What is an art trade

As one of the components of artistic communications, as a broader phenomenon, the art market is directly interwoven into the cultural, historical, social, and economic context of social development. It can be stated that the art market is equally entwined with the artistic and aesthetic, as well as with the material evaluation of a work of art.

The art market can be understood in a narrow and broad sense. In the narrow sense, the art market is an exclusively economic category that implies a general order of prices for a particular artist’s work of art, its investment appeal and mediation of transactions for the purchase and sale of works of art. However, the art market cannot be concluded solely within the framework of these actions. A work of art contains spiritual, intangible values, which, due to the uniqueness and uniqueness of works of art, are difficult to evaluate, so the art market is intertwined with various ways of justifying the value of an art work, lying beyond the pragmatic senses.

The art market is a polyfunctional phenomenon. Viewed in a broad sense, it acts as a regulator of the relationship between the artist and the public, simultaneously performing a number of social functions:

• informational,
• intermediary
• pricing,
• stimulating,
• regulating,
• sociocultural.

The informational function of the art market.

The process of perception and consumption of artistic creativity is surrounded by the whole institution of commentators, observers and critics, who largely affect the formation of public preferences. The art market has a need to create a special information field.  The information function of the market contributes to the development of market relations significantly, since all its subjects cannot function successfully without the relevant information. In a broad sense, this means informing the public about the work of this or that artist, it is not only a presentation of the results of his or her activities, but also the information field that is formed around the artist. An artist’s authority and reputation directly depend on his or her demand from the public. Namely: the totality of references to the artist in art criticism, biographical texts and biographies; church, historical documents, today in the media, special profile literature, special editions, etc. The creation of catalogs, in its essence, is not a new phenomenon. The demand for the artist by the public largely depends on the information support of his life and work. Not all the public can adequately perceive and interpret works of art, “read” the author’s idea, interpret the artistic reality created by him. Recipients of different levels of artistic and aesthetic training need information support for the artist’s work. An important role is played here by how the work will be interpreted by authoritative sources. The informational function of the art market is intended to actualize, first, a number of professionals, which should include the following:

• biographers,
• art critics,
• art critics,
• art advisers,
• curators.

A biographer (from the Greek biography – biography – biography of life) is a person who recreates the life story of an artist for scientific, artistic, popular and other purposes. As a rule, the first biographers of famous personalities, including the artist, where themselves. Subsequently, this function was transferred to those who acted as secretaries. It is biographical texts that often serve as an important key, helping to culturally and historically reconstruct the reality of former centuries, to understand the artistic reality created by the artist, not from the perspective of today, but from the perspective of the artist’s contemporary. Moreover, since many great masterpieces of painting, like their creators, are surrounded by mysteries and riddles, so the public has to rely on extant documentary sources.

An art critic, an art historian, is a person who specializes in the artistic and aesthetic evaluation of works of art. They usually produce detailed artistic and analytical articles and reviews published in various specialized media (today, including the Internet). Art historians and art critics prepare monographic works, collective scientific research and theoretical reports. Accordingly, their authoritative opinion directly influences the activity of collectors and patrons of art, to a large extent determining the price of the art work and the authority of the artist. At the same time, historical experience shows that many of today’s famous and important artists were not once recognized by art critics, because often their art anticipated public tastes and was not understood or appreciated at its proper value by their contemporaries-art professionals.

It is worth mentioning the art consultants separately. An art consultant is an English Adviser (adviser). Initially, his functions were performed by people close to those in power. They could occupy various positions from cardinal to contractors of royal works, i.e. their mediation in this connection was not professional. Obviously, the recommendation of a particular artist was a common and legitimate matter, since the ruler often did not understand art and was forced to listen to the advice of persons he trusted and respected. Even today, the profession of consultant is very much in demand. In a context where people want to buy art but have no time to study it professionally, an art consultant is a very legitimate figure on the art market. The consultant does not sell anything, but only buys art on behalf of the client or advises promising artists for his client. Moreover, unlike a critic or an art critic, an art consultant is not necessarily a universally recognized expert on art. That is why we do not classify him as an expert community, although he certainly acts as an expert for the client.

