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Global mega-galleries are putting the squeeze on smaller operators

The empire builders are changing the rules

“This place could rival MoMA,” said a high-profile US curator queuing to enter New York dealer David Zwirner’s imposing, new, five-storey, secondary-market gallery, which has almost 3,000 sq. m of space and opened in the Chelsea district of New York in February. “The space complements the primary market programming of the gallery’s three existing West 19th Street locations a block away,” says a gallery spokeswoman. More importantly, the comparison with New York’s Museum of Modern Art highlights Zwirner’s prominence and influence in the commercial sector.

A handful of established US and European dealers have, like Zwirner, expanded their empires this year, adding both new galleries and new artists to their stables. This has prompted debate about the state of the modern and contemporary art market: is this apparent monopoly unhealthy and indicative of an overheated market, or simply a sign of a robust ecosystem with a flight to quality at the top?

Dealer Larry Gagosian’s unprecedented business model has led to 12 permanent galleries in eight cities, with a third London gallery scheduled to open in Mayfair next year. Hauser & Wirth, Michael Werner Gallery, Galerie Thaddaeus Ropac and Pace have all launched new branches in the past 18 months. More dealers are set to follow suit, including New York’s Marian Goodman Gallery, which plans to open a David Adjaye-designed space in London’s Golden Square next autumn.

The empire-building of mega-­galleries such as Gagosian has changed the dynamic of the international art market: as heavyweights open more spaces and take part in more art fairs, they need, for instance, more stock than ever before. “The old ways of working can’t adapt quickly enough because we have very traditional, and quite uneconomic, business models,” said Marc Glimcher, the director of Pace, at Frieze London in October.

Major dealers are under pressure to keep up with their rivals, and a new space in a prime art centre, such as London or Hong Kong, enables them to be more competitive. The fear of being left behind prompted French dealer Emmanuel Perrotin to open a gallery in New York in September. “I don’t want to be the biggest; I just don’t want to lose [my artists],” said Perrotin (The Art Newspaper 2, October, p8).

Crucially, there is more competition to sign up the best, or, perhaps more accurately, most bankable artists. As 2013 dawned, the rules of artists’ representation continued to be rewritten as the market expanded. Gagosian was rocked by defections. Damien Hirst left the gallery last December after 17 years, while the veteran Japanese artist Yayoi Kusama joined rival Zwirner in February.

In May, Zwirner and Gagosian opened concurrent shows devoted to the art market behemoth Jeff Koons, coinciding with the launch of Frieze New York’s second edition. “The move was a masterstroke on Koons’s part, as he gained maximum exposure on both the commercial and critical fronts,” says a New York-based curator. At the Frieze London fair in October, Koons was noticeably back in the Gagosian fold, with a solo presentation comprising five works including Sacred Heart (Blue/Magenta), 1994-2007, priced at around $23m.

Made for the market

How the powerful international dealerships are fuelling the market for emerging artists has recently come under scrutiny. Frieze London was a prime platform for dealers keen to show work by their recent signings. Works by the Colombian artist Oscar Murillo (born 1986) were in demand at David Zwirner’s stand, with Urgencies in Time No.3, 2013, selling for $120,000. Hauser & Wirth sold Sterling Ruby’s SP246, 2013, to a private European foundation for $550,000 (Ruby parted ways with Pace early in 2012 and was subsequently taken on by Hauser & Wirth, who share representation with the London- and Berlin-based dealer Sprüth Magers).

Murillo also fared well at the London auctions in October; his spray-paint collage Champagne, 2011, went for £212,500 (est £40,000-£60,000) at Sotheby’s; two years ago, his works were selling for less than $3,000. There is also institutional interest in his work, with South London Gallery hosting his first solo exhibition in the UK (until 1 December).

Untitled, 2009, a silver-lined canvas by Jacob Kassay (born 1984), another young market darling often cited as a prime example of an artist whose reputation has been driven by commercial appreciation, fetched £158,500 (est £70,000-£90,000) at Phillips in October.

This kind of market attention can, nonetheless, encourage speculative buying, especially as collectors appear willing to pay premium prices for trophy works. “Murillo is being branded as the next Jean-Michel Basquiat by the speculative part of the market,” says the Belgian collector Alain Servais who owns a Murillo installation (The problem of digesting something that’s bigger than you can handle? #3, 2013). He argues that this current commodification of art has its roots in Ronald Reagan’s 1980s US tax cuts, prompting the growth of the wealth-holding 1% who have since poured their cash into tangible assets such as art and property.

Some commentators say that the quality of an artist’s work may suffer if they move up the gallery ladder. The critic Jerry Saltz said in a recent piece in New York magazine that when artists join mega-galleries “the artist is a brand, and the brand supersedes the art.” A US art adviser adds: “The Matthew Day Jackson show at Hauser & Wirth [“Something Ancient, Something New, Something Stolen, Something Blue”] in New York has suffered a critical drubbing, proving that bigger is not necessarily better.”

But the most serious consequence of the mega-gallery phenomenon may be that smaller galleries are squeezed out in the rush to sign up artists. Ed Winkleman, the co-founder of the video art fair Moving Image, says: “Mid-career gallerists have to spend an inordinate amount of time trying to carefully brand their artists, while working overtime to protect them from poachers, rather than giving them the room to experiment.”

In good health

Not everyone sees these market developments as unhealthy. “This is a far more complex picture than it appears,” says the New York-based art adviser Candace Worth, who argues that the contemporary art market is really a series of mini-markets, each one of them underpinned by wildly contrasting conditions. The biggest galleries publish substantial catalogues, help fund public museum shows and occasionally produce museum-quality exhibitions in their own spaces, she adds.

But Winkleman’s analysis of the past year makes for sober reading: “Ultimately what’s lost here is a support system for the type of art that isn’t quickly branded, leaving a legacy of commercially successful art, which may well represent who we are as a species in 2013 but isn’t the total picture of the art being made today.”

Originally appeared in The Art Newspaper as 'The empire builders are changing the rules'