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Managing director of an average size commercial art gallery in a rapidly changing art market landscape

In this essay, I will assume the role of managing director (MD) of an average size commercial art gallery in London. My gallery will be fictional but based upon general information of average size galleries. The average art gallery has up to 3 employees, one physical space and a median turnover of around one million dollars (McAndrews, 2018:46; Resch, 2016:59). In addition, my commercial art gallery deals in the primary market. The primary market is defined as the first sale of artists' new work through dealers (McAndrews, 2018:71). The secondary market is where dealers and auction houses offer works of art for subsequent resale (ibid., 74). It is important to express the differences between public institutions and commercial galleries for the purposes of this essay. Public institutions or museums aim at educating the public, have transparent organization and financing, rely on donations and sponsorship and have the public interest at heart (Cray et al., 2007:296). Commercial galleries aim at making a profit, provide no public financial information, are focused on selling art, are self-financed and serve a personal interest (Resch, 2016:23). Although both arts sectors have different aims, the core of managing arts organizations remains the same (Bendixen, 2000), namely bringing art to the public. Both types of organisations need to generate income whether it is through ticket sales or selling art. Therefore, sources on managing public institutions can relatively be applied to managing a commercial gallery. In the first part of this essay I will list the skills, knowledge and experience that I consider essential to the profession of a MD of a commercial art gallery. In the second part, I will elaborate upon two key issues facing the average size galleries in the context of the changing landscape of the art market and suggest managerial solutions that I would implement in my gallery. Firstly, I will discuss how I would manage to keep introducing emerging artists to the market in an increasingly costly and competitive market. Secondly, I will consider how I would adapt the gallery to the new digital media opportunities.

Skills, knowledge and experience needed as MD of commercial art gallery

Only recently, managerial concepts have been applied to the arts sector (Cray et al., 2007:295). Current trends in the arts industries have forced organizational leaders to be more entrepreneurial (Mulcahy, 2003). Applying managerial strategies in the gallery sector was at first considered a violation of the art world (Resch, 2016:10). However, it has already been shown in the public sector that professional management does not flatten out artistic input but has a positive effect (ibid., 17). Resch's main argument in consequence is that what sets a successful gallery apart from a non-successful one is a functional organizational model (ibid., 148). The MD is at the top of the organizational structure. Due to the particular nature of the arts sector, there is a different understanding of leadership and management as in other sectors (Caust, 2010:571; Cray et al., 2007:295). Because the average gallery is small, I will not only assume the role of leader of the organisation but also that of an art merchant. Both roles have specific skills, knowledge and experience attached to them.

In the role of leader the MD is in charge of the day-to-day running and the general management of the gallery. The MD is responsible for the long-term survival of the gallery, the financial security and the establishment of a reputation (Daft 1999: 39; Cray et al.,2007:303), which does not allow you to make uncalculated and impulsive decisions. The MD has to balance the interests of the gallery, artists, institutions and clients when making a decision. My master in arts and cultural management provides me with an understanding of general management of an arts organisation. In addition, my law degree equips me with the needed skills to draw up and understand legal documents and negotiate in a pragmatic manner. As MD of a gallery you encounter all types of legal documents: sales contracts, artists consignment contracts, rental agreements etc. Therefore I am convinced my law degree will benefit the function of MD.

