If you’ve ever bought a piece of art direct from a high street gallery, chances are you were buying from the primary market. For a recap on primary and secondary markets in art buying, check out our post here, but in summary the primary market is when an artwork becomes available for the very first time, either directly from the artists’ studio, from the gallery representing the artist, high street chains or at any other art exhibition or fair, this is when the price for the artwork is first established.
The secondary market, on the other hand, refers to the trade of art which has already seen at least one owner, it is likely to come from a private collection via an auction house, and a piece with an established provenance can often command the huge sale figures we see coming out of Sotheby’s and Christies, for example.
Many galleries will offer a valuation certificate either with a purchase or at a later date, the valuation certificate purports to advise you on what the artwork would be worth if it were re-sold or what you could expect to claim from your insurance should the piece be stolen. This is all well and good, unless you’re buying from a primary market source, because, how could the primary market source (i.e. the high street gallery) possibly know? As, in all likelihood, this piece is a new to market, never-before-been-sold work of art by a contemporary, living artist, who they likely represent and publish – and herein lies the crux of the issue. If an organisation is establishing the price of a product, a product that they themselves invest in developing, it stands to reason that the ‘valuation’ put on it by that very same organisation should be viewed with some scepticism.
Let me explain: the nature of the primary market means that there is no precedent set for what that piece is actually worth ‘in the wild’, so to speak. Within the four walls of the gallery, in which all artwork is priced accordingly and in line with the organisation’s overheads, margins and sales strategy, sure, it’s ‘worth’ what they say it’s worth.
But out there, in the free-market, where an artist’s reputation, desirability and collectability is based on a multitude of factors that are much harder to influence and control – it’s perfectly possible that the piece of art you paid £2,000 for will be of no interest to an auction house and in reality, might net you £600 on eBay or similar sites.
So, does this mean you shouldn’t buy primary market art? Of course not. If you’d bought a piece of art from the studio of Damien Hirst in his heyday fifteen years ago, this would have been a primary market source and a highly shrewd investment. And therein lies the rub, if you’re buying for investment purposes, standard high street art galleries, selling signed limited edition prints, aren’t going to do you any favours. If an investment piece is your main motivator, you need to be in the heart of the primary and secondary markets; so that you’re getting the nod on up-and-coming artists whose primary market pieces are hotly tipped or you’re in the know about sought after secondary market pieces at a steal. That’s a hella effort, you need a lot of time, or money, or both.
That’s why your main motivator for collecting art should be because you like it, love it, even! That’s how you can walk into a high street gallery on a Saturday afternoon, spend a grand on a limited edition print and enjoy it, because you can’t wait to get it on your wall and look at it each day. Because sure as May follows April, if you’ve bought into the ‘this piece will always be worth what you paid for it if not more’ line trotted out by gallery salespeople up and down the country, chances are you’ll end up disappointed. And out of pocket.
At MyArtBroker, we rarely see an artist from these types of galleries out perform the RRP, and remember, we don’t set the prices, deals are done based on what buyers are prepared to pay – this is how the secondary market functions. Many successful primary market artists never see traction in the secondary market, those that do are the exceptions rather than the rule.
For example, we continue to see great interest in the work of Sheree Valentine Daines and Lorenzo Quinn. Beyond that, we are regularly in the position of explaining to our members why their artworks aren’t worth a) the figure they originally paid or b) the figure stated on the valuation certificate.
So, what can you do? Nothing. The market is what the market is. As an unregulated entity (a discussion for another day) the art market plays by its own rules so it’s up to you to determine what a piece is worth. What’s it worth to you?
1. If you’re after investment, avoid the high street chain galleries, do your research and find yourself a dealer
2. As with any major purchase, know what you’re willing to pay – leaving a store feeling like you’ve paid over the odds for something doesn’t bode well for your state of mind or enjoyment of your piece
3. Take gallery patter with a pinch of salt, remember, they’re salespeople, with targets to hit
4. Buy towards the end of the month, there may be a deal to be had if the gallery is close to month-end and sales targets are looming
5. Buy what you like and you’ll never be disappointed