The function of information in the art market is assigned not only to individuals, but also to organizational structures. The exhibitions and biennales (biennale from Latin bis – twice and anus – year), which are traditionally held in recent years once every two years, are called to perform the informational function in this sense. Biennales do not sell works of art. They are only intended to show the general direction and trends of art in the world or in a particular country. Leading galleries usually take part in the Biennale. Thus, exhibitions and biennales also inform the public about the state-of-the-art process and the dynamics of the art market and its trends.

Of particular importance among art market players are art museums, both public and private. Museums, by acquiring an artist’s work, elevate his name, raise the rating of his works and, consequently, their value. Once in a museum, the work automatically becomes a more significant work. The more famous the museum, the greater the return the artist, living or long gone, receives. Moreover, museum collections represent the national treasure of a particular country, protected by the state, including during wars and other social upheavals. It is well known that many talented artists or their works remain unknown, being lost in history.  Works that make it into museums are guaranteed to be presented to the public for generations to come. Another important point is that once in a museum, the work is no longer on the market. In other words, once in a private collection, a work of art could still be on the market when the owner or heir wants to resell it. Museum works, with few exceptions, are withdrawn from the market, thus giving them even more value. Museums have a reputation of unquestionable authority.

The role and function of the curator should be mentioned separately. A curator can be a full-time employee of a gallery, or an independent person moving from one venue to another, including not only galleries, but also museums and biennales. A curator is a person directly involved in the development of a particular exhibition concept. The attitude to a curator is ambiguous. Some experts believe that he, being sometimes more important than the artists themselves, interferes with the artist’s free expression of his or her “self”. Others believe that the curator only guides and reveals the artist’s work to the public, focusing on the most important and relevant points.

The information function of the art market forms provence (from Fr. to happen, to arise) – the original, the source, the history of ownership and/or the location of any art object. For a work of art, it is the history of possession or the biography of the artwork, beginning after its first alienation. Having a provenance for an art object is extremely important. It is a body of documented evidence and proof that helps to establish that the object is not a forgery, a copy, a reproduction, or that it has not been altered in any way. The existence of a provenance helps to establish and secure the authorship of a painting to a particular artist, as well as the right of possession of a particular person. Provenance is a kind of archive, a “history” of the movement of a work of art in time and space. If we are talking about a work of art several centuries old, it is the historical documents, references to biographers, etc. that prove its authenticity and significance in cultural and historical perspective.

So, the information function of the art market implies that the public should have an idea of the artist and his work. Biennales, exhibitions, expositions, catalogs, monographs, etc. are sources that introduce the public to the work of this or that artist. If we talk about today, an impressive number of specialized and non-profile media have appeared, which review certain art events, and therefore form public opinion about this or that artist or movement. Press and television play a huge role in shaping and elevating an artist’s image and gaining publicity.

Representatives of the expert community and related subjects influence the market indirectly, as advisers, carriers of taste and knowledge, and opinion leaders. Ultimately, it is the buyers and collectors who generate the demand. Once again, the market is necessary to bring the artistic product and the consumer together in order to satisfy the needs of both sides: the artist and the public. Here there is a need for an intermediary function of the art market.

The intermediary function of the art market.

Commercial mediation is the facilitation of transactions between the parties, between the artist or owner of the artwork and the buyer. Mediation can be done in the “open” as well as by private agreement. The intermediary can bring the buyer and the seller together directly or conduct the transaction on behalf of one or both parties, while also respecting their commercial interests. This gives rise to a specific branch of artistic entrepreneurship in which artistic works are viewed not only as spiritual, but also as commercial values. In this case, the work of art is viewed as a commercial object (sale-purchase), where there is an entrepreneur, a person who has nothing to do with the creation of the work, but is interested in promoting it as an artist in order to increase the market value of his work and his personal accountability in society. In the history of the art business, which is focused on the visual arts, the traditional professions of intermediaries, which are art dealers, gallery owners, auctions, and art fairs, have already been established and consolidated. They are all active actors in the art market.

