• << Back to Articles for Collectors

Art, Money, Shepard Fairey, Banksy

and the Quest for Clarity

or

Adventures in Art Market Comparison and Analysis

(Note: Do you "invest" in art? Are you amazed how fast art sometimes goes up in value? Well, if you like to speculate, then here's a tale of two artists and their respective markets that might give you a little insight into how the art world works...)

What is it about art and money anyway? Artists agonize about how to accurately price their work. Collectors anguish over whether the art they buy is worth what they pay for it. Even dealers perplex about which side of the fine line their price strategies come down on-- reasonable or preposterous. In fact, we all have moments when we wonder whether art is worth anything at all.

The relationship between art and money can indeed be confusing, especially if you're not familiar with the business side of things, but if you look carefully at how the pros assess and evaluate art and its markets, you sooner or later realize that methodology almost always triumphs over conjecture. In fact, the art market is overwhelmingly orderly no matter which side of the creative equation you're on-- producer or consumer. Sure the routine goes a little haywire every now and again, but it returns to vibrant health each and every time. And yes, pesky itinerant opportunists are always on the lookout for neophytes to flimflam, but not even the most virulent among them can survive that transcendent one-two punch-- connoisseurial concurrence and the passage of time.

The art and money affiliation starts out innocently enough, pure and virginal; the easiest art markets to decipher being those of artists at the outsets of their careers. At these early stages, values are based primarily on physical considerations like studio rents, costs of equipment and materials, how long art takes to make, what size it is, and the like. Geography also factors into the equation somewhat as cost of living varies by region. Simply put, if your cost of living is low, all else being equal, you can afford to charge less for your art. Additionally, certain insular regional scenes may layer on entry-level surcharges, for example, in locations with uncharacteristically high percentages of galleries like Carmel, Scottsdale, Laguna Beach, or Santa Fe.

Beyond the beginning, however, the artscape complicates fast-- about as fast as dealers, curators, collectors, prognosticators, and critics insert themselves into the paradigm. Suddenly in addition to concrete facts about the art, you have third party concerns to contend with including opinions, politics, connections, influence, who owes who, who has access how many $$$, and fuzz like that. So begins a wondrous period of market mayhem-- mild style-- that interval which starts when an artist first "gets noticed," continues as the artist determinedly endures year after year of making and showing art, and hopefully concludes with that artist proving his or her mettle to the extent that cognoscenti who count declare them "here to stay." In the meantime, clarity of perspective remains elusive, and about all anyone can do is speculate on what might one day be, based on what's happened so far.

In a sense, all art is priced speculatively. Since art has no tangible value, significance can only be ascribed, never quantified. But there are degrees of speculation-- ranging from realistic and fact-based to incomprehensibly incongruous. For example, under normal circumstances, price levels for artists at various stages in their careers increase orderly and incrementally according to convention, i.e. according to how prices for artists who preceded these artists increased orderly and incrementally, according to advances in their careers, and so on and so forth-- it's kind of like tradition. Of course any artist can change direction or even stop making art at any time, career moves like that constituting the wild side of the speculation game, but generally, the chances of unanticipated occurrences decrease the longer an artist is around. And generally, prices rise predictably according to each successive success an artist racks up including notable one-person shows, museum exposures, published monographs on their work, and so on-- the amount of any given price increase proportionate to the significance of the respective accomplishment. You follow me? Good. The boring part of the article is now officially over. Time to get twisty with a little comparative art market analysis from a speculative perspective.

Take Banksy and Shepard Fairey, two undeniably influential urban talents, both with careers firmly rooted in outdoor art, both active for about the same periods of time, yet the makeup of the current markets for their respective work could not be more different. Now I don't claim to be an authority on the evolutionary intricacies of either artist's career, but maybe that's a good thing, kind of an unaffected outsider-looking-in kinda thing. Because when I look at these two, I see the entire speculative continuum of art and money in microcosm with one artist securely ensconced at each end of that continuum.

On the Shepard Fairey end you have a market that proceeds about as orderly as any artist's market can, progressing gradually, show after show after show, with no abrupt price fluctuations, no radical shifts in philosophy or in the art that's presented-- always on point, on message, on topic, on target, and most importantly, on audience. Yes, prices have increased over the years, but predictably so, and-- special added bonus-- pretty much anybody who collected Fairey in the late 1990's can still collect him today. In other words, by playing to everyone who shows any level of interest in his work, from fresh converts to steadfast devotees, he retains, solidifies, and grows his collector base. Reasons for the controlled rational nature of the Fairey phenomenon likely revolve around the artist and his core beliefs about art, but could also include guidance from dealers, collectors, his fan base in general, and related qualified "advisors."