Leadership is important in any arts organization (Caust, 2010:571). Caust argues that in arts organizations the ‘leadership' is provided by the artistic director and the ‘management' is provided by the general manager (2010:571). This applies to most public institutions but in the average gallery with few employees one person exercises both roles. ‘Management' is seen as a component of ‘leadership' but ‘leadership' is not mentioned as a component of ‘management' (Caust, 2005:154). Whereas management calls for keeping an eye on the bottom line and short-term results, leadership means keeping any eye on the horizon and the long-term future (Daft 1999: 39). As manager and leader the MD thus has to keep an eye on both long-term and short-term goals . The most appropriate type of leader for an art gallery in my opinion is a charismatic leader because it functions best in small organisations (Cray et al.,2007:302). Charismatic leadership is commonly used to describe leaders who are able to have profound effects on their followers through the force of their personality and individual abilities (Conger and Kanungo, 1998). Charismatic leadership is seen as particularly important for those facing a significant change (ibid.), as the current art market is facing. Many arts organizations are founded by individuals with strong beliefs that are very passionate about art (Cray et al.,2007:300). Successful dealers such as Ernst Beyeler, John Kasmin and Victoria Miro all have a charismatic personality which has a profound effect on their environment (Walsch, 2016; Williamson, 2010). Besides passion, a leader also needs certain knowledge acquired through learning and experience that others do not have (Gronn, 2000; Heenan & Bennis, 1999). As the leader of the gallery it is necessary to make creative decisions and strive for innovation (Reckhenrich et al., 2009:69). A part of being creative and innovative is to let go of let go of well-known solutions and patterns (ibid.,70).

In the role of art merchant the MD has to make the value of an art work tangible and visible by creating buzz, advertising and telling the story behind it (Resch, 2016:91). Therefore, it is necessary to acquire the appropriate knowledge of art history, contemporary art, the art market, artists, important collectors, institutions etc. (ibid., 119). Olivier Babin (former artist) and Harry Scrymgeour (art historian) of Clearing Gallery in Brussels for example, are both intellectual people (ibid., 73). I try to keep up with current trends by reading art news sites, books on the art market and going to as many exhibitions as possible. It is important to be aware of the current developments in the sector, so when talking to other gallerists or curators you can always join the conversation. However, only by working as the MD of a gallery you can master all the skills and knowledge needed for the job says Per Skartstedt (interviewed by Resch, 2016:72). In order to be able to convey that knowledge and sales-talk in a truthful way the MD needs to be confident and evoke trust with the buyers.

As MD of an average size gallery I have to limit the number of employees. Therefore I will assemble a small team that supplements the skills and knowledge that I personally lack, such as a graphic designing. At Gagosian for example, the team consists out of people with very different backgrounds (Resch, 2016:123). An organization is about teamwork, the MD has to involve everyone in the process and not impose different solutions upon them (Reckhenrich et al., 2009:71). It is not correct to force my personal beliefs and vision upon the gallery without subjecting it to feedback from my employees (Yukl, 2006). In order to create an inspiring environment for the organization it is beneficial to provide a guiding framework in which the employees can operate freely (Reckhenrich et al., 2009:71).

In both the role as leader and merchant social competence is a key quality (Resch, 2016:119). The gallery system and art world run on social interaction and trust (ibid., 154). James Fuentes advices to develop strong relationships with fellow gallerists (interviewed by Resch, 2016:112). In addition, Sprüth & Magers gallery expresses that social skills are very important and a large network is needed (interviewed by Resch, 2016:114). As a gallery you need a large network in order to reach a broad audience which results in more potential buyers (Resch, 2016:50-51). My three languages (English, Dutch and French) will also provide me with a great advantage in a global art world. The MD has the task of establishing long term relationships with institutions, collectors and other galleries in order to solidify the reputation of the gallery (Thompson, 2018:160). In today's world, it is important to accumulate different types of skills and knowledge as most arts profiles are similar (Resch, 2016:116). The new generation is multi-skilled, flexible, psychologically resilient, independent, single and unattached to a particular location (Ellmeier, 2003:3). In order to compete, I need to have a diverse array of skills and knowledge.

Changing landscape of the art market

In the past years, a lot of galleries had to close and since 2017 there are even more closures than openings (McAndrews, 2018:16). While this might give the impression that the art market is in bad shape, it is quite the contrary with dealer sales worldwide reporting an estimated value of $63.7 billion, up 4% year-on-year (ibid.). It are the small and mid-size galleries that are facing tough times. The majority of galleries is only marginally profitable (Resch, 2016:33). Resch claims this is because the business model of galleries is outdated, which only permits the already established mega-galleries to comfortably keep doing business (ibid., 22). The art market has entered a new era in which collecting art has become an investment for the super-rich (Adam, 2014:134; Findlay 2014:152). These super-rich line-up for the biggest galleries and the other galleries are left fighting.

