Opinion

Felix Salmon

Art market datapoint of the day

By Felix Salmon
July 27, 2009

According to his official bio, Jay Bryson, a Wachovia economist, is a much-quoted chap:

His comments on the economy regularly appear in The Wall Street Journal, the New York Times, and USA Today. He also makes frequent appearances on CNBC and Bloomberg TV.

Of course the downside of being quoted a lot is that sometimes you’re quoted saying something like this:

“Art is a very discretionary sort of object, and we are in the worst recession arguably in the postwar era,” said Jay Bryson, a global economist with Wells Fargo Securities in Charlotte, N.C. “Obviously somebody who has lost their job in a factory in Indiana probably is not buying art.”

I think probably somebody who still has their job in a factory in Indiana probably is not buying art. And never was. Especially not the kind of art sold at Bellwether, a well-regarded Chelsea gallery which sells art by artists you’ve probably never heard of. But which was still, until recently, pulling in a lot of money:

Becky Smith knows that all too well. She owned the Bellwether Gallery in Manhattan’s Chelsea neighborhood for a decade, but closed at the end of June after watching her revenue plummet to $80,000 gross in the first quarter of 2009. She had $40,000 net, and $10,000 of it went to rent each month.

The $80,000 figure was down from about $350,000 the same quarter in 2008 and about $600,000 during that period the year before.

In the first quarter of 2007, it seems, Bellwether was grossing $200,000 a month. Pay half that to the artists, and another $10,000 in rent, and you’re still making over a million dollars a year. And you’re not selling to factory workers in Indiana.

Interestingly, even at the height of the boom, that $100,000 a month going to Bellwether’s artists still works out at only about $5,000 a month per gallery artist — and you can be sure that a couple of the top names got the lion’s share. So while the gallerist was making a million dollars a year, a lot of her artists were probably making just a couple of thousand dollars a month.

So what now? Smith will continue to deal privately, but that means mostly secondary-market works, and little if any new money for artists. They’re the ones who are really going to start hurting.

Comments
7 comments so far | RSS Comments RSS

You are assuming (because Becky Smith is claiming) that she was paying half her revenue to her artists. 50-50 is the standard deal, but I would not be surprised if she were paying even more than 50% of her revenue to the artists. Look, if a piece is retailing for $10,000, and a collector comes in and says he’ll buy it for $9,000, surely the dealer will, well, deal. In short, do dealers really always get the 100% markup that they wish they got?

 

$10,000 a month in rent is not the only expense a gallery in Chelsea may incur (or any gallery in the country, for that matter.) Please include at least another 40% to 80% of her net devoted to health insurance, marketing, staff, utilities, packaging, shipping, materials, events, travel, entertaining, etc. The costs of doing business as a gallery are tremendous and even the most frugal gallerist/owner still comes out of it with less than you might imagine.

Posted by Robert Patrick | Report as abusive
 

RWB, I can assure you that if a gallery has a 50/50 split with an artist, that’s a 50/50 split of the sale price, not the list price.

Posted by Felix Salmon | Report as abusive
 

This is sort of a derail, but the Artlurker blog here in SoFla writes the following about our premium event here:

“It is presumed that Art Basel did wonders for this city, but in reality, in addition to making art more about money and less about art, the fair served to galvanized the party destination status that anyone who is seriously trying make work is currently trapped under, silently drowning like a seal beneath ice.”
(http://www.artlurker.com/2009/07/the-co llabo-show/)

Is art about its market, its culture, or itself?

-g

Posted by - g | Report as abusive
 

Pretty customary to split discounts up to and including 20%. Greater ones, she would absorb. But that doesn’t skew the 50/50 splitting of income too much–except in the case of big institutional sales and big jerky collectors who are greedy. Which could comprise a fairly big part of her business…

 

Correct me if I’m wrong, but not only will the artists be hurting but because they are freelancing they also won’t be counted in the unemployment statistics (at least not the one that every likes to quote).

Posted by Argel | Report as abusive
 

“I can assure you that if a gallery has a 50/50 split with an artist, that’s a 50/50 split of the sale price, not the list price.”

Not so Felix. Consignment agreements dictate how much of a discount artists agree to share. A gallery often must absorb what discount surpasses that amount to close a deal. They can ask an artist to split the entire discount with them, but the artist is under no obligation to absorb a full half and the gallery is still often left receiving less than 50% of what comes in.

Posted by Edward_ | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •