By Catalina Restrepo para Forbes México
Fortunately, many lessons have been learned from past mistakes, which has kept the market stable and even in constant growth.
La obra maestra de Leonardo da Vinci, Mona Lisa, en su nuevo escenario en la renovada Salle des Etats, donde el público pudo redescubrirla en París, Francia, el 6 de abril de 2005. Foto: © Raphael GAILLARDE / Gamma-Rapho vía Getty Images.
Context:
The First Great Boom In the history of the art market, there is a period known as the First Great Boom. This occurred in the 1980s and was named because of an increase in the number of collectors, works sold, and record prices. John L. Marion, who was the president of Sotheby's New York from 1975 to 1994, relates this phenomenon to the 1983 sale of Doris Havemeyer's estate, a prominent member of New York high society. However, in the early 1990s, it suffered a dramatic decline.
Let's imagine the 1980s on Wall Street. It's important to note that, at that time, Japanese technology companies and European multinationals, established after the war, had astronomical capital, and their activity in the stock market skyrocketed. Let's think about the number of millionaires who became billionaires for the first time. The euphoria and frenzy in the stock markets and the eagerness with which people wanted to invest in anything for quick returns and exponential capital growth. At that time, art was attractive because, besides being considered an investment with high returns, it had appealing tax benefits. Incentives for donating to museums were significant, and deductions were made based on the total market value of the pieces, not the purchase value.
Another factor that fueled this Great Boom was that auctions were no longer held in quiet places and desolate basements but had become social events attended by celebrities and socialites. Records were announced on the front pages of newspapers, and more and more people wanted to be part of this unrestrained and extravagant elite, similar to the Studio 54 atmosphere. The parties organized by Simon de Pury, the renowned auctioneer, were legendary, and they still are.
In the auctions, the prices of works by great masters, especially the Impressionists, reached figures never before seen in the art market. In fact, currently, most of these pieces are practically impossible to find in the secondary market. Don Thompson, a professor, economist, and renowned collector, author of several bestselling books on the art market, argues that this only happens when one of the "3 D's" is met: "Debt, Divorce, or Death." This led to a frenzy, and many people sought advice from stockbrokers to invest in art, although these advisors were experts in numbers, not in art.
The problem of forgeries intensified, as many of these advisors were unaware of the valuation criteria of the works, among other deficiencies that, during the "fat years," seemed not to matter. Everything changed in 1986 when the U.S. government realized the amount of money escaping their coffers and decided to modify tax laws. Now, deductions were based on the purchase price instead of the selling price, which would be exponentially higher and therefore represent a greater deduction. This discouraged collectors and led them to bring their collections to the secondary market through auctions. Lots and lots were seen that didn't even reach the reserve price. All those who had invested in art didn't understand what was happening; they only saw their investment fading away.
The Recovery of the 1990s
Fortunately, this decline was recovered towards the late 1990s. Several aspects within museums began to professionalize, including the role of the curator. Although Harald Szeemann was a precursor of this figure in the 1970s, it wasn't until the following two decades that the role of the curator gained more relevance and notoriety within museums. It was no longer simply about guarding the works on display but about serving as an active specialist generating content.
As for advisors, they were now well-informed about art and understood the complexities of its market. They recognized that the value of the pieces lay in their historical potential, and to identify this in the works, they had to be primarily art experts, in addition to understanding price behavior, supply, and demand.
On the other hand, while in the 1970s, the German Willi Bongard, editor of Die Zeit, created the first annual ranking of the most influential personalities in the art world, called Kunstkompass, with the Internet came the first online rankings, like artprice.com, created by Thierry Ehrmann in 1987, which were further strengthened in the late 1990s. In addition, art fairs began to proliferate, and the general public, including some with high purchasing power, began to collect.
With this resurgence, another phenomenon began to occur. The price of works by great masters and from the post-war period had reached such exorbitant sums - if they could be found available - that collectors realized it was more profitable to acquire high-quality contemporary art than mediocre pieces by great masters. As the 2000s progressed, artists like Damien Hirst, Maurizio Cattelan, and Andreas Gursky reached prices that were previously only seen in works by deceased artists. Artists whose works reached or exceeded one million dollars were dubbed "Blue Chip," just like costly but safe investments in the stock market. This term was applied not only because of their high price but also because they offered greater liquidity, something extremely unusual in the art world.
Ultra-contemporary Art
Thus, we can observe how the art market resembles a lava lamp whose substance rises, splits in two, and then the one that descended rises again, repeating this cycle over and over. The current scenario of the art market closely resembles those years. Fortunately, many lessons have been learned from past mistakes, which has kept the market stable and even in constant growth.
However, a few years ago, something similar happened: famous rappers, reggaeton artists, actors, influencers, and others began to showcase works by artists on social media. The artists themselves started gaining followers and becoming influencers, and thus, artists like KAWS were in the spotlight in 2019, representing fresh and fun art that everyone wanted to own. Many could buy collectible pieces, such as art toys, which were relatively "affordable." However, the market for KAWS has experienced a significant decline today, and like him, there are many others.
The article "What Happened to KAWS?" published last year on the MutualArt portal, states that according to their data, 1764 lots of KAWS were auctioned in 2021, more than ever before, flooding his market, as 80% of his works sold for less than $10,000 USD. Strong! Because that 80% represents less than 5% of its total value in the secondary market. That's why he sold almost 50% more works in 2021 than in 2019, not even reaching a third of the total value, since in 2019, more than 20 of his works were sold for over a million dollars.
On the other hand, information about art is no longer limited to museums and schools, but has spread in such a way that today there are countless YouTube channels, podcasts, and profiles on TikTok and Instagram dedicated to art. Some are more informative than others, but ultimately, a generation of more informed (not necessarily knowledgeable) people has been created, and therefore, they are more willing to demand that the language of art become more accessible and explained in understandable terms for everyone. That is, from the professionalization I mentioned earlier in the nineties, especially regarding curators, a decrease in the pompous language of art is now expected, since museums have had to adapt to the expectations of a more diverse, demanding audience, and yes, perhaps less academically inclined.
So, similarly to how in the nineties the figure of the curator gained prominence (having started to take shape two decades earlier), a relevant professional profile emerged in the field of the arts: The mediator. This audience specialist focuses on audience analysis and the creation of content aimed at facilitating the understanding of exhibitions. Although mediation began to develop in the nineties, it wasn't until a little over a decade ago that it began to establish itself as a highly specialized and fundamental education department within museums.
Likewise, the phenomenon of the stockbroker advisor from the eighties repeats itself in the form of an influencer advisor, who also doesn't guide the collector to make good decisions, and this is reflected in passing trends, like KAWS, precisely. Although there are also good advisors who nowadays continue to work from art, with the difference that they now understand much more about the financial spectrum; the trick is to know how to recognize them.
Lastly, the effect of the lava lamp repeats itself also with established contemporary artists, plus those who were starting to be considered Blue Chip in those years and who today are simply unattainable. Just as they stopped chasing great masters at the time, today reports indicate that novice collectors prefer to invest in a good Ultra-Contemporary artist (artists under 40 years old) than in a small and insignificant edition or piece by Damien Hirst, Takashi Murakami, or Jeff Koons. With all these parallels and similarities, I wonder: Could this be a new Great Boom?