Observing brands in contemporary art can be instructive, especially for brands selling services or products that matter to them but have functional benefits that are hard to objectively value such as wine, financial advice, consulting and sometimes automobiles.
Contemporary art, non-traditional art from 1970, can sell for incredible amounts, amounts that do not seem to be objectively merited. For example, a Damian Hirst mounted shark in the Metropolitan Museum of Art under the title “The physical impossibility of death in the mind of someone living” is said to be worth $12 million. There are some 2,000 On Kawra paintings that consist of a date precisely painted on a black background. One piece, “May 1, 1984,” sold for 4.2 million in 2014. Robert Ryman, for example, has seen his large all-white paintings sell for over five million. All white! The examples go on and on.
What makes these prices even more puzzling is the fact that several of the top artists do not do their own work. Andy Warhol famously did little of his own artwork, Hirst has a staff of 20 or so to do his, and Jeff Koons was quoted as saying that he is not physically involved in the production of art because he lacked the necessary abilities. So why the value?
A wonderful book entitled The $12 Million Stuffed Shark by Don Thompson provides some answers. It starts by observing that high prices do not reflect objective quality. Consider the following. A series of experts had difficulty determining the authenticity of a Jackson Pollock look alike painting that was bought at a free market for $5. The difference between a value of thousands vs. tens of millions hinged on their judgment—for the same painting. A Warhol authenticity board attempts to ascertain whether Warhol actually saw and approved a piece of art (because he obviously did not himself create it). If so, the piece is tens of millions, and if not it is nearly worthless.
We thus need to look to buyer motivations. There is logical rationale for buying art. It can increase in value over time, especially if you pick an artist that is moving up and the timing is right. However, the more important driver is the social and self-expressive benefits provided by buying and owning a piece of art. An art purchase can signify that you have sophistication and taste, that you are interesting, that you have arrived financially and socially, or that you are part of a small and special group of people associated with a dealer, auction house or museum that are the authorities of the field.
How does an artist establish a brand that can deliver and retain high prices and social and self-expressive benefits? It is by associations with collectors, dealers, art experts, auction houses, and museums who affirm that the artist has arrived by their credibility and own associations with other artists. A collector buys not only an artist but a painting that is owned by ____, handled by _____, endorsed by _____, hangs in ____.
An auction professional once said, “Never underestimate how insecure buyers are about contemporary art, and how much they always need reassurance.” If an established collector owns a piece that means that he or she values the artist. In fact, artists and dealers often screen and differently price their art so that its likelihood of ending up with a prestigious collector will be enhanced.
As an unknown artist, Hirst sold a work to Charles Saatchi, the advertising executive and prominent collector. It consisted of flies being hatched and attracted to a decaying cow’s head only to be zapped by a bug zapper along the way. That started Hirst on his way.
Actually, Saatchi will buy a dozen works of a new artist whose value will then rise, just because Saatchi owns his or her work. And to encourage Saatchi to buy, dealers give him a favored price. The fact that David Rockefeller was the prior owner of a seven foot Mark Rothko that sold at Sotheby’s in 2008 for 72.8 million, nearly three times more than the previous high for a Rothko. The fact that Rockefeller owned it increased its value. The fact that he bought it in 1960 for $8,500 didn’t matter.
Artists need to work with the most prestigious dealers possible. Dealers, in turn, will base their reputation on the artists displayed in their space. They cultivate up and coming artists and develop a relationship so that the artists do not move up to other dealers. Dealers will protect an artist’s reputation, in part to preserve the value of their inventory, by buying artworks behind the scenes to prevent the street prices from dropping.
There is a relationship issue – does an artist find and reward a dealer that will support him or her, or will the artist keep moving up whenever possible? Auction houses and museums represent the ultimate endorsement. Christies and Sotheby’s, the two most prestigious auction houses, can get an estimated 20% more for paintings because of their brand.
Saatchi, who owns over 3,000 contemporary artworks, is generous about loaning them to museums if they agree to display other pieces so that the artists say their work has been displayed in the museum. So how does an artist get established? Some, like Andy Warhol with his outrageous lifestyle and Tracey Emin with her bad girl image (she created a tent embroidered with names of her past lovers) get a lift from their personality and visibility.
However, others need to carefully cultivate dealers and collectors through personal relationships or selective pricing in order to upgrade their value in terms of who are owning or handling their art. Other brands, particularly brands that have the potential to deliver social and self-expressive benefits, can learn from the art world. These brands need to find ways to provide reassurance to buyers that they made the right decision – because the confidence and the benefits that go with that purchasing decision can be fragile.