top of page
  • Writer's pictureAndrew McIlroy

'Keeping Up Appearances' masks financial strain – Art galleries forced to rethink future

Magnus Resch, author of the controversial Management of Art Galleries (Photo: Bloomberg Pursuits 2015)

I have always admired gallery owners. Individuals who take on risk, setting up business in an endeavour they no doubt love.  And they deal in real things of value, art - not useless commodities, not natural therapies, not self-help advice.  Most often they are found working from a pristine bricks-and-mortar gallery space, rather than from some faceless, virtual corner of the never-space.

But is the sense of urgency that again surrounds the present-day art market and the drumbeat of freshly minted, commercially focused art fairs emerging over the past 5 years or so crowding out galleries for attention not least the fault of the gallery model itself?  Are these galleries that bravely resisted the ravages of the GFC to remain standing, running out of excuses as to why they cannot make money?

The fact that the punishing real estate rents in places like London, New York and Sydney is harming the gallery system comes as no surprise. Yet the problem is starker.  The majority of galleries in Australian are in the red, perhaps even technically insolvent.

This leads to one of the key problems - that of keeping up appearances and not being open and honest with their artists.

Melbourne's Axia Modern Art went into liquidation in 2011 owing artists and investors $1.5 million

Speaking at the annual Arts Business Conference in New York in September Vanessa Carlos, of the gallery Carlos/Ishikawa, offered a solution.  Honesty.

“I think it depends on what you are in it for as a gallerist.  If you are in it for sincere discourse, your artists will stay with you for that reason, and you don’t have to become Chanel. That’s a pressure that lots of galleries have, because they are less committed to the art itself than to this branding exercise, and they get themselves into a lot of debt. It was really surprising to see how very few galleries were making any money.”

“The challenges of small and mid-sized galleries are well documented: we all know that overheads and the expectations compared to the prices of the works for sale are very unmatched,” Carlos continued.

“For me, the problem is the lack of responsibility on every level - from galleries, collectors, and artists - in terms of how we support artists and galleries at every stage of their career.  Everyone likes to be very shocked when galleries close, but it is very simple.”

“It’s not just about rents and fairs being expensive. We know that,” Carlos said. “It’s about a general attitude about what is art, what do we want out of art, and how do we have a responsibility to ensure that we get that.”

The Online Revolution Falters

For years, web sales have been touted as the solution to circumvent the problems posed by the brick and mortar model.  Whilst somewhat supportive, Carlos was not overenthusiastic:

“Online sales are important, and in fact a lot of my sales happen online. But a physical space is always going to be important for me because an artist makes a lot of the work in the gallery space, which is also a place for experimentation.  And of course, the physical experience of art is one of its greatest joys, so why would you want to remove that?”

In the Australian experience, in an effort to shave costs on staff and overheads there has been a noticeable shift as galleries turn from shopfronts to more utilitarian premises – with mixed success. This bears out the view expressed by Magnus Resch in his controversial leaflet, 'Management of Art Galleries’.  

“Collectors will go wherever the art is, and everyone else - the inevitable crowds at openings, the passers-by who pop in to see whatever’s on view - has no bearing on the gallery’s bottom line.  Paying a premium for a desirable location, is therefore pointless. 

There are a few standout exceptions, which to my mind only proves the rule.

Writing in BloombergPursuits, James Tarmy argues that Resch identifies the heart of the problem as lying with everyone selling the same thing. (Why Do So Many Art Galleries Lose Money? James Tarmy, BloombergPursuits, 31 July 2015)

 BloombergPursuits, James Tarmy

According to Tarmy, Resch points to the vast majority of galleries competing for the same, tiny world of contemporary art collectors.  Diversity, he suggests.  This is easier said than done.  Sure, the contemporary collector base is small but groups interested in other than contemporary art are even smaller.  That's basically why everyone is selling variations of the same art; it's simply what the collectors want to buy.

Resch has other points - galleries are terrible at marketing and branding; they’ve done a horrible job of expanding their collector base; they’re not active enough in the secondary market; they fail to innovate their business models in any measurable way.

Tarmy concludes, "The realities of the primary art market depicted by Resch, however, are hard to argue with.  It turns out that the upbeat world of biennials and art fairs is in fact a cutthroat, antiquated, deeply flawed industry hampered by an obsession with keeping up appearances and an often misguided aversion to making money."  

No wonder galleries are forced to close.

Main Photo: Magnus Resch, author of 'Management of Art Galleries' (Bloomberg 2015)

Andrew McIlroy is a visual artist, living and working in Melbourne, Australia 

bottom of page