An art dealer is, in the modern sense, a professional who buys and sells works of art, in other words, an art merchant. The basis of an art dealer’s professional activity is to find new talented artists and establish relationships with them in order to promote and sell their works. This is the first part of the art dealer’s professional activity. Another, not less important, part of an art dealer’s activity is to find collectors, galleries, art museums, auction houses and fairs that are potentially interested in working with artists. The main commercial objective of an art dealer is to find and buy works of art at the best price and resell them at a higher price to collectors, galleries and other parties on the art market. Usually the dealer specializes in a particular artistic style, cultural and historical time or region, there is a narrower specialization in certain personalities. Art dealer is a merchant, a professional mediator between the artist and the public, he adapts the artist to real life and real life to art. Within the art market his role in the socio-communicative system “artist – artwork – public” is extremely important, he can not only anticipate the market trends, but also influence them. Accordingly, an art dealer of high professionalism in many respects can influence the artistic preferences of society, set and influence market trends. The difference between an art dealer and a gallery is that an art dealer does not have his own space and, as a result, his percentage of the transaction is usually lower than that of a gallery.

Art sales are also handled by art salons or galleries. Galleries usually specialize in one or more areas of art, have their own policy, concept and focus on different segments of the market. The gallery plays an important role in promoting the artist. Often the reputation of the gallery itself is higher than that of the artist, and then the authority of the gallery begins to be associated with the name of the artist. That is, galleries can define and influence market trends. In general, an artist is interested in working with a gallery because it acts as an intermediary between an artist and a buyer, providing sales and orders. The gallery owner’s (colloquially called gallerist’s) main task is to draw the viewer’s attention to his gallery, exhibition, artist in order to increase sales. A gallery owner mediates between a creative person and the business, trying to solve a difficult task: to make money for himself or herself and for the artist. At the same time, sometimes the gallery seeks solely to make a profit and, being concerned about how to please the consumer, tries to impose its strategy on the artist. Nevertheless, although an artist can sell his or her own work, history shows that rarely have they succeeded. At any rate, such examples are a striking minority.

Another form of commercial circulation of works of art is art fairs. An art fair is a place where art is periodically bought and sold. Fairs can specialize in a variety of types, particularly fine art.

A fair has several advantages:

• A wide variety of works of art are offered at the same time.
• Prices at fairs are traditionally lower than the market prices.
• All works of art have passed a certain selection.

Different art market players are represented at the fair, often sharing the same tastes and preferences.

Many professionally oriented side events take place at art fairs – conferences, exhibitions, film screenings, printing and multimedia sales.

Another key commercial intermediary between the artist and the public is the auction. An auction (from Latin auction – public auction) is a method of selling goods to the highest bidder. The higher the demand for a given commodity (usually due to its rarity or other qualities that are attractive to the buyer), the higher its price. The struggle of potential buyers for the possession of a given product increases its price. Sometimes the final price is higher than the market price when a buyer, seized by a passion to own the item or a desire to outbid all other bids, sets a price at which the item outside the auction will never be sold. The auction is a market in its purest form: the price reached in the bidding process is a compromise acceptable to both parties. We can distinguish two main types of auction bidding:

• The English system, when the bidding, is based on the principle of raising the price;
• The Dutch system, when the bidding, is based on the principle of lowering the price.

The auction directly affects the promotion and recognition of the artist in society. The strategy of setting estimates, exhibiting paintings for auctions, and the actions of the auctioneer or presenter can greatly inflate the value of an artwork. Auction houses strive to attract as many visitors as possible, and while they certainly only care about solvent visitors, others nevertheless also play their part – igniting excitement, waiting to conquer price records. Auction houses value their reputation and try to carefully select the works. But most auction houses adhere to the principle of “caveat emptor” (lat. “Let the buyer be vigilant”), in other words, the buyer acts at his own risk and is responsible for his choice after being convinced of the quality of the object before the transaction. Extensive and detailed provenance can’t guarantee absolute authenticity of the painting. Not even the most professional and reputable expert can give such a guarantee.

