But Who Supplies the Art?

Have you ever wondered about supply chains and how they apply to artists, galleries, museums and other vendors of art and art experiences?  Probably not.  Most of us are not artists or art enthusiasts to think about supply chains but it's actually quite interesting to consider.

First of all, yes, galleries and museums have supply chains. Your favorite cafe has a supply chain.  Your local farmer's market has a supply chain.  And your work of art on the wall had a supply chain.  The supply chain for any given thing is made of resources flowing in, where they are transformed into the outgoing product or service sent outward (sometimes through distribution channels) to the last person holding it. A supply chain is a long term relationship between an artist and suppliers to make sure artwork gets made on time with good quality. So just for funzies (because I know you're dying to hear about art supply chains) let's look at supply chains for artwork as a product and with exhibitions as the service provided by both galleries and museums.

Please stay awake.

Alright... it will help to outline some general (oversimplified) differences between museums and galleries before getting started. Museums sell a service or “experience with the art” through tickets, while galleries sell a “good” which is the artwork itself. However it should be noted that galleries may also provide a free service of displaying the art to the public, and sometimes gallery presentation can even rival museum quality. And of course museums sometimes sell art and its friends in the gift shop.  At the risk of oversimplification (and I'm pushing it here) the gallery is a space to view and purchase art, where the museum is a space to view art on a paid ticket basis.  It would then follow that the primary business goal of a gallery is to have art that, hopefully upon viewing, prompts a purchase, and a museum’s goal is an exhibition that is worth purchasing a ticket (or making a major gift) to see. This is not a hard classification, but just a general difference that will help the reader while comparing supply chains for both types of venue.

One of the dangers of oversimplifying exhibitions as a paid service is that
tickets are often heavily subsidized by endowments, grants and gifts. via

Having laid out these general differences between a museum as service and a gallery as a seller of goods, let’s return to supply chains. The management of resources flowing in are referred to as inbound logistics, which includes oversight and control of first tier and second tier suppliers. But whom exactly are the first and second tier suppliers for artwork? Well that depends on what you name the transforming agent (center) of the supply chain. It could be argued that a gallery or a museum is the transforming agent and that the artist would be a first tier supplier. But I think it is actually more fair to view the artist as the transforming agent of the model (Figure 1).  After all, some artists have big egos to feed, so let's just make them the center of this universe.

Figure 1: Primary Art Market (just a draft!)

An artist-centric supply chain views the artist as the transforming agent for the product, which would be the artwork. Inbound logistics are simple for this model where ideas and materials are the first tier suppliers that are then transformed by the artist into the work of art. One could also ascribe ideas to second tier suppliers like education, art history or theory, etc. And of course some artists do oversee art supplies all the way back to where the raw materials are sourced - for example I lived down the street from the Jack Richeson factory in Appleton, Wisconsin and I bought my paint right at the pump (so to speak)!

A small hiccup to this model is that some blue-chip artists act more like branded lines of merchandise (Warhol, Chihuly, Koons, et al.) and have enlisted crews of artist assistants to make the work for them. A great conundrum for the art world is whether these assistants are first tier suppliers or if they are a component of the artist or brand itself. Most of the controversy around this practice of outsourcing labor (or even ideas) isn't whether the assistants actually participate in the creative process, as they absolutely do, but the lack of transparency and credit for their contributions to the audience and ultimately the buyers.

Even with these complications over suppliers, comparatively speaking, outbound distributers for the art market are far more complicated than inbound suppliers because artwork can have a tremendous afterlife once it leaves the hands of the artist. During (and after) the artist’s life their work may be bought and sold again and again through galleries, collectors, dealers, art fairs, auctions and museums. This resale complicates the model, since most supply chains usually end at the buyer, however resale of art means we have another distribution point. Museums may be a special exception to this since artwork is typically accessioned into a museum's collection, effectively ending the buying and selling life cycle. In some rare (often controversial) cases, museums may “deaccession” works for resale, but the prevailing tendency for museums is to keep their collection, which makes them a fairly stable node in an otherwise chaotic distribution network.

Museums are assumed to be an endpoint for artwork, witness the controversy
when the collection of the Rose Art Museum (above) was almost sold off in the
 late 2000's (or the recent underwear bundle at the Detroit Institute of Art).

The outbound supply chain for a single artwork may be comprised of many distributors, like galleries, auctions and art fairs, who sell work to collectors or dealers, who may keep or sell the work again. A simple difference between dealers and collectors could be that a dealer is a collector who intends to resell. It should be noted that there is a distinction in the artworld between first sale and subsequent sales, dubbed primary art market (Figure 1) and secondary art market (Figure 2). The primary art market predominantly consists of sales from an artist’s studio or website, or consignment at a gallery or art fair. Buyers are typically individual collectors, although sometimes businesses may purchase for their collections (Microsoft, Progressive and Deutsche Bank for example). Since these artworks are more or less owned as an asset by the business, the collections may risk being "liquidated" into the secondary art market, just a like a dealer may resell the work when the market is right.

