Freakonomics Radio - 485. “I’ve Been Working My Ass Off for You to Make that Profit?”
Episode Date: December 9, 2021The more successful an artist is, the more likely their work will later be resold at auction for a huge markup — and they receive nothing. Should that change? Also: why doesn’t contemporary art im...pact society the way music and film do? (Part 2 of “The Hidden Side of the Art Market.”)
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When we think about the art market, we tend to think of the sellers, the galleries and
auction houses, and the buyers, the art collectors, museums, maybe even some speculators.
That's what we looked at last week in the first episode of a three-part series we're
calling The Hidden Side of the Art Market.
Those buyers, and really even the sellers, they represent the demand side of the art market. Those buyers, and really even the sellers, they represent the demand side
of the equation. Today, let's talk about the supply side. In other words, the artists.
What does the art market look like from their perspective?
Well, I would say it's the world's largest unregulated commodities market, except I was
corrected by a friend that art is not a
commodity. A commodity is like orange juice or copper, so you can't really compare apples and
oranges, but it is extremely unregulated and subject to all kinds of monkey business.
That's Tom Sachs.
I'm an artist, 55 years old, and I live in New York City. I'm a sculptor, and my priority is making sculptures
that really expose the transparency in which they're made.
Sachs may sound low-key, but he's a pretty big deal.
His work is in the collections of top museums in New York,
Los Angeles and San Francisco, Paris, Milan.
You get the idea.
When we spoke with him, he was in Hamburg,
Germany, setting up the fourth installment of a virtual space mission he's been working on
for 13 years. We're going to the asteroid known as Vesta on a mining mission because we've run
out of gold here on Earth. It's a pretty elaborate expedition. You could call it performance art.
That's, to me, a dirty word. I say live demonstration.
Early in his career, in order to subsidize his art making,
Sachs did a lot of manual labor, construction, elevator repair. He has called himself the second
most talented Jewish carpenter of all time after, you know, Jesus. By the early 1990s, he was making art pretty much
full-time. I remember once when I first started, I went surfing with a buddy who was an art
collector and he bought a piece of art and then he dumped it at auction. This was a piece that
Saks had made. And I was like, dude, and it was a really cool sculpture that I welded by hand and burned my hand or whatever.
Welding is hard.
It's toxic and hot and hard work.
And I'm good at it, but I probably wasn't that good then when I made it.
It was hard to do.
And so I said, so you're telling me that money is worth more to you than this thing that I bled over.
Are you still friends with this guy?
I haven't spoken to him in many years,
but I also years later understand with like death, divorce, and taxes,
which are the three reasons why people sell things usually, things happen.
Money is a funny thing.
People have different situations, so I certainly wouldn't hold it against him.
I just think it was the first time it had happened to me, so I was shocked by it.
As we learned in the first episode of this series, there is a lot to be shocked by in the art market.
Here's a quick recap of what we know so far.
It's one of the strangest markets that I have ever seen.
The primary market where most of the artworks are sold is a complete black box.
Galleries are supposed to keep a price list available for anyone to peruse,
but that's just really not how art is sold.
If I have the money to buy a Mercedes, I get the Mercedes.
But that is not true for many artists.
Even the Met has been priced out of the market when it comes to certain artists.
Maybe 90% of the art that's sold sits in a warehouse.
Art is a bad investment.
The art market is a fascinating, sexy, intellectually compelling, unregulated global market.
We also learned last week about the unlikely rise of Alice Neel, an artist who died in 1984.
She had been a prolific painter, but she never sold much, and she spent years on welfare.
But today, her paintings sell for millions.
At $2,500,000, I'm selling to Alex's Telephone for $2,500,000.
But those millions don't go to Alice Neel's estate.
They go to the family of the man who acquired the painting back in the 1960s.
He probably paid a couple hundred dollars.
That said, the Neel estate still owns plenty of her work.
So will they share in the gold rush too?
Today on Freakonomics Radio, how do artists get paid? Truthfully, it's feast or famine.
What's it like for a living artist to see something they created sell at auction for
a hundred times what they were originally paid? You feel a moment of like, oh, your stomach drops.
