The art of valuing works of art
Boudewijn Brands, Contributor, Jakarta
Talking Prices: Contemporary Art, Commercial Galleries and the Construction of value; by Olav Velthuis; Ph.D. dissertation Erasmus Universiteit Rotterdam, June 7, 2002
Currently, a play titled Art by Jasmina Reza is being performed in Singapore. It is about three friends and a painting. In the opening scene Marc and Serge are looking at the painting just bought by Serge. The painting is simply a white canvas with some diagonal markings.
When Marc asks Serge how much he has paid for it, he is surprised at the answer: S$20,000. In defense, Serge says that a Mr. Huntingdon of the (famous) Huntingdon Gallery would have taken it for himself at 10 percent more. But, of course, he does not, Serge explains; he prefers to sell to private clients as "That's how the market circulates".
But Marc still cannot understand that his friend wastes so much money on such s**t. Serge makes things worse by rubbing it in that his friend is obviously unaware of the fact that the modern art museum, Center Pompidou, owns works by the same artist and that "... the painting builds on a profound, intellectual tradition" which Marc, alas, is apparently unaware of.
In this play, the message is that you need to be an insider to the art world "in order to understand the economic and cultural values at stake".
This situation is described in the conclusion of a Ph.D. dissertation titled Talking Prices. It deals with Contemporary Art, commercial galleries and how they construct value.
The author focuses on the primary market and on art sold through galleries. This market was, until now, largely ignored by economists because of a lack of data. The author has focused on it as he considers it important "because most artists do not have a secondary or resale market. After being sold on the primary market, their work will never appear on the market again".
He estimates that the works of less than 2 percent of Dutch artists appear at auction on a regular basis. He quotes another estimate stating that only 0.5 percent of the works sold today will still have a market value in 30 years.
You might object that this situation does not prevail in Indonesia but then, no such study has been done here. The author has done research in two art capitals that are both perceived as the epicenters of the national art markets in which they are embedded: New York and Amsterdam.
He looks for an answer to the question of how prices for contemporary art are arrived at. In eight chapters he comes to the conclusion in which he depicts the scene described above.
So how is contemporary art priced? In cynical terms, an artist and/or his work have to be liked by a gallery owner or curator who is a member of the insider group.
In Indonesia, according to my observations, it also helps if the artist can speak English and has an exotic name. You then get a nice presentation and writing by a noted writer and then, of course, it is not in the gallery's interest to sell something cheap or at a price members of the community at large can afford. This way, it brings in a large commission and stays exclusive.
In many cases, the decision to bring on an artist is made by experts (as art critics) and their recognition also has a strong impact on the initial economic value of a work of art.
If this first barrier is cleared a price should be determined: In chapter 3 he shows how gallery owners arrive at a price. It is done by using scripts or checklists. An example is to fix prices based on size, material used and the curriculum vitae (exhibition history) of the artist. For price increases three scripts exist. These are based on age of the artist, the number of successful sales or the recognition the artist has received.
The author concludes that the quality of the work never influences its price. He also tries to explain two anomalies in the art market: The fact that art is usually priced according to size within an artist's repertoire and secondly, the strong taboo on lowering prices.
As far as Indonesia is concerned, one can also find inner circles.
Check the ritual: Meeting a person, the first thing done is checking whom you know in art. Drop the right names and then you are almost accepted. There seems to be some power game going on, however.
As the group Jendela exhibited at TIM in 2000, noted art critic Agus Dermawan judged their works as "lazy, impolite and looking too much to art developments in the West".
New art critic and then would-be curator Hendro Wiyanto responded in the same paper calling such a reaction a baseless insult, like throwing mud at the artists.
Whose judgment should follow? This study gives some interesting insights.