The art business: Strategies, tricks and new trends
The art market is a complex ecosystem where galleries and auction houses play fundamental, yet very different, roles. While galleries are the starting point for artists, promoting their work and building their reputation, auction houses act as a barometer of the market value of artworks, setting prices based on demand. But beyond these basic definitions, there are strategies, tricks, and trends that shape the value of art and its commercialization.
The galleries
Galleries are the first line of validation in the art market. They carefully select the artists they work with, promote them at international art fairs, and introduce them to key collectors. Their role is not only to sell art, but also to build narratives and enhance artists' prestige through exhibitions, collaborations, and expert curating.
However, there's a "secret": galleries control the primary market and wield considerable power over prices. A work might sell in a gallery for €10,000, but if the same piece reaches auction a few years later and sells for €50,000, the gallery loses control over its value. This is one of galleries' biggest fears: that auctions will inflate or devalue their artists' prices without their intervention. Therefore, they set prices strategically to maintain stability and prevent the devaluation of their works. In fact, they often prefer to sell to committed collectors and, in some cases, vet potential buyers to prevent rapid resale at auction. Furthermore, working with a reputable gallery can increase both the value of the artwork and the artist's reputation.
Auction houses
Auction houses operate in the secondary market, selling works that already have a history of ownership. In an ideal world, auctions would reflect a work's true value based on supply and demand, but the reality is that auction houses also manipulate the market.
On the one hand, auction houses operate on a commission basis, charging both the seller and the buyer, with fees typically ranging from 15% to 25% of each party. Furthermore, they sometimes guarantee a minimum price for the seller or even offer private agreements with collectors before the artwork goes to auction. Some auction houses employ morally questionable techniques, such as aggressively promoting certain artists to generate headlines and attract more buyers, or using "phantom bids" to artificially inflate the price. As a sales strategy, auctioneers also use psychological techniques to generate excitement and drive up bids.
Despite these strategies, the auction market has shown an unexpected trend in 2024: although never before have so many works been auctioned as now, the total value of the market has fallen.
Large buyers have reduced their investments due to geopolitical instability, and the luxury segment has suffered. In contrast, most sales have occurred in the under €5,000 range, with 50% of works selling for less than €600. This has allowed new collectors, especially younger ones, to enter the market.
The most expensive work of art ever auctioned is Leonardo da Vinci's "Salvator Mundi", sold in November 2017 for $450.3 million (approximately €382 million) at Christie's in New York
A new market
One of the most disruptive events of 2024 was the sale of a work created by the robot Ai-Da, auctioned for over a million dollars, ten times its estimated value. This has sparked a debate about originality and copyright in art created by artificial intelligence. As auction houses begin to accept these pieces, we may be witnessing the birth of a new market within the art world.
On the other hand, NFTs (non-fungible tokens) have introduced a new category of digital assets to the art market. Although the initial hype has subsided, some auctions continue to embrace this technology, offering digital pieces with blockchain-based certificates of authenticity. Artists and collectors have found in NFTs a way to trade art without relying on traditional intermediaries, although market volatility remains a factor to consider.
Ai-Da , the first hyperrealistic robotic artist, has captured the market's attention with her work AI God: Portrait of Alan Turing , which pays homage to the British visionary and father of modern artificial intelligence.
Galleries and Auctions: Competition or Collaboration
Although traditionally seen as rivals, galleries and auction houses could mutually benefit. Some galleries are already organizing their own private auctions to maintain control over their artists' prices, while auction houses are exploring fixed-price sales, moving closer to the gallery model.
Despite their differences, both structures are essential to the art market. Galleries create artists and establish their initial values; auction houses consolidate their prestige and grant them international recognition. Without one, the other could not function.
Ultimately, the art market is constantly evolving, and understanding its secrets helps us better grasp how a work's value is determined. Whether buying from a gallery or bidding at auction, the important thing to remember is that art is not only an investment but also an expression of creativity and passion.