This is like a horrible decision I made. If you're thinking there ought to be a law to give artists
a cut on the secondary market, well, there is a law. It's proven thinking there ought to be a law to give artists a cut on the secondary
market, well, there is a law. It's proven to be hard to enforce. No one thinks it has big teeth,
if you know what I'm saying. And how much does the brutality of the art market dampen
the urge to create? That's really the question of the day, isn't it? This is Freakonomics Radio, the podcast that explores the hidden side of everything.
With your host, Stephen Dubner.
In October of 1973, Sotheby's Auction House in New York held a sale of contemporary art.
It came from the collection of Robert and Ethel Skull, who had made their money running a taxicab empire.
The sale turned out to be the start of a craze that has only accelerated ever since. Robert Scull had been a passionate collector of
paintings by Jasper Johns, Mark Rothko, Andy Warhol, Robert Rauschenberg, and many others.
When Scull started buying these paintings, often directly from the artists,
they weren't particularly expensive. By 1973, that had changed. Sotheby's broke several records that night, selling 50 pieces
from Skull's collection for a total of $2.2 million. On average, that's $44,000 per piece.
Today, that number sounds quaint. As we heard last week, a single Alice Neel painting, and not at all a remarkable one,
recently sold for $2.5 million.
But in 1973, people were blown away by these auction prices.
Big prices were one thing for old master paintings, but for art that was made recently and bought
cheap?
Here's the art critic Robert Hughes from a documentary called The Mona Lisa Curse.
One thousand to two thousand dollars on average for a Rauschenberg or a Jasper Johns.
The painter and graphic artist Robert Rauschenberg, a fixture in the pop art scene,
was one of the biggest names in the sale. Years earlier, Robert Skull had bought directly from Rauschenberg a piece called Thaw.
He'd paid $900.
On this night at Sotheby's, it sold for $85,000.
Rauschenberg, on whose work Skull had made such a profit, gate-crashed Skull's celebrations. The documentary shows Rauschenberg giving Skull a not-so-playful punch in the shoulder.
And then he says,
For Christ's sake, you didn't even send me flowers.
In case you couldn't make that out, the artist says to the collector,
for Christ's sake, you didn't even send me flowers.
To which the collector says,
Send you flowers? For what? Then Rauschenberg says,
it was a great markup. It was a great markup. You're right. You're right. I've been working
my ass off for you to make that profit. Rauschenberg was angry. He felt Skull was
disloyal, no longer a collector, but a profiteer. But then Skull turns the tables.
He points out that Rauschenberg would also benefit from these inflated prices.
How about yours that you're going to sell now?
I've been working for you too.
We work for each other.
Rauschenberg freezes.
He doesn't seem to know what to say,
as if he hadn't even considered what the inflated auction price would do for him.
And then he gives Skull a hug.
You buy the next one, okay?
You buy the next one.
Well, I'll take a look at it.
Come to the studio.
All right.
Why not?
So that was a quasi-happy ending for Robert Rauschenberg.
Still, here's a big question. When you see an artwork
selling at auction for many multiples of what the artist originally received,
should you feel bad for the artist, knowing they don't get a penny?
No, you shouldn't, because auction prices have great signaling power for the primary market.
That's Magnus Resch, an economist who studies the art
market. Sometimes prices in auctions are much higher than the gallery prices. However, you'll
soon see that the prices in the galleries will go up because the gallerist justifies the price
increase by saying, hey, look at the recent auction results. Galleries and buyers are using auctions in order to inflate prices.
But, Resch argues, there is a catch, a gigantic catch.
99.9% of the artists that you see at galleries and exhibitions, their value will never increase.
In other words, Robert Rauschenberg was lucky to have the problem he had.
Lucky that his work was considered special enough to be sold for a
huge markup on the secondary market in an auction. This meant he could at least indirectly recover
some of that markup by increasing his prices on the primary market. But again, Rauschenberg
was in a tiny minority. The art market is a gigantic pyramid with just a few artists at the top who command high prices.
Truthfully, it's feast or famine.
Everybody wants to buy your work or nobody wants to buy your work.