1. How can the MD of the average gallery introduce emerging artists in the increasingly competitive and costly art market?

The first issue concerns the increased costs combined with the growing gap in between the few mega-galleries and the rest of the art market (McAndrews, 2018:80). In 2017, dealers and galleries with turnover below $500 000 saw a decline in sales of 4%, while the few galleries with a turnover of more than $50 million saw a sales growth of 10% (ibid., 16). First, the few mega-galleries such as David Zwirner, Hauser & Wirth, Gagosian and PACE gallery have spaces all over the world which permits them to represent many artists and do simultaneous exhibitions all over the world (Thompson, 2018:75). The average gallery with one space cannot cope with this pace. Second, the rent costs of a retail space in a prime urban location and salaries of employees increasingly weigh the budget (McAndrews, 2018:88; Resch, 2016:13). Third, the art market has become event-driven, meaning that the foot traffic has severely reduced and most sales are now made at art fairs or done privately (McAndrews, 2018:88). In addition, the spaces at those art fairs have become very expensive, making it hard for the average gallery to make a profit at a fair (ibid., 89). Fourth, Mega-galleries increasingly cherry-pick artists away from lower and mid-ranked galleries which cements their superior market position (McAndrews, 2018:90; Resch, 2016:10; Thompson, 2018:78). On top of that, there are too many living artists for the level of investment and support available (McAndrews, 2018:63).

These difficulties have as result that is has become hard to introduce emerging artists into the market while remaining profitable. An emerging artist can be a young artist or an older artist that was previously not recognised by the global art world. The 72 years old Walter Swennen  for example, has only recently become successful and is now represented by Gladstone Gallery and Xavier Hufkens. I will constantly be on the lookout for talent and develop an eye for the aesthetic quality of art. The gallery establishes prices for the artist's work, supports its production, controls the supply and acts as the manager, administrator and promoter (McAndrews, 2018:71). Talent alone is not sufficient, an artist needs proper representation and management in order to become successful (Frasogna and Hetherington, 2004:7). The small gallery, Dauwens Beernaert, in Brussels for example, has picked up Loïc Van Zeebroek  (1994°) from the art academy and has been successfully promoting his work, which is what my gallery would do. Mega-galleries mainly represent mature and superstar artists and few emerging artists (Resch, 2016:57). Thus, smaller to midsize galleries are the most vital intermediaries between emerging artists and the art market (ibid., 9). Generally, galleries finance those emerging artists with the profit from their successful artists. However, only a relatively small number of artists become commercially successful (McAndrews, 2018:72). In conclusion, launching an emerging artist is expensive for the average gallery and they run the risk of not benefitting from the financial success. The question is how the average gallery can manage to remain profitable while still supporting and promoting emerging artists.

A first solution I would implement as MD is to collaborate with other galleries. Many dealers now cooperate with other galleries and institutions to promote their artists, develop their careers and establish their public profile (McAndrews, 2018:73). Zach Feuer and Joel Mesler, two separate galleries, started collaborating in 2013 (Boucher, 2015). By renting a booth together at an art fair they could split the financial risk (Resch, 2016:130). They also collaborated on exhibitions and had space together in Hudson, New York (Boucher, 2015). In 2015, they even decided to merge together into Feuer/Mesler gallery (ibid.). By merging they combined capital, workforce, clientele and could afford a new large space. With more employees they could put a managerial structure in place and establish a global presence by being present at different places at the same time. However, in 2017 they decided to close the gallery and part ways, which is proof of the competitive market (Boucher, 2017). Another example is Sprüth Magers gallery, which is one of the top tier galleries in the world with 55 employees over 5 locations worldwide representing over 60 artists (Artnet News, 2018; Resch, 2016:114). The gallery arose out of the merger of Monika Sprüth Gallery (Cologne) and Philomene Magers (Cologne) in 1998. They have always done things a bit different whilst always working in function of their artists. In 2016, they went against the current and opened a space in Los Angeles instead of New York City because they felt it suited their artists better (Vankin, 2016).

