Skip to content

May we suggest

Interviews / October 23, 2008

Don Thompson: Stuffed Sharks, Empty Wallets and the Art Market to Come

In The $12 Million Stuffed Shark, Toronto economist Don Thompson attempts to show how branding, gallerist–auction house competition and other market forces have shaped recent record-high prices for contemporary art.

With sales chilling at the Frieze Art Fair last week and auction prices falling dramatically following Damien Hirst’s auction high in mid-September, this might seem to be the autumn of the art market’s discontent.

It’s a season that Toronto economist Don Thompson is watching with particular interest. Thompson’s latest book, The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art, uses marketing theories like branding and competitive advantage as tools for understanding how prices like Hirst’s got so pumped up in the first place.

In advance of Thompson’s talk at the International Festival of Authors on Sunday, October 26, he chatted with Leah Sandals about the rapidly changing art market, its implications for Canada and about arts funding and museum management issues. What follows is a condensed version of their conversation.

Leah Sandals: How will the global economic downturn affect the art market, do you think?

Don Thompson: Oh, disaster was written all over this past weekend’s auctions in London. The question was always whether the art market balloon would burst or whether it would slowly deflate. The assumption was that it would flatten out and slowly deflate. But what this weekend tells us is that it’s burst.

This weekend, we had Frieze Art Fair and then Sotheby’s, Christie’s and Phillips de Pury auctions on consecutive days. Frieze by all accounts was mediocre; there was lots of interest but not much buying. The typical pattern at Frieze where people race in and put holds on things and the dealer says “OK, 10 minutes only and give me your cell number,” that’s just not happening anymore.

Granted, art fairs are hard thing to measure because they’re completely opaque. Everybody lies about sales; neither the dealer nor the collector has any incentive to tell the truth. So the only part of the market that has much transparency are the major evening auctions. And the three of them over the weekend were disasters, the biggest disaster being Phillips de Pury, which was described by a couple of dealers as the worst performing auction since 1991. Basically, half of the lots didn’t sell. The lower estimate for the 70 lots was 80.6 million pounds, while it actually only achieved 5 million pounds.

LS: Could anything stabilize the art market at this point?

DT: There are about 100 major contemporary art museums being built around the world. And the four major ones around the United Arab Emirates and Qatar will buy about 500 works of museum-quality art per year for the next five years. A lot of that is being bought privately, and those 500 works a year will prop up the museum-quality part of the market, though we are still holding to see what will happen to prices. The middle market, though, looks as though it’s crashed. Not from lack of interest but from great uncertainty.

LS: Your book focuses mainly on the international market. What echoes of these trends do you see happening in Canada?

DT: Well, it’s very difficult to draw parallels. The book talks about London and New York and the major evening auctions and dealers. And there’s no parallel in Canada to that art market. The best comparison I can give you is that Hirst brought in $200 million with his two-day September auction, and that is four or five years of Canadian sales, period.

We did see signs of that middle market collapse in Canada two weeks ago with Toronto International Art Fair, which had lots of visitors and lots of interest but virtually no sales. I talked to half a dozen dealers who said everyone’s holding back.

But having said that, the Canadian economic system is vastly better than in US or Europe. We’re nervous but employment’s still going up and nothing’s failed. So it’s hard for many reasons to draw a direct comparison. We’ll have a better sense in November, probably.

LS: You mention in your book that you collect art yourself. How would you describe your collection?

DT: Absolutely eclectic. Basically things that my wife and I like. Every few years we sell works off and buy new things. We are currently in the process of selling our last Group of Seven work, an AY Jackson. After that, everything we have will be modern or contemporary art.

Our favourites are not artists, but works. The example is you’ll go to a show of new artist works and there will be 30 works and you’ll like two of them, and you’ll choose one of those two works that touches your soul and speaks to you over time.

LS: Though your book has received numerous positive reviews, it has also been criticized for a lack of understanding regarding the basic meanings of contemporary artworks. What’s your response to these criticisms?

DT: Well, I make no pretense of being an art critic. My dealer friends have said, “You have and eye or you don’t, and Thompson, you don’t have an eye.” So I would never pretend to tell someone what is good or bad. If you go to a contemporary art auction at Sotheby’s in London out of 65 works, dealers say, most people will like two. So there are two works, say, I’d be happy to live with in my home many others for which there is a negative price, that is, I would pay not to have them in my home. Everyone has that reaction but no one has the exact same two or three works they prefer. Taste is that diverse.

LS: In your chapter on museums, you discuss the ways that private collectors are increasingly determining museum programs, like Eli Broad has at the Los Angeles Museum of Contemporary Art. What’s your take on collector interactions in the Canadian context, like the Art Gallery of Ontario renovating to give Ken Thomson’s collection an exclusive exhibition space?

DT: Well of course two things are happening with the Thomson collection. One is it’s a magnificent collection. And secondly, of course, he paid for the space; that’s nothing to argue with. I did happen to like his old space up in the Simpson’s store; there were no people there and you could go live with the art and talk to the curator. But I don’t think anyone disagrees with the move the AGO is making.

What you find in other museums is that collectors are saying is that “We’ll give you 10 works,” and the museum says “We want three,” and the collector says “10 or nothing.” Yet if those three the museum wants constitute three years’ worth of its acquisitions fund, then it might do it—even if the other condition is to have all 10 on display, or to give all auction monies to the Red Cross.

Another impact of collector influence in these circumstances is that you end up seeing in the museum not what the curators want to show you as the most interesting or best examples of an artist’s work, but rather what the artist or the collector thought you should see. Maybe that’s not a critical issue but it distorts somewhat the traditional model of the museum.

One could say that showing contemporary work distorts the traditional museum model too. The traditional model was to show things at least two generations or 40 years old. Because no one can know until 40 years later whether an artwork is historically important. But now you see stuff in museum exhibits being sold by the gallery across the street. You get you get the example of a Murakami museum show in Los Angeles where dealers fund the show and assemble the work and sell it after the show. That’s getting away from the museum model into a collective dealer show.

LS: In one chapter, you address theories on government support of the arts. What’s your take, then, on the arts funding cuts that Stephen Harper announced in August and September?

DT: The book talks only about the visual arts, the art you hang on a wall. And there’s considerable evidence that what’s most effective in visual arts is subsidizing education at the beginning of a career or commissions at the end of a career. Government paying artists for effort only or for buying art has failed whenever it has been tried.

Yet government subsidies go into performing arts too. There, you have a different subsidy model. Because you can’t do opera, for instance, without subsidies. Even if you sold out every show you wouldn’t make enough money to break even.

So presumably the best way to support visual arts is by rewarding merit, not activity. There is a phenomenal amount of art prizes worldwide. I don’t know if they’re successful, but they do reward merit.

LS: What’s next for you?

DT: Well, I think in a couple of years my publisher might want a follow-up to this book on art markets. But for the time being I’m working on another book—sort of applied economics but it has nothing to do with the art world.


Don Thompson appears at the International Festival of Authors in Toronto on Sunday, October 26, at 2pm in the Studio Theatre at Harbourfront Centre (235 Queens Quay W, Toronto ON).