Selecting an artwork may be based on intuition or an emotional response, but before choosing an artwork you must consider where you want to obtain it from – the primary or the secondary art market.
by Chava Krivchenia
When starting as a collector, purchasing your first artwork is exhilarating. Bringing the piece home, choosing where to install it, you realize the artwork will continuously add to your day-to-day life. It has the power to alter your mood when you are working in your office, waking up in your bedroom, or enjoying your morning cup of coffee. Selecting an artwork may be based on intuition or an emotional response, but before choosing an artwork you must consider where you want to obtain it from.
The use of jargon in the art market, similar to the economic market, may seem confusing and at times incomprehensible. Usually, the terms that sound vague or ambiguous are just shorthand for specific concepts. An example of this being the meanings of and differences between the primary and secondary art markets.
The most bare-bones definition of the primary and secondary markets is that the primary market represents the selling of capital which has never been sold before. The secondary market is the re-selling of capital, artwork which has been valued and sold on the market before. Within the art market, the primary and secondary markets have key characteristics and differences to consider as a collector (or an artist) in addition to this rudimentary definition.
The primary market implies that the artwork being sold has never been bought before, and often is coming straight from the artist’s studio. Agora Gallery works exclusively with emerging artists, making the gallery active in the primary rather than the secondary art market. Depending on the focus of a specific gallery or collector, they may strategize to solely participate in the primary or secondary market, but it is also common to participate in both.
As a beginning collector, it is helpful to understand the nuances of both in order to strategize your purchases. Part of the decision to participate in either market depends on a collector’s motivation and intention when purchasing artwork, such as financial investment or the support of an artist’s career.
When purchasing an artwork in the secondary market, the purchase involves the artwork and the financial and artistic history of that artwork. Over time, an artwork may increase in value depending on the value and availability of the artist’s other works. Historical events that may alter the value of an artwork in the secondary market include (but are not limited to): the reputation of collectors who have purchased the artist’s work in the past, and the purchasing or exhibiting of the artist’s works by art institutions such as museums. As a successful artist and collector, the desired progression is for an artwork to gain value each time that it returns to the secondary market.
If the progression of an artist’s career does result in economic success the primary market selling price of that artist’s artwork is the lowest price that a particular artwork will ever have been sold for. Since the primary market is the lowest an economically successful artwork will ever sell their art for this is often the most affordable the artwork will ever be, which is one benefit for individuals who have a limited budget or are just beginning to collect.
The primary market involves artwork that comes directly from the artist and their studio. Not only is the primary market more possible for emerging artists to become known through, but it is also the only market in which an artist receives direct payments for their artwork (unless they were to collect their artwork from the secondary market). Artworks sold through the primary market can be bought at contemporary art fairs and the galleries who represent the respective artists. Art sales at galleries, such as Agora, who support emerging artists or sell artworks from an artist’s studio are a part of the primary art market.
Auction houses such as Sotheby’s and Christie’s are predominately participants in the secondary art market. An atypical exception of this is the artist Damien Hirst’s direct selling of his artwork to an auction house, cutting out his gallery representation in the middle. Auction houses predominately sell artworks that were once a part of a private or public collection. When an artwork is sold through the secondary market the profits go to the seller or previous owner of the artwork, not the artist. Indirectly, the increase in the value of a sale in the secondary market may increase the value of artwork an artist sells in the primary market, but the secondary market sale does not benefit the artist directly. It is common for established contemporary artists to sell their artwork in the primary art market, while their older work (unless kept in the artist’s personal collection) is sold in the secondary market. Sales within the secondary market must consider the artwork’s valuing history.
The benefits of participating in the primary market, as a collector, is that you are supporting an artist and their career directly. The primary market also provides an investment opportunity. Since the artwork is potentially marked at its lowest price, if that emerging artist gains fame or institutional attention your artwork will appreciate. The secondary market provides an investment opportunity as well, but the initial buy may be a larger down payment on this investment than that of a primary market sale. The secondary market is also where a majority of artwork, which is not contemporary, is sold and is more indicative of the long-term value of an artwork. When an artwork is sold at a profit repeatedly a collector may feel more reassured that the investment will continue to be profitable. Being able to track a pattern of increased worth provides a sense of security for collectors who participate in the secondary market, and therefore may be a more secure investment.
Since there is no history of purchases, there are fewer statistical reassurances that an artwork purchased in the primary market will be a profitable investment. This is not a concern if you are not solely trying to make a profit off an artwork. Both primary and secondary art markets provide an opportunity for collectors to make a profit, and both have elements of risk.
The market that a collector decides to participate in depends on their commitment to an artist, willingness to risk an investment, and intention to resell or keep an artwork. If you intend to keep the artwork in your home, then the trends recorded by the secondary market are not of any concern. Ultimately, if a collector prioritizes supporting artists directly it is best to purchase through the primary market. By participating in the primary market, not only do you support emerging artists, but you also add contemporary artworks to your collection which no one has ever owned before.
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Chava Krivchenia is an art historian, writer, and curator. She values promoting and collaborating with contemporary artists and has experience working in galleries, museums, and studios. Chava holds a MA in Art History and specializes in environmental, installation, and assemblage art.