That's Canis Prendergast, another economist who studies the art market.
He is at the University of Chicago, where he also manages the business school's art collection.
We have an endowment, and our annual budget is a little short of a quarter of a million dollars,
which, even though it's a lot of money, is a pittance to the contemporary art world.
So talk about that. I've had a little experience with galleries and artists and auction houses and museums in New York,
where it seems that there is this really almost a handful of desired upcoming artists,
but the minute they're anointed, their price goes from close to zero to quite a lot.
The way that relationship usually works is that they will show their first couple of times,
and the price might be $20,000.
Once it becomes known that this is a desired artist, there is a line around the corner.
But the price doesn't change from 20 for a while.
Instead, what they do is they give it to MoMA, if MoMA's interested.
MoMA is the Museum of Modern Art in New York.
Or increasingly, they give it to very well-placed private collectors.
And once it gets into that network, that's what allows prices to go up like crazy.
So what you have is that strange interregnum where people are queuing around the corner.
And this is where you also get a lot of the discontent of galleries where somebody will buy it at $20,000 and the next day they'll turn around and sell it at auction.
And galleries obviously don't like that.
No. In the same way as what happens with Cubs tickets, you know, playoff tickets, they turn
around and flip it.
I believe this happens with luxury watches, too, even when they're sold at market prices
and some high-end cars like a Ferrari or Lamborghini.
Absolutely.
It's exactly the same thing, or it's even true for sneakers, for example.
And companies are now deciding how to manage that kind of secondary market
in a way that they didn't before. When it comes to contemporary art,
the gallerists who represent artists have to manage this potentially large gap between their
market, the primary market, and the auction market or other secondary sales. I mean, at the core, we set prices based on supply and demand.
That's David Zwirner, one of the most successful art dealers in the world.
He runs galleries in the U.S., Europe, and Asia.
Last year, he did more than three quarters of a billion dollars in sales.
But then we also look at external factors.
What's happening in an artist's career? Are there
major exhibitions on the horizon? Is this artist making very few pieces? And we come up with the
right price that's fair, respectful to the career, but not ahead of the market. So you create a
problem down the line. Let's say you find a new artist and this artist has 12 paintings and the right price is $100,000.
Can we work with that number for starters?
Sure.
But you know you could easily find 12 people to buy these paintings or maybe one person to buy all of these paintings for $200,000 each or maybe $500,000.
What would be the downside of going for the maximum price?
The downside might be that the artist decides to create a very different body of work.
And all of a sudden, those 12 buyers run for the exit.
They don't like this work.
You are stuck out there with very high prices, right?
The downside is also that all of a sudden, three works by this artist show up at auction
and don't sell.
And you are stuck out there with very high prices
and you can't recover.
The prices are somewhat miraculously a one-way road.
Prices have to go up to sustain careers.
And that's why I'm very much of the philosophy,
if you want to be in it for the long haul,
be smart about prices.
Don't be greedy.
Go step by step.
This is one of the things that makes the art market such a strange market. For most products, when demand rises sharply, the manufacturer will
increase supply and or raise prices in order to exploit that surging demand. And that works fine if you're making widgets or t-shirts. You can
quickly ramp up supply even tenfold if you have to. But if you are a gallerist with an artist
who's suddenly grown hot, you can't tell them to just paint 10 times faster, although you'd better
believe it has been tried. As far as raising prices, that has its own problems too. As David Zwirner told
us, you don't want to have to lower prices later and damage the artist's reputation.
And as Canis Prendergast told us, you also don't want to allow just anyone to buy the painting
because that anyone might be a speculator who's only interested in flipping the painting at auction for a large
profit. So what can a gallerist do? Canis Prendergast again. It's not pervasive, but does
happen. When you buy a work, they will make you sign a contract which gives them, meaning the
gallery, the right of first refusal for any further purchases. So if you decide to sell it, you have to sell it back to
the gallery. Those contracts exist, but are not very pervasive. Because they're borderline illegal?
Correct. I think that's exactly what it is. A more common tactic is for galleries to select
their buyers very carefully. How do they manage this? Imagine you walk into a gallery and see a piece you really
like. Some of the other pieces by the same artist are marked with a red dot, meaning it's sold.
