The four rules of writing about art auctions

By Felix Salmon
December 4, 2013

A loyal reader asks my advice for writing about art auctions. It’s pretty simple, and boils down to four rules:

  1. It isn’t a market for masterpieces.
  2. Ignore auction records.
  3. Adjust for inflation.
  4. Make judgments.

The best way to illustrate the first rule is via a chart, which I generated from data given to me by the good people art Artnet:

What you’re seeing here is a pretty volatile six years in the history of art auctions. (The figures for 2013 are to November 30.) Artnet took all the lots sold at Sotheby’s and Christie’s in each year, and separated them into the top 20% and the bottom 80%. They then measured how much money the top 20% of lots brought in, as a fraction of the total.

In absolute terms, the ranges were big: the top 20% of lots brought in $6.8 billion so far this year, compared to just $3.2 billion in 2009. But in percentage terms, the numbers are astonishingly constant, right around the 90% level: they never dipped below 89%, or rose above 92%.

In other words, no matter what the market, the top quintile of art works will always accounts for 90% of the value of the art sold.

This is a fact every art reporter should know — because the minute you start interviewing self-appointed art-market experts, they’re all going to say exactly the same thing. It’s a quote found in auction report after auction report, and it generally comes from some dealer or other: “the very best art is in high demand and getting amazing prices,” he’ll say, or words to that effect, “but anything less than the very best is going to be very hard to sell”.

The astonishing thing is that art-market reporters fall for this every season, even though it’s exactly the same thing they’ve heard in every other season. In today’s market, they write, it’s all about the masterpieces — the truly amazing works which sell for jaw-dropping megabucks. Everything else is an also-ran. (It’s taken for granted that the most expensive works are masterpieces; we’ll come back to that in a bit.)

But the fact is, statistically speaking, that the distribution of art-market values never really changes at all. What’s true today was true yesterday, and was true a decade ago as well. The only difference is the way in which the art-market caravan has moved on and anointed a new set of art works as being the “masterpieces” worth spending insane amounts of money on.

Similarly, every season there’s breathless coverage of new auction records — a long list of artists, all of whom just saw a work sell for more money than that artist has ever received at auction before. The auction houses love to present those auction records as a sign that the market is particularly healthy. But in fact, it’s more of a sign of how fickle both the auction houses and the art market are. Each season, a new artist is hot, and sells for high prices; the superstars of yesteryear, by contrast, aren’t even accepted for auction at all, much of the time. Today’s masterpiece is tomorrow’s mildly embarrassing reminder of how bad our taste used to be.

And then, of course, there’s the simple act of adjusting for inflation, which seemingly no art-market reporter is capable of. For instance, that record-busting Francis Bacon triptych is not “the Most Expensive Artwork Ever Sold at an Auction” if you follow the sensible rule that all prices should be adjusted for inflation. The record still belongs to Vincent van Gogh’s Portrait of Dr. Gachet, which was sold for $147 million, in today’s money, back in 1990.

So what should you do, if you want to cover the art auctions? Here’s one idea: try to spot the artists who aren’t selling, or who are quietly being moved to the day sales. The auction houses do a very good job of expectations management, in setting public estimates for the paintings they’re selling: if the estimate is low, and the price realized is equally low, it’s easy to think there’s nothing newsworthy going on — even if, a few years ago, the same piece might have sold for multiples of what it’s now able to fetch.

But the best art-auction reports go further than that, and talk in detail about the ever-present gap between price and quality. Inside an auction house, it’s in everybody’s interest to pretend that the most expensive art is the best art. But no one actually believes that. So: which works are faddishly overvalued? Which ones look like they’re selling for a (relative) song?

A little bit of connoisseurship, in an auction report, goes a long way. Maybe that should be the first rule of covering such events: don’t leave your critical faculties at the door. Without them, indeed, you’re unlikely to be able to say anything particularly insightful at all.

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Two more: avoid generalising from tiny samples, and adjust for the premium. Journalists often report that a lot sold for ‘low estimate’ when the sale price includes an extra 1/3 premium. These are great rules. I’ve elaborated and applied here: http://grumpyarthistorian.blogspot.co.uk  /2013/12/how-to-write-about-auctions-ol d-master.html

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