Tuesday, January 13, 2009

Art, Commerce and Galleries !

Well, that is a quite a different title from my last one which was which artists should you buy and collect !

Thank you for all the emails, considering that maybe only 20-25 people know about the existence of this blog, it was nice to get a response from nearly every one including some celebrities in my dictionary ! Well, if you are a key stock market speaker on CNBC and reading this blog, its quite flattering for me. Also some of the most important people in the Indian art space have been more than encouraging.

As more and more people know about our small existence, I thought for most of the new collectors or aspiring collectors, its important for me to share some views on the commerce of investing in art so you know what you are really paying for the art work.

Gallery Commissions - If you are coming in from any other asset class, be prepared to get shocked as you are used to paying 1-2 % as transaction charges or brokerage, in art gallery commissions are a minimum of 33 % to 50 % ! so if you pay 2 lacs for a work that you have acquired then 66,000 to 1 lac could be the cut for the gallery and the rest goes to the artist. Now this is fine when you are paying 2 lacs, it gets better for the galleries when you are buying a painting worth 25 lacs, as the gallery takes in 8 to 12.5 lacs as its commission. The question that new collectors may ask is that are these mark ups justified, well, I think in some cases they are, running a gallery is an expensive business, with retail space, cost of catalogues and collateral if you are running it right. The problem is that most of the galleries have no curatorial content and they basically get the works on a consignment basis so they are showing over 100 artists and happy selling 2 to 3 works per month. Serious galleries have to spend money on discovering, promoting and marketing an artist, have lesser shows and hence they deserve the 50 % mark up, they would happily give you a 10 to 20 % discount if you are buying regularly. So remember this when you buy a work, hence it is even more critical to research the artist and the gallery before cutting a cheque, as otherwise you may have a work that looks nice but has no asset value as no one will buy it. In these times, the best of galleries are maybe selling 2-3 works a month and even with 50 % margins,they are not breaking even on costs,liquidity or the lack of liquidity in this market is also a key factor gallery commissions. If you are re selling a work through a gallery, the general norm is 10 % of the sales price as gallery commission and could be lower for big ticket sales.

Galleries are important to showcase art and also discover new forms of art and hence it always makes sense for you to track what key galleries are doing, I will give you that list in my next blog with my frank opinion on websites you should visit to look at how people are shaping up the art space.
Auction Houses- They are another source of buying and selling art, Christies, Sothebys, Artcurial, Philips De Pury are some of the key international auction houses and Saffronart being my pick in the Indian space and even the international space. Minal & Dinesh Vazirani have re defined this space and definitely go to http://www.saffronart.com/ and explore the website. My favourite sections are Previous Auctions,Collection of the month and also Collector's Corner which is updated on the 1st of every month. Auction houses will typically charge you a 10 to 25 % buyers premium over your price and take 10 % as sellers commission if you are selling the work. International auction houses will charge extra on a lot of small charges so please be extra careful if you are selling something. If you like something, then it is a great place to buy due to attractive prices, proven authenticity and exhibition record of a work.
Well, I hope this gives you a fair idea on the commerce of buying and selling art and do let me know if you have any questions, you can email me at indianartreview@gmail.com, leave a comment here or on my page at http://www.indianartnews.com

Enjoy your art !

P.S - the next blog post would be a critical take on India's top Galleries and some of their websites that I visit regularly.

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