Figure 2: Secondary Art Marker (just a draft!)

The secondary art market consists mostly of dealers who sell the work through galleries, auctions or fairs. Auctions sell work on behest of a gallery or dealer for a percentage or minimum of the total sale. If a consignment gallery represents an artist at an auction, the artist’s cut comes after the gallery’s cut. A dealer is usually an individual collector or someone working for a secondary market gallery. Only under the most specific contractual obligations would a secondary art market dealer ever have to compensate the original artist during the resale of their work. Note: When an artist receives their initial cut of the original sale of their work, they are almost always completely removed from resale negotiations and commissions, which can be a point of frustration for artists.

Since artwork is assumed to appreciate in value (unlike some products such as domestic cars or electronics which lose value over time), the secondary art market almost always operates with higher yields than the primary art market. For this reason, a buyer can almost always expect to pay more to be the second (or third or fourth) owner of a work of art than the first and so buying as close to the source (the artist) as possible will create the most gain for a resale. In a very rare case, an artist frustrated with the higher margins in the secondary art market may proceed directly to an auction, bypassing initial consignment of their work through the gallery system. Such was the case of Damien Hirst’s oeuvre “Beautiful Inside My Head Forever” which sold for $198 million at Sotheby’s. However Hirst’s “bypass” was still subject to Sotheby’s fees for its auction services.

An auction of Damien Hirst's work from 'Beautiful Inside My Head Forever'
at Sotheby's in September 2008 via

Besides front end sales, another distribution method for galleries is to have a revolving back room inventory of artwork. Each month the gallery may have a new exhibition of works in the front end of their gallery space, but a flat file and back room storage can hold considerably more works.   These back room works are also on consignment and/or may be made available on the web.  This inventory will hopefully change frequently as these works are hopefully sold. Galleries vary greatly on this matter, as some may have no backroom inventory at all and still others may be principally a back room inventory of works for sale.  Flat File Boston is an example of a back room only inventory.

Although a front end gallery exhibition may be beautiful to behold, a consignment gallery needs sales to hack it.  However some contemporary or "bleeding edge" galleries may have more radical artists and ephemeral exhibitions more for market strategy than sales. These so-called 'statement exhibitions' are essentially free services that act to increase the likelihood of other sales through word of mouth promotion, media attention or other boons. Statement exhibitions can boost the clout and value of other artists or the gallery without necessarily selling any work that month.  In this strategy, the gallery temporarily suspends its role as a distributor to act as a promotional agent for future exhibitions.

Let’s return to the distinction between galleries and museums as they can provide a good discussion between distribution of art as a product and a service.  Since museums may function as a service, they may also act as a promotional agents since they are not focused on sale of works but rather on getting visitors in the door for ticket sales, which garners attention for the artist.  The exhibition staff transforms loaned or purchased artwork into a ticketed service. A museum may work directly with an artist or through the artist’s gallery (or multiple galleries) which act as a representative, negotiating contracts and promotion for the artist, among other services. Contracts between artists, galleries and museums can vary greatly. The exhibition costs are usually on the museum but other services, like shipping, can fall on anywhere between the museum, gallery and artist themselves. 

Significant to this discussion of distribution networks, museums are not only provide services with the art, but they also can operate as buyers of art.  Museum may purchase works for their collection from auction, dealer or artist.  Museums may purchase a work from an successful exhibition in their own space or they can also launch exhibitions entirely from their permanent collection.

An overhead view of Art Basel Miami, courtesy of Catherine Fox
One final note would be that the recent proliferation of art fairs has challenged the exclusive "either-or" choice between art as either service OR product. Art fairs are typically ticketed but the work is almost all for sale. This model of ticketing to see an exhibition of works for sale used to be more common (such as the Paris Salon) until museums began to take the lead in the market of viewing art as a service. Art fairs like the New York Armory, Art Basel (Miami and Switzerland) and the Venice Biennale can now far outpace the enormity of an art viewing experience at a museums, often flooding a city with hundreds of international galleries for several weeks.

Whether a product or a service, art has value and is heavily commodified. This discussion on the supply chain of artwork can be very difficult for art enthusiasts and (of course) artists to stomach. Most everyone involved in the art world will tell you it is a passion first rather than a business. However, where there is money involved, there are good and bad ideas. And so tactics have evolved to make the supply chain flow faster and more profitable.