Can flipping art ever be a good thing? A debate among artists, gallery owners and entrepreneurs on how to make speculation work for everyone

Artnet News kicked off Frieze week in London on Tuesday with a panel discussion on flipping art at Cromwell Place in London.

“Tipping the Balance of Power” welcomed three panelists — Lucien Smith, artist and director of the Cultural Innovations Lab at Lobus, gallery owner Rachel Uffner, and Max Kendrick, co-founder and CEO of Fairchain — to discuss whether new innovations can help artists and retailers benefit better from skyrocketing auction prices.

“Flipping was a very dirty word for a long time,” said Chairwoman Julia Halperin. “The market for ultra-contemporary art has skyrocketed and so the practice of speculative selling has become much more lucrative and common.”

Outlining the challenges of the conversation, she noted that sales of works by artists born after 1974 and auctioned within three years of their creation totaled nearly $257 million in 2021, up from almost $23 million US dollars in 2012 – a 1,000 percent increase compared to the 200 percent increase in the S&P 500 in the same decade.

With modest resale fees in the EU and no commission in the US, artists typically don’t benefit directly from these sales and sometimes suffer harsh economic consequences.

“One of the things that hurts an artist’s career is when your auction prices get too high, you can’t keep them, they get low and nobody wants to buy your work anymore because you’re burned out,” said Smith, who once wrote himself was famous for his rapid rise to success.

Welcoming speculation and arguing for a more active art market, he added: “I think prices should be able to go up and down like stocks. People who just want to make money on the art market should be welcome. We should be lucky enough as artists to be able to sell a work.”

He views certificates stored on the blockchain as a means to increase trading volume and provide collectors with new incentives like fractionation.

The panel compared these newer technological options to more established approaches for galleries to ward off speculation such as social pressures, long standing reputations and legal resale deals.

From left: Julia Halperin, Max Kendrick, Lucien Smith and Rachel Uffner.

“What gets left out a bit are relationships,” says Uffner. “I want to get to know the people I’m selling to and that experience has only come from years of working in the industry. That is a first line of defense.”

Based on her own experience of working with artists, she has expressed skepticism about encouraging speculation about sustainable growth. “The goals I hear from the artists I work with are that we stay strong, stay under the radar and keep working and growing, and then one day you get to the point where your work is for huge sums of money on sale is. If it makes more sense.”

Another gallery tactic, “buy one, give one,” or BOGO, which requires a collector to donate an artist’s work to an institution upon purchase, has become more common — and not necessarily sustainable.

“A lot of younger artists and galleries think that building a resume is important [institutional] Collections are the most important thing,” said Uffner, “but so many different things have to happen at the same time.”

Fairchain, sponsored by Kendrick, allows artists and galleries to create contracts stored on the blockchain that record a work’s provenance and set rules for resale and royalties. Crucially, it addresses the reality that resale is often inevitable thanks to the “three Ds” — debt, death, and divorce.

“The fact is, when you think about accessing and engaging with art, a system where everyone is focused on only selling to museums or to people who are so wealthy that they would never need to resell the works isn’t very open system,” said Kendrick. “It doesn’t create many opportunities for ordinary people to get involved.”

“Technology has allowed the contracting approach to grow at scale, so we don’t necessarily have to rely on experience to have some tools that we can use to start putting protections in place,” he said.

This year’s success of Sotheby’s new Artist’s Choice model, first developed by Simon de Pury, enables artists and their galleries to offer works for auction and benefit directly.

The new system is a step in the right direction, Smith said, but still doesn’t consider artists without gallery representation. He called for more flexibility, adding that we need “a system that allows for any type of trading and multiple use cases that benefit everyone.”

Also encouraged by the development but unsure if it’s a one-size-fits-all solution, Uffner noted, “It doesn’t work for every artist to take an object from their work and auction it off. Ultimately it’s about relationships because what the artist wants is a very individual thing.”

“We all want transparency,” Kendrick said. “Some artists might be ready for it, but for many artists, this data about your sales is really treated like an asset and something quantifiable. The problem with that transparency, and we’ve seen it in the NFT market and we’re seeing it in the stock market, is that it introduces this minute-by-minute volatility.”

“There are better ways to increase access and make it easier for people unfamiliar with the arts ecosystem to participate,” he added.

Towards the end of the discussion, all panellists seemed to agree that the market would benefit from an industry standard framework that has yet to emerge.

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