If you’re an art collector, you likely spend a lot of time exploring the primary art market, defined as the sector of the art market where artwork is being sold for the first time, usually at galleries or directly from the artist. However, you may be surprised to learn that following the trends and outcomes of auction sales - the dominating sector of the secondary art market - will allow you to have better insights into an artist’s resale value, and determine whether the asking price on the primary market is aligned with what the artist can fetch on the secondary art market down the line.
How exactly might that work? Let’s take a look at an artist whose success on the primary art market has driven up the price of their work on the secondary market: Damien Hirst. Hirst, a contemporary art bad boy from the UK who often makes headlines for provocative artworks that fetch jaw-dropping prices on both the primary and secondary art markets, is often lauded for deftly navigating between these two sectors. Often times, his hijinks on the secondary art market have greatly driven the price of his artwork. For example, his 2008 single artist sale at Sotheby’s - a move rarely made by an artist in the first place - saw the artist sell a slew of newly created works at auction, bypassing his primary market dealers in favor of making a splash at auction. The sale was incredibly risky, to be sure - but when Hirst sold out the entire sale, it became clear that the move would have a long-term impact on the price of his work. It is worth noting that the global financial markets began to plummet in the days following the sale, so his timing couldn’t be better or more ironic. Today, Damien Hirst’s name is synonymous with success, and his pricing on both the primary and secondary market are always making headlines.
What’s more, while the primary market remains largely opaque regarding the price of artworks because galleries are not required to report pricing, the secondary art market is legally required to report the sale price of any artwork sold on the auction floor. If a collector follows these auction results, they will have a much better idea of how much artists tend to fetch at resale, which will allow them to better assess whether the asking price of a work by this artist at a gallery on the primary market is relative to the artist’s value at auction. We would suggest it’s certainly worth doing your homework!
Here, we lay out some strategies for understanding how the secondary art market influences pricing on the primary market, and highlight opportunities that offer value to collectors.
Understanding How Auction Sales are Organized
Live auction sales occur in both day sales and evening sales, usually organized as Morning, Afternoon, and Evening Sales. The later evening sales are more likely to include work that is being offered at a higher price point. For example, most blue-chip artworks are offered in the Evening sale, while Morning and Afternoon sales are reserved for more ‘reasonably’ priced works in the same genre. Likewise, if an artist is being included in an evening sale, or a May or November sale (which are the main season sales), that demonstrates that the artist likely has a high resale value.
Once upon a time, auction houses catered specifically to collectors of certain types of artwork, and arranged auction sales according to the collectors’ preferences. For example, Impressionist and Modern art were often offered in entirely separate sale weeks from Post-War and Contemporary sales, with exhibitions and events organized to cater to entirely different audiences. However, auction houses quickly realized that there was quite a bit of overlap in collecting interests, and they could appeal to a larger base for both genres by combining them in a week of sales branded as “20th-Century Week.” Now, you can buy an Impressionist work by Monet or Egon Schiele the same week you can purchase a Joan Mitchell or Kara Walker.
As a collector, you can get a sense of which artists represent the most value to auction houses, based on whether that artist has been included in some of these auction sale events. For example, in Christie’s upcoming 20th Century Week sale held in November, works are being offered by KAWS and Yayoi Kusama, suggesting that these living artists are some of the best-performing on the secondary art market.
Identifying Opportunities by Assessing Pricing on the Primary and Secondary Market
Though the two markets are quite different, primary market and secondary art market pricing often overlap. While it’s certainly important for collectors to support the galleries that actively support artists’ careers, it’s also important to ensure that they’re buying a well-priced work with significant resale value. For example, if an artist’s work is fetching $20,000 on the secondary market, but their gallery is quoting a figure for a new piece well above this price point, you may want to question why there’s such a discrepancy.
Likewise, it’s important to note that an artist’s work isn’t always more expensive on the secondary market. In fact, it’s not uncommon to find your favorite artist is selling work on the primary market for $50,000, yet you can find a work by the same artist at a day sale for $10,000 to $15,000. That’s why it’s vastly important to keep your eye on the secondary art market - you never know what you might find.
Above all, before making a purchase on the primary market, it’s important to find out whether that artist has a resale value on the secondary market in the first place. Of course, this won’t be the case for the vast majority of artists, particularly emerging artists, whose work often doesn’t appear on the auction floor until their career is significantly advanced. While we do wholeheartedly support the purchase of emerging artists, it is important to do your homework on pricing. There are several approaches for determining whether these artists will eventually have resale value: Namely, if the artist is receiving a significant amount of buzz, appearing frequently in major exhibitions, landing significant press, landing representation by multiple galleries and/or showing work internationally in both public and private projects and exhibitions.
Otherwise, it is usually fairly easy to determine an artist’s secondary art market value by thumbing through the auction house’s printed and online catalogues. Identify those artists whose work can be found at auction, compare their pricing to the primary market galleries, and determine whether the figure you’re being quoted is aligned with your research.
Ultimately, finding and snagging opportunities on the primary and secondary art market is best taken on with a trusted advisor - an expert can help you source accurate pricing, and get a better grasp on the totality of the artist’s resale value. Get in touch with Art Market Liaison if you’re looking for more advice!