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Andrea Quintanilla Galindo
The Price of Art: Key Factors in the Valuation of a Living Artist’s Work
We should ask ourselves how the valuation of artworks is carried out.
There are different elements that influence the sale price once we try to place a value directly on a piece of art. Firstly, one of the main factors determining an artwork’s value is the artist's legitimacy; with there being two types of artists we can identify: emerging artists, and artists who are already in high demand.
To go into more detail, let us delve deeper into the artist's legitimacy, which sustains the author's profile in the professional sphere. Thus, the concept of legitimacy is the artist's recognition throughout his or her career by the interested public, peers, art critics and the art market. Therefore, it will depend on his or her type of artistic production with innovative characteristics that fit into the reference system, i.e. coherent with the wishes of the system or the subsystem that establishes the judgement. It will also be influenced by the artist's ability to actively participate in the social life of the community, becoming visible within the community.
It is not only the popularity of the artist that has an influence, but also other factors such as the relevance or the development of the artist's work over the years. On the other hand, you should have a broad knowledge of the market, since you will be able to know recent data such as the prices of similar artworks, the behaviour of the market with regard to the entry or exit of a piece of art and even the level of demand behind it.
According to lawyer Diego Guzmán, "the art market depends on the perception of the production of the work as a material good. This perception depends directly on the position that the author has acquired in the field of art throughout his or her career. In this sense, the position transcends the economic aspect and is based on a cultural capital provided by the other agents in the art field, such as other artists, historians, curators, gallery owners or collectors. This can have an anti-economic character in that its creation is aimed at the accumulation of symbolic capital, being a denied, accredited and at the same time legitimate economic capital, with economic benefits according to conditions and over a long period of time".
With respect to the previous criterion, low-priced artworks made by emerging artists are acquired with the idea of obtaining a higher value over time, in line with the recognition of the author. On the other hand, there are works whose production is directly linked to economic perception. That is to say, artists already have a suitable cultural capital that gives them a sustained demand which facilitates pricing. They even produce works according to the particular demand of a collector. We can include the great deceased masters within this market. Although the production cannot be adjusted to a specific demand, the decision to market this kind of work continuously depends on the demand in that period of time. In this case, galleries could be involved as agents for artists. Likewise, art dealers appear as interveners, buying for direct sale to collectors or commissioned by collectors to find works for their collection, obtaining them on behalf of the latter.
Regarding the fact that some pieces are worth more than others, this will all depend on the career of the artist in question. Whether they have a history of exhibitions over time or have had exhibitions in museums or galleries, their work will fetch a higher price than other artists of the moment. However, there are cases of artists who, despite not having a great trajectory, their work is in demand, increasing the value of their pieces.
In addition to their trajectory as an artist, it is essential to know their golden period, in other words, the best period of the artist's career. As they are works made within that particular period, their work may command a higher price compared to other periods in the rest of their career.
Likewise, each gallery follows a process for the valuation of artworks. We could give as an example the TARQ gallery in Mumbai, which states that its value is influenced by criteria such as the artist's market, characteristics of the pieces such as size, materials and techniques used, as well as the number of editions of a given work. Of course, there is a direct work together with the artist, taking into account the history of prices set in previous exhibitions, the new pieces to be exhibited and their artistic peculiarities, thus arriving at an estimated valuation of each work.
However, these factors, which are part of the monetary value of art pieces today, vary depending on whether we are talking about a sale within the primary art market or the secondary art market.
On the one hand, the first market contains all the commercial relations that take place directly with the artist, who is both author and seller. It is not only possible to use the figure of the sales contract of finished works, but also contracts for commissioned works and donations of works. Therefore, we are dealing with a consumer relationship between the artist and a museum or collector, which may be a collective of artists in the case of the sale of collective or collaborative works. However, gallery owners or art dealers can also be part of this market as they are not final consumers. This happens if they directly sign the sales contracts for the pieces and become the new owners, at the same time, looking for a second buyer with interest in the work.
When it comes to the secondary art market, we are covering a large part of the auction houses. This market includes commercial relationships where there is an intermediary between the artist and the final buyer, giving recognition to the other participants who promote and expand the reach of the artist's works. The focus is not only on sales contracts, but also on figures such as consignment contracts and commercial agencies. Here, the art dealer plays an important role historically when talking about an intermediary or dealer to date. In this business model, there is a strong relationship between artists and their art dealers, the latter being galleries that represent the artists themselves.
