The formula for selling a million-dollar work of art

The formula for selling a million-dollar work of art

In September of 2008, something unheard of happened in the art world. A British artist, Damien Hirst, took 223 pieces of his new work to Sotheby’s auction house and sold every single piece. I’ll start the bidding here at £2,500,000. It was a 2 day event, and the total sale was about $200 million. It broke the record for single artist auction
of $20 million back in 1993. Hirst’s work included things like this
zebra, this unicorn, and this painting made from butterflies. So how did he – how do artists – do this? Well for the most part, the artists aren’t
the ones behind it. Okay, so obviously money isn’t the only value that defines a work of art, and who knows how history will remember this unicorn. But order to sell a million-dollar artwork, you need strong market value– and you need extremely high demand.
And a ton of work goes into creating that. As Don Thompson describes in his book, the formula for art pricing goes something like this. The bigger the work, generally the more expensive it is. But, the biggest variable is the reputation
of the artist. Sometimes you’re world-famous, and sometimes you’re not. What? But when a new artist steps into the art market, the reputation of the artist heavily relies
on the name of the dealer. This shark by Damien Hirst is a good example. Hirst first began working with an art industry giant, Charles Saatchi, in the 1990s.
Saatchi commissioned Hirst to make anything he wanted for £50,000 after seeing this cow’s head at a show shortly after Hirst’s graduation in 1990. Hirst bought a shark for £6000 from an Australian fisherman and created this, injecting it with tons of formaldehyde. Later in 2004, it was sold for $12 million to a billionaire hedge fund manager, Steve Cohen.
It was roughly 130 times the original price but it makes sense considering Saatchi’s reputation. And it makes more sense when you think about how it was bought – dealers can use selective information to get potential buyers to pay more. Hirst’s huge auction I mentioned before… For dealer-sold work, everything is private,
including the prices, which gives dealers the upper hand in pricing.
In 1988, New York City tried to ban this by reinforcing the Truth in Pricing law, and
galleries fought back HARD, paying fines and protesting saying that showing prices will
be “getting in the way of the enjoyment of the exhibition.”
By keeping the price private, art dealers can rely more on their reputation to make
the artwork feel more valuable to the buyer. Outside this equation, the basic laws of economics also apply. The next step of operations for the dealer is creating scarcity.
In 1999, when Jenny Saville, a new emerging British artist became affiliated with Charles Saatchi, he convinced her to cut her work down to only 6 paintings per year. He sold them for $100,000 each. So what does this all result to?
According to Artnet, the estimated size of the art market was $64 billion in 2015.
And market is growing outside of traditional sales of galleries and auction houses.
This chart shows the art world might be learning the lesson Saatchi taught Jenny Savile –the total value of the art that’s being sold is growing faster than the number of pieces. Sell less of it, for more. But to sell that million-dollar artwork, you’ll need reputation bigger than Hirst’s, or Charles Saatchi’s.
The dealer model still dominates the fine art world, but for the rest of us, selling
art online has never been easier. The prices are open and it’s accessible for a broad
group of people. And for one thing, now you know where to start: think big.

60 thoughts on “The formula for selling a million-dollar work of art

  1. IDK why y'all sound so incredulous about Damien Hirst's pieces, but played the story about conceptual blank canvases as some kind of acquired taste for the refined palette.

  2. No actually it's THINK FAMOUS.Those artists mentioned in this video ARE ALREADY FAMOUS IN THE ART WORLD.By "reputation" they mean FAME.The only thing is I dont see any emerging fine artists getting REALLY famous on the internet.Anywhere.Not on Youtube.Not on twitter moments.Nowhere.Not on the main page of Yahoo either.The only person who's gotten really famous in the art world in the past ten years is Banksy but he didn't get famous by posting videos all over Youtube of his art or getting his pictures featured on twitter moments.Banksy got famous by painting shocking artworks on the walls of Bristol and London England.He did shocking artworks to stand out from the rest of the struggling graffitti artists in England at the time.His plan worked (for him and his gallery) but if any one ELSE wants to get famous for their art NOW who the heck wants to go the route of painting on walls (or posting posters or stickers on walls) anymore.That venue is getting tapped out.Yet gallery owners out there dont seem to give a crap about taking on new fine artists showing their work on Youtube etc..What gives?

  3. Great Video about selling..keep it up.

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  4. Amazing! My Great Writer teen told me they learned this at their art charter school!!!! I did not believe it. But it’s True!

  5. You are conditioned to what is valuable and what is art, basically you have been taught what art is even if it is junk. The art market is a collective mind were the only interest is in the high prices of sold art, you become fixated by the millions of dollars and not by the actual art.

  6. I have been painting for decades and have had very little success. Meanwhile I have seen women who show lots of cleavage and sexy photos on their websites with hardly any real talent. Yet they made millions in less than a year. Life is a pain.

  7. Guys it's simple. Their two reasons anyone pay's an absurd amount for art. 1. As an investment, 2. to launder money. You can take a painting overseas without paying tax, it's the same with jewelry.

  8. Or the time a dude said he found some unknown artists work and that he was a virtual legend for a time with over a dozen pieces. Each canvas sold for half a million each. Meanwhile, the unknown artist was actually the guy who 'found' the artworks and basically scammed the uppity art collectors.

  9. I guess one factor for all those ridiculous prices in the art industry is *money laundering. Think about it: you can artificially set the price of something with little practical value to millions of dollars through mostly subjective arguments. Once a certain piece of art or artist is widely famous (in other words, its price is already known and accepted), one can use it as currency instead of money for illegal business or buy them from an early dealer while declaring less for the transaction than what was actually paid, being certain of the potential to sell it for a "higher" (higher than the declared) price. Illegal dirty money –> ridiculously expensive art –> clean, legal money

  10. Well as long as the Art Market is (almost) a totally unregulated you can provide any kind of strategy to crush it! But nowadays, the prices and deals are quite transparent: not automatically but being provided with the right informations isn't that difficult anymore. More, taking the case of Damian First is not representative about the market per se. It is a particular case in a very particular context.

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