HEC - Montréal - Chair of Arts Management

Structure of the Contemporary Art Market and the Profile of Italian Artists
Author(s): Alessia Zorloni
Source: International Journal of Arts Management, Vol. 8, No. 1 (FALL 2005), pp. 61-71
Published by: HEC - Montréal - Chair of Arts Management
Stable URL: http://www.jstor.org/stable/41064863
Accessed: 01-02-2016 19:20 UTC

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://www.jstor.org/page/
info/about/policies/terms.jsp

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content
in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship.
For more information about JSTOR, please contact support@jstor.org.

HEC - Montréal - Chair of Arts Management is collaborating with JSTOR to digitize, preserve and extend access to
International Journal of Arts Management.

ST Ö R
http://www.jstor.org

This content downloaded from 130.113.111.210 on Mon, 01 Feb 2016 19:20:07 UTC
All use subject to JSTOR Terms and Conditions
o N MISTRIAL ORGANIZATION
Structure of the
Contemporary Art Market
and the Profile of Italian
Artists
Alessia Zorloni
Structure of the Contemporary Art
Market
T The art market can be viewed as a pyra-
he term “ art market” refers to the pro-
cess through which works of art are
sold and distributed. Broadly, it com-
prises auction houses to which property is sent
for disposal to the highest bidder and dealers
who buy their stock both from auction houses
and directly from artists’ studios. The main
centres for the sale of these luxury goods are
New York and London, as measured by auc-
tion-house turnover1 and by the number of
commercial galleries dealing in contemporary
works; other cities capable of attracting inter-
national prices are Paris (France has the third-
largest art market in the world), Rome (Italy
has the fourth-largest market) and Cologne
(Germany has the fifth-largest market).
All of these markets are situated in wealthy,
developed countries, some of which also have
active art markets at the local level. Milan and
Vienna, for instance, are home to the auction
houses Finarte and Dorotheum, respectively,
and Italy has a vibrant indigenous art market.
Italian local art markets have certain advan-
tages over those of other countries. In addition
to its advanced economy, Italy has a huge res-
ervoir of ancient art and is home to the Venice
Biennale. Nevertheless, art markets have been
growing in other countries. The largest con-
centration of emerging art markets is found
in East Asia - China, Taiwan and Hong Kong
VOLUME 8, NUMBER 1
· FALL 2005
This content downloaded from 130.113.111.210 on Mon, 01 Feb 2016 19:20:07 UTC
All use subject to JSTOR Terms and Conditions
(Greater China) and South Korea with a —
second string of markets in Thailand, Vietnam
and Russia (Robertson, 2003).
mid. At the broad base the market is relatively
competitive, since supply is abundant, entry is
free, the product is homoegeneous and sellers
seek to differentiate similar goods; competi-
tion hinges on variety rather than on price. As
we move up to the market sectors dealing in
works of higher quality, the market becomes
more concentrated. Entry is restricted, and
the prospects of making a profit are uncertain
since galleries face high barriers to entry and
the dealer can influence the prices fetched by
his artists, some of whom are bound to the
gallery by contract. However, unlike other
restricted markets where barriers to entry ben-
efit sellers at the expense of buyers, in the art
market buyers and sellers are equally interested
in maintaining restrictions (Singer, 1988).
The Primary Market
A primary market is one in which original Alessia Zorloni is Assistant
Professor of Microeconomics
works are sold for the first time. It includes
and Information Economics
artists’ studios, contemporary art fairs and art and a doctoral student in
galleries (Heilbrun and Gray, 1993). The pri- Communication Economics
mary market is the most innovative part of the at IULM University, Milan,
Italy. Her research focuses
distributive process in terms of aesthetic values
on evaluation strategies and
and trends. It involves the highest risk for both pricing mechanisms in the
dealers and clients, because the art is on the contemporary art market.
61
market for the first time and there is no infor-
mation available about the works.
However, a distinction should be made
between a new work by an artist who has an
established body of work and a new work
by an emerging artist with no market back-
ground. There is a higher risk involved in
purchasing a work by the latter, because the
artist has no existing works with which it can
be compared. Although pieces by emerging
artists are sold mainly on the primary market,
young artists are increasingly entering the sec-
ondary market.
The commission charged by art dealers is
usually the main source of income for the gal-
lery. It ranges from 33% to 44% of the selling
price; in some of the top commercial galleries
it can reach 60%. The sales commission is pro-
portional to the visibility of the artist, the rep-
utation of the dealer, and the investment made
in marketing and promotion. Occasionally,
with promising young artists, the gallery will
pay an annual retainer, in exchange for the
sole right to sell the artists work, and pay the
artist from the profits rather than take a com-
mission. Another alternative is for the seller
to purchase the work from the artist outright.
However, consignment is the most common
arrangement for selling the works of emerg-
ing artists. If the work is sold, the seller claims
a commission and the remaining proceeds of
the sale are remitted to the artist.
Within consignment, however, the levels
of service provided to the artist and the type
of promotional activities undertaken by the
gallery do vary. The services range from full
gallery representation, to a single exhibition
promoted by the gallery, to work held for sale
in the gallery’s stock room. Sometimes a com-
bination of all three types of service is used.
Dealers usually have exclusive rights to the Acknowledgements
artist’s output, but since contracts are generally The author wishes
limited in terms of geography and duration, to thank Carlo
oligopolistic distribution is the usual practice. Antonio Ricciardi
Several dealers acquire a monopoly on an art- of IULM University,
ist’s output, each within a specific geographi- Milan , for his con -
cal market (e.g., the United Kingdom, Italy, stant guidance and
Germany). In some cases each dealer acquires a Angela Besana for
worldwide or regional monopoly for one type her advice and her
of production (e.g., watercolours, gouaches, intellectual stimu-
lus. The author also
oils). The actors in an oligopolistic market col- acknowledges the
laborate closely and generally agree on prices helpful comments of
so as to maximize everyone’s profit. two anonymous ref -
erees and the editor
of the International
The Secondary Market
Journal of Arts
The exchange of existing art works constitutes Management ,
the secondary market. In contrast to the pri- Fran çois Colbert.
mary market, the participants in a secondary She is espe-
market are likely to be well informed about the cially grateful
artists and their work. Therefore, this market to Francesco
is much more predictable and entails less risk. Mantegazzini for his
insightful sugges-
Auction houses usually charge a variable fee
tions, which helped
based on the selling price, the cost of handling to improve the
and any other expenses incurred, such as for manuscript.
an illustration in the sales catalogue.
The market structure for auction houses
thus tends to be international for highly
valued and well-known artists ( mainly classi-
cal contemporary and avant-garde) and local
for lesser-known artists whose work may fall
into the categories of alternative or junk art.
The principal auction houses clearly fit this
pattern, with Christie’s and Sotheby’s shar-
ing a world duopoly of high-value works that
attract widespread interest, while a few other
houses handle important art from particular
national markets (alternative art works) and
a larger number auction off lower-value deco-
rative objects ( junk art works). In this sense,

