An information-loaded, economic look at contemporary art.
Not many of us need the information economist Thompson (Emeritus, Marketing and Strategy/York Univ.; The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art, 2008, etc.) carefully provides here. Those who are willing to pay millions of dollars for a piece of art likely know most of it anyway. Still, the author provides an intriguing look into the operation of the basically unregulated market for contemporary art. So what makes one artist more popular than another? Is it branding, back story, or celebrity, or is it event-driven? Many now see art as an asset class, and other collectors buy art to show off, to become market makers, and some are just following the (very wealthy) crowd. It is evident that the author has encyclopedic knowledge of the artists, dealers, private collectors and investors in the contemporary art scene. He explains how art is sold—through dealers, art fairs or the large auction houses of Sotheby’s and Christie’s. Tracking the market is difficult, specifically due to the opacity of private dealer sales. Often, both buyer and seller wish to maintain anonymity for reasons of their own. If auction houses decide to guarantee a price for a work or barter seller or buyer premiums, no one complains—that’s simply the way the game is played. The author makes it abundantly clear that the market is high-risk, illiquid, high-cost and unable to be hedged. “As an economist and contemporary art enthusiast,” writes Thompson, “I have long been puzzled by the alchemy that causes a Warhol to be valued at $63 million rather than $5 million or even $100,000….In thinking about prices, remember that the operative part of the word contemporary is ‘temporary.’ ”
Intermittently fascinating but best left to the 1 percent.