Art market
[3] In 2018, Robert Norton, a CEO and co-founder of Verisart, noted that "Art is the second-largest unregulated market after illicit drugs and it's significantly overshadowed by fraudulent activity.
[8] Also, because original artworks are not fungible, they have valuation challenges not similarly affecting securities,[9] with dynamics of what Karpik calls singularities.
[15][16] Concurrently, the previously non-transparent art market became more accessible via the increasing availability of indices and online data,[17] although researchers discovered biased price estimates in the auction houses.
[18] Art sometimes has transient fashionability that also can affect its value: what sells well for a time may be supplanted in the market by new styles and ideas in short order.
For instance, in the spring of 2008 a collector offered over $80 million for Jeff Koons' stainless-steel Rabbit, and yet a year later, of four works in the fall auctions at Christie's and Sotheby's in New York, only two of his pieces sold well and one failed to sell entirely.
[26] For this reason, gallerists and art dealers consider what types of works are currently in vogue before deciding to represent a new artist and are highly selective in those choices in order to maintain a level of quality that is saleable.
[27] As another form of gatekeeping, this is done primarily to protect price points from the potential dangers of speculation,[28] or what Velthuis calls "control of the biography" of the artwork.
In response to criticisms regarding chandelier bidding and unidentified third-party guaranteed bids, Christie's International chairman Edward Dolman countered that, without a secret reserve, illegal cartels of bidders would know in advance information that could facilitate their manipulation of the market and corruption of final valuation by selling price at auction.
[35] The emergence of advanced technologies and data-driven analysis introduces new participants in the field of art market transparency.
France's share of the art market has been progressively eroded since the 1950s, when it was the dominant location and sales at Drouot surpassed those of Sotheby's and Christie's combined.
[40] Art auction sales reached a record billion in 2007, fueled by speculative bidding for artists such as Damien Hirst, Jeff Koons, and Richard Prince.
[41] The recent rise of the Chinese art market, both in terms of the size of its domestic sales and the international significance of its buyers, has, combined with a rich cultural heritage of art and antiques, produced a huge domestic market and ended the duopoly held by London and New York for over 50 years.
To secure consignments, auction houses concede high estimates to suit the requirements of art owners.
[48] Beginning in 2014, Christie's charged 2 percent of the hammer price of a work that meets or exceeds its high estimate.
[53] In autumn 2008 when the market turned sour, Christie's and Sotheby's had to pay out at least million on works for which they guaranteed a minimum price but which failed to sell.
[56] In 2003, Sotheby's abandoned its partnership with eBay after it lost millions through its various attempts to sell fine art over the internet.
No auction houses or dealers admit openly to participating in the black market because of its illegality, but exposés suggest widespread problems in the field.
Because demand for art objects is high, and security in many parts of the world is low, a thriving trade in illicit antiquities acquired through looting also exists.
