Cracking the Egg
| by Georgina Adam |
Some unanswered questions surround the sale of the Fabergé trophy for £22.9m
Illustration © Katherine Hardy
In the cyclical booms and busts of the art market, downturns tend to reverse prevailing trends. In 2015, for example, the reign of the Zombie Formalism trend died of a 7% contraction in global sales. In Miami that year,
Jeffrey Deitch and Larry Gagosian mounted the figurative group show Unrealism in its wake, officially anointing figuration as the art market’s next big thing. The art economy recovered, and figuration ascended until the next inflection point in 2022, when, with rising interest rates, prevailing trends again began to reverse. Confident collectors became cautious, expanding galleries downsized, and during this year’s autumn fairs, headlines boasted of Millennials’ rising interest in Old Masters, the ulti- mate referendum to the ultra-contemporary bubble that just burst.
Each of these trends underwent textbook asset price inflation, whereby low interest rates send the demand for excess wealth storage skyrocketing one of many ways financialisation has fundamentally changed the culture of collecting. Now in the third consecutive year of contraction, high prices are under scrutiny as being out of sync with real long term value, as well as a barrier to entry for potential new collectors. In response, dealers are becoming more flexible, even if only behind the scenes. In an interview with the journalist Marion Maneker, Larry Gagosian defied conventional wisdom and supported the lowering of primary prices: “Like any market, you have to adjust.”
In the shadow of roiling political turmoil and economic uncertainty, as well as the ongoing closures of galleries struggling to make ends meet, the debate between dealers and artists, and buyers and sellers, is: how much is art really worth?
Great expectations
In the speculative market, high prices can be justified by the promise that they will even continue to rise. Or, “if you’re asking $100,000 for an artwork”, the collector Jeff Magid wrote in Artnews, ideally “it might retain some financial value”. This expectation can often end in disappointment, particularly in the growing arena of private sales. Lately, says the adviser Mattia Pozzoni, transactions will stall due to sellers’ “anchoring”: “Many bought near the top and don’t want to ‘let go’ at today’s clearance levels, while others keep citing comps from a frothier cycle.” As the Gagosian director Harmony Murphy points out, auction records have limited accuracy in determining a work’s long-term value. Using Sotheby’s owner Patrick Drahi’s anonymous bidding on a Francis Bacon triptych at his own auction house in 2020 as an example, she says, “they are buying their own inventory at record just to assign value to something”.
Outsized expectations on returns might be traced to younger collectors’ skewed vision of older generations, says Brian Butler, the owner of Los Angeles gallery 1301PE. “They only hear the stories of the great successes, and none of the mistakes.” The reality is that even within celebrated collections, the majority of works depreciate, and recognition is rarely immediate. Joy Simmons, an early patron of David Hammons, Mark Bradford and Mickalene Thomas, is often asked who she is interested in. “They see that I’ve been successful in collecting artists when they were younger,” she says, “But 90% of my collection is not making headlines, and the ones who are having a moment right now, for the most part, I’ve held on to for quite some time.”
Different systems of value
“The art world has always been about prices,” says the University of Chicago professsor of economics David Galenson, echoing a commonly repeated phrase. But according to an essay for the arts organisation e-flux by Andrea Fraser, an artist and profes- sor at the University of California Los Angeles, the “emergence of art as a financial asset” in the early 2000s split the market into its own autonomous subfield within the art world. One consequence is that the market increasingly embraces the language and fast-tracked expectations of the financial industry. At the height of the ultra-contemporary bubble, Murphy recalls, “Everyone wanted to buy into an artist as they were IPO-ing [Initial Public Offer], and expected everything to ten times within a year.” The focus of market conversations also tends to fall squarely on prices rather than art, adds the dealer Laurel Gitlen. “We’re not really talking about ideas.”
Fraser’s essay outlines how the market espouses different preferences and values from other art world subfields: while academia emphasises ideas, and exhibitions trade in experience, the market is measured in dollars. “The market loves paintings,” says John Schmid of the Chicago gallery Ackerman Clarke, “due in part to its long history, but also the fact that it’s ripe for consumption” with its relative ease of shipping, storage and display. In fact, according to the latest collector survey conducted by UBS and Art Basel, paintings comprised 64% of dealer sales in 2023. Conceptual sculpture, meanwhile, “tends to require more space and isn’t always as approachable or straightforward to a private collector”, says Avery Semjen, a Modern and contemporary art specialist at Phillips. Consequently, its prices, even among institutionally celebrated artists, offer a glimpse into a world relatively untouched by speculation. At Phillips’s Modern and contemporary sale in New York in February, where a 2022 Marina Perez Simão painting sold for $279,400, a wall-mounted shelf by Haim Steinbach took just $40,640. In September, a 2002 Paul Pfeiffer sculpture from a body of work shown in his traveling museum survey (2023-25) sold for $15,480 at Phillips. And at Ackerman Clarke, conceptual sculpture starts at $3,500, a price Schmid needs to support with additional private sales and “other things I don’t want to do”.
We do need a little speculation
There are many benefits of paying living artists more for their art, including higher standards of living and greater access to resources. The artist Alexander Kroll says strong sales have allowed him to scale up and experiment further. But, conversely, “The attempt to financialise art gets to very dangerous zones of sterility,” where artists are incentivised to repeat commercially successful bodies of work. There is no guarantee that money improves the quality of art. “In fact sometimes it makes it worse.”
How much are collectors willing to bet on an unknown name with no guaranteed returns on investment? To attract new collectors in their 30s and 40s, Simmons recommends the $2,500 to $5,000 range. Fellow collector Alain Servais puts his own number at $10,000 to $15,000, while Dean Valentine says $8,000. Faced with increased costs for rent, shipping, employing staff and more, Gitlen says galleries showing works priced under $10,000 “are almost certainly losing money”. But by also representing more established artists and foregoing a permanent brick-and-mortar space, she is able to set emerging artists between $3,500 and $5,000. Remaining accessible to institutions and other artists “goes a long way in establishing peer respect and longevity”, she says. “It also allows an artist to experiment and build before the price point gets too high.”
Embracing the investment mindset
According to Georgia Stylianides, an adviser and quantitative analyst, the best collectors “aren’t just picking winners, they’re helping grow them”. On Instagram, she recommends that collectors adopt a venture capitalist (VC) mindset. “Every work of art is basically an option on an artist’s future cultural relevance,” she says, and like any VC’s investment portfolio, most bets will flop. Out of thousands of artists, she adds, a small sliver may go on “to fundamentally shift our perceptions of art”, but “those works are the ones that will define a collection’s long-term value”.
For Butler, investing in the artists of one’s time is “the adventure of being part of culture”, but in the decade after founding his gallery in 1992, he noticed collectors showing more and more interest in finding “some margin in the market”. Burnt by investments in artists who failed to withstand the test of time. Financially or otherwise—risk-averse collectors are now increasingly looking away from the present toward the past, where hindsight is 20/20. As the market contraction continues, the reversal Butler would like to see now is collectors going back in time in a different way: to simply buying what they like.
01 December 2025