How Art Galleries do Business

 

Back in the good old days, galleries pretty much handled all sales of art by their artists. Artists were generally OK with that because they had few if any ways to sell on their own. Now things are different. Due primarily to social networking and other online options, artists are able to establish and control their careers to a far greater extent than ever before, sometimes even more so than galleries. This situation not only requires galleries to rethink exclusivity, representation and the degree of control they require over their artists but also for artists to rethink how they delegate their art and maintain good relationships with galleries while at the same time not limiting themselves in terms of career opportunities.

THE BEATING HEART OF THE ART WORLD

What’s less immediately visible to the wider world is the role that galleries play, and how a gallery itself becomes established. There are a handful of so-called “mega-dealers” whose names may be familiar even to those on the fringes of the art world, Gagosian, and Hauser & Wirth to name a few. But galleries are still the beating heart of the art world, the mechanism through which many artists find their way to institutions, the world’s great collections, or just the homes of people who love their work.

Galleries have multiple roles, both visible and invisible: to incubate and support their artists, often by going above and beyond the normal work of putting on shows, promoting their artists, and selling the works; and to providing services such as financial management or book publishing, in order to help their artists focus more fully on their work.

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Galleries come in all ages, shapes, and sizes too. Art Basel and UBS’s Art Market | 2017 report estimated there were roughly 296,000 dealers and gallery businesses in 2016. Just under 40% of them had annual sales of less than $500,000, while a similar share had sales totaling between $1 million and $10 million.  Nearly two-thirds of all galleries employed five or fewer people, and only 4% had 20 or more employees.

Regardless of size, at the core of a gallery’s identity is its “program.” The term generally refers to the roster of artists a gallery represents, but can also describe a conceptual framework or area of focus that guides that roster, as well as other activities such as collaborations with other galleries, performances, and lectures, or fair appearances. Most will stress that their primary role is to facilitate their artists’ production of great work, in any way they can.

The biggest advantage of an artist being represented by an established gallery has over an independent artist is access to a broad and loyal clientele. As an independent artist, it may take you years to build your loyal clientele and to gain the recognition that your work deserves, whereas an established gallery already comes with an established collector’s list. Gallery directors and staff will know exactly who will fall in love with your abstracts, portraits, or landscape photography and they make sure that these people get a chance to look at your work. These relationships are built over years and collectors do become incredibly loyal to their galleries and people who run them, developing deep, trusting friendships.

Many times emerging collectors will contact the gallery directly to discuss their aesthetic needs. It’s much easier for a busy CEO to schedule a personal meeting with an art expert at the gallery than spend hours researching artists online. So, whether they’re budding art investors searching for the new ‘star’, a couple looking to decorate their newly-remodeled condo, or a husband seeking a perfect anniversary present, serious buyers will always turn to established galleries for advice on emerging artists and quality, original art.

 

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NAVIGATING A NEW GLOBALIZED MARKET

Attendance at fairs serves another vital purpose: finding collectors. According to a study by the European Fine Arts Foundation, collectors are gradually moving away from discovering and purchasing art from gallery exhibition spaces and gravitating towards digital platforms and international art fairs. Participation represents enormous costs, which are often difficult for smaller galleries to cover.

Likewise, the advent of the digital age has changed the entire art gallery business model by simplifying operational processes and expanding the scope of collectors a gallery is able to engage. For art gallery business owners, taking advantage of digitizing their vaults is extremely important. Not only does it save a gallery time and financial resources, it often facilitates sales.

Digital spaces have democratized the way that art is bought and sold, allowing artists and dealers without brick-and-mortar spaces to join the market from the comfort of their computer. This appeals to a new generation of art collectors that prefer to purchase art online. According to a study by Invaluable about market trends in the United States art market, younger generations are turning towards social platforms like Instagram and Pinterest to discover new art, rather than the traditional museum or gallery visit.

 

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When it comes to purchasing, 51% of collectors between the ages of 25-34 would purchase art online, and collectors age 35-54 are about 33% likely to purchase online, as well.

Independent dealers that are operating exclusively within the digital space are able to undercut the prices of brick-and-mortar galleries that have location costs, full-time staff, and in the case of Taglialatella, shipping costs between their multiple gallery locations, their highest overhead.

Expanding into the primary market has presented a different set of challenges for the art gallery business. A

 

THE FUTURE OF THE ART GALLERY BUSINESS MODEL

It is clear that a new generation of art collector’s is radically changing the way that the art gallery business functions. As young art consumers begin to enter the market, gallerists and artists alike will have to embrace new technologies and engage within digital spaces in order to keep up.

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