Auction houses have wide client base and “untwisted” name; they charge commission and high transaction costs. On the other hand – for the artist, his representative or the owner of the painting, there are unconditional advantages of selling at auction:

• The desired work can be sold in a very short time
• The final price may be substantially higher than the market price.

Information about the auction is publicly available. This information is obvious to all, market participants can play both in favor of the artist (subject to high-profile record sales), and against him (if unsuccessful – low price or withdrawal from the auction). Information spreads instantly, and many art market participants learn about what happened.  The volume of the art market is usually assessed by auction bidding, because they are probably the only reliable sources by which to estimate the volume of the art market. About the formed prices for certain works of art (the same date of publication, quality, size, etc.) can be said in the presence of 7-10 sales of works of analogues. A single sale cannot be a final price, as it can often be made for non-objective reasons – excitement, rivalry, desire to possess, etc.

The activities of auction house for a long time formed a special culture of action, especially characteristic of the sale of works of art.

A separate but extremely important subject of the market within the framework of cultural mediation is the patron of the arts. Patronage of arts is the targeted support of specific people, projects, or social fields of activity. Philanthropy is usually not a professional sphere of a person’s activity.  A patron of the arts is able to have a significant impact on the development of artistic life in society by patronizing and promoting certain art and certain artists. In terms of the functions it performs, patronage of the arts is able to influence in many ways the personality of the artist and the preferences of the public, shaping public tastes, including those of future generations. A patron of the arts, as a non-professional art connoisseur in the first place, often has either the power, the material resources, or other means of influence to inculcate his artistic preferences in the public and influence the direction of artistic life in society. A patron of the arts most often has a large collection of art, which he exhibits at his own showroom, with the aim of introducing a particular artistic style, movement or persona to the public.  A patron may benefit financially from the sale of works of art.  He often donates works of art to various addressees – state structures, museums, private individuals, previously acquired works of art.

Price-forming function of art market

Artwork is one of the first varieties of crafts. Crafts “according to the stages of the social division of labor are usually subdivided into home craft, custom craft, and market craft”. In other words, craft is labor that involves material compensation for labor. At the same time, a work of art is the objectification of the artist’s talent and creative abilities, the objectification of artistic ideas and images into a unique expressive form. Any work of art is unique. The uniqueness of a work of art, determines not only its spiritual value, but also its material value. Awareness of this fact was the reason for the emergence of the art market. Thus, we can also argue that it is the art market that has developed a system of care about the objects of art, by defining the value inherent in them.

It is known that there are subjective and subjective values. Object values are everything that has an embodied quality, a material thing is in a certain sense a value that is characterized by the social function of this thing. A subjective value is a material value. There is a concept of economic value. Economic value is not the price of a commodity. Economic value includes not only tangible value, but also intangible value. The use value or utility of a thing or service depends on the relative importance of the need the item or service serves and the extent to which, it satisfies the need. Cultural values are cultural values that are created by man to meet man’s spiritual and cultural needs. Spiritual and cultural values are subjective values. They tend to be values of consciousness. It is customary to include the values of the moral, religious, artistic, scientific and so on. Spiritual values, formed in a concrete and historical cultural context, act as models that are approved and sought to be followed. Externally, values appear as properties of an object or phenomenon, but they are inherent in it not by nature, not simply by virtue of the internal structure of the object itself, but because it is involved in the sphere of human social being and has become a bearer of certain social relations.

It can be stated that a work of art combines all the above-mentioned values. When a person buys a work of art solely to conform to social status or, to decorate an interior, he uses the functionality of the painting.  A work of art also has some added value, abstracted from the object itself; everyone sees something different in it. And in this connection, works of art have no functional value, being rather an object of passion for the individual. Art, as a form of social consciousness, is a subjective value, based on artistic values, designed to meet the aesthetic needs and demands of the individual. But, in one way or another, a work of art has a material value, which depending on the subjective value can remain unchanged and even increase to a great extent. In determining the value of art it is necessary to consider categories related to rarity, uniqueness, impossibility of reproduction. It does not lose its use value with the centuries.  A work of art, even when it is priceless, still has a material equivalent. This also means that the remuneration received by the artist for his work determines not only the material value of the work, but also includes the moment of awareness of its subjective cultural and artistic value. Paul Gauguin, the world-famous artist, once wrote about painting: “It combines all emotions, enjoying it, everyone imagines a story according to the power of his imagination, and once he looks at it, his soul is overwhelmed with the most heartfelt memories. This is not due to memory, but all this is already imprinted in the work of art. It is extremely difficult to evaluate such emotions, they are different for everyone, and at the same time the price of a painting does not yet determine this transactional-energetic capacity.

