8 Economic Forces That Can Increase Art Sales

 Wait a minute... profit in the arts? Most every artist I talk to is upset that their work isn't selling more often or for more money.  So let's be honest, most artists we know ARE NOT living off sales of their work.  Artists are not benefiting from giant figure sales in the secondary market, except for the notoriety, because these profits go towards dealers.  We've all heard many ideas on how we can bone up art sales for the local artist but have we looked at the more abstract economic factors at work here?  In basic economics for any particular industry there are several forces that increase profitability, but what are the market forces that could drive up profits in the arts?  Well, here's eight of them.  Some of them are more obvious than others, some of them are more worn out than others, and some of them just might work.

#1 INCREASE THE TARGET MARKET SIZE
Big art, little art, expensive art, cheap art, get more people to buy things called art.  

Well of course! An increase is market size is obviously good for art sales.  But let's unpack what it really means to increase market size.  Are we talking about the art market as a whole?  Surely record sales at auction houses mean little to small potato artists.  Still, the argument that if more people are demanding art then the amount of successful artists will grow is true, but only as if is specific to your work.  In the big picture, any sale of art is good right?  Yes, but in the micro climate of your local art community a particular niche needs to grow in market size too.  In other words, this growth has to be real in the specific genre of work you are producing (ab-ex painting or landscape photography for example) and in the specific markets you're selling in, not just the world art market as a whole.  Still economically speaking, growing the market is fairly fool-proof way to grow sales.  If the target market for your genre doubles, the revenue of works sold in that genre will likely double as well.



#2 PROMISE TO RAISE THE FUTURE PRICE
Buy it now and sell it for more later!  Or hey just buy it now and keep it - that's cool too!  
Just look at it being worth more everyday!  

We're all familiar with this claim about artwork, "It will increase in value indefinitely!"  Maybe, but only if it's art that holds value over time. Fortunately art is in good company as one of the few purchases in life - like gold, stocks, collectibles, real estate, etc. - that can hold or accrue in its financial value over time.  This value is appreciative as opposed to domestic electronics and cars which are assumed to depreciate over time.  Also, art is assumed to increase its emotional, cultural or personal value over time, adding an intangible benefit to buying art now versus later.  In short, if value consistently increases over time, speculative buyers will buy earlier. Investment theory holds that when potential buyers know that the value of their purchase will stay the same or increase over time, they are more likely to purchase.



#3 INCREASE THE INCOME OF THE BUYING MARKET
Why is there always a bunch of broke people hanging around the gallery who want to buy art but "just can't afford it"? Why don't you go get your act together and come back with some discretionary income?

Every artist has heard this, "I wish I could buy your work but money is tight right now."  Speaking for myself, I have a secret wish list of art that I'd buy if I won the lottery.  What if everyone in the gallery had an extra hundred bucks on them? This economic argument assumes that the market that already buys art had more money then they would purchase more artwork, more often or at higher prices.  Just imagine if receptions were crowded with people fighting to buy the art instead of eating hummus.  Who the hell do you think is paying the rent at these galleries?  Most artists, galleries and museums have a wealthy collector or two.  It stands to reason that if wannabe or low volume art buyers had better paying jobs or a padded bonus then there would be more purchases of artwork overall, more often or for higher prices.



#4 DECREASE COMPLEMENTARY PRODUCT PRICES
Want more people to buy art?  Make everything around it cheap!  Make framing cheap!  
Make shipping and installation cheap!  Make art fair tickets and lodging cheap!

Complementary products are those things that go together, for example batteries and battery operated toys are linked in value. If the cost of batteries goes up too much, the sales of battery operated toys will go down. Conversely if the cost of batteries goes down, sales of battery operated toys should go up. Get it? So if the cost of art services like framing decrease then more people will purchase artwork because custom framing is an attractive and affordable add on. Also consider that transportation, lodging and expenses for art fairs can be cost prohibitive.  If traveling to an art fair were $100 cheaper, the traveler would have an extra $100 to purchase artwork outright.  Lowering gallery commissions is another avenue to reducing overall prices for artwork. Reducing the standard 50/50 split to 30/70 would reduce the price tag of art by 20%.  Couple that with more affordable framing and sales would hopefully go up, but this does mean less income for art services like galleries and framers. 


