and that leads Thompson to his explanation for the extreme value: as with almost everything else in contemporary life, it's all about branding.

Damien Hirst: The Physical Impossibility of Death in the Mind of Someone Living , 1991
Tiger shark, glass, steel, 5% formaldehyde solution
213 x 518 x 213 cm
Photo courtesy of Saatchi Gallery, London

The author believes that, for the top strata of contemporary artists, art no longer obtains value based upon the quality of the work, its size, the materials used or critical reception. Value derives largely from an outgrowth of the other factor that is ordinarily important: the name and reputation of the artist. Contemporary artworks at the highest level are branded by the phenomenon of the celebrity artist - that is, the brand-name artist. They are also branded by the galleries that represent the artists or that sell the works on the secondary (the resale) market, by the collectors through whose hands the pieces pass, by the auction houses that resell the works, by the art fairs that turn collective gallery shows into high-energy, high-net-worth entertainment, and by the brand-name museums that bring the art to both the discerning public and the merely curious.

The shark therefore gained in price the way a commodity picks up its value-added tax: at each step along the way in its passage to the marketplace. The piece was conceived (but, by the artist's accepted practice, not actually made) by Damien Hirst, the brand-name artist of the yBas (young British artists) group. The shark, commissioned and first owned by branded collector Charles Saatchi (the advertising executive), passed via the branded gallery owner Larry Gagosian into the hands of the branded collector Steven A. Cohen (a hedge fund manager) and his wife Alexandra. Its three-year loan to The Metropolitan Museum adds more branding value that will serve the current owners well should they decide to sell the piece.

If branding sounds like a concept honed in the market for consumer products, the choice is quite deliberate. In explaining how contemporary art is valued, Thompson, a professor of marketing and economics, sees a direct relationship between the value of art and the societal embrace of branded goods on one hand and the cult of the celebrity on the other. It's like buying a designer's clothing because you don't trust your own taste or reading a gossip magazine because it makes you feel more in the know. That is, it's about placating insecurities concerning taste and image by embracing the brands of tastemakers:

Money itself has little meaning in the upper echelons of the art world - everyone has it. What the rich seem to want to acquire is what economists call positional goods; things that prove to the rest of the world that their owners really are rich.

Even if you are only moderately rich, there is almost nothing you can buy for £1 million that will generate as much status and recognition as a branded work of contemporary art. A great many people can afford a small yacht. But art distinguishes you.

It may also be that, with what is and isn't art having become almost as hard to define as what is and isn't good art, branding is about the only way that a collector can be reasonably sure that what he is getting is indeed "art" - let alone "good art" (presuming that by "good" one means art that enriches ones reputation and bank account.).

Damien Hirst: For the Love of God, 2007
Platinum, diamonds and human teeth
6 3/4 x 5 x 7 1/2 in. (17.1 x 12.7 x 19.1 cm)
Photo courtesy of White Cube, London

Thompson lays out his case in well-constructed prose. It is also clear that he has done much firsthand research, which he matches with insight and with enough anecdotes to keep the pace brisk. In what may be the best exposition of the contemporary auction business that has been published in some time, Thompson analyses the intricate ways in which the branded auction houses, Sotheby's and Christies, build excitement in their salesrooms and how they add value by collaboration with collectors and dealers (and now with artists themselves, as seen by Damien Hirst's direct-to-auction sale this past September of new work, at Sotheby's). Thompson's description of sales in progress has the authenticity of one who has been there. A first-time buyer should read those chapters before raising a paddle. Even for experienced collectors, there are revelations, such as the fact that, although consignors cannot bid on the art they are selling, an exception is made for divorcing couples, who can take their marital squabbles onto the sales floor by bidding against each other and anyone else nervy enough to get involved.

