What Is the Secondary Art Market?
Editor's Update: The steady traffic this post generates shows the interest in the secondary art market remains high. This repost updates some broken links and outdated information.
While prices may not be as inflated as in the past, particularly in the art print market, it is easy to see why the work of some artists stays constant on the secondary art market.
What is the primary art market?
In order to address the question of what constitutes the secondary art market, you must first know what makes up the primary art market.
The answer, as with many things in the art market, is complicated. Since the broad secondary art market includes very expensive work by old and contemporary masters to relatively inexpensive four-color offset lithographs, you will find the terminology is used differently depending on circumstances.
The essence of a primary sale is the first transaction where art is sold, in most cases. However, complexities arise when you examine the distribution chain.
It is simple when a transaction is made between artist and collector. The situation is less clear when an artist makes a wholesale sale to a gallery that then offers the work at full retail. In this instance, the retail transaction made by the gallery is considered the primary market transaction. Of course, there are other methods of first sale to consider.
Defining a secondary market sale
A secondary market sale occurs when the original buyer
decides to put the work for sale a second time. Whereas this sale is most often
initiated by a collector seeking to sell the work, there are cases when a gallery
will put pieces directly into the secondary market. This generally is not good
because it means the gallery has too much inventory and too little demand for
the work. No gallery is going to sell through the secondary market when it has
buyers for pieces in the primary market.
The venues for the secondary art market range from the toniest auction houses and private dealers to established brokers and galleries all the way down to eBay. In November 2009, The Economist ran a story titled “New or Secondhand?” that accurately depicted the upper end of the market. The information and concepts the article discusses do not apply to most readers here. Alan Bamberger has an useful, illustrative article, "Retail Gallery Prices May be More Than Art is Worth," on his ArtBusiness.com Website.
The art print market is divided
For our purposes, we are here to discuss the secondary art market as it pertains to the art print market that includes selling reproductions as prints. In the art business, there is a split, or bifurcation in the print market. That is, there are those fine art prints made in time-honored fashion, which by the nature of their creation are limited. These would include etchings, woodcuts, aquatints, engravings, serigraphs, stone lithographs and so forth. See Wikipedia for more details: http://en.wikipedia.org/wiki/Printmaking
The other component of the print market primarily is made up of reproductions of original art. Some would call this the decorative art market while others reserve that term for the open edition and poster market. How you describe it has as much to do with what end of the market you derive your income as anything.
Art terms are much like driving laws in Boston, which is to say suggestions.
If you are an artist, dealer or collector involved with etchings, your view of a giclée is likely to be a decorative reproduction. On the other hand, if you make your living selling giclees, or some other form or fine art reproductions, you may take issue with your work being called decorative art. Unfortunately, you can only control how you market your work.
Different processes create different perspectives
If you study the work and promotional information offered
over the years by artists and galleries at the New York ArtExpo, I know you
would not find exhibitors characterizing their work as decorative art –
especially those who sell limited editions. It is completely natural they would
use descriptions better suited to help sell their work.
The International Fine Print Dealers Association (IFPDA) also holds an annual show in Manhattan. You will find this small, but important, group of dealers generally eschews representing much of the work found at shows such as ArtExpo New York. Most will argue, as does gallerist Kathryn Markel on her website, where she defines such work as “wall decor."
While not stating wall decor is necessarily a dreadful thing, high-end dealers do not encourage buyers to participate in paying set prices for higher priced work at ArtExpo. Their reasons are the works typically are reproductions, and that much of it these days are digital art. And, there you have the bifurcation in the art print market.
The diminishing secondary art market
When it comes to the secondary market, there is an active
market for many artists whose work is found at shows such as ArtExpo New York.
You will also find many other artists whose work has transcended the "wall
decor" mentality. In other words, it is a mixed bag. Arguably, the best
example of a secondary market player is Art Brokerage. It carries a vast selection of both originals and limited
edition prints from a wide range of artists, including many who have exhibited
at ArtExpo over the years, and many others whose has never been exhibited
There is an implication that art reaching the secondary market will have appreciated in value, and thus have become more collectible along the way. For some artists, this is accurate, but for the few who enjoy seeing their art selling well above initial prices, finding an active secondary market for most is not a reality, especially in their lifetime. It is one of the reasons I have argued for not having limited editions of fine art digital reproductions.
