One of the most celebrated artist/collector confrontations of the 20th century occurred at Sotheby’s (then called Sotheby Parke Bernet) in New York on October 18, 1973, when taxi-magnate Robert Scull was selling 50 paintings from his well-known collection of Pop Art. Pop had captured the public imagination during the latter part of the 1960’s, and the Scull auction was the first of what would become contemporary art auction events, with celebrity attendees and artists receiving major press coverage.
Robert Rauschenberg was one of the hottest artists to emerge in the 1960’s, and his painting Thaw was among the works being sold by Scull. The collector had purchased the painting for $900 fifteen years earlier. At the auction, it sold for $85,000. (What would it bring today — $15 million? Readers are encouraged to contact me with their ideas.)
The proceeds from the sale, of course, would go completely to Scull, the painting’s owner, and Rauschenberg was incensed. “For Christ’s sake,” he declared, giving the collector a not-so-friendly shove, “you didn’t even send me flowers! I’ve been working my ass off for you to make that profit!”
Scull answered, laughing, “How about yours that you’re going to sell now? I’ve been working for you, too. We work for each other.”
Rauschenberg was having none of it. “You buy the next one, OK?” he demanded. “At these prices. You buy the next one.” Scull placated him, and they ended up hugging, but the issue has remained a sore point with artists.
Three years later, due to lobbying by artists such as Rauschenberg, the State of California passed the Resale Royalty Act, requiring that living artists (or their estates, if the work is sold within 20 years of the artist’s death) must receive 5% of the resale price when their works are sold.
The act was unpopular with collectors, as might be expected, with some of them saying that in fairness an artist ought to be required to reimburse a collector by a similar percentage if his artwork were later sold for less than collector originally paid. Dealers confidently predicted the end of the contemporary art resale market in California. In the end, nothing much happened. Since the act applied only to sellers residing in California or to sales taking place in California, it was easy enough to evade the royalty by having a sale take place out of state.
In 2011, a group of artists or their heirs filed suit against Sotheby’s and Christie’s, since both auction houses had branch offices in California, for failure to pay royalties for California artists’ works sold at their New York Venues. The suit was dismissed on the grounds that the Resale Royalty Act violated the Commerce Clause of the U.S. Constitution, and the verdict was later upheld on appeal.
Royalties on resales may still be a pipe dream on the part of American artists, but resentment at enormous profits made by collectors is still alive and well, rare though such occurrences are as a percentage of total resales. In this matter, artists are joined in their irritation by dealers who object to speculators flipping a painting bought only a few months earlier for an “obscene” profit.
Dealers have a motive other than resentment at profits to object to feeding frenzies. They want steady growth in the prices and careers of their artists, and a sudden spike in demand can become a case of Too Hot Not To Cool Down. Sure, there’s a lot of publicity when an artist gets hot, the kind of advertising you can’t buy, but a sudden cooling off of interest is also noticed, and there is always a certain Schadenfreude among art-world spectators when a string of failures at auction indicate that last year’s Hot Young Thing has become today’s Has-Been. (See my blog of four years ago.)
Dealers have therefore tried to prevent flipping on the part of their clients. I’ve heard of dealers telling buyers, “If you consign this work to auction anytime in the next three years, you can forget about ever buying another painting from me.” Such a threat, obviously, has no means of legal enforcement, and any teeth in the warning assumes that the dealer will have in-demand artists and a steady cash flow in the future.
Now, however, there’s a new anti-flipping push in a market that’s been red-hot for the past few years: contemporary African and African-American art. Christie’s currently has an on-line selling exhibition, “Say It Loud (I’m Black and I’m Proud)”, dedicated to the promotion of contemporary black art. According to the show’s curator, Destinee Ross-Sutton, buyers are required to sign a contract agreeing not to resell the work at auction for at least five years. They must give the artist right of first refusal if they decide to sell the work privately, and the artist must receive 15% of the profit on a sale to a third party. Christie’s says that 75% of the works have been sold so far, and one assumes that the buyers have been willing to sign the required contract.
Is it the start of a new day in the art business? I’m skeptical. The works in the Christie’s show aren’t big-ticket items; they range in price from $475 to $43,000. When there’s a chance that works can be flipped for profits in six and seven figures, high-priced lawyers will be called in, and artists (and their dealers) may find that enforcement of anti-flipping provisions may involve more in legal costs than such enforcement is worth.
High-profit art flipping takes place in the stratosphere of the contemporary art market, a tiny level where reputations and Who’s-About-To-Be-Hot are decided by machinations invisible to mere mortals like ourselves. I’ve likened attempts to predict coming hot artists to attempts by day traders to pick tomorrow’s hot stock. Unless you enjoy gambling, forget about such things and remember that most contemporary art will never be worth more than you paid for it. Buy art that gives you pleasure every time you look at it. If you want to talk through your artistic likes and dislikes with me, give me a call.