After years of selling the vast majority of their art to dealers, the auction houses have made deep inroads into the direct market to collectors. The dealers have counterattacked with the rise of the art fair, four of which have obtained what Thompson believes is branded status: Art Basel, Art Basel Miami Beach, TEFAF (also known as Maastricht, after the Dutch city where it is held) and Frieze (London). Just as the auction houses build excitement in the thirty seconds to three minutes it takes to start and complete the bidding on a multimillion dollar work of art, the art fairs generate frenzy by selling out important works within hours or even minutes after opening (indeed, even prior to the actual opening).

Eighty percent of the art bought from local dealers and local art fairs will never resell for as much as the original purchase price.

Jeff Koons's embrace of the art of banality, as the successor to Andy Warhol, has been perceived by Thompson and others as making him a successor to Warhol's embrace of money as muse. It is therefore no surprise that, when it became known that Koons was stocking his private collection with traditional works such as a wood carving of St. Catherine by the sixteenth century German sculptor Tilman Riemenschneider and a Gustave Courbet nude good enough to loan to The Metropolitan Museum for its recent retrospective of the artist's work, the press became suspicious: Did Koons, who started as a commodities broker, pick up sooner than his own customers on the simple fact that a market in which you can buy a wall of old masters for the price of a single Koons was headed for a painful adjustment?

Thompson completed his book before financial upheavals triggered global recession, and he is careful to work from the evidence strictly at hand: that the market was roaring but that all markets periodically (and unexpectedly) shift from roar to whimper. In the context in which we now read the book, what might have been a somewhat surprising conclusion now looks like conventional wisdom:

In the overwhelming majority of cases, art is neither a good investment nor an efficient investment vehicle. Most art will not appreciate, and there are high transaction costs, including dealer markups, auction house commissions, insurance and storage costs, value added tax and capital gains tax when work is sold.

Thompson traces Picasso's Garçon à la pipe from its sale in 1950 to Mr. and Mrs. John Hay Whitney for $30,000 to its sale at Sotheby's in 2004 for $104 million. He calculates that as a net return (after expenses) of fourteen percent per year over fifty-four years, "for one of the best long-term art investments anyone can cite…. No advisor cites Monet's Le Grand Canal, sold at Sotheby's in November 1989 for $12 million and reauctioned by the same auction house sixteen years later for $10.8 million."

At the levels below branded works, the results are worse:

Eighty percent of the art bought from local dealers and local art fairs will never resell for as much as the original purchase price. Never, not a decade later, not ever. Buy inexpensive art if you love it and want to live with it, but not in the hope it will appreciate in value.

Thompson does not spend much time trying to judge the quality of contemporary art as art. By his own thesis, that would be unnecessary. Branding is about elevating the reputation of goods and services that originate with a respected source. The general perception of a well-known brand is that it stands for something better. Thompson concludes that, in a market in which a dead shark can become art, only to be swapped for another shark's corpse, in a work by an artist who rarely participates in the actual making of art, the art becomes a concept piece made real by technicians and given value by the multiple brands through which it passes and which it represents.

If Thompson's hypothesis is correct, branded art will eventually lose value. That is because a price based primarily on branding will attach for a time, but it is hard to preserve the value of a brand in something that is supposed to serve as more than a useful article (such as a Prada handbag or Mercedes sedan, to cite two familiar brands). It is a bit like romance and love; you can start with the former, but it had better transform into the latter if it is to last. At some point, the value in the art should come from its success as art and not as a brand. In the most extreme cases, should the day come when the brand falls from favor (as many famous brands have done), what will be left will be art no longer.

A regular contributor to Culturekiosque, Alan Behr practices intellectual-property law at the New York office of Alston & Bird LLP. He last wrote on the artist Shepard Fairey and the copyright lawsuit launched by the Associated Press.

The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art
By Don Thompson

Hardcover: 272 pages
Palgrave Macmillan (September 2008)
ISBN-10: 0230610226
ISBN-13: 978-0230610224

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External Links

Guardian Interview of Charles Saatchi

The New York Times: Steven A. Cohen, A New Prince of Wall Street Buys Up Art

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