ABSTRACT The author examines the supply side of the contemporary visual arts industry using the conventional analytical
apparatus of industrial organization theory. After defining the contemporary art market, the author describes,
from a theoretical point of view, the process by which art works are distributed and sold and the structure of the
market at the global level. Four distinct markets are described: classical contemporary, avant- garde, alternative
and junk . Finally, the author assesses the Italian art framework and recommends, on the basis of the findings of
the analysis, the establishment , in Milan , of a museum of contemporary art and an art bank , a large collection
of works available for rental purposes.

KEYWORDS Contemporary art markets, Italian museums, marketing the visual arts

62 INTERNATIONAL JOURNAL OF ARTS MANAGEMENT

This content downloaded from 130.113.111.210 on Mon, 01 Feb 2016 19:20:07 UTC
All use subject to JSTOR Terms and Conditions
the auction houses have taken the monopoly
away from the experts and tastemakers such as
Duveen and have become the main authority
in dictating fashions and trends.
The United States is home to the lead-
ing international art market, due to favour-
able conditions such as a stable political and
economic environment, a strong currency, a
highly speculative stock market, and a number
of fiscal and legal incentives. It is a very open
market, since the import/export of original
works of art more than a hundred years old is
duty free and taxes to be paid by the seller are
lower than in Europe. In addition, there are no
restrictions on exports and foreign buyers are
not charged VAT. Other contributing factors
are the presence of international museums and
a political benevolence towards private fund-
ing.
Market Segmentation and
the Supply of Art Works
4 s we have seen, the contemporary art
ii market is made up of sub-markets (pri-
mary and secondary), which can be further
segmented, using Abells (1980) approach, on
the basis of the quality of product offered, the
price range and the market dimension, into
four markets: the classical contemporary art
market (or the branded art market), the avant-
garde art market, the alternative art market
and the junk art market.
These markets are differentiated according
to the degree of monopoly, the inelasticity of
supply and various features of demand. While
the junk art market comprises many suppliers
who operate in a perfectly competitive market,
the classical contemporary market comprises
a small number of suppliers who form an
-
oligopoly. The avant garde market, which is
international and highly speculative, is domi-
nated by a handful of players. Inelasticity of
supply varies according to the market; it is
weak in the junk market and relatively weak in
the avant-garde market but strong in the clas-
sical contemporary market.
The Classical Contemporary Art
Market
The term “ classical contemporary” refers to
works by historical contemporary artists of the
20th century. The classical contemporary art
market is characterized by the uniqueness of
the product, since the supply is fixed (Moulin,
1967). There are no laws preventing dealers
from entering this market, but the market is
controlled by older firms that are well endowed
with capital and a reserve of art works. It is
therefore difficult for a young, relatively
undercapitalized newcomer to gain entry. In
this market, where painters have achieved the
status of strong brands, the galleries have lost
control over the distribution network of art
works; therefore their strategies are secondary.
The market is supplied at an international level
with works that are sold by collectors through
auctions or by commercial galleries.
The Avant-Garde Art Market
Defined as the market for art works that are
most closely associated with the not-for-
profit sector (Brighton and Pearson, 1985),
the avant-garde market attracts more media
attention than the other art markets. A small
number of artists,2 represented by an even
smaller number of galleries, which are often
part of networks, offer works to a handful of

