Market Monday: Crowd Control

This week, three stories that achieved the rare feat of pulling much of the industry into the same heated conversation...

HARD KNOCK LIFE: On Valentine's Day, Anna Louie Sussman delivered a feature that explored the provocative question doubling as the piece's headline: "Can Only Rich Kids Afford to Work in the Art World?" She catapults into this prompt off two findings in a recent New York Times report about the financial realities of 22-24 year-olds in the post-recession era. According to a study analyzed by the Times's data-journalism shingle, The Upshot, 53 percent of the people in this age group "aspiring to work in art and design" received ongoing subsidies from their parents, with the average annual amount clocking in at $3,600. Those numbers qualified art-strivers as the neediest industry-specific cohort among their peers, in both prevalence of aid and yearly dollars received from mom and pop. Sussman then buttresses this portrait of extraordinary hardship with the wrenching firsthand account of a former gallery assistant all but forced to take a higher-paying job as a financial-aid counselor at the vulnerable old age of 26, as well as ghastly statistics like the average annual salary of a Met research assistant ($34,300) and an entry-level staffer at Sotheby's ($40,000). Truly, the entire situation is one step away from Les Misérables. 

In case the sarcasm in that last paragraph didn't leech through your device screen, allow me to introduce Pulp Fiction's Jules Winnfield as my no-frills, NSFW translator. Don't get me wrong. I'll be the first to agree that the 21st-century art industry is a slim-odds, winner-takes-all affair, whether you're creating work, exhibiting it, or selling it. But as a public-school teacher's son who rode the bus in LA and slept on his brother's floor until he got his first art-world promotion, I have zero sympathy or patience for the argument that it's just too hard for everyday people to succeed in the arts anymore. Instead, I can only respond by relaying the economics community's notion that, contrary to popular belief, anyone can "afford" anything they want. It's just a matter of whether they're willing to do what they need to do to make up the difference. 

Still, there's a substantive point to be made via Sussman's article, albeit indirectly: namely, that we have entered an era in which many people believe that the fine arts should operate by the same career-track rules as industries like finance or consulting. The art world is still nowhere near the level professionalization that would justify the fiscal victim-narrative now taking hold, but it has become glitzy and mainstream enough in the past 15-20 years to create that illusion. This represents a major change from previous generations, when no one competent enough to stand trial would ever expect a life of stability from an art career. Despite the recent shift in optics, though, aspiring curators, dealers, and arts entrepreneurs of all kinds would still be wise to keep in mind the same thing that artists themselves understand all too well, or should: very little of real value has ever been made from a position of comfort. So if the stress and uncertainty of a few lean years in your early twenties is enough to scare you away from working in the arts, then bailing early almost undoubtedly leaves both you and the arts better off in the long run. [Artsy]

ROUND + ROUND WE GO: Apparently intent on doubling up the holiday troll job, Artsy ran a second piece on February 14th that re-energized the increasingly tiring debate over "art flipping," or rapid resales by the group I refer to as COINs (Collectors Only In Name). In it, traditional industry insiders Thaddaeus Ropac and Todd Levin clash swords with purported art-acrobats Stefan Simchowitz and Bert Kreuk (whose path to infamy I wrote about here). The former duo essentially argues that flipping is a cancer that should be eradicated from the market. The latter duo argues that it's a defensible tactic of modern collecting at the very least, and at most, a public service that scandalized dealers should thank them for performing. 

Meanwhile, every successive time I encounter this alleged controversy––FYI, it gets written up about once every two months, or just slightly more frequently than the overhyped practice of selling art through Instagram––I feel more and more like the exasperated cops in this eerily appropriate clip from The Usual Suspects. The truth is that, to some extent, both sides are running what my grandfather would call a snowjob. On one hand, many gallerists and dealers––even the most respected ones––"flip" work all the time. In fact, when it comes to secondary-market dealers, reselling at a healthy profit as quickly and as often as possible is literally their entire job description. The good ones are just a hell of a lot more discreet and strategic about the practice than human megaphones like Simchowitz and Kreuk.

At the same time, the most prominent flippers' commitment to regularly muscling into the press cycle distorts reality in the opposite direction. By the definition observers think of in the context of Simchowitz and Kreuk, "flipping" requires the art market to be uptrending, if not boiling over. It's impossible to play resale hot potato unless buyers are lining up in a frenzy to acquire work by young and unproven talent, often because they see the transaction as an arbitrage opportunity. That's not where we've been since at least mid-2015. Which means any dealer running this strategy needs to consistently manufacture the illusion that he and his business model are more formidable than they really are, like a howler monkey inflating his throat sac to maximum-bellow to attract potential mates. I'm not saying flipping hasn't changed the industry, or that all dealers behave equally recklessly. I just think it's a waste of time to spend month after month, year in, year out, fighting over the avatars of a largely cyclical phenomenon.  [Artsy]

ENDURANCE TRAINING: Finally this week, less than a month after its executives pounded their chests about buying their independence back from newly insolvent parent company Auctionata, Paddle8 "gutted" its staff with a fiscal meat hook that stretched across three coasts and two continents. According to Nate Freeman, the firm eliminated "dozens of staffers in their three offices, in New York, London, and Los Angeles" since February 1st, with select departments being reduced to one-person operations. Although a Paddle8 spokesman portrayed the move as a necessary step in the company's efforts to break free of the Auctionata merger, it's noteworthy that the purge was either accompanied or preceded by the departure of co-founder and ex-CEO Aditya Julka, as well. (Julka will reportedly remain onboard in an advisory capacity, to the degree that that's anything other than a face-saving PR smokescreen).

As Freeman points out, Paddle8's skin-and-bones makeover now represents the third well-known art-industry startup to enter crisis mode this year. Aside from Auctionata's bankruptcy, Artspace laid off "nearly all" of its staff early last month, including former editor-in-chief Andrew Goldstein. Incidentally, Goldstein materialized in the same position atop artnet News's masthead just a few days prior to the Paddle8 bloodletting, but I highly doubt most of his old colleagues at Artspace have found their footing again so quickly. 

Much as I'd love to hold forth about the structural reasons this type of art-tech massacre was inevitable, doing justice to the subject would demand far more real estate than I have in this format. (Side note: 25 pages left to edit in my book about it.) In the interim, unrealistic as I know it is, both Paddle8 and the larger startup struggle make me wonder if we shouldn't apply the same principle to covering online art-sales platforms that many veterans wish we would apply to covering emerging artists: namely, to wait until they manage to stay relevant for 5+ years before we decide to pay any real attention. [ARTnews]

That’s all for this edition. Til next time, remember: The crowd has its own logic, but logic isn't everything.