Besides collaborating with other galleries I will form partnerships with other areas of the arts sector or even with other industries. Salon 94, Jeanne Greenberg Rohatyn's gallery, uses innovative ways to advertise her gallery (Resh, 2016:89). She connects her artists to other sectors such as fashion, music and sports. She gets her artists a short review or photo in a fashion magazine, connecting them to new audiences (ibid.). She recently founded Salon 94 Design branching out into the design world (Kino, 2017). Another example is the world renowned gallery Dominique Lévy, who does lots of partnerships with people of finance, other galleries and Christie's (Resch, 2016:128). In consequence, I will position the gallery at the centre of a diverse network representing excellence.

A second change I would implement, is to start dealing on the secondary market. The secondary market offers the possibility to invest in established artists, which provide a stable income. One third of the galleries worldwide already operate in both markets (McAndrews, 2018:75). Dealers operating in both markets make higher profits (McAndrews, 2018:76; Resch, 2016:60). The overheads of establishing emerging artists can be compensated by selling the work of established artists on the secondary market (Resch, 2016:60). Skarstedt Gallery is perfect example of a hybrid gallery that combines primary and secondary markets representing both successful artists and lesser-known artists (ibid., 71). The disadvantages are that in the secondary market a gallery is in direct competition with big auction houses such as Christie's, Sotheby's and Phillips and that it might direct the attention away from promoting emerging artists.

2. How can I as MD adapt the gallery model to the new digital media opportunities?

The second aspect of the changing art market landscape is the shift towards online art dealing. The arts sector must adapt to the rapidly changing social and technological environment and imagine new ways of targeting collectors both online and offline (Lee, 2014). The global online art and antiques market grew by 72% in the past five years and was estimated to have reached a new high of $5.4 billion in 2017 (McAndrews, 2018:229). Many dealers and galleries reported that they use online sales to access new clientele and see the online channel as a key area of growth (ibid.). The online market provides my average gallery with an extra channel of sales. The online world is also not restricted to a certain location, but opens my gallery up to worldwide exposure. Many galleries and especially collectors are still reluctant to fully engage in this way of dealing art. However, I believe that the online market has the potential of becoming the main sales channel within the next few years. At first people were also hesitant to buy clothes or electronics online, but over time the confidence grew and now it is one of the most common ways of shopping (Thompson, 2018:150). As MD of my gallery I am willing to take risks in order to innovate. For example, the manager of the rock band Radiohead decided to release their album “In Rainbows” (2007) only as a digital download (Morrow, 2009:161). This happened before the time of major streaming services such as Spotify, Tidal or Apple Music. It shows that managers have the power to innovate and find new ways of bringing the work of artists to the largest possible audience. The album launch was a huge success because of the press coverage on the revolutionary way of releasing an album but also because of all the traffic directed to their website where you could buy merchandise and concert tickets (ibid., 164).

While the shift towards an online art market might seem efficient and user-friendly, the primary motive to visit a gallery is still a social and symbolical one, one wants to be part of a certain social class (Resch, 2016:78). Personal contact remains the most effective way to sell art (Resch, 2016:92; Thompson, 2018:153). The majority of the skills and knowledge needed to be an MD of a gallery involve personal interaction. When collectors go to galleries or art fairs they do not only want to buy art, they want to meet artists, other collectors and people from the creative industries in general. If more galleries tend to move towards the online market this essential social dimension around the art world will diminish and this can have a negative impact on the art world.