RESUME L'auteure étudie les facteurs de l'offre dans l'industrie des arts visuels contemporains à l'aide de instrument d 'analyse classique
^
de la th é orie de organisation industrielle. Après avoir d éfini le march é de l'art contemporain , elle d écrit d ' un point de vue
^
th éorique le processus par lequel les oeuvres d'art sont distribu ées et vendues, ainsi que la structure du march é au niveau inter-
national. Quatre march és distincts sont présentés : celui de l'art contemporain classique, le march é de l'art d 'avant - garde, celui
de l'art alternatif et le march é du Junk Art. L'auteure évalue ensuite la structure du march é de l'art en Italie et , en se fondant
sur les r é sultats de son analyse, recommande la cré ation à Milan d ' un musée d'art contemporain et d ' une banque d 'oeuvres d'art ,
une vaste collection d'oeuvres qui seraient offertes en location .

MOTS CLÉS March és de l'art contemporain , musées d'Italie, marketing des arts visuels

VOLUME 8 , NUMBER 1
· FALL 2005 63

This content downloaded from 130.113.111.210 on Mon, 01 Feb 2016 19:20:07 UTC
All use subject to JSTOR Terms and Conditions
big collectors, both private and institutional.
According to Brighton and Pearson, the Art
Council of Great Britain, the Art Council of
Scotland and Wales, and the Hayward Gallery
are the main economic determinants of visual
artists. Robertson (2000) places the Tate
Modern at the apex of public-sector validation
in the United Kingdom.
The Guggenheim Museum, the Whitney
Museum of American Art and the Museum
of Modern Art, all in New York City, can be
considered the ultimate arbiters of what is sig-
nificant in the avant-garde art world interna-
tionally, since New York is the central market
for contemporary art. The top artists work-
ing in the international avant-garde market,
such as John Baldessari, Christian Boltanski,
Tony Ousler, Grayson Perry and Julian Opie,
are promoted through exhibitions and group
and solo shows in national and international
museums and galleries. This market is gov-
erned by a small group3 consisting of curators
from the principal modern and contemporary
art museums and a few dealers, collectors and
critics, who together establish an artist s brand
and award him or her a place in the history of
contemporary art.
The Alternative Art Market
An alternative to the mainstream interna-
tional avant-garde market is represented by
the alternative art market (Robertson, 2000) ,
since the galleries in this market, unlike those

RESUMEN La autora estudia el área del suministro en la industr í a de las artes visuales contemporáneas aplicando el método anal ítico con -
vencional que se propone en la teor í a sobre la organización industrial. Tras brindar una definición del mercado actual del arte, la
autora describe, desde la perspectiva de la teor í a, el proceso por medio del cual se distribuyen y venden las obras artísticas y la
estructura del mercado mundial . Se detallan cuatro mercados distintos: el clásico contempor áneo, el de vanguardia, el alternativo
y el "junk art". Finalmente, la autora da una apreciación del marco conceptual del arte italiano y, basándose sobre los resultados
de su análisis, recomienda la creación en Milano de un museo de arte contempor áneo as í como de un banco de arte, o sea una
amplia colección de obras que ofrece al pú blico la posibilidad de alquilarlas.

PALABRAS CLAVE Mercados de arte contempor áneo, museo italianos, mercadotecnia de las artes visuales

64 INTERNATIONAL JOURNAL OF ARTS MANAGEMENT

This content downloaded from 130.113.111.210 on Mon, 01 Feb 2016 19:20:07 UTC
All use subject to JSTOR Terms and Conditions
in the not-for-profit sector, do engage in pro-
motional activities. The alternative art market
is differentiated from the junk art market pri-
marily by higher prices and the fact that artists
are tied to one dealer or a small number of
dealers working under contracts with exclusiv-
ity clauses. This is a national market and the
prices are set by demand, as determined by the
opinions of the critics and other leading fig-
ures in the art system. Since these social actors
play a major role in building an artist’s reputa-
tion and defining aesthetic values, sellers vie
for their attention and approval.
The large body of art works not selected
by either the avant-garde or the alternative
market is picked up at the base of the art
market and sold in the new art supermarkets
or warehouses, or in non-specialist shops and
stalls, thereby entering the junk art market
(Robertson , 2000).
cheap or “ sub-artistic” (Moulin, 1967). The
junk art market consists of paintings that are
not considered legitimate art and whose func-
tion is essentially decorative, as well as works
that were once on the avant-garde market but
have since been removed (Robertson, 2000).
The market for junk paintings seems to con-
form to the classical model of pure competi-
tion since it features a vast number of suppliers
and buyers, none of whom is capable of domi-
nating the market. Market supply is almost
infinitely elastic, since there are no barriers
to entry and thousands of dealers enter the
market with homogeneous works, driving art-
ists’ returns towards opportunity cost (Singer,
1992). The main outlets for these goods are
galleries, shops, warehouses, department stores
and, more recently, the Internet.