In every sense, the economic side of the approach seems secondary to the artistic and aesthetic side. But even the opinion of a narrow circle of professional public, represented by art historians, critics and experts cannot be the only true one, the market is formed by the common consumer, that is every person has the right to judge the value of a work of art, by purchasing it or not at a certain price. And at the same time, by buying it, the consumer indirectly influences the development of the artistic process. Many artists cannot refuse the temptation to create to please the public. Here, the balance between wanting to be sincere in one’s art and at the same time popular with the public, has at all times influenced the artist and, therefore, the entire artistic process.

The rise in art prices is also determined by the fact that the works of particular artists, the market leaders themselves, are becoming increasingly scarce. In this case, the strategy of investors is to speculatively increase the price of the artist by acquiring as many of his works as possible. Collectors and dealers often monopolize the market for a particular art in order to maximize their profits.

It is important to note that the art market is divided into two groups of influence – buyers and sellers. The sellers in turn are not only auction houses and galleries, but also potential sellers – the collectors themselves. There are fewer and fewer good works on the market, because most of them end up in private collections and museums. Many collectors have no immediate plans to resell their property. Just as once in a museum, a work of art remains there forever. It turns out that sellers and potential sellers have a favorable environment for speculative price increases on what they are about to sell.

The regulatory function of the art market

It is well known that the market must regulate supply and demand. The higher the level of skill an artist achieves, the more in demand he is. This is logical. An artist who is unable to produce the goods society needs will be forced to move to another sphere of activity. The term “demand”, which the author often uses in this study, is nothing more than the matching of supply and demand for a particular good or service. One of the most important criteria of the artist’s demand is his employment, engagement – a system of attracting intellectual and creative resources to create, promote and sell cultural products to meet the spiritual needs of society. Types of engaging differ according to the source of funding: public, private, mixed. Engagements can also differ in terms of goals: social, non-commercial, commercial. Social and creative order is the most tested type of engagement. In this connection, the question of freedom of creativity arises. Freedom of creativity is the principle according to which the author of an artistic work is free to choose the direction of his creativity, themes, use any visual means and artistic techniques that he considers the most appropriate to achieve the chosen creative purpose. But it is impossible to talk about the absolute freedom of creativity of the artist, because he is a derivative of his culture. He is always limited by the value and normative base of the art of his time. But it is through interaction with it that the talent of the artist is formed.

The regulatory function of the art market also implies the direction of the national economy, namely the nature and level of development of education, mass information, and legislation in the field of culture and art. The demand for an artist is directly related to the presence of demand, and demand, as we saw earlier, also depends on many factors not directly related to creativity. The public as a social organ for the perception of art, including collectors, will only appear where the conditions are created for it. A product cannot “find” its purchaser on its own, that is why the market creates conditions for rational movement of goods from producer to consumer. The most important condition for the successful functioning of the art market, as well as for any other market, is the formation and development of its infrastructure, which provides the promotion of goods from producer to consumer, which creates the need for artists and their work.

The formation of the developed infrastructure has to start from the state policy in the sphere of culture and art, not only correctly realized by the ministries and other state bodies (including various state awards, grants and subsidies), but also creating economic and legal prerequisites for the development of the patronage of art and business activity in the sphere of culture and art. There should be real incentives in society for the emergence of charitable foundations, galleries, and general support of culture by business. It is a question, first of all, of the tax and legal base, creating favorable conditions for the development of the above mentioned. The tax base also should be favorable for the export and import of art works to and from the country. This implies legal transparency and protection of all subjects of the art market.

