Developing the Next Generation of Collectors
by The Founder
For the past 30 years the art business has been on cruise control. I honestly believe that gallery owners and art dealers thought the Baby Boomers were the end game for the business and never bothered to strategize for the future.
Now let me clarify that there are different levels of art collectors out there. And there are three tiers the the gallery business: high, middle and low. Typically the high and middle market galleries are “Blue Chip”. Blue chip galleries sell art to collectors who are more often than not investing in art from more of a financial standpoint and less of a “wow that's going to look great in my dining room” perspective.
When we hear about the art business boom it's not the low to middle markets making the headlines. That news is strictly for the high market selling in auction houses and international art fairs. That part of the art business is golden. It's the non blue chip mid to low market I am making reference to.
If you were to take a snapshot of the mid market in 2012 as opposed to the one in 2005 you would see a remarkable difference. Many mid market blue chip galleries were forced to close after the economic crisis started in late 2008. There are countless reasons for this but one of the biggest things in 2009 was that the industry was reporting that the average sale price for art was $1,000. Wait, what? How could that have ever happened? It happened because the economic woes of the marketplace scared the Baby Boomers, which resulted in them tightening their belts and truth be told many of them were having to return to work because they could not
afford retirement.
And so the decline in the mid market began. No one really knows how the low market galleries were effected by the downturn, there isn't much data available, just personal interactions with gallery owners and curators.
I'm confident that most people do not realize that in an average US city the majority of art galleries fit into the low marketplace. Now if you were to go to a large city like LA, NYC, or Chicago, you'll find the majority of galleries are mid to high market blue chip. In a large city, real estate rates are higher and a low market gallery cannot remain viable, pay overhead, etc, without a set source of income.
It would be helpful to describe a typical low market gallery. It is a space generally that shows local and regional artists, depending on the part of the nation it is located they plan their shows six months to a year out or they plan month to month, they depend on purchases from the general public and generally have a handful of collectors. Their pricing structure demands they sell individual works for under $5,000. They are owned by artists, collectors and art activists. Most only sell a few pieces a month, the gallery owners work a second job or they have a partner that funds the space to keep it in operation. In short if the gallery was to stay open based on art sales, it would have to close. Low market galleries are very popular because they give local artists a chance to have their work shown in public.
So what's wrong with having a low market gallery that only sells from time to time? Aren't they contributing to the health and culture of society? The simple answer is yes they are a viable part of our society strictly from a cultural perspective. But when it comes down to simple economics they are doing a disservice to the community. Artists begin to lose hope that they will ever sell work and have anything more than a part time career in art. The community in turn falsely is lead to believe, by these galleries, that work is being sold. But then there is another negative that follows suit, no sales typically means a low market gallery closes its doors, so the community then begins question whether the visual arts are viable in their town. All of this is simply avoidable.
If a gallery wants to show art without selling it then it would be my recommendation to start a non profit contemporary art museum. Otherwise, make a plan to develop a new group of collectors.
What is a collector?
Simply stated they are a person who buys a work of art because they see value in the piece and the artist. A blue chip collector not only sees the value of the work, they see the potential for the work to be sold for a higher price at a later date. The blue chip collector is purchasing nationally recognized artists for the most part although there are exceptions to the rule.
So what needs to happen for low market galleries to begin selling to new collectors?
Education.
The general public is the potential collector base for a low tiered gallery. You might say, “The average Joe isn't going to buy art and more than likely they can't afford it”. You would be wrong if you did say it. Americans spend their paychecks on luxury items every day. What do we need to live? Food, clothes, transportation and a place to sleep. Everything else is extra. People don't bat an eye about going to see a first run movie on a date or with the family and spending $20 to $100. They also go to the bar, they smoke cigars and cigarettes, they play the lottery.
And what is the common thread for all of those things?
They are temporary luxuries that don't last. What if we were to educate the public that they could own art that will last potentially for generations if it is well maintained, would they spend less on temporary luxury goods? What if in that education, people learned that they could effect a change in the local economy by purchasing art from a local artist instead of factory produced “art” from a big box retailer?
How you begin the process is up to you. I would recommend that you partner with other galleries in your town and work together through the process. Sure you may have to partner with people you don't see eye to eye with, but remain focused on the end goal, consistent sales. If you look at markets in the US that have embraced this ideology you find a united front for the arts, a strong community of successful career artists, and a strong sense of community pride.
This is just the starting place of something revolutionary in the low marketplace in America. Now that you realize you are holding the ball, it's time to get to work.