The Junk Art Market The Pricing and Value of Art Works
The term “ junk” refers to inferior goods that T Tnlike at the end of the 19th century, when
have no aesthetic value and are identified as VJ the pricing hierarchy in France followed

FIGURE 2 MARKET EXPANSION PATH IN CONTEMPORARY ART

Degree of
monopolistic control ¿ , By connecting points A, B and C it is possible
Frontiers of the market to find the Market Expansion Path for
Price contemporary visual art.

High , international, high

Middle, national, high B

Low, local, competitive A

-
4 »
IS ) 4
_
O)
o
•M E
3 ^ *
E
CO 3
3 CD
Characteristics
t03í CD
H
~
ÍT3
CD
OO O oo of art operators
σ c ^
3
CD O O E ~ E
CJ CD
C CD o
O=
3

>- E
03 IS )
ω
c
O
~a
£
03 =ru
Ή
u
Z3
-
4J
IS )
IS ) -Q
03 -y CQ 03 CL>
03 CL
00 C 3
UJ IS)

Source: Besana ( 2002 )

VOLUME 8, NUMBER 1
·
FALL 2005 65

This content downloaded from 130.113.111.210 on Mon, 01 Feb 2016 19:20:07 UTC
All use subject to JSTOR Terms and Conditions
the aesthetic hierarchy set by the Acad émie des
Beaux-Arts, todays pricing hierarchy depends
on the preferences of an elite group of collec-
tors, critics, dealers and curators for any given
period. The pricing hierarchy for works by
emerging artists is less stable, due partly to
the internationalization of the market (Sagot-
Duvaroux, Pflieger and Rouget, 1992).
The monetary value of a piece is determined
by various factors that are, in turn, influenced
by the participants in the art market. One
factor that can have a direct effect on the value
and price of a work is the artists reputation,
which is a function of the number of exhi-
bitions he has been represented in, honours
received, prices fetched and the relative promi-
nence of the gallery that represents him. The
reception of just a few pieces can determine
the fate of an artist s entire output.
The value of an art work is also determined
by technical factors such as the artists tech-
nique and choice of media and the size of the
work. Other factors are the dealers reputation,
ability to control supply and create demand
during market upturns and downturns, and,
finally, ability to create trends and to market
artists. Exogenous factors are the level of
development of the cultural infrastructure and
macro-economic and fiscal policies.
The Artist’s Brand
An artist’s reputation is a key factor in the pric-
ing process. It rests on the information that
dealers, critics and researchers provide to pro-
spective buyers and is crystallized in what I call
an artists “ branding process.”
The theory of brand identity can also be
applied to the contemporary art industry. It
derives from the interaction of many dimen-
sions both within and beyond the artist s con-
trol. For established artists, brand identity is
defined in relation to two elements of the art
system: the artists history and the artists cre-
ative identity.
An artists personal history is among his
most valuable assets. An artist starts to become
a brand when he consistently wins prizes,
receives critical praise and is invited to show
at important exhibitions. The number of solo
exhibitions in prominent cultural institutions
and the quantity and quality of criticism are
66
This content downloaded from 130.113.111.210 on Mon, 01 Feb 2016 19:20:07 UTC
All use subject to JSTOR Terms and Conditions
often the basis for building a credible brand
identity.
An artists creative identity is determined by
stylistic codes and is a permanent component
of his output. The codes can relate to forms,
materials, colours, subjects or techniques. An
artist becomes a brand when his name evokes
the characteristics of his work (e.g., Vanessa
Beecroft: and her naked models, Maurizio
Galimberti and his mosaic portraits, Grayson
Perry and his ceramic pots). At this stage the
artist is clearly differentiated from the compe-
tition. He has a place in the art system and can
command higher prices.
The difference in prices fetched by branded
and emerging artists can perhaps be justi-
fied by the fact that it costs less to promote
a branded artist - as in this field the degree
of satisfaction depends fully on ones degree of
knowledge about the artist (Sagot-Duvaroux,
Pflieger and Rouget, 1992) .
Technical Characteristics of Art
Works
Among works of equal aesthetic quality, prices
can vary according to such factors as the
technique and medium used and the size of
the piece. Since few buyers can display large
works in their homes, the price of an art work
increases with decreasing size, so that the fall-
ing demand for large pieces serves to lower
the price. Moreover, purchasers of large pieces
are generally museums or foundations, which
have the power to negotiate by virtue of the
fact that the work will be displayed in public,
enhancing the artists reputation. Large works
add to an artists fame, increasing the value
of his output and promoting the sale of his
smaller pieces.
Degree of International Competition
The extent to which local and regional art mar-
kets allow or encourage foreign competition ,
through art fairs or international auctions or
the establishment of foreign-owned galleries,
determines the degree to which international
competition is welcomed. An international
presence raises the profile and value of the art
work by exposing it to an international market
( Robertson , 2000).
INTERNATIONAL JOURNAL OF ARTS MANAGEMENT
Level of Development of
the Cultural Infrastructure
The number and quality of visual art muse-
ums in a country give some indication of the
level of its cultural development. The quality
of a country’s museums influences its ability
to attract blockbusters and foreign exhibitions
and to develop its artists. Countries that are
ill-equipped to participate in the international
museum circuit risk having their artists deval-
ued and marginalized.
The dependence of contemporary art on
museum validation is an economic matter as
well as an aesthetic one. Art needs to be vali-
dated by a museum in order to avoid specu-
lation, since instability is fertile ground for
speculation. Like the financial system, which
guarantees the value of the currency in the
absence of a gold standard, the museum system
(or, to be more precise, the entire art system)
guarantees the value of art in the absence of
objective standards of certification.
Power of the Dealer
Along with these factors, the dealer plays a fun-
damental role in price development. Auction
houses can be viewed as “ free riders” since they
benefit from promotion efforts without having
to pay for them. The dealers strategic activities
are limited to allocation of capital resources,
limitation of supply and manipulation of
prices. He can choose to spend more on pub-
licizing an artist’s work and thereby hasten the
process of recognition, or to allocate most of
his resources to acquiring art works that will
be placed in storage for long periods while
waiting for prices to rise (Moulin, 1967).
In the short run, trading in art is not unlike
trading in stocks; in the art market, as in the
stock market, what counts is not the reality
but how the actors perceive the reality. In the
long run, however, in the stock market objec-
tive criteria become important whereas in the
art market they cease to be subjective in the
very long run, where the judgement of history
comes into play. In the interval between the
short run and the very long run, art dealers
are free to manipulate supply and also, within
limits set by the market, to demand high
prices.
VOLUME 8, NUMBER 1
· FALL 2005
This content downloaded from 130.113.111.210 on Mon, 01 Feb 2016 19:20:07 UTC
All use subject to JSTOR Terms and Conditions
If the dealer succeeds in temporarily con-
trolling the price of an artists work, he can
attempt to maximize his profits in several ways.
He may keep prices relatively low in the hope
of increasing demand, or he may store works
acquired at low prices, buy back those in cir-
culation, limit the supply, set prices high, and
select buyers who he is sure will not quickly
resell. If circumstances are favourable owing to
the popularity of an artists work or to specu-
lation fever, the dealer may try to sell many
works as quickly as possible in order to drive
prices up rapidly. In this case, rising prices will
attract speculators seeking quick profits and,
owing to the existence of a parallel market, the
dealer will find it difficult to maintain control
over prices for long. In this market the para-
dox of scarcity plays a large role, since prices
tend to rise when demand exceeds supply.
Hence operators exert considerable influence
over prices through supply strategies in order
to keep them high.
On the other hand a work of art must not
be too scarce, because its value depends on the
artists brand and this value is linked to the
number of people who have already seen his
work. A minimum number of works is needed
for information to be spread and to give the
buyer the utility to buy. Yet the spread of infor-
mation also depends on the characteristics of
buyers. A contemporary museum, for instance,
gives a work more exposure and contributes
more to building the artists brand than an
anonymous buyer, because the museum can
exhibit an acquired piece and promote it in
exhibition literature (Sagot-Duvaroux, Pflieger
and Rouget, 1992).
A contemporary artist may be said to be
successful when his work fetches prices at auc-
tion that approach those asked by the gallery
handling his work and those obtained for the
work of his better-known contemporaries.
Validation Strategies in the Visual
Arts: The Italian Case
n the previous section I described ( mostly
I from a theoretical point of view) the eco-
nomic structure of contemporary visual art
and how the market is structured at a global
level. In the following section I will focus on
67
 TABLE 1 THE 15 HIGHEST- PRICED ARTISTS AT THE BEGINNING OF THE 21ST CENTURY *