In this type of market, the value is not only determined by the precedents behind the work or art object, but also by the provenance criteria or as the ownership record of the piece. This value may be increased if it has a relevant ownership history or if it belonged to a public figure.
For example, unique pieces that were part of actress Audrey Hepburn's family such as original portraits of her between 1953 and 1968, scripts from the film Breakfast at Tiffany's, original contracts for her films or musicals, her iconic black lacquered briefcase, exclusive dresses, accessories, the famous red ballet slippers, and more than 500 of her own items.
Now, we already know the traditional business model which takes time for the artist to gain legitimacy within the market. However, there are emerging artists who did not have to go through a process of artistic recognition, achieving economic benefits in less time. This is thanks to these intermediaries who make sure that the artists who work with them are launched to fame in a random way, i.e. without any critical support. This gives rise to the term "art flipper", which refers to wealthy collectors who seek out works by emerging artists for immediate resale, thus increasing their profits. Clearly, they are treating the contemporary art market as a financial bubble, based on strategies taken out from the stock market by renowned galleries and collectors.
Having understood all of the above, we must take into account that the valuation of an artwork may be necessary for purposes such as inheritance, advice on buying and selling, and the patrimony of natural or legal persons. This type of valuation is even requested in order to cover the liabilities of companies or individuals.
Nowadays, there are companies dedicated to consultancy and valuation of the intellectual property of specific assets, in order to offer professional advice together with proposals and strategies for their clients. This is done by a team of experts in this kind of valuations who, with a particular methodology, obtain data and information from galleries and auction houses. These companies consider some important aspects such as:
-The author of the artwork
-The place where the author resides
-The artistic movement to which the artwork corresponds
-The size of the artwork
-The artistic period or peculiar style (aesthetics)
-The authenticity behind the artwork
-State of conservation
To conclude, we can emphasise that the valuation of art pieces is variable. It is not only necessary to consider the factors that influence both art markets hand in hand with the legitimation process of each artist, but also the act of financial speculation, which no longer follows the typical path of the artist where his or her evolution over time can be appreciated.
Although the traditional way to reach a commercial value still exists, this financial bubble would make art pieces achieve a high value in the market in less time as there are multiple agents in the art field that launch certain artists to fame, being a decision taken by a subject or a group with great economic interest behind it.
Author information: Andrea Quintanilla Galindo is a Bachelor in Corporate Law from ESAN University (Lima, Peru), with previous experience as an artist's legal assistant. Currently, Andrea is an Associate at Fashion Law Latam. Here, she has previously contributed to the association's blog and has represented them at events for the Fashion Industry.
*Image within the text: by Taryn Elliott
 Navazo, P. (2018) Procesos de legitimación en el arte contemporáneo: análisis del fenómeno mediático, comercial e institucional del colectivo de los Jóvenes artistas británicos durante las décadas de cambio de los siglos XX-XXI. [Doctoral dissertation, Universidad Complutense de Madrid].
 Grupo ATValor. (2019) La valoración de obras de arte. Blog de Grupo ATValor. https://atvalor.com/la-valoracion-de-obras-de-arte/
 Guzmán, D. (2018). Derecho del arte. El derecho de autor en el arte contemporáneo y el mercado del arte. Universidad del Externado de Colombia. https://doi.org/9789587729146
 Raut, A. (2020). Cómo se determina el precio de una obra de arte. Revista AD. https://www.revistaad.es/arte/articulos/como-determina-precio-obra-arte/27818
 El País. (2017) Los objetos más personales de la actriz Audrey Hepburn salen a subasta. El País. https://elpais.com/elpais/2017/09/25/gente/1506339905_282512.html
 From “Procesos de legitimación en el arte contemporáneo: análisis del fenómeno mediático, comercial e institucional del colectivo de los Jóvenes artistas británicos durante las décadas de cambio de los siglos XX-XXI” by P. Navazo, 2018, Thesis for Doctoral dissertation, Universidad Complutense de Madrid.
 From “La valoración de obras de arte“ by Grupo ATValor, 2019, Blog de Grupo ATValor.
 From Derecho del Arte. El derecho de autor en el arte contemporáneo y el mercado del arte, (p. 217), by D.F. Guzmán, 2018, Bogotá: Universidad Externado de Colombia.
 From “Cómo se determina el precio de una obra de arte“ by Avni Raut, 2020, Revista AD.
 From “Los objetos más personales de la actriz Audrey Hepburn salen a subasta“ by El País, 2017, El País.