The year was 1973. The setting was a New York Auction House, Sotheby Parke-Bernet. Local taxi entrepreneur and art collector Robert Scull was having a sale of his predominantly Abstract Expressionism and Pop Art works. The results were extraordinary: records were set for living artists including Cy Twombly, whose painting sold for $40,000: over 50 times the $750 Scull had originally paid it.
But it was another work that made this a night to remember. Robert Rauschenberg’s Thaw combine, sold to Scull for $900, went for $85,000. Immediately following the sale, Rauschenberg angrily confronted a smug Scull, outraged he had been ‘working his ass off for you [Scull] to make that profit’, whilst he – the artist – didn’t see any of the upside.
Primary versus Secondary
The auction gave contemporary viewers a glimpse of just how great the investment potential of contemporary art could be, but it also exposed an inherent unfairness in the model: how do artists capture the eye-watering uplift in value on the secondary market? Although Scull quickly replied to Rauschenberg: ‘I’ve been working for you too: we’ve been working for each other’ - presumably as the sale promised to inflate the primary market value for his work - Rauschenberg didn’t look particularly grateful.
Many artists have since faced similar frustrations. The Scottish-born, Trinidadian-residing painter Peter Doig recently admitted he’d added up all the prices his works had achieved at auction, after his 1990 work Swamped set a new record when it sold for $39M at Christie’s in 2021. He calculated that whilst his paintings had generated $250M in auction sales, the amount he received for them was just $65K.
He commented on the figures: "I think what most people don't understand [is] there's a massive, massive gap between the primary market — which is where an artist sells their work to someone, usually through their gallery — to the secondary market, which is, you know, a whole other world. And there's no relationship between the artist and the buyer in the secondary market."
Whilst this is undoubtedly unfair, both Rauschenberg and Doig are amongst the highest echelons of profitable artists and are therefore guaranteed to (eventually) command huge prices on the primary market. Rauschenberg died a rich man, with his estate worth around $600M.
Paying for the privilege
The vast majority of artists will of course never reach these peaks. In fact, artists on average are paid a shockingly low wage on the primary market. A recent report from ‘Structurally F–cked’, entitled ‘An inquiry into artists’ pay and conditions in the public sector in response to the Artist Leaks data’ evidences the extent of this. Whilst focusing on public commissions, the hundreds of artists who took part detail the going rate for making art in the UK in 2023. The report finds that the overall median hourly rate was just £2.60, dramatically below the UK minimum wage of £9.50. As they are public commissions, these works will not be resold, but the figures clearly represent how little artists are paid to create work in 2023.
Make hay whilst the sun shines
Even for fortunate so-called ‘market darlings’, rapid success is not always a good thing. Over the last few years, young women painters including Flora Yukhnovich, Antonia Showering and Anna Weyant have all experienced unprecedented price inflation, and an exponentially widening gulf between their primary and secondary markets. Take the example of Weyant’s Summertime, which was sold on the primary market in 2020 for $12,000 before fetching $1.5M at auction less than two years later.
Whilst – as is the case of Doig and Rauschenberg – it may be tempting to dismiss these concerns as short-term pain versus long-term gain, with the current dynamics of the market it is possible this may be the highest level of success and pricing these artists reach. This was famously the case with artists like Lucien Smith and the so-called Zombie Formalists. Equally, such speculative purchasing – where works go for 10 times their auction estimates – may also harm the artists careers. This is because stability is highly prized in the art market, to such an extent galleries will do anything in their power to avoid volatility.
Towards a fair deal
The question is therefore how best to give artists a stake, or royalties, in their work as it enters the secondary market. Whilst interesting developments are taking place within the web3 art economy, the Artist Resale Right currently represents the best attempt to do this with physical works.
Introduced by the EU (and subsequently the UK) in 2006 following concerns of this nature, it gives artists a share of up to 4% of secondary sales, although the payments are capped at €12,500. This appears to be gradually becoming enforceable in the UK, after some art market businesses were seen to be non-complying by not disclosing the relevant sales information. Whilst this may be a positive step, if we take the examples of artists such as Anna Weyant it’s clear the cap of €12,500 would be much less appealing than the 4% of her secondary market value.
This is where Mintus and its primary market share structure come into play. Mintus’ primary concern is to open up the world of art investment through its innovative platform, meaning investing in iconic works of art has never been more accessible. As well as bringing in new players to the art market, we are also deeply committed to improving it for its most important stakeholders: artists.
Our primary market share structure is a bold new initiative that aims to tackle the lack of royalties received by contemporary artists on the secondary market. The way it works is simple. Mintus partners with a gallery and artist, selecting work to acquire so they can be made available online to our investors. Instead of acquiring 100% of the work, however, we only take 80%. This still ensures the artist gets paid, but they also keep a 20% stake in their work. When the work is then resold down the line on the secondary market, they will benefit in a wholly unprecedented manner by directly sharing in the profit.
We are proud to be the first business to introduce this unique offering, and sincerely hope we can make the art market a fairer place for its most important members.