Price
Artist Title Medium Sale
( millions )
1. Bruce Nauman $ 9.0 Henry Moore Bound to Foil Sculpture 17 May 2001
(1967 ) ( Christie's, New York )
2 . Jeff Koons $ 5.1 Michael Jackson and Bubbles Porcelain 15 May 2001
(1988) (Sotheby's, New York )
3. Jean - Michel Basquiat $5.0 Profit I Acrylic 14 May 2002
(1982 ) ( Christie's, New York )
4. Ray Charles $ 2.0 Male Mannequin Sculpture 16 November 2000
(1990 ) ( Christie's, New York )
5. Sigmar Polke $1.527 Doppelportr ät Painting 7 February 2001
(1963-64 ) (Sotheby's, London )
6 . Felix Gonzalez - Torres $1.5 Untitled ( Blood ) Plastic 16 November 2000
(1992 ) ( Christie's, New York )
7. Chuck Close $1.3 Cindy II Oil/ canvas 15 May 2003
(1988 ) ( Christie's, New York )
8. Miguel Barcelo $1.261 Autour du Lac Noir Mixed media / 26 June 2002
( 1989-90 ) canvas (Sotheby's, London )
9. Anselm Kiefer $1.050 Athanor Mixed media 14 November 2001
(1991) ( Sotheby's, New York )
10. Damien Hirst $1.050 Something Solid [... ] Installation 13 November 2003
( 2001 ) ( Phillips, de Pury &
Luxembourg , New York )
11. Richard Tuttle $ 0.95 Letters, the Twenty -Six Senes Metal 15 May 2002
(1966 ) (Sotheby's, New York )
12. Eric Fischl $0.9 Noonwatch Oil/canvas 16 May 2000
(1983) ( Christie's, New York )
13. Mark Tansey $0.9 Achilles and the Tortoise Oil/canvas 12 November 2002
(1986 ) (Sotheby's, New York )
14. Susan Rothenberg $0.9 Layering Mixed media 12 November 2003
(1974-76 ) (Sotheby's, New York )
.
15 Maurizio Cattelan $0.8 La Nona Ora ( The Ninth Hour ) Installation 17 May 2001
(1999 ) ( Christie's, New York )