This one has a green dot. That means it's reserved. And what does reserved mean?
Yeah, that's a crazy thing.
The artist Tom Sachs again. On reserve means, which is such a
bullshit thing, just means someone's interested in this. It's like, so I can't really promise
it to you, but it also probably means if you are really important, I'll probably screw over the
first guy and sell it to you. What kind of important do you mean when you say that?
Like, is just wealth important enough?
No, I think wealth is very, very important.
I think influence, like, hey, this guy might buy two paintings and give one to a museum.
For another view of how galleries manage their buyers, I went to Amy Capilazzo. She is an art market powerhouse
who knows pretty much everybody and everything.
I walk in, let's say it's a gallery
showing a relatively new artist.
I've read a lot about this artist.
I think she's amazing.
They're hot, hot, hot, right?
Right.
And I'm not told they're sold,
but I'm not told the price either.
I'm sorry, it's on hold right now.
And I say, well, whatever it's on hold for, I'm willing to match and increase 25%.
What happens now?
Typically, dealers won't do that because you probably have a cadre of four or five
that are your mainstay collectors.
And you really have got to reward them first because they come back for every show.
And they'll buy something even that's not hot, hot, hot in your next show. Do you find it an ethical practice of the gallery? I find it a
practice of necessity. They might have only 10 paintings and there's 100 people asking. So it's
going to be some discriminating process that determines who gets what. A lot of small galleries
have a roster of artists, let's say 10, 12 artists that they sell and represent.
And maybe one or two of them is the cash cow for the whole pack.
So those two artists become the bait for collectors.
And the dealers might say, well, I can't sell you this,
but I can sell you this other artist I represent.
And if you start buying the stuff you don't want,
it will eventually get you the stuff you do want.
I heard a story of a gallerist saying,
I'll sell you this piece by this artist
only if you buy this other piece by this other artist that I represent that doesn't sell as well.
Right. I mean, it's not like that's illegal, right?
It's just s***. Can you imagine if you were that second artist and you heard that story?
I guess you'd be grateful that something sold because it's money, but like, ew, it's slimy.
Just to be clear, this is not the only slimy scenario that Tom Sachs has encountered during
his career.
There's this phrase that was coined by a friend of mine, an art dealer named Hugo Nathan,
called LPM, lies per minute.
He says, oh, she's got about seven LPM. He's only working at a three.
And the lies are things like, always in secondary market, they will sell a piece for like $100,000.
Let's say you own it, and I'm the dealer, and I sell it for $100,000. And we had a deal that
we'd split it 50-50, right? But I tell you that we only sold it for $70,000. And we had a deal that we'd split it 50-50, right? But I tell you that we only sold
it for $70,000. And everyone finds out everything because they're bragging about it at the cocktail
party. But the art world is so f***ed up that they'll tolerate a certain amount of lying as
long as it's worth their while to do the next deal. I don't really understand it. That's not
how I was brought up. But that's something that happens. And I know that's happened to me because I found out.
And the guilty party in this case was a gallerist then?
It's always the gallerist that lies.
Coming up after the break, we speak with another successful artist, Shabbalala Self, about being on the supply side of this very strange market, especially in the auction market.
It's a completely dystopic, surreal situation.
And what is it that makes an artist keep going, even with all these headwinds?
Nothing will stop them. Nothing.
I'm Stephen Dubner. This is Freakonomics Radio. We'll be right back with this second
episode of our three-part series, The Hidden Side of the Art Market.
My name is Shabbalala Self, and I'm a painter.
Shabbalala Self grew up in Harlem, got a degree in studio arts from Bard and then an MFA from Yale.
Soon after, she landed a solo show and gallery representation.
Now she is in her early 30s.
Her career has already been a critical and commercial success.
I think the art world can be very opaque.
And until the point that you are fully immersed in it, many things don't make sense.
Self is especially known for historically
conscious portraits of Black female figures mixing paint, fabric, and other materials.