This isn't so much about Shepard Fairey, by the way, as it is a classic example of art market stability. Fairey's produced (and continues to produce) an abundance of art, made thousands of sales at a variety of price points, has a proven track record, and certainly appears committed to the lifestyle for the long haul. His sales history and career progress are easy to document, the market for his art is a picture of health, and his creative legacy is practically a foregone conclusion. In other words, speculating on the subsequent course of Shepard Fairey's career is about as close as you can come to not speculating at all.

Now hold on to your hats 'cuz here we go. On the opposite end of the continuum is Banksy, recently the art world's speculative acme-du-jour. Not that long ago, his art was selling for pocket change and today the ante is well into the tens of thousands of dollars just to play a hand. But what's the game?

In 2006 came Angelina Jolie's highly publicized patronage at Banksy's monumental Los Angeles show to the tune of some hundreds of thousands of dollars. That certainly ignited the market, but did it mean anything? Did it lend credence and durability to the market for Banksy art? Not really. It was little more than Hollywood headline hype-- big hype for sure-- but hype just the same. Jolie is not known for her art collection and her acquisitions certainly don't impact the mindsets of art world stalwarts. Maybe if the buyer were Steve Martin-- a world-class collector-- things would be different.

Oh wait... you don't know what art world stalwarts are? They're loyalists of the highest order, people who would rather buy art than EAT, who devote their lives to collecting art and supporting artists, who understand what they collect as well as anybody out there, who continually contemplate and reflect on day to day developments with artists in particular and with the art world in general, and who are in the thick of the hunt until the ends of their days. And do you know how many people that represents? Not many. The truth is that only a small percentage of people who buy art do so in large enough ways to influence the course of collecting (and perhaps even of art history)-- as well they should. We like that level of experience, commitment, and dedication at the helm. The flip side, however, is that this small percentage can only support (and subsequently deify in perpetuity) a small number of artists. Furthermore, the deification process is slow and methodical, no matter who the artist, requiring decade after decade of accomplishment after accomplishment and success after success-- each and every instance subject to acute unforgiving scrutiny. Nothing ever happens fast-- at least nothing enduring.

Which brings us back to Banksy. Subsequent to 2006, his art escalated in value faster than pretty much any substance known to man. A price structure that topped in the low $1000's as recently as 2004 was exceeding $1,000,000 at the high end by 2008, with barely a rope footbridge to connect the two sides of the cash chasm-- a circumstance that's not particularly healthy for either the art market in general or for Banksy in particular. It's not the folks who buy Banksy at the high end of the chain letter that anybody should be worrying about-- they've got far more money than they do ways to spend it. It's Banksy-- his meteoric rise to mythic status and price structure to go with it uncompromisingly intensify the pressure to perform, to sustain the frenzy. Gobs of speculative $$$ suddenly ride on him too, many of which are fickle and prepared to go south at the slightest hitch. So here we stand, arms folded, toes tapping, waiting for his next big coup.

And let's say that next coup's a jewel-- and the next and the next. How high can prices possibly go? Two Banksy's have already sold for $1 million plus at auction... and in another couple of years? $5 million? $10 million? But wait, my artful darlings. Those two sales were in 2008, an interim pinnacle for the artist. Highest hammer price at auction for a single work of art since then is just under $350,000 (not including buyer's premium) as of this writing, July 16, 2012. Hmmmm. Has the dust begun to settle? You see, there's not a lot in the way of history or stability to fall back on, to hold in the heat, to preserve the status quo. And one more irksome detail-- step outside the vortex for a moment, look around, and you quickly realize you can buy exceptionally established eternally enshrined serious blue chip art for $350,000, not to mention $1 million plus. Yes, tunnel vision temporarily trumped reality, but at least prices have fallen back towards earth to a certain extent.

This isn't so much about Banksy, by the way, as it is a classic example of a market that's spiraled perilously out of control fueled by rampant speculation. Banksy's a major force in terms of advancing the envelope of what art is, especially on a popular level, but his market stability and continuity from longevity standpoints remain tenuous to say the least. His market is also proof that common sense can temporarily get caught up in the hubbub of the moment while whoever's in charge of the big picture decides to take a long lunch. Will the market for Banksy's art weather the storm to triumph and prosper? Will he go down in history as one of the most brilliant and influential outdoor artists of all time? Will big money buyers continue to feed the machine? Stay tuned.

So there you have it. The best way to learn about art prices is to critically honestly earnestly dissect and evaluate artist markets, one by one, until you begin to get a feel for the territory. Not only is there a realistic dollar value for everything, but there's also a perfectly logical fact-based explanation to go with it. It's that simple and no more complicated. And I wish both Banksy and Shepard Fairey long and continued success with their art.