For the past 30 years the art business has been on cruise control. I honestly believe that gallery owners and art dealers thought the Baby Boomers were the end game for the business and never bothered to strategize for the future.
Now let me clarify that there are different levels of art collectors out there. And there are three tiers the the gallery business: high, middle and low. Typically the high and middle market galleries are “Blue Chip”. Blue chip galleries sell art to collectors who are more often than not investing in art from more of a financial standpoint and less of a “wow that's going to look great in my dining room” perspective.
When we hear about the art business boom it's not the low to middle markets making the headlines. That news is strictly for the high market selling in auction houses and international art fairs. That part of the art business is golden. It's the non blue chip mid to low market I am making reference to.
If you were to take a snapshot of the mid market in 2012 as opposed to the one in 2005 you would see a remarkable difference. Many mid market blue chip galleries were forced to close after the economic crisis started in late 2008. There are countless reasons for this but one of the biggest things in 2009 was that the industry was reporting that the average sale price for art was $1,000. Wait, what? How could that have ever happened? It happened because the economic woes of the marketplace scared the Baby Boomers, which resulted in them tightening their belts and truth be told many of them were having to return to work because they could not
afford retirement.
And so the decline in the mid market began. No one really knows how the low market galleries were effected by the downturn, there isn't much data available, just personal interactions with gallery owners and curators.
I'm confident that most people do not realize that in an average US city the majority of art galleries fit into the low marketplace. Now if you were to go to a large city like LA, NYC, or Chicago, you'll find the majority of galleries are mid to high market blue chip. In a large city, real estate rates are higher and a low market gallery cannot remain viable, pay overhead, etc, without a set source of income.
It would be helpful to describe a typical low market gallery. It is a space generally that shows local and regional artists, depending on the part of the nation it is located they plan their shows six months to a year out or they plan month to month, they depend on purchases from the general public and generally have a handful of collectors. Their pricing structure demands they sell individual works for under $5,000. They are owned by artists, collectors and art activists. Most only sell a few pieces a month, the gallery owners work a second job or they have a partner that funds the space to keep it in operation. In short if the gallery was to stay open based on art sales, it would have to close. Low market galleries are very popular because they give local artists a chance to have their work shown in public.
So what's wrong with having a low market gallery that only sells from time to time? Aren't they contributing to the health and culture of society? The simple answer is yes they are a viable part of our society strictly from a cultural perspective. But when it comes down to simple economics they are doing a disservice to the community. Artists begin to lose hope that they will ever sell work and have anything more than a part time career in art. The community in turn falsely is lead to believe, by these galleries, that work is being sold. But then there is another negative that follows suit, no sales typically means a low market gallery closes its doors, so the community then begins question whether the visual arts are viable in their town. All of this is simply avoidable.
If a gallery wants to show art without selling it then it would be my recommendation to start a non profit contemporary art museum. Otherwise, make a plan to develop a new group of collectors.
What is a collector?
Simply stated they are a person who buys a work of art because they see value in the piece and the artist. A blue chip collector not only sees the value of the work, they see the potential for the work to be sold for a higher price at a later date. The blue chip collector is purchasing nationally recognized artists for the most part although there are exceptions to the rule.
So what needs to happen for low market galleries to begin selling to new collectors?
Education.
The general public is the potential collector base for a low tiered gallery. You might say, “The average Joe isn't going to buy art and more than likely they can't afford it”. You would be wrong if you did say it. Americans spend their paychecks on luxury items every day. What do we need to live? Food, clothes, transportation and a place to sleep. Everything else is extra. People don't bat an eye about going to see a first run movie on a date or with the family and spending $20 to $100. They also go to the bar, they smoke cigars and cigarettes, they play the lottery.
And what is the common thread for all of those things?
They are temporary luxuries that don't last. What if we were to educate the public that they could own art that will last potentially for generations if it is well maintained, would they spend less on temporary luxury goods? What if in that education, people learned that they could effect a change in the local economy by purchasing art from a local artist instead of factory produced “art” from a big box retailer?
How you begin the process is up to you. I would recommend that you partner with other galleries in your town and work together through the process. Sure you may have to partner with people you don't see eye to eye with, but remain focused on the end goal, consistent sales. If you look at markets in the US that have embraced this ideology you find a united front for the arts, a strong community of successful career artists, and a strong sense of community pride.
This is just the starting place of something revolutionary in the low marketplace in America. Now that you realize you are holding the ball, it's time to get to work.