In galleries, her work likely sells for the mid to high five figures, but the art world being what
it is, that's hard to verify. One of her galleries told us, I am afraid I cannot provide a price range for Shabbala the Self's artworks on the primary market. Whatever the case, price isn't the only thing
that Self is thinking about when she sells a piece. I mean, I care a lot about who buys my
artwork. The work has its own life once it leaves your studio. And in it having its own life,
it has its own story. And part of its story is the person who owns it.
I like to note that them owning the work
can somehow broaden the narrative around that one particular piece.
Self has had some positive experiences with buyers.
Like works going to people who are wonderful collectors
that may be down the line because they're not huge name collectors when it has been offered works.
And she's had some less positive experiences.
Early on in my career, a lot of people presented themselves
as if they were going to be good fits for my work,
that they really liked the work, that they respected the work.
But in reality, they saw no value in the work outside of it being an object.
If you are not an artist or don't care much about art,
that may sound odd because a painting by Shabbalala Self is, of course, an object.
Those kinds of people are the ones that have resold the work.
Those are the kind of people that have reduced the work to its pure monetary value.
This too may sound odd.
Shabbalala Self objecting to the idea that the original buyer
of her work would focus on its monetary value. There was, after all, a mutually agreed upon
financial transaction that put the painting in the buyer's possession in the first place.
In a capitalist environment, we tend not to think too much about the emotional connection between the things we consume and the people who produce them.
This does seem to be changing a bit.
More and more consumers want ethically produced food and clothing, for instance.
But for the most part, free markets train us to not make a strong connection between producer and consumer.
That's what prices are for. A price is the point
at which the desire of a consumer meets the need of a producer. But the art market is different.
As we've been hearing in this series, price doesn't necessarily perform its standard function
in the art market. There's too much subjectivity and too much volatility. But there's an even bigger issue.
The products being sold here are the personal creation of an individual artist. A given artwork
is an intimate, emotionally charged extension of the human who made it. So think about it from
the artist's perspective. You've already agreed to sell what is essentially a piece of yourself, but then later the buyer decides to get rid of it? Shabbalala Self has
been successful enough to see her work resold at auction for a significant markup. Her auction
average is over $270,000. How does she feel about that? at auction is so gross. It's a completely dystopic, surreal situation. And I don't want
my work in that context. I don't want my work being spoken about in that context. I don't want
people bidding on my work in that way. And it's very exploitative in many ways. The artists don't
gain anything. You're using their name and all the work that they've made to put on this big production. And a lot of people are, you know, making money off this.
But the artists themselves, they oftentimes feel overly exposed.
And not in a way that's productive.
I asked Tom Sachs how it feels when his work comes up for auction.
How does it make me feel?
It feels a little bit like a grift. I mean, not a lot of my work goes up for auction. How does it make me feel? It feels a little bit like a grift.
I mean, not a lot of my work goes up at auction.
My work is so great
that people love it more than money
and they hang on to it.
Does the auction house even contact you
or your gallery to say,
we've got this Tom Sachs piece coming up for sale?
They contact me because they want me to promote it. They want me to make sure that it looks good.
They want to make sure that it's not broken and that it's clean and that I made it. They want
to make sure that there's a certificate of authenticity. And it's in my interest for it
to yield a high price at auction, even if I don't get any of that.
It's in your interest because it affects your overall reputation? There's a hope
that it helps and doesn't hurt the primary market. But I really don't care about that stuff because
I can't really control it. You know, I can consecrate that I made it. I can offer help
to explain if there's some questions, but it's not the motivating force.
Sachs is represented by several galleries in the U.S., Europe, and Asia.
Some of his pieces are large, complicated, and very labor-intensive, like the interactive space mission he was getting ready to show in Hamburg.
But he makes smaller stuff, too, like a sneaker he made in partnership with Nike designed to hike around
Mars in an earlier virtual space mission. His studio in New York employs roughly 20 people,
all trained in the intricacies of producing Tom Sachs originals. He even created a film
about the proper way to work in the studio. It's called Ten Bullets,
and the film itself is a work of art,
tongue-in-cheek and quite possibly a masterpiece.
The studio is a complex and enigmatic working environment
full of precise rules and principles.
We call these rules and principles the code.
