Thursday, January 31, 2013

On chandeliers and price lists

The New York Times had a front page story a couple days ago that, as The Art Market Monitor put it, was "a jumble of concerns about the art market and how it isn't regulated."  There seemed to be two main concerns:  so-called "chandelier bidding" (the fact that "[a]t major auctions the first bids announced for a piece are typically fictional — numbers pulled from the air by the auctioneer to jump-start bidding") and that galleries don't post price lists.

As for the first issue, Felix Salmon explained back in 2007 that chandelier bidding is "not a bad thing at all: in fact, it’s a necessary thing if the auction, as designed, is to work."  Its function is "to get the bidding up to the reserve price. But remember, that’s exactly what both the buyer and the seller want: they both want a deal acceptable to them. If there were no phantom bids, then the item for sale would simply not get sold."  "There is no harm done":  "if the deal does get done then everybody’s happy, and if it doesn’t then that’s the same outcome as if no phantom bid had been made."

Dealer Ed Winkleman takes on the other issue here:

"I don't see why this is really a newsworthy 'problem.'  In the 10+ years I've been in the art business, I have never once heard anyone complain unprompted about the lack of prices being posted other than journalists. ... I'm personally not sure why this issue keeps coming up in the press.  Perhaps ... and I'm just wondering out loud here ... it's because the lack of posted prices confirms some journalists' resentment that if you have to ask you can't afford it. ...[I]f this practice prompted complaints to the government on a regular basis, perhaps I could see the Times' 'expose' serving some public good.  As it is, though, it really seems much ado about nothing."