Art Pricing: The Enigmatic Side of Monetization

• A dozen New York City and London art galleries were contacted by CNBC for their current exhibition price lists.
• An artist's career may be safeguarded and the practice of flipping work may be avoided if gallerists choose not to disclose prices, according to one gallerist.
• Blockchain technology is being utilized by some organizations to increase transparency in the industry, as seen with Artclear, a register of artwork.

Some of the art market's sales techniques are met with skepticism from Attorney J.D. Harriman.

He informed CNBC via video call that there is limited authentic information and pricing data available. According to him, galleries rarely display prices for artworks.

According to Harriman, a partner at Foundation Law Group, galleries with a new artist won't post prices, but instead will gauge what their patrons are willing to pay for it.

The artist can sell their piece for $100K if they keep the $50K sale secret, as stated in a follow-up email to CNBC.

If an artwork hasn't sold, the gallery may consider lowering the price, but this information is kept confidential to avoid affecting the artist's reputation.

Unlike with company stocks, there is no obligation to disclose the worth or ownership of artworks. Similarly to real estate, insiders often assess the value of an artwork based on its potential market demand.

Nine New York City art galleries responded with pricing information, while none of the London galleries did.

The Society of London Art Dealers aims to promote public confidence in the responsible dealing of fine art by encouraging its members to display prices, as stated by Paul Hewitt, director general of the organization.

Photographers and art advisory companies may wait for a market maker or someone with cachet to show interest in their pieces if they do not display prices, according to Harriman. Additionally, collectors may overpay for parts of an artist's collection they have not yet acquired in order to keep the value of their own collection high, said Harriman.

Collectors tend to keep the value of their art pieces private, just as they do with their stock market investments and overall wealth.

Is it illegal, unethical, or just shady for everyone to use tactics to maximize sales in a market, as Harriman said?

In every sale of a used car, sellers urge buyers with phrases like "last chance" and "one time only."

Why galleries don't share prices

London gallerist Lucca Hue-Williams explained that one reason galleries don't publish prices is to protect the artists they represent. "Prices being sent around can often create speculation and a bit of a frenzy from an artistic standpoint," she said in a phone interview with CNBC.

"We do not want flippers entering our gallery, Albion Jeune, and comparing prices to see what they can sell our work on for," Hue-Williams stated. Our gallery showcases emerging artists whose work is likely to be well-known in their home countries but less recognized in the U.K.

Hue-Williams strives to develop their careers by ensuring that clients are deeply connected to the artists' work and may return to loan pieces for future museum exhibitions.

Pricing work can be a complex decision for early-career artists, according to artist and curator Gosia Łapsa-Malawska. She said that new artists often ask her about pricing and may choose not to display prices during an exhibition because they prefer to negotiate a figure. Łapsa-Malawska advised emerging artists to start at a certain level and to only go up in price, emphasizing that dropping the price is the worst thing an artist can do.

Not displaying prices for artwork can deter potential buyers, as they may be hesitant to inquire about the cost, according to Łapsa-Malawska, the curator at London gallery The Muse at 269, which publishes prices online.

The display of the price of art in a physical gallery can have psychological and emotional effects on buyers, according to Łapsa-Malawska. She explained that buyers might feel like the price is a barrier, preventing them from liking the work.

A mysterious market

Tony Tjan, CEO of Cue Ball Capital and an art collector, defines the value of an artwork in a similar way to other collectibles. He considers factors such as popularity, scarcity, and credentialization, as well as whether something has organically captured the zeitgeist. Experts can also provide advice on the value of a piece.

The cost of expertise can hinder people from purchasing art, as stated by Charlotte Black, the founder of Artclear, a company that verifies artworks and maintains information about them on the blockchain.

Finding verifiable data about artworks is challenging and costly, necessitating expert advice and assurances, which makes the market exclusive, as she explained to CNBC via email.

Artclear aims to increase access to the art market for more people, similar to how stock trading platforms have democratized the financial markets for retail investors. Black stated that this would enhance the confidence of digital marketplaces and decrease the expenses associated with transaction fulfillment.

Black stated that the art market is a mystery to many people, but it becomes clear when you are an expert or have access to one. It is difficult to determine what you are purchasing, so it is best to buy only what you love.

Tjan, who is also co-founder of nail salon chain MiniLuxe, agreed with the sentiment that value should be driven by what it means for you. "Yeah, it is mysterious," he said. "It's art, right?"

Although there is more online information available to aid in discovery and valuation, there is still no highly liquid global marketplace, which contributes to the perception and reality of 'black box' pricing, as Tjan explained in a follow-up email to CNBC.

"Although I enjoy purchasing artworks at auctions, I prefer to establish connections with artists and acquire or commission pieces directly from them," Tjan stated.

Making art affordable

According to Ramsay, a collector and industry expert, the upscale art world aims to create a sense of exclusivity by not making prices transparent. He has observed this in high-end shops and events, where prices are not visible on luxury items such as clothes, watches, wines, jewelry, and cars. The art market follows the same pattern, he said in an email to CNBC.

The Affordable Art Fair, founded by Ramsay, is a series of events that showcases artwork in more than a dozen cities worldwide. The Battersea event, which runs until Sunday, features prices ranging from £50 to £7,500.

He stated that the goal is to make art buying accessible and inclusive, to educate individuals and empower them to begin or expand their collections.