Considering his substantial overhead,
I wanted to know how Sachs and his galleries price his work. One thing I never do is say, oh, it cost me a dollar to make it,
so I'm going to sell it for two or sell it for five. I never think about it like that.
I make the thing I want to make, and then I kind of hold it at arm's length like Macbeth, and it's a skull in my hand. And I'm
like, what is this thing? Is this worth $3 or $1? And then I have to be really honest with myself
and put whatever the cost and time aside and just let it be what it wants to be.
Because when Marcel Duchamp leaned that snow shovel up against the wall, and the critics said, how long did it take you to put that snow shovel up against the wall? And he said, only just but a moment, but a lifetime before in contemplation.
But when the sneakers, let's say, get sold on the secondary market for like two grand, what's that feel like for you? I know it's eight grand now, by the way, which is super annoying. It's embarrassing. It wasn't my intention. We're working to correct
that because the whole point of doing a sneaker is to get it on people's feet and the fun of that
and like sharing. I always tell artists, look, stop trying to hide from the art market.
That again is the art market maven, Amy Capilazzo.
And by the way, you need the market maven, Amy Capilazzo.
Capilazzo has sold the work of countless artists at auction, often for prices much, much higher than they sold it for originally.
She also knows many of these artists personally, including Tom Sachs.
Oh, he's a high maker, like he's an obsessive maker.
So his priority is not making a lot of money.
But he's got a studio to run, he's got a family and so on.
But let's say I buy a piece by Tom Sachs through one of his galleries.
Let's say I pay 50 grand.
Then 20 years from now, I sell it at auction for 100 times that much. As Tom's friend and supporter, how do you feel about that progression?
Because the auction house is going to get more money from that commission
than he did for making it. Does that strike you as fair?
Look, artists used to sometimes call me and say, I can't believe you're selling my work. I just sold that for $50,000. I was like, well, listen, I can put you on the phone with some other artists who sold their work for $50,000 and today it's worth two. If you want to just like balance out your concern, we could talk about what would happen on the other side. And I'd say, did you sell the work for money? Because if you traded it for love or something, maybe there's a rep and warranty problem on the ownership, and I'd want to make sure there was clear title.
But if you traded it for money, like, that's the way it goes.
If you traded it for money, that's the way it goes.
How can you argue with that?
But here's an interesting fact about the art market.
Many artists are themselves priced out of it, even very successful artists.
Tom Sachs again.
One of the things that's been frustrating for me about my art career is like,
I'm not an art collector.
I don't have the resources to buy the art that I want.
You don't have the resources to buy your own art at market price, right?
I don't.
I don't.
And I can't.
And things have come up at auction.
I haven't been able to buy them.
This, we should note, is how capitalism
often works. The bounty goes not to those who supply the market, but those who manage it or
manipulate it. I wanted another perspective on this idea, so we went to Glenn Lowry,
director of the Museum of Modern Art. When it comes to the art market,
Lowry is a knowledgeable but largely disinterested party.
If you're in the museum world, the art market runs parallel and sometimes intersect really have enough money to buy his own work when it goes on the secondary market. And I'm curious what you think
of that situation of the value that's being accrued to artworks where the creator is often
left out of the value chain. It's complicated. I like Tom a lot. I admire him. I think he's one
of those artists whose work asks probing questions and is always surprising. He can take you to the
moon and beyond faster than any other
artist I know. But I've never thought about the degree to which artists are capable of acquiring
their own work on the secondary market. But you can look at that through many different lenses,
one of which is it shows that his work is accruing in value. And presumably that means that the next thing he sells will also benefit from that value.
This, you will remember, is the same point the art collector Robert Skull made to the artist Robert Rauschenberg back at that 1973 auction.
I've been working my ass off for you to make that profit.
How about yours that you're going to sell now?
I've been working for you too.
We work for each other.
Shabalala Self has also heard this argument.
She doesn't quite buy it.
The idea is that if your work sells
for a certain amount of money at auction,
then you can raise your prices.
But that's not always the case.
And even if you could,
the auction is not something that is consistent
or stable or even sane, really.
