The truth is, there is no right way to collect art. If the work has emotional, social, and cultural significance then its value is intrinsic and can’t be determined by numbers. At Art & Light, this tends to be how we collect, but there are other considerations many collectors make. Let's dive into one we get asked about all the time...Financial value and potential investment value over time.
When thinking about collecting art as an investment, it’s important to understand the commercial value of the work.
The commercial value of art, in simpler terms, is its market value or cost. When talking about the commercial value of art there are two separate markets where numeric value is determined.
The primary market is controlled by the artist who determines the price of the work. Galleries in the primary market, like Art & Light Gallery, can be part of helping an artist to establish the value or price of the work. The primary market value is based on the artist’s exhibition history, sales history and career accolades. Generally, the more exhibitions and collectors an artist garners, the higher the demand for the work, the higher the price of the work.
The secondary market describes all successive passages of the artwork after the initial exchange between the artist and the original collector. In the secondary market the price of the work inevitably follows demand and supply. Secondary market value is mainly determined by galleries and auction houses. It’s in the secondary market that artwork is resold and value is established based on the history of pricing, historical importance, and history of ownership. This is where demand and supply comes in . . . The more an artist’s work is included in museums and major collections, the less of that artist’s work is available for sale in the market, the more value that artist's work has.
Many (most) artists work for decades (as in sixty years) to establish the sort of career markers that make their work viable in the secondary market. So when collecting from an early or mid-career artist there is no guarantee that one day your grandkids will sell it in an estate sale and suddenly make 1.5 million on the work. This takes us back to why we collect art in the first place.
What will be meaningful to you in the long run will be the same instincts that drew you to the artist and the work in the first place. By all means follow the artist’s career and be sure to ask for a certificate of authenticity when you purchase work. When you have your collection appraised, evidence of provenance will be important in establishing the value of the work. Your collection will never lose value but it will most often take many years for the artwork to gain a significant profit.
By purchasing original artwork you are part of helping to establish the artist’s career and ultimately their success. Original simply means made by the artist, not reproduced from an original. When purchasing artwork, understanding how the work was made will help you to determine if the work is original, help you to connect with the artist’s process, and give you some insight into the artist’s established pricing. Keep in mind that as an art collector you are building a legacy that can be handed down generationally.
So what do you want your collection to say about you and what do you want to leave behind?
Written by Liz Rundorff Smith