Much must be done in terms of training of professional staff for this sphere. This refers to quality education (universities, libraries, conferences, lecture halls, etc.) in this sphere for all the actors of art-market starting from artists, curators, art-managers, art critics and ending with the formation of the general high level of education determining the general high demand for art, which is the public. Here the financing of state museums, allocation of funds for restoration, purchase of new exhibits, organization of exhibitions, technical equipment, etc. is not insignificant. Or, as already mentioned above, the creation of conditions for transferring these functions to the business environment.

Stimulating function of the art market

The market encourages producers to create the economic goods society needs at the lowest cost and to make sufficient profit.

The proportion of people who are constantly interested in art is quite small. The fact is that the needs that art satisfies are not vital and existential; a person can live without them. Recall that according to the authoritative opinion of J. Heisinga: “Human culture arises and unfolds in play. And collecting also – there is a game. And “Play is a kind of excess… At any time, play may be postponed or not take place at all. Play is not dictated by physical necessity… It lies beyond the process of immediate gratification of needs and passions.  It turns out that the circle of people who form the demand for art, on the one hand, is quite narrow, but, on the other hand, art also performs social connections and can act as a translator of various current states of society; consequently, the demand for works of art can vary significantly, depending on the development of the art market.

At the same time, the market seeks to profit, therefore, focuses on the majority, which inevitably leads to a decrease in the quality of the artistic product, it’s massing. Another important market element is competition, the phenomenon when market players compete with each other for the market. With regard to the topic of this study, this implies a rivalry between artists for the attention and recognition of the public, the consequence of which is an increase in the number of orders and sales of works of art.

“Can an artist be a universalist? And create for himself, for the chosen few, and for the public at large at the same time. Theoretically, yes. Practically, less often. As a rule, it is easier to combine the first goals and separately put the third. In terms of marketing, the first and second cases are called “offer marketing.

The leading role is played by the branching and professionalism of the overall market infrastructure, which today can be represented in the form of the following diagram:

The sociocultural function of the art market.

The art market is concerned with the sale of works of art, but the influence it exerts goes beyond the material value alone; directly or indirectly, it affects all subjects of artistic communication. It has become clear that the multifaceted nature of art communications lies primarily in the interpenetration of their various forms. In a way, the art market is an applied factor in the integration of artistic reality into real daily life. It is the mechanism without which it is impossible to imagine the normal functioning of art and its main subjects: the artist and the public. The art market has taken various forms of its realization at different times. As an important, but not the leading part of artistic communication, its place in artistic mediation has depended on the development of other forms of this mediation. At the same time, none of these forms of mediation contradicts each other, but is a necessary condition for maximum effectiveness of the overall result. The peculiarity of the art market is that it is not only a system of economic but also in many ways a system of cultural relationships in which not only the supply and demand for art objects are formed but also their aesthetic, spiritual and cultural value.

A person’s attachment to culture occurs through sociocultural activity.   In this sense, the art market is a vivid example of active and diverse sociocultural activity, which is realized in different cultural and historical epochs in appropriate specific forms.

So, we have considered the phenomenon of the art market in terms of its functions. These functions are realized synchronously, so it should be noted the poly functionalism of the art market. The art market is a complex and multifaceted sociocultural phenomenon, which has a significant impact on the artistic and cultural life of society. Since a work of art can be an object of purchase and sale, participate in commodity exchange, there can be a demand for it, and it can compete with other works of art, we can also talk about the art market. Promoting the artist on the art market is a necessary element of the artistic life of society. There is an opinion that “there is no point in producing art if you don’t exhibit and sell it: inner contemplation and meditation are sufficient then. Art is focused on creating value and selling it.”

For artists, the problem of their promotion on the art market has always been relevant. The very notion of promotion is not a scientific term from the point of view of cultural studies. Let’s try to outline the boundaries of what will be understood under the word promotion within the framework of this study. The promotion of an artist on the art market implies a set of the following actions:

• Creating, broadcasting and implementing in the consciousness of the public the necessary personal image of the artist;
• informing about the quality and level of products created by the artist, confirmed by the expert community;
• stimulating customer activity through demonstrations, screenings and exhibitions;
• Justifying the price of the artist’s work.