The Art Ecosystem: Who are the Players and Why are they Important?

Image: Picture taken by the author at Art Fair Tokyo (2024)

If you have played the game of chess before, you probably know the important rules to win. Understanding the significance of controlling the center of the board or protecting your king by castling can be decisive factors in achieving victory. However, even more crucial is knowing the players or pieces, such as how far your pawn can move or the unique movements of your opponent’s knight. As you enter the art market, you aspire to become a successful collector and find valuable art pieces. Similar to chess, it is essential to understand the major players in the art market if you want to become successful. Here are the key players you need to know.

1. ART GALLERY

Of course, artists are the most important players in the market. Without them, what is there to buy? However, there need to be the ‘Validators’ who recognize the artists and promote their artworks. Needless to say, the first major player in the market is the gallery.

Although there are different types of galleries, such as primary and secondary, let us focus on the most common type: the primary gallery. Generally speaking, primary galleries are responsible for finding artists with potential and promoting their artworks. They not only sell the artworks at their exhibitions but also create catalogs, contact journalists, send out newsletters, and hold lavish parties with the artist, collectors, critics, and curators. Essentially, they are responsible for the “branding” of the artist.

Image: Pierre Matisse

As a collector, why is it important to find the right gallery? This is because only a few gallerists or dealers have the exceptional eye for discovering great artists. As a professional working in the art industry, I aspire to become like the legendary dealer Pierre Matisse (1900-1989), known for introducing European modern art to the U.S. and for discovering renowned artists such as Jean Dubuffet and Joan Miró. Purchasing artworks from dealers like Pierre Matisse, who can identify pieces with significant potential, is crucial. Interestingly, many of the artworks he obtained to sell at his gallery became so valuable that he rarely sold them and kept them for himself.

2. MUSEUM

The gallery puts a lot of effort into maintaining good relationships with museums, as they are also important 'Validators' that play a vital role in promoting the artist.

Image: Solomon R. Guggenheim Museum

When purchasing a smartphone at an Apple store, you likely understand why certain phones are more expensive. Factors like battery life, display resolution, storage capacity, and performance all contribute to the price. However, unlike smartphones, the value of artwork is much harder to measure. So, why are Picasso's artworks worth more than others? The reason lies in their historical significance and profound impact on art history. Picasso, a pioneer of Cubism alongside Georges Braque, introduced new perspectives that shaped 20th-century art. When a museum recognizes the historical importance of an artwork, it validates and reinforces its significance by adding it to their collection or showcasing it in exhibitions. This greatly increases both the value of the artwork and the artist.

As a collector, you may find that an artist has exhibited in a few museums or has artworks in their collections. However, it’s important to note that not all museums have the same level of influence. For instance, the Guggenheim Museum or MoMA in New York hold far more power and influence than museums in Japan or Singapore. Albert-László Barabási, a network scientist featured in the video above, researches how artists achieve success. In his article 'Quantifying Reputation and Success in Art,' he claims that 39% of artists who exhibited in these influential museums continued their careers 10 years later, compared to only 14% of artists who did not. Needless to say, artists who have worked with these prominent museums have more exhibitions, sell more works, and achieve higher prices for their art.

3. COLLECTORS

Believe it or not, collectors don’t just buy artworks; they are also key players in the art world who significantly contribute to the value of art. In fact, galleries sometimes choose specific collectors to sell certain artworks to.

Image: Picture taken by the author at Art Basel (2024)

For art dealers, it’s crucial to sell artworks to the right collectors. They don’t want the pieces to be damaged or resold at auctions, as this can significantly harm the artist’s reputation. Dealers prefer to sell to collectors who will care for the artwork, ideally displaying it in their homes for friends to admire. The best-case scenario is finding collectors willing to donate the artwork to museums in the future. This not only preserves its cultural significance but also ensures that museums, with their expert staff, will provide the best care. Additionally, artworks that have been part of renowned collections, like the Rothschild family’s, can see a significant increase in value.

We’ve seen collectors purchase artworks as symbols of their wealth and power. Today, many even build private museums and hire well-known curators to organize professional exhibitions. This means that collectors are now playing the role of 'Validators,' much like museums. It’s exciting to think about how this will shape the art market in the future.

4. AUCTIONS

If you're familiar with the art industry, you've likely heard of Sotheby’s, Christie’s, or Phillips. Whether they are friend or foe to the artist is up for debate, but it’s undeniable that they are major players in the industry. As a collector, understanding their role is essential.

Art galleries are often reluctant to sell artworks to buyers who plan to resell them at auction houses because it can harm the artist's reputation. Auction prices can sometimes become inflated, causing artworks to sell for more than they would at a gallery. While million-dollar sales might grab attention, art dealers and artists prefer their works to be valued for their historical significance rather than being treated as mere investments. They want art to be appreciated for its cultural worth, not just its price tag. In the worst-case scenario, if an artist’s auction prices start to drop, people's faith in the artist can easily fade, leading to a decline in interest in their work. Once collectors lose confidence in an artist, it can be extremely difficult to rebuild that trust.

To be fair, auction houses aren’t necessarily harmful to the art market. In fact, they help democratize it and place great emphasis on the provenance of artworks. They have specialized departments dedicated to ensuring that pieces with problematic histories, such as those looted by the Nazis during the war, are not resold—collectors should steer clear of these to avoid legal issues. While art dealers often criticize auction houses, they also keep a close eye on the prices achieved there, as auctions offer one of the few ways to gauge real-time demand for an artist. However, it’s important to remember that auction prices can sometimes give a misleading sense of demand, as they can be inflated by just two competitive bidders.

Image: Picture taken by the author at Tiroche Auction House during the pandemic.

By reading this article, I hope you now have a better understanding of the key players in the art market to help you make informed decisions for your collection. Look for an art gallery or dealer with a keen eye who can identify artists with great potential and protect them from resellers. Ideally, seek out artists who have worked with respected museums, as these institutions ensure the cultural significance of their artwork. When a museum includes works alongside those of Leonardo da Vinci, Pablo Picasso, and other legends as part of their collection, you know the art has truly become ‘priceless.’

If you have any questions, feel free to contact me here.

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About the Author

Shion Hamazumi

After graduating from Tel Aviv University (Israel), Shion has been working with Tokyo Gallery+BTAP. With over 70 years of history, the gallery boasts a wealth of collectors from around the world. Driven by his passion for art, he helps collectors understand the art market and share his love for art history.