The Uneven Terrain of The Art Market

The art market is not an easy beast to follow, both to those fluent in the market and especially to those unfamiliar with the market. With an industry value of fifty billion dollars globally, the art market exists in a variety of realms from auction houses, to art fairs, galleries, private dealers, and more recently online. Across these realms, the standards of practice in authentication and provenance vary wildly. For example, higher profile auction houses like Sothesby’s may be able to hire art forgery experts to analyze their pieces before they go to market and even then may only be able to stop a fraction of counterfeit pieces from circulating. Online markets may offer little to no provenance information. Dealers have to be reputable as many will misappropriate artworks and traffic in counterfeit or illegal works in order to turn a profit. The bottom line is, there is no universal industry standard to guarantee that both a buyer is purchasing an authentic work and that the seller is selling an authentic work.

The most basic way to authenticate an artwork is through tracking its history, which is known as provenance. Provenance, ideally will track the artwork starting with its creation and then highlight all the various owners and transactions all the way to its present state. This is important because the provenance will be able to show if a work is indeed by a certain artist as well as ascertain if the work went through legal transactions throughout its history. Throughout various points in history, such as the colonialization of American or the Nazi conquest during WWII, looted art was a rampant problem. The stolen art then went into circulation and throughout time lost its association with the looting, through a series of “good faith” purchases. Many of these stolen artworks are now protected under laws which require identified artworks to be returned to rightful owners, such as the Native American Graves and Repatriation Act (NAGPRA). Provenance can help identify works that were stolen or illegally trafficked and return them to their rightful owners. However, provenance is much easier said than implemented. History is often riddled with gaps and filling in those gaps requires an extraordinary amount of research either through word of mouth or supporting documentations. Provenance can be fallible and easily faked, so due diligence is key.

Provenance is not exclusively used throughout all realms of the art market. In museums for example provenance is essential for an acquisition because the majority of museums are nonprofit institutions that operate under the public trust. Loss of trust means loss of funding, donors, and stakeholders as well as a flurry of legal and ethical issues. Any misstep will also be highly publicized, often on an international scale. An auction house, although for profit, is in the same boat because of the high publicity and legal issues that will inevitably ensue. A “good faith” purchase or acquisition is more often than not, not a reasonable excuse for a museum or auction house that will hold up in the court of law. It is expected that they know better and are held to a much greater degree of scrutiny. A private dealer, gallery owner, or collector might not have the same profile and will not generate the same level of scrutiny. These individuals also might not have the knowledge or resources to conduct provenance research. When art enters the digital realm, there is a large surplus of markets and sellers. Practically anyone can do it and therefore authenticity is even more up in the air. Simply put, knowledge, resources, and legal scrutiny to conduct due diligence provenance searches and authenticate artworks does not extend equally to every corner of the art market.

Another way to authenticate artwork lies in the realm of forensic analysis. Art forgery detectives will use chemical analysis and infrared scanners to check for certain signifiers of forgery. Telling signs of forgery might include modern paints or chemicals used on base layers of the artwork whereas use of modern materials on upper layers might be indicative of conservation treatments. Other telling signs are fragments of modern clothing articles found in base layers and pencil gridlines that are often used for accurately tracing an existing artwork. High profile auction houses may bring in specialists to make sure works going up for auction are authentic. The FBI may use forgery detectives in cases where there have been a chain of forgeries that they suspect a single forger was behind. The knowledge and devices used by forgery detectives are highly specialized and are typically out of the budget for most members of the art market. There is a lot of incentive for art forgery as the prices of high profile art skyrocket into the hundreds of millions. Techniques for forgeries have only improved with time. The most skilled forgers research the materials and pigments used to make sure their forgeries are period appropriate. There are also techniques to age artworks as well as mimic conservation treatments, making forgeries even harder to spot.

These days artwork is becoming more and more a financial asset than a luxury asset. Collectors will buy artworks with the intent that they will appreciate in value so they can be later sold for a profit. Whereas good faith between two parties may have been sufficient in the past, collectors today expect the work they purchase to have value and be the real deal. High profile collectors will often enlist the help of consultants to make decisions about purchasing and financing artworks for eventual profit. The once ethical consideration of providing provenance and authentication has turned into a demand that only the more knowledgeable and affluent dealers or auctioneers can provide. To keep up with the changing ways in which art is being used, the rest of the art market also needs to get on board.

Although the art market grosses around fifty billion dollars on a global scale, the market is controlled by established masters whose works sell for millions of dollars at auction. Of the small fraction of contemporary works sold at auction which account for around 2.7 billion of the art markets global sales, 45% of those sales are controlled by high value sales of well-established masters. This situation leads to a very top heavy market where the majority of the proceeds go to old masters while emerging or contemporary artists struggle to compete for relevancy. The concept of the starving artist is a widely accepted concept for a reason, imagine having to compete for a fraction of a fraction of the total market. The top heaviness of the market often leads to misrepresentation and trickery. A dealer could potentially sell a painting by an established master for much more than the market value, simply because it is perceived as valuable. What is more, emerging or want to be collectors have to navigate a market that is very much not equal and might not want to invest the energy to do so. This barrier to entry leads to high profile collectors dictating the market and keeping the energy at the top. While art may have a relatively high value, it has a very low liquidity because so little of the market is actually sold, but what is sold goes for very high prices. As it is currently, the art market makes it especially hard for both new artists and new collectors to break into the market.

In its current state, the art market is an unstable beast that is commandeered for the benefit of a select few and filled with wildly unequal standards across the board. Problems such as provenance gaps or lack of provenance and expensive or nonexistent authentication standards make it difficult for collectors and sellers to conduct trustworthy trades. The irregular standards make it easy for fraud and misrepresentation. Finally, the top heavy market ensures that powerful collectors and established artists have almost complete control of the market, leaving emerging artists and collectors in the dust. What the art market needs is equal standards and transparency across the board. How it gets there is another question entirely. New technologies such as distributed ledgers and Blockchain provide tantalizing possibilities by allowing provenance information to be recorded in a secure and immutable form for everyone to see. The fast moving pace of technology may allow affordable authentication technologies to be available for artists and collectors in the future. Only time will tell how the art market will evolve. As for now, it is desperately in need of a fix.

Article by: Christopher Rahmeh