So to base your market on something
that's constantly in flux like that,
it's not really a good idea.
As for being priced out of the market,
Self is in a similar position to Tom Sachs.
Could I afford to buy one of my pieces at auction?
No, I would not be able to.
I don't know if I could even buy one of my pieces
at primary market, you know, art's very expensive. But yeah, some pieces I would definitely love to buy back in the future. Like they're pieces that I miss and have disappeared. They've been purchased at auction and no one knows where they're at. It's all very secretive. But if I don't, it's okay. I've made the work myself. I suppose I can make myself another one, you know, from the end of the world.
But if you ask Shabbalala's self whether an artist should get a share of the sale price
when her work is resold at auction?
Of course.
I definitely feel like artists should get a royalty if their work is resold.
I think most people would agree with that.
The notion of an artist's royalty on resale
is not a novel idea, and it's not an imaginary idea.
I went back to Amy Capilazzo for some details.
Can you tell me anything about legislation or regulation
having to do with secondary market sales
and the share of those sales that may go to an artist or
estate? The art market has a funny history about this. A resale royalty to a living artist or an
artist's estate exists in Europe in something called the droit de suite, and it's for EU
countries, and it includes a couple of other non-EU countries. Droit de suite means right to
follow in French. It's officially known in Europe as the
artist's resale right. The law is meant to ensure that when a physical work of art is sold on the
secondary market, the creator or their heirs will get a share of the price. But it wasn't really
constructed right. It's not an intelligent form of taxation because you end up writing checks to like Gerhard Richter for 14,000 euros.
As a matter of fact, the royalty is capped at just 12,500 euros.
And Gerhard Richter is one of the top selling living artists.
His auction record is over 46 million dollars.
Like if there's ever anyone in the world who doesn't need 14,000 euros, it's Gerhard Richter.
And the artists who would be beneficiaries of such a thing generally have no markets. So when you sell something for 5,000 euros and they get a
check for 50 euros, I mean, it's hard to say you're really doing what you intended. Maybe the smarter
solution is like in Britain, they started a lottery where a certain percent of the lottery
went to support the arts. Because what you're trying to do is with all the big rich money
flowing into the art world, you're trying to help artists and help those pursuing artistic practice
who might not have commercial output or are more committed to performance or other kinds of
artworks that are less commercial to have a robust culture of that. I think the Dwarda Suite is goofy
and misguided. Goofy and misguided as this type of law may be, there are plenty of American artists
who would like to see it practiced here, but it doesn't exist here. I asked Glenn Lowry from MoMA
whether he'd be in favor. Well, other forms of artistic production like music have different
copyright structures than the visual arts that permit creators to benefit
from the ongoing use for periods of time of their creation. And in fact, living artists today do
benefit from any reproduction of their works of art, at least if they belong to one of the many
arts collaboratives that have come together. I'm all for artists benefiting
from their creativity. And while the droit de suite has been discussed in this country on many
occasions, it has been impossible to adopt for a variety of reasons. But we know from Europe that
it can be made to work. And there's no reason why an artist shouldn't have the same benefit that a musician or a filmmaker has.
What are the reasons that that isn't possible here?
I've been in enough discussions over the years to understand that there just isn't the kind of consensus, either at the state or federal level, to make that happen.
There have been artists' royalty acts proposed in Congress, but none passed.
The state of California did pass a royalties act, backed by, among others, Robert Rauschenberg. It set aside a 5% royalty when the work of a
California artist was sold in California by a California collector. As you can imagine,
these restrictions were sufficiently narrow to prevent many royalties from being collected.
After some legal challenges, the California royalty law was narrowed even more
and now applies only to artwork created during a single year, 1977.
Somehow it seems fitting, given everything we've learned about the art market thus far,
that an attempt to address this relatively simple royalty issue was so badly mangled.
As we heard earlier from the economist Canis Prendergast,
It's one of the strangest markets that I think I have ever seen.
And Prendergast, who truly loves art,
believes that the strangeness of the art market,
its illiquidity, its lack of clear and obvious rules, that this has a large consequence.