* Artists born after 1940; ranking by highest hammer price at auction between 1 January 2000 and 1 January 2004
Source: Artindex

how the private and public sectors in Italy
have adapted to the ever-changing market.
Two issues will be explored: the cultural
sector, which provides the institutional frame-
work for the industrial organization of visual
arts, and alternative validation strategies. The
instruments of such strategies include personal
networks, marketing and communication pol-
icies, and, most importantly, innovative ways
of developing the visual arts.
Level of Development of
the Cultural Infrastructure
In the international context Italy’s art system
is rather weak and vulnerable. Despite its pri-

68 INTERNATIONAL JOURNAL OF ARTS MANAGEMENT

This content downloaded from 130.113.111.210 on Mon, 01 Feb 2016 19:20:07 UTC
All use subject to JSTOR Terms and Conditions
macy in historical art, Italy has a tradition of
indifference to and neglect of contemporary
art. Cultural policies in the art sector have long
centred on managing the country’s rich heri-
tage rather than on supporting the production
of contemporary culture. In fact until the early
1980s contemporary art museums in Italy
barely existed. The few institutions devoted to
modern art, like the Galleria Nazionale d’Arte
Moderna in Rome, did not keep up with the
latest trends.
When Italian artists achieved international
recognition, Italian museums did little to
promote them or to help them become estab-
lished. No Italian museum gave members of
Arte Povera a solo exhibition in the early stages
of their careers. The situation was similar with
the Transavanguardia group, so christened by
the critic Achille Bonito Oliva, after their suc-
cess had been ensured by the curator of the
Basel Kunsthalle, Jean-Christophe Amman ,
and by the German art dealer Paul Maenz.
In Italy both groups were exhibited in public
spaces not designated specifically for art, rather
than in museums, while at the international
level they were promoted by European and
American institutions.
The organization of contemporary art
exhibitions was left completely to the local
authorities, whose choices, in the absence of
clear policies, were usually influenced by polit-
ical and personal factors. However, the 1980s
brought some signs of change with the open-
ing of the Castello di Rivoli museum in Torino
in 1984 and the Museo Pecci di Prato in 1988,
followed by the Galleria Cívica of Trento, the
Museo d’Arte Moderna of Bolzano and the
Palazzo delle Esposizioni in Rome. These
institutions, along with the existing Padiglione
d’Arte Contemporánea in Milan , helped to
establish the first generation of Italian artists
after Transavanguardia through several group
exhibitions. A later addition to the group is
the Palazzo delle Papesse in Siena, founded in
1997.
Altea (2001) examined the influence of
these museums on the making of artists’
careers. Of a sample of 28 artists heralded by
the publication Espresso in 2000 as “ the new
Italian generation , ” 4 she found that none of
their curriculum vitae listed a solo exhibition
in an Italian public museum at an early stage in
their careers, and just 28% listed group exhi-
VOLUME 8, NUMBER 1
· FALL 2005
This content downloaded from 130.113.111.210 on Mon, 01 Feb 2016 19:20:07 UTC
All use subject to JSTOR Terms and Conditions
bitions. The recently established Palazzo delle
Papesse appeared in 42% of CVs, trailed by the
Galleria d’Arte Moderna in Bologna (28%) ,
the Castello Di Rivoli (17%) , the Museo
Pecci (14%) and, finally, the Cívica Galleria
of Bolzano (7%). Other not-for-profit spaces
listed in the CVs included the Trevi Flash Art
Museum (35%) , the Sandretto Re Rebaudengo
Foundation , Guarene (21%) , the Bevilacqua
La Masa Foundation in Venice (14%) and the
Teseco Foundation in Pisa (10%).
It is worth noting the increasing presence
of private foundations in the Italian arts arena
over the last decade. Along with the Sandretto
Re Rebaudengo and Teseco foundations,
recently established with the aim of promot-
ing the work of Italian artists, Milan’s Prada
and Trussardi foundations are dedicated to
presenting the work of cutting-edge interna-
tional artists.
Personal Networks
What alternative means of validation, then,
are available to Italian artists? Art schools
(Accademie di Belle Arti) have long since lost
their power in selecting and establishing young
artists; they are confined to a formative role. In
contrast to other countries, such as the United
Kingdom with the Summer Exhibition of the
British Royal Academy, Italy’s student exhibi-
tions are mainly internal events not regarded
by the art world as an occasion for discover-
ing new talent. Hence the artists’ validation
process is characterized by the prevalence of
personal networks (Altea, 2001).
While personal networks may be part of
the art system in every country, in Italy they
are particularly important, not only because of
the small size of the local art market - which
encourages the development of quasi-monop-
olistic situations - but also because of the
small number of contemporary art museums
