Private view

The bursting of the contemporary art bubble has been a comedy of errors. But what will the market's collapse mean for museums and artists?
February 28, 2009

I watched a funny video on the internet the other day. It wasn't an uploaded Monty Python or Two Ronnies sketch, but it reminded me of their best jokes. It was on the website of one of the world's largest auction houses, Sotheby's. Titled "The Contemporary Art Market: A Candid Look from the Inside," it was a corporate attempt to explain the sudden decline in prices for contemporary art.

In the video, Tobias Meyer, head of contemporary art at Sotheby's (and also the generalissimo of the contemporary art boom and the man who said the art market was "non-cyclical") began with consummate vagueness. "I'm here to talk about our series of November sales which we just completed—which clearly was a very, very important event in the art market because it happened in a dramatically different financial environment than what we had witnessed previously." How long did it take him to come up with that sentence? Important? In the last round of contemporary art sales, the big auction houses made around half of the minimum they had estimated.

The denial of facts in the face of overwhelming evidence is one of the richest inspirations for great comedy. The art world is offering some marvellous opportunities in this vein. For two months now auctioneers, dealers, collectors and commentators have been performing the most remarkable contortions. In his video, poor old Tobias Meyer can't make up his mind. Should he admit there was a bubble or not? "There is a return to seeing the real object and making a decision based on that," he says, adding comfortingly, "We have several veteran experts who have seen these changes in the market before." By which he means they were working during the 50 per cent price crash in 1990. This sounds like an admission that we have just been through a bubble. Then again, maybe it's not, because the market now presents "opportunities," implying prices will go up again. Meyer's confident demeanour reminds me of the Black Knight in Monty Python and the Holy Grail after his arm is chopped off. "It's only a scratch," the knight claims. "I've had worse."

What we are seeing is the doyens of the art world desperately trying to disassociate themselves from the market they have been part of. "The market is making decisions about what is great and what is not so great," Sotheby's experts tell us. "What's great sells." The excuses with which the art world talks down the downturn will only multiply. They will be able to say that there is less good quality work for sale—because in a market of lower prices, collectors are less keen to part with their best pieces. At the same time, they will claim the opposite and point to the high prices fetched by exceptional works which billionaires, facing economic ruin, will be compelled to sell.

Yet the real question is, as in the rest of the economy—how bad is it going to get? There was one revealing moment in the Sotheby's video. Talking about an Yves Klein blue monochrome, which he'd managed to auction in November, Meyer remarked "Between 1998 and 2006 the world record price for a contemporary painting was around $20m… So now the $20m for Yves Klein is back at the world record level that it had maintained in 1998-2006." True, $20m is a lot of money for an Yves Klein, and probably way more than will be paid for one in 20 years' time. Nevertheless, while Meyer meant to argue that prices have only dropped to their level of two years ago, he sounded like he could be expecting a move back to 1998 levels—the "zero hour" of the contemporary art boom.

Other arguments revolve around where we will be when the dust settles. At Art Basel last June, the fair's former director Sam Keller told me he imagined that a day would come when works of art would be sold and downloaded over the internet in the way that music is. Even then it seemed amazingly far-fetched for a market for which the entry level price was £5,000. Some think that the place of contemporary art in our society has been changed so fundamentally that the clock cannot go back. Artists, they say, are the new rock stars: even if the money disappears from the market, the public will still be attending museums in the record numbers notched up in recent years.

To which I say, dream on. Museum attendance was driven by the media excitement around the commercial success of the art market. The huge profits of companies funded big shows and the donations of billionaire businessmen bankrolled museum expansion. The expansion plans of scores of museums have already been put on hold or in doubt—including those of the Tate Modern—and without the big attractions one may expect attendance to slip.

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The experts are right about one thing, though. When the world economy grows, the art market will grow again. But not every economic boom is accompanied by the same scale of growth in art as the 800 per cent we witnessed in the last five years. Furthermore, contemporary art booms come and go, but each time a new one arrives it brings a set of fresh names. The old stars never recover their former financial glory. That's what happened to Julian Schnabel, whose prices boomed in the 1980s and never recovered from the 1990 crash. Still, Schnabel has been able to reinvent himself as an Oscar-winning film director. Damien Hirst (pictured, right) recently unveiled his reaction to the demise of the art bubble, which turned him into the wealthiest contemporary artist of all time. He has started to paint in what looks like a faux Baconesque style. Hirst may do better to take a leaf out of Schnabel's book and try his hand at celluloid.