The traditional brick and mortar art gallery has been a key component in the art marketplace for a very long time. Representing living artists based on its mission, aesthetic, price point and target audience, the gallery charges a commission, around 50% (for commercial spaces, it can be less for non-profit galleries) for handling the marketing, sales and development of the artist’s work. Art galleries are big business, contributing to a $45 billion dollar global industry based on this model.
However, the internet and cost of real estate in the world’s top cities has increasingly rattled the relevance of art galleries. Are galleries, once the center of the art market and dream of an artist’s necessary in today’s art market? With galleries closing due to exorbitant rents and artists having access to direct sales with a global audience of buyers, the evolving role of the art gallery is changing rapidly. Collectors and buyers are moving towards digital art spaces to discover and purchase art from the comfort of their own home with the click of a mouse. This presents today’s art gallerists with increased competition and artists who are challenging – or eschewing altogether – its commission structure. Artists now have many opportunities to sell their work directly to buyers or through hundreds of convenient online marketplaces that take much less commission (more like 10-35%). With online and virtual art galleries, a global art market, and the growth of international art fairs. How is today’s art gallery staying relevant and profitable?
We spoke with three art gallery owners and directors to get their take on the current state and future of the art gallery:
Brian Swarts is the President and Director of Sales at Taglialatella Galleries, overseeing operations for their New York City and Palm Beach locations. Taglialatella is a major player in the global art market, focusing on contemporary, modern pop and street artists, with work by Warhol, Bansky, Basquiat and Lichtenstein just to name a few.
Orly and Mora Benzacar are the second and third generation directors of the Buenos Aires gallery, Ruth Benzacar. The gallery’s more than fifty-year trajectory has seen the growth of the space from a private residential showroom in the mid-1960s to one of the most important contemporary art galleries in South America. With their distinguished experiences, Swarts and the Benzacars offer insight into the everyday operations and the challenges of running an art gallery business.
Getting Gallery Representation
For artists, getting the attention of art galleries in the hopes of acquiring representation is an enormous challenge with very slim odds of being successful. Schwarts points out that his gallery receives nearly a dozen unsolicited submissions a day, and hasn’t signed one artist who submitted via email to date. “A lot of times we receive submissions that are being sent out to hundreds of different art galleries and the work isn’t relevant to us. It may be a style or medium that we don’t carry, for instance. So, although we look at everything, it’s difficult to wade through all of that,” he says. Instead, the gallery depends on personal connections to build new relationships with artists that fit the mission and style of the gallery. Swarts continues, “We prefer taking the recommendations of dealers or other curators, in addition to spotting artists on our own online or at a museum show, for example.”
Ruth Benzacar Gallery considers several factors when selecting their roster of artists to represent.
Mora and Orly Benzacar take a similar approach of keeping their ears to the ground for artists who fit within the gallery’s mission and aesthetic. “Our curation process is wholly visual,” explains Orly. “When we’re deciding on whether to take on a new artist, we aren’t thinking at all about the sale. We aren’t talking about whether their work is ‘sellable’ or weighing out the monetary value of the artist. Because when it comes down to the actual sale of a work, how am I supposed to sell something that I don’t actually believe in?”
Like all ‘brands,’ an art gallery needs to tell a story with a consistent narrative, meaning that artists looking for representation should be carefully studying each individual gallery they submit to evaluate if their artwork is the right fit. Likewise, artists should depend less on unsolicited portfolio submissions and more on building relationships with the networks in their local arts community. Benzacar sums it up: “We work on exclusivity. Our artists are only allowed to work with us within Argentina. So finding that ‘fit’ is important; they have to believe in and be dedicated to us as much as we are to them.”
How Does an Art Gallery Price Art?
For gallerists that work within the secondary market, pricing their work of established artists is often about scavenging historical sales records. (A primary market is art bought directly from an art gallery or artist’s studio; the secondary market is when its resold on the market.) For example, Taglialatella can source fifty years worth of data to know exactly what a limited edition “Mao Tse Tung” by Warhol should sell for based on its previous value. They use the same data analysis to price the works of the likes of Jean-Michel Basquiat, Alex Katz and Keith Haring.
Pricing the works of emerging artists, on the other hand, is a challenging and strategic task. Both Swarts and the Benzacars emphasize the importance of listening to art collectors and the market if you expect your art gallery business’s pricing model to work. “When it comes to an artist that is still developing, pricing is a bit more fluid. We tend to pay a lot of attention to the reaction of the works in the gallery. It is common to adjust prices depending on the reaction an artist receives over a set period of time, and whether or not we see a demand in the gallery,” explains Swarts.