and their inability to keep up with trends.
The negative impact of personal networks
on the production of contemporary art can be
seen in the economist Pier Luigi Sacco’s (1998)
“ game-theoretic” model of the art system. In
this model, the interactions and combined
strategies of three actors ( the artist, the dealer
and the collector) result in both monetary and
relational capital. The latter can be thought
of as credits: for a given creative project, the
69
greater the number of accumulated credits,
the higher its status within the system and
the greater its likelihood of achieving further
success. Each actor chooses a specific level of
investment in his or her activity. A high level
of investment by the artist means plenty of
time and resources spent on the creative proj-
ect, while a low level of investment means a
larger proportion of the artist’s time devoted
to building the brand and visibility.
This analysis indicates that, in the early
stages of their careers, there are strong incen-
tives for artists to invest more heavily in the
accumulation of relational capital than in
the creative project. The validation strategies
described above have proved to be of limited
effectiveness since their power does not go
beyond national borders. In spite of Italy’s
art tradition , Italian artists have low visibil-
ity outside their homeland. Just a handful,
such as Maurizio Cattelan, Vanessa Beecroft,
Francesco Vezzoli and Margherita Manzelli,
have achieved recognition abroad. A glance
at the program of the most recent edition of
Kassel’s Documenta or at the programs of vari-
ous biennials will show that few Italian artists
have access to international exhibitions.
The low profile of contemporary Italian
art has prompted much debate among crit-
ics. The problem has been discussed in terms
of the need for a national artistic identity, as
has happened in other countries in past years
(in Germany with the Neuen Wilden and in
the United Kingdom with the YBAs). In the
past year a group of galleries run by enter-
pnsing individuals and a series of exhibi-
tions organized by critics such as Alessandro
Riva, Gianluca Marziani, Luca Beatrice and
Maurizio Sciaccaluga have attempted to create
a brand for the new generation, labelled Nuova
Figurazione Italiana. However, such signal-
ling5 strategies cannot make up for the lack
of adequate art policies and a fully developed
network of contemporary art museums.
Conclusion
T taly is a country with great potential for the
A arts and with some quality art being cre-
ated at the present time. However, the Italian
market for contemporary art cannot be con-
70
This content downloaded from 130.113.111.210 on Mon, 01 Feb 2016 19:20:07 UTC
All use subject to JSTOR Terms and Conditions
sidered strong: it is a national market, with
little power to attract international buyers and
international prices. The Italian art system is
characterized by several factors that represent
a strong barrier for artists wishing to enter the
international arena: the scarcity of contempo-
rary art museums, the scant attention paid to
young artists by the public sector, unfavour-
able tax laws for dealers and collectors, and
above all the predominance in the art world of
a network of personal contacts. As a result, the
range of opportunities for artists to become
established is very narrow in Italy and a small
circle of individuals and institutions control
the market. This situation fosters opportu-
nistic behaviour on the part of artists, who
are encouraged to concentrate their efforts
on building relational capital rather than on
developing their talent.
Actors in the Italian art system must learn
to communicate a strong Italian brand at the
international level and to raise public awareness
about contemporary art. One way to increase
the visibility of artists, both nationally and
internationally, and to build a strong national
identity would be to establish a museum of
contemporary art and an art bank in Milan .
Such an art bank would represent the larg-
est collection of Italian art available for rent
and the most active institutional supporter of
young and emerging artists both within Italy
and beyond its borders. The collection would
include paintings, sculptures and photographs
by Italian artists and be available for rent, at
affordable rates, to businesses, institutions,
and government departments and agencies.
Its purpose would be to give exposure to high-
quality original art within the business commu-
nity and to encourage interaction with art on
a day-to-day basis, outside traditional venues
such as museums and galleries. The art bank
would have two main benefits: artists would
gain directly through the purchase of their
work, and corporate, public sector and private
clients would have access to works by Italy’s
most talented contemporary artists. Moreover,
potential buyers would have an opportunity to
become acquainted with a work before com-
mitting to ownership. From corporate offices
to restaurants, from haute couture boutiques
to Italian embassies around the world, the art