There is a bit of a conundrum here
In today’s market, if an artist is productive and continues
to put new editions in the market place, it tends to reduce the resale prices of
earlier pieces. This is different from the previous boom decades. If artists combats the problem of lowered prices on
the secondary market with small editions, of 200 or less, they cap their income
for that work. This leads to the need for higher and higher prices for their new
work, or to put more editions in the pipeline to maintain a steady income, both
actions have consequences.
Should artists be paid a resale royalty?
When it comes to the secondary market, artists do not
participate in the inflated prices. Only California has droit de suite laws
where artists are legally ensured a share of the proceeds when it is resold in
the state. The legislation is known as the California Resale Royalty Act, which was struck down last May as
unconstitutional. Resale laws are common in
European Union countries. I doubt there will ever be a movement within the
U.S.. beyond the now failed attempt in California.
Until the past few years, you could go to the back of Art Business News or Art World News and find several pages of small ads from dealers in the secondary art market. In a sign of the times, those publications have fewer ad pages with secondary market ads almost vanished. Coincidentally, in another telling sign, if you research art prints, particularly giclee prints on the sites of secondary market art brokers, you will find many pieces being offered well below their original price.
In the art business, more than secondary market is hurting
A factor in the market that has diminished with trade magazine ad pages are secondary art market websites offering works while having little inventory. Attorney, Joshua Kaufman, a long time columnist for Art Business News, wrote, “The Online Secondary Market: Resource or Parasite?” It is an informative piece details the business methods of rogue operators who put a negative effect on the market place. It also warned that much of the way they were operating was illegal.
While we like to think it was the industry policing itself that drove many shady characters out of the market, it was eroding market and economic conditions that took away their incentive. What remains to be seen for the industry is whether the market will return to a place where artists using the giclee medium will see an active market with rising prices for their work on the secondary market.
Where is the print market headed?
My opinion is it will be difficult for the market to bring us back to the old days of a booming profitable secondary art market for several reasons. First, most artists working in multiples these days are using the giclee or digital printing format. I do not think the public clamors for limited edition giclees. It is a supplier driven product.
I think most of the public would rather pay a little less and get to enjoy the art as an open edition. This hypothesis is supported by evidence some longtime publishers in the giclee market are moving away from creating limited editions, or using the term "giclee." Lastly, once there is an established pattern of digital prints not increasing in value, it will be difficult to reverse such a trend.
This may be a market with a beautiful creative product, but it also a business that follows trends. If the trend grows stronger to open editions, it will depress the secondary market for fine art print reproductions. That is not all bleak. I think it will force the art to be sold for its enjoyment rather than the implied wish it will increase in value.
Buyers of giclees found, before the current economic crisis, that they could not recover close to the sale price of prints they bought when they tried to take them back to galleries, sell them on eBay, or through an art broker. Things certainly have not improved in recent years. The upside for artists is they are freed from artificially limiting their income with the limited edition marketing model.
What should artists thinking about getting into the print market do?
I think giclees offer artists a powerful way to sell more work. Rather than looking to maximize the sale of a limited edition, I recommend keeping the edition open. There is no reason the pieces cannot still be numbered using your own open numbering convention. If the artist’s work does become collectible, then the lower numbers will probably have some higher secondary market value than original prices.
For those who feel a need for limited editions, I would consider producing a small edition of 200 or less that is hand-embellished by the artist. I think if it is clearly stated the edition will be accompanied by lower-priced open edition pieces, there would not be conflict with buyers. Certainly, recently retired artist, Terry Redlin, was able for decades to sell both open and limited editions of the same images without creating a problem for his self-publishing company or the dealers who carried his work. I am guessing, and would suggest, that in such a situation, with both open and limiteds, the limited edition have exclusive dimensions.