[L-PROJECT] WHY ARTS CAN BE EXPENSIVE? -DIGGING DEEPER INTO WHAT IS THE PRICE DETERMINATION FACTORS?
Updated: Nov 25, 2021
An animated meme of a cat flying through the sky while leaving a rainbow trail named "Nyan Cat" was sold for USD 590,000 at a digital auction on February 19, 2021. This animation has been around in the digital world since 2011 and has been in the hands of the artist, Christopher Torres until an anonymous buyer finally bought it at a digital auction house. Since 2020, the demand and trend in buying digital art through cryptocurrencies are soaring high. Purchasing art using digital currencies are become common these days.
Many of you may think this article will discuss the cryptocurrency transactions behind the auction bidding at that digital auction house. Nope! This article does not talk about that kind of discussion, even though NFT or Non-Fungible Token is indeed an exciting topic in the digital market these days. Purchasing using digital currencies has been favored by many; digital artworks over USD10,000 have been sold online.
Still, the value of artworks in the physical market are no less than the digital. Salvator Mundi, a work of art by Leonardo Da Vinci, was sold at an auction by Christie's auction house in 2017 for $ 450.3 million. That makes this painting is the most expensive painting ever sold in auction history worldwide.
THE QUESTION IS, WHERE ARE THE PRICES COME FROM?
Artworks often raise questions for those not used to it, such as why painting can be expensive. What are the following factors? Can the artworks in my house be that expensive? What affects the price of the artwork out there? How could a work of art on a digital platform sell billions, or how could someone's painting sell for over a billion US Dollars at an auction?
The pricing of artwork may not be confused with the pricing of gold, stock, or wholesale goods found in many world markets. Even so, determining the value of an artwork can be based on a collective agreement between art operators (curators, galleries, auction houses, etc.) by considering various factors.
The historical value and the painter's name are certainly some of the factors that trigger the high price of an artwork, but that does not define that the more ancient the artwork = the higher the price. Compared to the works of well-known artists that are hundreds of years old, Nyan Cat is nothing, considering the flying cat's age is still less than ten years old. In a similar situation, Leonardo Da Vinci's paintings should not be more expensive than the works of other artists who may come from the early 10th century.
In the book "The Value of Art" (2014), Michael Findlay says that there are five indicators that can be used to determine the price of an artwork. Those indicators are noted as;
An artwork that has already changed hands to a second or third party and more will have its own added value in the artwork itself. History of ownership can affect the prices if the artwork has been in possession by a prominent figure, institution, auction house, or gallery. This ownership record will be attached to the artwork, and it can be seen by whoever owned it. The more eminent the name of the previous owner is, the more likely the price of the artwork will soar.
The condition of a painting or sculpture indeed can determine the value of the artwork itself. In his book, Findlay explained the differences between "good" and "perfect" conditions in terms of determining the art price. These ratings can affect up to 15 to 20 percent of the artwork's price itself. A "poor" condition artwork can even sink in price up to 40 percent compared to the artist's average price.
Famous paintings or artworks surely have many fake prints scattered everywhere and sometimes claimed by certain people using classical reasons that many art dealers may face, such as "My great-grandfather knew the painter Picasso, he gave him this painting straight away. It is always been here for a long time." If the dealers are not good observant, then that person can become suddenly rich like a windfall.
Anonymous paintings usually end up as decorative displays, and some people don't care whether the art is real or not as long as they like the design. However, different stories and prices will be told if the painting was signed by the original painter, backed with supporting factors of authenticity that art specialists usually examine.
Expensive works of art don't have to come from hundreds of years ago. A piece created by a new artist can also fetch a fantastic price at the auction. Of course, all thanks to the services of galleries or agencies that help the artist to get exposure. The more he is known, the more exhibitions he runs, the more countries he visits, and the more people who know about him, the more the price of the work he creates will increase. In this digital era, social media can also be a place to help artists spread their wings through virtual exhibitions that will have an impact on their values and their work.
Galleries and art dealers have a way to determine the quality of a piece of art. Commoners usually cannot judge whether that artwork is good or not because no one has the exact same experience while looking at the same artwork. An objective and academic approach are undoubtedly needed so that most art operators can meet the same agreement to determine the quality of an artwork.
Each auction house, gallery, art dealer, and art institution also have its own way of determining the price of an artwork. You'll also find lots of other methodological explanations out there about the price they charge for a piece of artwork.
Mikke Susanto, a lecturer at Gadjah Mada University, Indonesia, in the book "Why Are Painting Expensive?" summarizes some of the theories that determine the art price. From the four versions of theories regarding the art price indicators, Mikke concluded that there are three significant factors to determine the art price. Those three indicators can be listed as - personal (ownership, original signature, artist, artist's reputation, provenance, and artwork history), - product (condition, quality, authenticity, subject, size, techniques, ideas and themes, media, and style or flow), - and external factors (image distribution, market ecosystem, reproduction, demand, intermediary influence, and publication).