bank could bring style and originality to busi-
ness and commerce through its collection of
INTERNATIONAL JOURNAL OF ARTS MANAGEMENT
contemporary Italian art, avoiding the capital
outlay required for purchase (rental fees are
considered a tax-deductible business expense).
Since art is an acquired taste, the education
of potential buyers should be seen as the most
critical tool in increasing awareness and a prin-
cipal objective of the leading cultural institu-
tions.6 To that aim, private galleries could
team up with universities to offer a range of
art courses, along with special classes for the
public in which curators and other market
experts discuss the historical and artistic sig-
nificance of art works as well as their market
value.
The development of strategies such as these
would constitute a major step in establishing
Italian emerging artists while also boosting the
private market, thus introducing an element
of healthy competition into the art scene in
Italy.
Notes
1. Auction turnover in 2004, by country: United States 46.3%,
United Kingdom 26.9%, France 7.2%, Italy 3.7%, Germany
2.9%, Hong Kong 1.9%, others 11.1% (source: Artprice.com) .
2. The following artists are among those active in the avant-
garde market: Franz Akerman, Assume Vivid Astro Focus,
Dinos and Jake Chapman, Matt Collishaw, Wim Delvoye,
Ellen Gallagher, Gilbert and George, Nan Goldin, Hew Locke,
Christian Holstad, Jim Lambie, Sabah Naim, Chris Ofili and
Q. Le Dinh.
3. According to ArtReview, the American magazine, the top
10 players in the art world in 2004 were: 1. Larry Gagosian
(dealer), 2. Glenn D. Lowry (director, MoMA) , 3. Nicholas
Serota (director, Tate Modern ), 4. Maurizio Cattelan (artist),
3. Samuel Keller (director, Art Basel), 6. Dakis Joannou (col -
lector ) , 7. William Ruprecht (CEO, Sotheby’s) , 8. Ronald
Lauder (chairman, MoMA), 9. Robert Storr ( US curator and
academic) , 10. Takashi Murakami (artist).
4. Espressos list: Elisabetta Benassi, Carlo Benvenuto, Simone
Berti, Bianco-Valente, Botto & Bruno, Maggie Cardel üs,
Monica Carocci, Loris Cecchini, Sarah Ciracl, Roberto Cuoghi,
Lara Favaretto, Giuseppe Gabellone, Stefania Galegati, Luisa
Lambri, Marcello Maloberti, Margherita Manzelli, Nicola
Pellegrini, Perino & Vele, Diego Perone, Cristiano Pintaldi,
Paola Pivi, Sara Rossi, Marco Samorè, Alessandra Tesi, Sabrina
Torelli, Patrick Tuttofuoco, Francesco Vezzoli, Italo Zuffi.
5. On the concept of signalling activity, see Ricciardi and
Gambaro (1997).
6. To that aim, IULM University is set to launch a cultural com-
munications observatory and a new project, Brand Art Prize, in
order to promote and develop the visual arts.
References
Abell, D.F. 1980. Defining the Business: The Starting
Point of Strategic Planning. Englewood-Cliífs, NJ:
Prentice-Hall.
VOLUME 8 , NUMBER 1
· FALL 2005
This content downloaded from 130.113.111.210 on Mon, 01 Feb 2016 19:20:07 UTC
All use subject to JSTOR Terms and Conditions
Altea, G. 2001. The Museum of Contemporary Art
and the Italian Art Framework. Unpublished
master’s thesis, Department of Arts Policy and
Management, City University, London, UK.
Besana, A. 2000. “ II molo del critico nel mercato
dell’arte.” Economia della Cultura, n° 2. Bologna:
II Mulino.
Besana, A. 2002. Economia della Cultura. Milan: Led
Edizioni.
Besana, A. 2003. L’arte in chiave economica. Milan:
Led Edizioni.
Brighton, A., and N. Pearson. 1983. Enquiry into
the Economic Situation of the Visual Artist in Great
Britain. Unpublished manuscript.
Heilbrun , J., and C.M. Gray. 1993. The Economics
of Art and Culture. Cambridge: Cambridge
University Press.
Moulin, R. 1967. The French Art Market ( trans. of Le
marché de la peinture en France) . New Brunswick,
NJ: Rutgers University Press.
Poli, F. 1999. II Sistema dellArte Contemporánea.
Rome: Editori Laterza.
Ricciardi, C.A., and M. Gambaro. 1997. Economia
dell’informazione e della comunicazione. Rome:
Editori Laterza.
Robertson, I. 2000. The Emerging Art Markets of
Greater China 1989-99. Unpublished doc-
toral thesis, Department of Arts Policy and
Management, City University, London, UK.
Robertson, 1.2003. Art Markets. Lectures, Department
of Arts Policy and Management, City University,
London, UK.
Sacco, P. 1998. “ La selezione dei giovani artisti nei
mercati delle arti visive.” In Economia dell’arte.
Istituzioni e mercati dell’arte e della cultura,
W. Santagata, ed. Torino: Utet.
Sagot-Duvaroux, D., S. Pflieger and B. Rouget. 1992.
“ Factors Affecting Price on the Contemporary Art
Market.” In Cultural Economics, R. Towse and
A. Khakee, eds. Berlin: Springer-Verlag.
Singer, L.P. 1988. “ Phenomenology and Economics
of Art Markets: An Art Historical Perspective.”
Journal of Cultural Economics, Vol. 12, n° 1, p. 27
40.
—
Zorloni, A. 2005a. “ The Importance of Being Funky:
Creativity as Economic Resource and as a Factor
of Personal Success. ” Challenge 2000, La Rivista
di Management per L’Azienda Evolutiva, n° 21,
p. 10-15.
Zorloni, A. 2005 b. “ II Mercato dell’Arte Contem-
poránea.” In Sette Idee per la Cultura, attached
to LABItalia, n. Gen-Feb. Milan: Edizioni
Professional! Italia.
v§>
71