Art: it’s a jungle out there. Fortunately, Magnus Resch – dubbed “the world’s leading art market expert” by CNN – is here to help. Recently, the Yale professor published the book How To Collect Art, a no-nonsense resource for individuals navigating the complex intricacies of the art market. It’s the latest in his series on art and business, which includes titles like Management of Art Galleries, How to Become a Successful Artist and How To Collect Art, all of which advocate for transparency in the art world.
Magnus Resch: Connecting with fellow artists is a pivotal aspect of your role. We analysed 500,000 artists to uncover the key to success: it lies in the network an artist cultivates. Although competition among artists is common, establishing your own community and fostering mutual support is crucial. When you view your artist friend as part of your community and recognise the potential for collective growth, it’s important to back their work and consider exchanging artworks.
MR: While it’s flattering to receive a commission request from a collector, it can swiftly turn into a source of frustration. Collectors often come with specific ideas that may constrain your creative freedom. So I highly advise establishing clear guidelines upfront, and a Commission Agreement is invaluable for this purpose. It should include three key components: firstly, upon contract signing, it’s prudent to request a small non-refundable fee, typically around 10% of the total work price. This ensures the collector’s commitment and safeguards you from undertaking unpaid work. Secondly, once both parties agree on a proposal, such as a sketch or a 3D rendering, you should get 50% of the fee. It’s crucial not to skip this preliminary step before embarking on the actual artwork. Involving the collector in the process from the outset helps manage expectations. Lastly, commence work only after receiving this initial payment. The remaining fee should be settled upon completion of the artwork.
MR: Typically, rent constitutes the highest overhead for galleries, followed by salaries, fairs and transportation costs. Gallerists often adhere fervently to the belief that establishing a presence in a central location within a major city, where rent is highest, is imperative. In fact, 81% of galleries in larger cities opt for prime real estate locations. However, it’s noteworthy that the majority of visitors to these galleries lack potential as buyers. Genuine potential clients usually plan their visits in advance rather than appearing randomly. Given these factors, smaller galleries in particular must question the rationale behind maintaining expensive space in prime locations, especially when the benefits are relatively modest. Consequently, for smaller galleries, exploring options like short-term rentals, smaller spaces or shared spaces can prove prudent.
MR: Art fairs have emerged as the primary distribution channel for galleries, with many generating up to 50% of their annual revenue from these events. However, for smaller galleries in particular, participating in fairs can easily lead to financial losses due to high costs associated with booth fees, travel, transportation, staff, and insurance. If cost reduction isn’t feasible, it’s advisable to reassess whether your work aligns with the fair and the other galleries exhibiting there. Each fair has its own profile, and it’s possible that your offerings may not be a good fit. Additionally, consider the strategic placement of your booth within the fair, as galleries often report significant changes in revenue based on their location. Seek feedback from colleagues who have participated in the fair to gauge their experiences. If you’ve reached a point where you’ve tried everything to enhance your situation, it may be wise to attend only those fairs where you’ve previously left with a profit, rather than relying on intangible future profit potential.
MR: Investing in art can yield significant returns, particularly for artists represented by a handful of elite galleries at the top of the market. Notably, our findings reveal that just 20 artists contribute to 50% of the total auction revenue. The vast majority of artworks – comprising 99.9% of available pieces – do not necessarily offer the same level of investment potential. While it’s advisable to purchase pieces that genuinely resonate with you, my book How to Collect Art explores strategies to prevent overspending on art acquisitions and maximise the value of your investments.
MR: Absolutely, it’s perfectly acceptable to request a studio visit to get to know an artist’s work better before making a purchase. Studio visits offer a unique opportunity to engage with the artist in their creative space, gaining insight into their process, inspirations, and the context behind their artwork. Additionally, it allows you to see a broader range of their work than what may be available in a gallery or online. Many artists and galleries welcome studio visits as they foster a deeper connection between the collector and the artwork. Simply reach out to the artist or gallery to inquire about scheduling a visit.
MR: I refer to it as responsible buying – an approach where purchasing art transcends mere financial transactions and becomes a philanthropic gesture. Instead of viewing it solely as an investment, I see it as a form of donation, understanding that I may not be able to resell the piece. By acquiring artwork, I support the artist and their gallery, enabling them to sustain their creative endeavours. This, in turn, fosters a vibrant artistic community, encouraging ongoing exploration and expression of human creativity. For me, it’s a means of contributing positively while also gaining an object I cherish and a story to share.
How to Collect Art by Magnus Resch is published by Phaidon and is available now. phaidon.com