As MD I would adapt my gallery to the online society of today by adding an online sales channel. There are two options for creating an online environment for the gallery. The first one is to offer a buying-option on the already existing website. Only 30% of the gallery-websites provide the opportunity to see prices or actually buy a work (McAndrews, 2018:253). In consequence, my website would provide detailed information on pricing as well as provenance, condition, artist biography and exhibitions because buyers want transparency. Nonetheless, you still need to invest in directing traffic towards the gallery-website, which is not easy and not costless (ibid., 252). The second option is to have a membership with an already existing art platform such as Artsy on which the gallery can list their available works. This can reduce the costs of designing the gallery's own platform. However, most of the works on these platforms are sold at prices below $50 000 (65%) and therefore the profit has to come out of the quantity of sales (McAndrews, 2018:245). As my gallery wants to establish artists and built a good reputation it does not need quantity in its clientele but quality such as highly regarded collectors or public institutions.

I would furthermore intensively use social media to market the gallery and the artists. Social media has proven to be beneficial tool for commercial marketing (Alden et al., 2011:172). Advertising through email and letters is outdated (Resch, 2016:91). Many galleries are now exploring social media as a proactive marketing and sales tool (McAndrews, 2018:253). Through online social networking, artists can be linked to other artists and thus form a small cluster of niche marketing, wherein the manager of the artists plays a crucial role in establishing these links (Morrow, 2009:173). The young gallery, Unit London, uses Instagram extensively to market their art works, selling over 50% via Instagram (Heilpern, 2016). As a marketing strategy they exhibit artists who themselves have over 100 000 followers on Instagram to increase their own visibility (ibid.). Instagram offers the possibility of people stumbling upon the account as a result of scrolling and clicking on other profiles.

On the one hand online marketing and sales strategy is cost-efficient and user-friendly, on the other hand a physical space is still fundamental. Spiegler (director Art Basel) claims that it is absolutely necessary to maintain a physical space as it adds a lot of credibility to the gallery (cited in Thompson, 2018:74). Unit London also maintains two prime locations in central London because they recognize the value for collectors in seeing the work in person (Heilpern, 2016). As mentioned above the personal contact between gallerist and client remains essential to the gallery sector. I would move the gallery to a cheaper location, but certainly keep a space in which to organize exhibitions.

Conclusion

Being the managing director of an average size gallery is a complex profession, requiring a range of different skills, knowledge and experience. I have been developing a diverse profile combining my legal background with a degree in arts and cultural management in order to differ from other profiles in the art market. In the role as charismatic leader I have to secure the financial budget, handle the general management, keep an eye on both long-term and short-term goals and understand legal documents. The MD has to assemble a team of diverse backgrounds and create a frame in which they can operate freely in order to achieve the best results. In the role as merchant I have to promote and sell artists, have sufficient cultural knowledge and possess powers of persuasion and negotiation. Overall it is important that the MD has considerable social competence as the art world is a fundamentally social world. The ultimate aim as the MD is to build a good reputation for the gallery and establish long-term relationships with other galleries, artists, collectors and institutions. Only after gaining a considerable amount of experience I will be able to perfect the craft of gallery management.

The combination of increased costs, increased gallery inequality and a new online market puts the outdated gallery model under a lot of stress. As the MD, I am responsible to maintain the profitability of the gallery and adapt to the changing art market landscape by implementing creative and innovative concepts. The main aim of my gallery would be to safeguard its capacity to launch emerging artists into the market. Moreover, the social dimension is of great importance to the art world and needs to be united with the online channel of art dealing. Most sales are still made through personal contact and most collectors buy art to be part of the art world and meet the people inhabiting it.

As a result I propose to create a hybrid gallery by adding two new sales channels to the model: secondary market and online market. This provides the gallery with extra revenue streams that can be used to promote emerging artists. Furthermore, my gallery will make extensive use of social media – especially Instagram – to promote artists and exhibitions. Lastly, I would collaborate with other galleries on exhibitions and art fairs, and form partnerships with other sectors such as music and fashion to advertise my artists. It remains important that the gallery maintains a physical space – albeit in a cheaper location – in order to nurture its social network, host events, set up exhibitions and evoke credibility. My aim is to further supplement my profile with the skills and knowledge it lacks and work on various facets of the gallery in order to become an excellent of outstanding managing director.

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