Artists’ Selling Power

The film and entertainment industries exercise strong bargaining power over non-negotiating artists, or ‘hired hands’, whose marketability remains unproven and relatively low – the powerless majority.

However they have had to learn to accept the bargaining power of negotiating artists who, because of their proven high marketability and potential for high income/profit generation, are able to dictate high fees and other favourable contractual terms and conditions for their performances – a relatively small, but powerful, minority.

The powerful minority scenario has also appeared in the contemporary art world in recent times, as sale prices of many living artists’ works have soared and achieved wide media interest beyond the cognoscenti. UK artist Peter Doig’s painting White Canoe, 1990-91, fetched $11.3m at Sotheby’s London in 2007 and set the auction record for a living European artist; and South African artist Marlene Dumas’s painting The Visitor, 1995, fetched $6.3m at Sotheby’s London in 2008, creating the current auction record for a living woman artist. How have such artists exercised their exceptional economic power, and how have their dealers and buyers reacted?

Most artists dislike their works being resold/flipped by buyers wanting to make a quick profit a short time after purchase. Most prefer their works to be held onto for a lengthy period by genuine ‘collectors’ – especially by respected public-facing institutions, whose acquisitions bring artists critical and scholarly acclaim and less likelihood of their being resold, and by private collectors who have a track record of building a body of work that may in the long term be donated/bequeathed to such public institutions. In theory, artists always control the first sale – its price and to whom to sell. But the vast majority are in a weak bargaining position and in reality exercise little or no control over such things. A minority of artists have commercial gallery dealing for them but actually have very little bargaining power to influence, let alone control, their prices and select their purchasers.

Artists who do have strong bargaining power in the marketplace can choose who can buy directly from them, and exercise powerful influence and control over sales by their dealers. Gossip and speculation in recent times have suggested that powerful ‘negotiating’ artists and their dealers maintain blacklists of speculative (and therefore unwanted) purchasers to whom they and/or their dealers would never sell. It is now known that such practices do operate – certainly in the US and probably elsewhere – because of a lawsuit currently being heard by a federal court in New York.

Craig Robins is a collector of Dumas’s works and, in 2004, sold her painting Reinhardt’s Daughter, 1994, through New York dealer David Zwirner. Although there was no written consignment agreement between Robins and Zwirner, Robins asserts there was a verbal contract and that one of its key terms required Zwirner not to disclose to anyone the terms of the sale – and especially the fact that Robins was the seller. Zwirner became Dumas’ dealer in 2008. Robins asserts that Zwirner, in order to gain favour with Dumas, told the artist about Robbins’s sale of her work through him; and that this resulted in Dumas ‘blacklisting’ Robins from future purchases of her work. Robins now claims $8m compensation from Zwirner for violation of their verbal consignment contract, in particular their non-disclosure agreement.

Zwirner is defending Robins’s claims. He denies there was any verbal or written non-disclosure agreement with Robins, or that he told Dumas of the 2004 sale in order to gain favour with her. Zwirner asserts that, after he became Dumas’s dealer in 2008, he was obliged to ‘act in accordance with Dumas’s expectation of being informed of such sales, and to inform her that the new owner would be willing to loan Reinhardt’s Daughter for important exhibitions’.

The court is currently hearing testimony from the parties and their witnesses to decide the facts – who agreed what, with whom and when – in order to judge whether there was a breach of confidentiality by Zwirner. But the case has already revealed unique insights into current artist and dealer practices at the high end of the contemporary market.

It is not clear whether Zwirner’s assertions of his obligations to Dumas (to disclose to her the identity of the buyer of Reinhardt’s Daughter) was expressed in a written artist/gallery deal, or was an implied term of their verbal agreement, or was merely his interpretation of his ethical and professional duty to the artist. These are important revelations, because the practice of most dealers is jealously to guard the identity of their purchaser clients, not only from other dealers but also from their artists whom they fear would cut out the dealer by selling directly to buyers in the future. Credible evidence of such fears and related protective practices was given in 2005 by the Society of London Art Dealers (SLAD) to the UK’s Culture, Media and Sport Committee of the House of Commons, which was investigating the art market. SLAD gave written evidence describing how ‘responsible art market professionals already operate’ and arguing that a draft model agreement or a code of conduct would not be as effective as the production of a ‘checklist of the points which dealers should keep in mind in drawing up agreements’. SLAD asked for less, not more, regulation.

During the committee’s oral public hearings, questions asked by members indicated the nature and extent of their concerns. For example, Sir Tom Lighten from SLAD was asked by a committee member, ‘Tell me, presumably you did not get to be a knight of the realm for not showing invoices to artists?’ and ‘Can you tell me a bit about galleries that do not show (invoices to artists). Is the practice widespread? How does it occur? Is it that artists are so desperate that they will accept any practice if the gallery will help them?’ To which Sir Tom’s reply included the comment that ‘there are obvious reasons that you would not show the sales invoice for client confidentiality – it has the name and address of the client – but I think there is much greater transparency … I am totally in favour of as much as possible being put into writing. Certainly that is the practice we follow’. In its subsequent report, The Market For Art, the committee strongly recommended that the UK Government should actively pursue the development of best practice guidelines for the art market and that relevant auction legislation, some dating back to 1845, should be reviewed and updated.

The multi-billion-dollar art market is one of the least regulated in the world. Art market professionals and collectors and artists are left pretty much to their own devices – bargaining power – to conduct their business. In the absence of legal regulation (of which a rare example is the Artist’s Resale Right operating throughout the EU, and a score of countries beyond, but not yet throughout the US), contracts are the key business tool for securing deals. Contracts of sale, artist/gallery deals and non-disclosure agreements do not need to be made in writing to be legally binding and enforceable in the business Anglosphere – including the UK and the US, which are two of the world’s leading art markets. It is regrettable that there still persists in these markets the arcane and archaic tradition of relying on the handshake, gentlemen’s agreement or relationship of personal trust to do art business deals.  Whatever the eventual court decision in the Dumas case, the testimony of the art market professionals already suggests that it is a case of the biter being bit.

© Henry Lydiate 2010

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This article is from the Artlaw Archive of Henry Lydiate's columns published in Art Monthly since 1976, and may contain out of date material. The article is for information only, and not for the purpose of providing legal advice. Readers should consult a solicitor for legal advice on specific matters. Artists can get free online legal information from Artquest.