I think the market structure itself helps to lead, which is that most people are excluded from
participating in or enjoying something that theoretically could be a public good instead
of a luxury good. Is there any way to quantify the loss of not having art be, for the most part,
a public good? It's a terrific question. I don't know quite how to do it. Let me do it in a more negative sense, which is most forms of contemporary culture could legitimately claim to change people's beliefs, change political discourse or whatever. That's certainly true for music over the last 30 years. I think it's true for film. I think the great failing of contemporary art is that it
leaves no mark essentially on the public. And I think it's because the public simply doesn't
understand it because the public simply doesn't interact with it. So it's very difficult to
quantify what the cost is. But I think it's great failing is its absence of impact on society more
broadly in a way that I think most cultures have
successfully done. And I think what's so striking is how many artists are trying to have that impact,
but instead end up in an art warehouse in Switzerland.
It's kind of heartbreaking what Prendergast suggests, that the art market itself is
responsible for the failure of modern artists to have a real impact on society.
Isn't that, in the end, the true value of art? But Prendergast also notes that artists don't
give up trying. I was struck by Tom Sachs' view of the art market that, for all its sliminess and bullshit and lies per minute,
all his words, by the way,
that he is as devoted as ever to doing what he does.
He's even fine with the current gallery system
and the 50% commission that most galleries take.
And I think, by the way, whatever they take,
it's a really good deal for me.
Because why?
They don't do nothing.
They have their expensive real estate.
If they're good, they get out there and they sell it and do their job so I can do my job.
My work is my life.
So my dealers are really taking care of my life.
It's kind of life and death.
So someone can facilitate that in big ways and small ways,
like emotionally, and then just take care of the finances.
It means everything to me, so I can do the one thing
that I'm put on this planet to do better than anyone else,
which is make Tom Sachs art.
I'm the best at making Tom Sachs art.
That's the only thing I'm the best at.
And Shabalala Self, who finds the art market opaque and bizarre and vulgar. Again,
all her words. She too is fully committed to her life as an artist. Artists are meant to make works
that are true and meaningful, that can help change people's opinions about themselves and about
others and about the world in general. There's something that I've always done.
It's something that I did before I ever got paid, before I made any money.
I made art and I wanted to study art and I wanted to be an artist.
In retrospect, I realized that I always was an artist,
but just now I'm a working artist.
There's really no one difference.
And if I never got paid for another piece of work, I'd probably get more arrests.
So maybe I would make better work.
I don't know.
I'd be a little bit more clear-minded.
And if you are looking for the ultimate example of the commitment to art making despite a mountain of hurdles, despite poverty, despite not having your work sell,
just look to Alice Neel.
In death, her work sells for hundreds of thousands,
even millions of dollars.
In life, she was marginalized.
And yet...
Alice Neel continues to inspire artists.
That's Neel's biographer, Phoebe Hoban.
But it's not just because of the fact that she's a great artist.
It's also because she never gave up.
As a role model, as someone who is so devoted to their passion
and to their own creative drive, that nothing will stop them.
Nothing.
Not the death of a daughter, then the estrangement of a second daughter, the abandonment of her husband, suicide attempts.
Nothing stopped this woman.
Painting alone for 20 to 30 years and just piling up the canvases in the hallway. Coming up next time in our third and final installment of The Hidden Side of the Art Market, we track down the last person Alice Neel ever painted.
This is my sitting in Alice Neel's backyard. This is Alice beginning the portrait.
We try to identify the biggest sources of disruption in the art market.
This is where NFTs and the blockchain come in.
Massive amount of information available today
that was not available 20, 30 years ago.
New York is definitely not the singular global center
that it was.
And we chat with the disruptor of disruptors.
Pain in the ass?
Troublemaker?
For me, it's just one thing.
Art, art, art, art.
That's next time on the show. Until then, take care of yourself and if you can, someone else too.
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As always, thank you for listening.
So if you were a corporation, I don't know, maybe you are an LLC or whatever,
what's your profit margin look like?
Profit margin.
Yeah.
That kind of says it right there. I kind of went to the Marcel Duchamp School of Art, which is like everything's art and nothing's art.
It's either priceless art or worthless trash.
And that's very hard to tell the difference.