For an art gallery like Ruth Benzacar, whose physical space functions in isolation from most international art collectors, attendance at an international art fair is critical. Mora Benzacar says, “A big part of valuing works is simply paying attention to the market and listening to what the collectors are willing to spend on an artist. When we go to art fairs, we are constantly talking to collectors, dealers, artists and gallery directors. Another important element is obviously paying a lot of attention to the trajectory and reception of an artist throughout their career.”
Orly elaborates, “We work with Liliana Porter, who was invited to the Venice Biennale where she did a show that was very talked about it. It did very well. It created a new demand that allowed us to value her works higher. And obviously, that meant that we needed to take advantage of that push and show some work in the United States at Art Basel.”
Whereas Benzacar measures the value of work completely on the market, Taglialatella’s art gallery business model supports three brick-and-mortar sites with a significantly greater overhead expense. Art galleries have to cover their costs and bring in revenue. “We have a full-time staff across three galleries. We have a framer here on the East Coast and another on the West. We have full-time art handlers. We have works that are shipped back and forth from New York and Florida. All of those things have to be taken into consideration when we are pricing each individual piece,” says Swarts.
Navigating a New Global Art Market
An art gallery’s attendance at fairs serves another vital purpose: finding collectors. According to a study by the European Fine Arts Foundation, collectors are gradually moving away from discovering and purchasing art from gallery exhibition spaces and gravitating towards digital platforms and international art fairs. Participation in these international art fairs – and there are many – represents a considerable cost, which is often difficult for smaller galleries to cover. Orly says, “Art fairs represent a considerable cost for us. We are paying for travel, fair fees, shipping, hotels, it becomes very expensive. But we find a lot of clients at fairs who wouldn’t find us otherwise because of geography.”
Likewise, the advent of the digital age has changed the entire art gallery business model by simplifying operational processes and expanding the scope of collectors a gallery is able to engage. For art gallery business owners, taking advantage of digitizing their available artwork is extremely important. Not only does it save a gallery time and financial resources, it often facilitates sales.
Ruth Benzacar’s art gallery has been able to overcome one of their most significant challenges—geography—by uploading their entire collection into an easily accessible digital catalog. “When I started just ten years ago, we printed out these enormous booklets to take to any art fair we attend. It was a lot of work and we had to throw them out after every show. Now, everything is organized in the cloud. When we attend fairs, we show collectors everything on a phone or tablet. We have those dossiers ready and when a collector inquires about a piece that we haven’t brought with us to an art fair, we can send it over immediately to their email. We keep that information and stay in contact with those collectors when new works come in. Sometimes that leads to sales without a collector ever stepping foot in the gallery or seeing the work in person.”
Digital spaces have democratized the way that art is bought and sold, allowing artists and dealers without brick-and-mortar spaces to join the market. This appeals to a new generation of art collectors that prefer to purchase art online. According to a study by Invaluable about market trends in the United States art market, younger generations are turning towards social platforms like Instagram and Pinterest to discover new art, rather than the traditional museum or gallery visit. When it comes to purchasing, 51% of collectors between the ages of 25-34 would purchase art online, and collectors age 35-54 are about 33% likely to purchase online, as well.
Art galleries like Taglialatella are now competing with digital marketplaces and collectors who buy art online.
Taglialatella has had to adapt their art gallery business model to keep up with fluctuating trends fueled by technology. They shifted away from exclusively selling pieces on the secondary market, which used to be more difficult to find but now is as simple as “shopping on Google for an Andy Warhol painting.” Independent dealers that are operating exclusively within the digital space are able to undercut the prices of brick-and-mortar galleries that have location costs, full-time staff, and in the case of Taglialatella, shipping costs between their multiple galleries, their highest overhead.
Expanding into the primary market has presented a different set of challenges for the art gallery business. According to Swarts, over the last five years, he has encountered more and more artists that want to run their own business. “We’re finding that many artists want to do their own marketing, sales, and exhibiting and cut out the role of the art gallery,” explains Swarts, “Rather than have a gallery show, they do a pop-up. Rather than working with an agent or dealer, they sell their works online. For some artists it works, for others it doesn’t but it is one of the biggest challenges facing art gallery business today.”
The Future of the Art Gallery
A new generation of art collectors is radically changing the way that the art gallery business functions. They buy their clothes and computer online, so why not art? As artists become more entrepreneurial, start their own businesses and devise multiple product lines to sell directly to buyers, they don’t need hope for the slim chance that a gallery might represent them. Whatever the future holds, change will be a comin’. Gallerists and artists will have to embrace new marketplace platforms and engage within digital and virtual spaces as a new business model for selling art is created.
What do you think about the role of art galleries now and how will it change in the future? Are these changes good? Tell us your art gallery experiences and thoughts.