The secondary art market
By: Michael De Bruges
The secondary art market - a useful notion for the art investor
As there are secondary markets in the trade of goods or wares, there is a secondary market in the trade of art. The great difference is that art doesn't depreciate with age, even if subject to wear, and that prices on the secondary art market aren't determined by singular usability but by their universal desirability. What we understand by a primary and a secondary market in the art trade is important for our appreciation of the monetary value of a work of art. When an artwork comes to the market for the first time at a gallery or any other art exhibition we speak about the primary market. This is the moment when the price for the artwork is established for the first time. The artist, or the gallery owner / dealer in conjunction with the artist, establish a selling price based on art market indicators at the time of presentation. As with any commodity market, the mechanism of "supply and demand" defines this pricing structure.
Once the artwork is purchased on the primary market and the buyer, whether a private collector, an institution or a dealer, decides to resell it, it enters the secondary market. Most items sold through auction houses form part of the secondary market, as the artwork has already been purchased at least once. Secondary market trade means trade in art that is not coming directly from the artist.
As in many other trades there is a great amount of speculation in the commerce of art. Some prices asked on the primary market inevitably raise dubitative questions as to longevity. However, such considerations matter little for the primary market's dynamism; strongly sustained by marketing artefact, sales technique, fashionable trends and not least, by the Vanity Fair that is art collecting.
It is evident that the prudent art investor better turns to the secondary market where value is established and not arbitrary or ethereal. The secondary market implies that a certain time will have passed between the act of creation and the present proprietary transaction. This is of course not true in all instances but can be used as a convenient rule. The artificial hype that may have been created around the artist at the moment of his introduction to the art world, or during his ascendance in the same, or at his height, will in most cases have waned or stabilized and there is room for a more neutral and sober evaluation of the work itself.
But also for the art collector is the secondary market a safer bet. Though subject to the prevalent Zeitgeist, the secondary market is not so trendy and does not explore, to the same extent, the eventual momentary personal celebrity of an artist. Not dealing with the artist is an expedient way of not getting biased be his/hers personality or circumstances and to focus on the work of art itself. Artists are moreover always unequal in their production and often bad judges of their own work. In first instance, giving all one's attention to the individual work and to that work's precedent and aftermath, instead of to the maker's person or ideas, is essential for sound judgements on Art.
Some actors on the art market would like to reserve the term secondary market for a highly specific trade in prints. The term is however far too useful to be limited to such specific usage as its logical connotation, i.e. what is intuitively understood by the expression, is of particular importance to investors and collectors alike.
The author is a specialist in modern European painting. Please see http://brugesfineart.com
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