#5 INCREASE SUBSTITUTE PRODUCT PRICES
"Holy jeez tickets for Billy Joel are like $200!  I guess I'll just buy a painting instead." said no one ever.

By increasing the cost of direct competitors to artwork, like comparable forms of entertainment and unique objects, one would hope that sales will go up as the market chooses art as a substitute for their first choice. However, the substitute must truly be a reasonable alternative to the buyer's first choice. A movie-goer, a concert-goer, a football fan, a scifi novel enthusiast must prefer to switch their first choice to purchase a museum ticket or a small work of art.

A great conundrum in the arts is that while gallery admission is typically free, the average cost for a work of art far exceeds the average cost of a movie tickets or even a full weekend at a music festival. Therefore, impulse buys of art are rare. Sure, there are a few people who buy art on impulse but only if the cost is completely within their discretionary income.  Be that it may, if other entertainment options increase in cost until it equals a work of art both in cost and perceived value to the buyer, it stands to reason that the purchase could go either way.



#6 DECREASE COST OF PRODUCTION
Dude, I found silkscreen supplies on Craigslist and I finally cleaned out the basement.  
Guess who's gonna make a bazillion print edition?

Every artist already does this in some manner: lower your costs to increase profit. For example, if an artist can buy bulk, use cheaper materials or processes, bundle or barter art materials and studio space, etc. they will be spending less and therefore make more of a margin on artwork sold . One major issue with this tactic is that artists have been employing this to diminishing returns since industrial manufacturing already toppled craftsmen and trade workers.  In many industries, cutting prices is known as "a race to the bottom".  Indeed, factories keep increasing efficiency to lower their prices but as the trend continues industry wide there is a tendency for only the largest scale operations to stay in business and pushing out smaller operations who cannot afford the small margins. Most artists and galleries are already working in very small operations with little ability to streamline the making and selling of artwork. Still, any ability to reduce overhead equals more profit on work sold.



#7 DECREASE TAX AND REGULATION OR INCREASE SUBSIDIES
So I'm "too little to succeed". Where's my government bailout?

With this tactic, we're looking at the government to solve our problem through tax cuts and subsidies... and I'm skeptical. The US government has not always paid much attention to the arts.  National, state and local grants are competitive and programs like the "one percent law" are rare.  However, the US government favors businesses (both big and small) and more than ever individual artists need to see this potential for savings. Artists who don't operate as small business lose out on tax benefits. The difference between a hobby and a business is just a few tax forms apart. Many artists don't know that their studio, materials, transportation, framing, et al. can all be written off as a business expense. It's also important to note that interest paid on student loans is credited on personal tax returns (though usually not directly for your business). For most artists I know, being an artist is like running a business that loses money, which is fine since you get some slack from the IRS for a losing business! The artist that can reduce their overall tax burden stands to benefit. Imagine if a million artists could save $100 a year on their tax return.  That's $100 million for artists nationwide.



#8 DECREASE NUMBER OF FIRMS
Hey could you go sell art somewhere else?  This is kind of my thing.

Probably the most controversial tactic for an artist to turn a profit is to knock out their direct competitors.  Most artists are friends with their direct competitors so that's not going to go over very well.  The art industry is different from other industries like major manufacturing and retail where monopolies or oligopolies battle for turf.  Art is a little more interwoven, at least on the local and regional scale.  The phrase "a rising tide floats all boats" is often used to describe the strategic dependence that artists, galleries, museums, art services, publications, colleges and other organizations share in order to bolster their region's art market as a whole.  Regionally, the market structure for art usually functions as a "perfect competition" where market share is widely distributed.  This is not as true at the national or international level where major auction houses, blue chip galleries and dealers will definitely benefit from edging one another out.

So that's it for the economic forces.  Personally, I think increasing the income of the buying market is the best option going forward.  I think that a middle class art enthusiast, particularly for contemporary work, should be a top priority for artists, galleries and museums.  Most collectors are high income but there's always scores of people at reception who wish they had the money to buy what they see on the walls.  Where is the middle class collector base?  Are art-enthusiasts disproportionately broke?  I think this is a largely untapped segment of the American population.