Why is Art so Expensive?

Renowned for depicting emotion through vibrant color, Jona Mitchell earned over $30,000 in art sales between 1960 and 1962 and sales of the late artist’s works have only increased since her death in 1992.  Born in Chicago in 1925, shepainted her way to prominence in the second generation of the American abstract expressionist movement. In 2007, one of her pieces sold for $3.8 million at Christie's New York and next month at Phillips auction house, two of her paintings are expected to sell between $19 million and $27 million.

To many who consume art in ways other than buying, price tags in the millions can be hard to comprehend. As Mitchell will obviously never create another piece of art again, this only adds to its value. The “death effect” is when an artist sees an increase in their prices in the five years leading up to their death. Every consumable good is more valuable the less there is of it and when an artist dies, art buyers can rest assured there’ll never be an original piece by that artist ever again. 

So when the artist is dead, who gets the money? When a work sells at auction, the artist makes no profit. The price is split between the artwork’s previous owner and the auction house or gallery. So even if Mitchell were alive, the hands who touch the money made from the selling of her work would remain the same.

What goes into the cost?

Much like a house or a stock portfolio, art is an investment and often, it’s a pleasure indulged in by the super rich, but what, besides the death effect, makes some art more valuable than others? London-based independent curator and writer Fatoş Üstek explains the art valuation process as “a complex set of relationships.” She continues, “the artist, and their profile with their experience to date in conjunction with their visibility and public outreach, mixed with the artistic strength and the market appeal of the work and in reflection of the artist's peers with similar track records and their respective sale prices all play a role. The medium in use, the production costs and the labor intensity are taken into account. For instance, watercolour on paper is rarely more expensive than an oil painting.” 

“As an art historian the value of a work of art (ideally) has nothing to do with monetary value, but with cultural influence,” explains Sarah Jaffray, an art historian, educator, curator and writer who has previously worked at the British Museum. “It is about collecting works that you feel are reflective of broader cultural patterns. It may not be that the artist/artwork is the greatest living artist, but it is an important representation of what was happening in our time. This is ultimately the subjective decision of the curator and should be scrutinized. When a work is collected, it accumulates authority and historical relevance,” she continues.

Many things go into the price of a piece of art such as the rarity, the time it took to make, the creation process, the artist’s journey as well as being influenced by the status of the artist, which is a rarity in itself. “The factors that influence trends in purchasing artworks change at all times. A new name, a new technique or a striking new artistic position might be the immediate ones to be listed. Meanwhile, the discourse and the popularity of the artist may inspire the purchases. In the context of public collecting, the artistic position and its significance in a wider art historical context, its representations alongside the strength of the artwork all play a role,” states Fatoş.

Analysing art trends is a nuanced activity with many factors causing types of art and artists to see drops and surges. “Contemporary art [buying] is definitely [influenced by] promotion via social media. I cannot speak to millionaire/billionaire buyers' interests because it (honestly) makes me ill to think about what is pushing them to buy specific types of art as investment. I also think artist networks - the art scenes created within certain cities or geographies tend to work and buy amongst themselves,” mentions Sarah.

Some art is also considered important due to what it’ll say about our time in years to come, making art a collection of historical pieces and artefacts. “An artwork which is built on historical references by nature hints at historical relevance, especially if the referred practices have marked a historical significance. However, it is not enough only to make references to other historically important artworks, but to provide a furthering of the progress in which their predecessors initiated.”

Marcel Duchamps, “The Fountain”, 1917

“Here, I am thinking of Sherrie Levine's Fountain (Buddha), 1996 which makes a direct reference to Marcel Duchamp's Fountain from 1917,” explains Fatoş. Levine's Fountain references Duchamp's famous 1917 piece by beautifying the original object in a coat of shiny bronze. In this way, Levine is emphasizing the aesthetics that Duchamp bypassed in order to make a point of re-contextualizing an everyday object into a piece of art (its labeling as an artwork is still debated today). “Moreover, an artwork that is reflective of its times and that is bringing forward a steward criticality charged with artistic ingenuity might also signal historical relevance,” concludes Fatoş.

Who gets the money?

Much like the valuation of art, the ownership of art is just as much of a convoluted conversation. While an artist typically sets the price of their artwork, once it is sold on the primary market (from artist/gallery to buyer), the artist will usually see no remuneration for works sold on the secondary market (from previous buyer to new buyer). Royalties are something that some artists have fought for over the decades by advocating to receive compensation for re-sold works like musicians. The artist doesn’t continually make money from one piece of artwork sold over and over again, instead, the owner, buyer or gallery does.

In 2018, Artsy published an article arguing that if artists were to receive resale royalties, they would suffer. The argument states that resale royalties actually reduce the value of art, making artists who sell works receive less overall. This is evidenced by data suggesting that resale royalties would be nowhere near enough to compensate for losses of art sold on the primary market at a reduced value. This devaluation is predicted to cause art to be worth less over time resulting in artists making less profit from selling their works.

In another article, written by another writer, the case for artists receiving royalties is argued. The writer details the work of London-based company the Artist Resale Right (ARR), invented in 2006 to ensure that visual artists receive royalties when their work is sold on the secondary market. Likewise, London-based not-for-profit DACS who collect and distribute royalties to visual artists and their estates paid over £100 million in royalties since their founding in 1984. The article contends that Artsy statistics show that ARR has allowed artists to share in the increasing value of their work.

Furthermore, the article argues that artist royalties do not impact the price of works on the primary market according to data which also highlighted that 57% of artists receiving ARR royalties did so through selling works in the low end price range of €1,000 to €3,000, revealing that they were most likely to be emerging artists.

Bottom line

Above all, contemporary art is a luxury item and is appreciated for the methodology and artist’s reputation as well as its interpretation of the subjective human condition and the times we are living in. Even with this, it’s difficult for most artists to make a living off of their art. The value of art travels along an unpredictable journey, with many aspects causing prices to go up and down.

It’s easy to see why the art market is owned by anyone who can afford a stake in it. If an artist is to share in the increased value of their works overtime, royalties appear to be a viable option that also allows the artist to be able to track when their works are sold and re-sold. However, if the value of works sold on the secondary market decreases, which is especially impactful for artists just entering the market, it is difficult to present a logical case for artist royalties, though this is unclear. Efforts to make the art industry more accessible and diverse are perhaps better to help mitigate the challenges faced by emerging artists trying to make a sustainable living. Ultimately, an artwork is owned by whoever bought it, but it is the artist who created the work in the first instance and who keeps the industry in existence. 

Tali Ramsey is a UK based writer who writes about art and culture.