Skyrocketing Art Prices: Good or Bad?

Every few months, there is a sensational story about the latest work of art that has sold for millions of dollars. Art prices have been skyrocketing for decades and pieces like Salvator Mundi sold for $450 million a few years ago. In recent years, online sales have gone from $6 billion in 2019 to $12.4 billion just a year later. The fact that there was a pandemic meant people could not buy art in person, so this makes sense to a degree, but that is a huge jump in just a year. Art auctions sell about 120,000 artworks by about 30,000 artists to people from about 60 countries. It is a massive industry. How a piece sells for some enormous figure like $450 million is simple: “the reason some artists’ work sells for millions of dollars is that there’s a consensus in the art world that those works should sell for millions of dollars. ¹.” The average art consumer and the average art buyer might find this all puzzling and maybe dismaying if they plan to purchase art. However, there might also be an assumption that high art prices help artists and so astronomical figures might be good for the art world. There are three key questions before we can truly decide whether art selling for millions of dollars is a good thing: Who is buying the art, is it good for artists, and is it good for the economy.

Salvator Mundi, 199-1510, oil on panel, Leonardo da Vinci

Who is Buying Art at These Prices?

The answer is largely billionaires. Starting in the 1980s, very wealthy people from Japan kicked off the art market craze. Then, in the new millennium, art buyers from China caused the art market to swell to the degree it is today. Now, billionaires from China, Russia, and India are the primary art buyers. They are buying primarily Contemporary art. Twenty years ago, Old Masters were the primary draw at art auctions and now it’s people like Jeff Koons, who has broken his own personal record in sales seven times since 2007.

Popeye, Jeff Koons, stainless steel with color coating, 2009-2011. Displayed at Encore Casino in Everett, MA.

Is It Good for Artists?

It depends. For artists like Jeff Koons, yes. Even if his art at auctions is mostly secondary sales and he does not benefit from those sales, his primary sale price can skyrocket because he has a record of sales in the secondary market. Same with other auction darlings, Damien Hirst and David Hockney. Artists who rarely have pieces that sell for millions at auction are not so lucky. As art sales shift from galleries to auctions, many galleries have closed, which affects emerging artists who cannot sell at auction; “more galleries closed than opened in 2017, according to last year’s UBS and Art Basel report.².” Many artists feel left behind and watch from the sidelines as other artists’ works are sold for hundreds of millions of dollars. But, even the artists whose work does sell at auction can be bitter: “when a piece sells at auction or in the secondary market, the artist does not [financially] benefit at all, and that, I know, is very scary and upsetting to many artists.³.” Many of the notable sales in recent years have made headlines and it must be frustrating to watch as your work of art is sold for tens or hundreds of millions and know that you are not getting any of that money.

Is It Good for the Economy?

It definitely can be. Art sold at auctions is taxed at 28%, so as prices increase and the market swells to include more artworks and more artists, that’s a good portion of the money going to the government. As we discussed in a previous article, the art market contributes billions of dollars to the US economy, and part of that is art auctions. As prices go down and the art market suffers, it contributes less to the economy, like any other industry. But at the moment, with prices at astronomical levels, it’s definitely a boon.

At Artistic Connector, we care most about the artist and the art consumer/buyer. For emerging artists, these crazy prices are harmful as the focus moves away from galleries that represent a variety of artists to auctions that represent a few. For established artists whose art sells for millions at auction, it’s a little more complicated; yes, high prices at auction mean that they can raise their primary prices, but they get nothing from that auction sale. For the buyer, you have to be a billionaire to participate in many auctions and with access to emerging artists being more limited, it’s harder to purchase art that is not ridiculously expensive. Art prices are this high because it is what the market will bear. In the future, it’s very possible that prices will go down as buyers decide it’s not worth paying hundreds of millions of dollars. And then more buyers can join the market. But, I think the best way to buy art is from the artist or gallery. Primary sales are how artists make a living and it’s important to support them.

What do you think about skyrocketing art prices? Do you think it’s good for art and culture? Let us know below in comment section!

1. Gaby Del Valle, “Why Is Art so Expensive?,” Vox, October 31, 2018, https://www.vox.com/the-goods/2018/10/31/18048340/art-market-expensive-ai-painting
2. Gaby Del Valle, “Why Is Art so Expensive?,” Vox, October 31, 2018, https://www.vox.com/the-goods/2018/10/31/18048340/art-market-expensive-ai-painting
3. Gaby Del Valle, “Why Is Art so Expensive?,” Vox, October 31, 2018, https://www.vox.com/the-goods/2018/10/31/18048340/art-market-expensive-ai-painting